RYERSON HOLDING CORPORATION CHICAGO, Aug. 3, 2017 /PRNewswire/ -- Ryerson Holding Corporation (NYSE: RYI), a leading distributor and value-added processor of industrial metals, today reported results for the second quarter ended June 30, 2017.
Eddie Lehner, Ryerson's President and Chief Executive Officer, said, "First and always top of mind, I thank our customers for their continuing support and my Ryerson colleagues for a job well done in the quarter. Ryerson executed admirably despite conflicting and volatile factors impacting our industry, making the most of our opportunities given muted pricing power leading to margin compression. We grew market share, demonstrated better expense leverage, and further improved working capital efficiency, managing our days of supply below 70 days for the second consecutive quarter despite significant price deflation in carbon and nickel commodities. These are accomplishments and competencies that remain when the transitory impacts of volatility dissipate. Although price-driver deflation blunted pricing power in the quarter relative to rising inventory replacement costs, a better balance appears to be emerging between inventory replacement costs and selling prices moving into the third quarter, along with potentially improving carbon and stainless pricing dynamics. Ryerson continues generating and realizing self-help opportunities while improving and strengthening the business to the benefit of all Ryerson stakeholders."
Second Quarter 2017 Financial Results
Revenues were $875.4 million for the second quarter of 2017, up 7.5 percent from the first quarter of 2017 and up 18.3 percent for the year-ago quarter. Tons sold increased by 4.2 percent in the second quarter of 2017 compared to the first quarter of 2017, and 2.6 percent compared to the year-ago period. Additionally, average selling prices per ton increased 3.1 percent in the second quarter of 2017 compared to the first quarter of 2017, and 15.4 percent compared to the second quarter of 2016.
Ryerson's gross margin was 16.0 percent for the second quarter of 2017, compared to 19.7 percent in the first quarter of 2017 and 22.0 percent for the year-ago period. Included in cost of materials sold was LIFO expense of $14.2 million for the second quarter of 2017, compared to net LIFO income of $0.7 million for the first quarter of 2017 and net LIFO income of $7.0 million in the second quarter of 2016. Gross margin, excluding LIFO decreased to 17.7 percent for the second quarter of 2017, compared to 19.6 percent in the first quarter of 2017 and 21.1 percent in the year-ago period. Average inventory costs rose significantly faster than Ryerson's average selling prices in the second quarter of 2017, leading to margin compression. A reconciliation of gross margin to gross margin, excluding LIFO is included below in this news release.
Warehousing, delivery, selling, general and administrative expense decreased by $0.6 million, or 0.5 percent, for the second quarter of 2017 compared to the first quarter of 2017. Compared to the year-ago period, expenses increased by $3.6 million, or 3.2 percent. Ryerson demonstrated expense leverage in the second quarter of 2017 as warehousing, delivery, selling, general and administrative expenses declined to 13.3 percent of sales compared to 14.4 percent in first quarter of 2017 and 15.3 percent in the second quarter of 2016. Erich Schnaufer, Ryerson's Chief Financial Officer, said, "We continue to improve and effectively manage our expenses by leveraging our scale to efficiently deliver our value-added products and services while improving the customer experience."
Net income attributable to Ryerson Holding Corporation was $0.6 million, or $0.02 per diluted share, for the second quarter of 2017, compared to net income of $14.8 million, or $0.40 per diluted share, in the first quarter of 2017, and $5.6 million, or $0.17 per diluted share, in the second quarter of 2016. Excluding a loss on the retirement of debt, and impairment charges on assets, net income attributable to Ryerson Holding Corporation in the second quarter of 2016 was $16.9 million, or $0.52 per diluted share.
Adjusted EBITDA, excluding LIFO was $51.5 million in the second quarter of 2017, compared to $54.3 million in the first quarter of 2017 and $56.0 million in the year-ago period. Reconciliations of Adjusted EBITDA, excluding LIFO and net income attributable to Ryerson Holding Corporation and earnings per share, excluding impairment charges on assets, and losses on retirement of debt to net income attributable to Ryerson Holding Corporation are included below in this news release.
Second Quarter 2017 Working Capital and Liquidity
In the second quarter of 2017, Ryerson's inventory balance stood at 68.9 days of supply compared to 69.1 days in the first quarter of 2017 and 74.4 days in the year-ago quarter. Additionally, Ryerson maintained ample liquidity to finance growth in the second quarter of 2017. As of June 30, 2017, borrowings were $377 million on our primary revolving credit facility with additional availability of $266 million. Including cash, marketable securities, and availability from foreign sources, Ryerson's total liquidity was $326 million compared to $302 million in the first quarter of 2017.
Third Quarter 2017 Commentary
Although the outcome of the Section 232 investigations involving steel and aluminum imports to the U.S. market are not yet known, gross margins are expected to stabilize as replacement costs that peaked in the second quarter appear to be moderating. Global supply and demand fundamentals appear to be firming; the U.S. dollar has retraced from post-election highs while imports appear to be hitting a soft pocket in the third quarter of 2017 as compared to the second quarter of 2017. Demand patterns remain generally positive for our key end markets compared to last year, and Ryerson anticipates these conditions to continue into the third quarter. If average inventory costs reset and realign with market prices over the next several quarters without negative inflections in key drivers, Ryerson expects its commercial, expense, and inventory management efforts to lead to gross margin stabilization as the third quarter progresses.
Second Quarter 2017 Business Metrics
Second First Second Sequential Year-Over-Year
Quarter Quarter Quarter Quarter Change Change
2017 2017 2016
---- ---- ----
Tons shipped
(In
thousands) 518 497 505 4.2% 2.6%
------------ --- --- --- --- ---
Average
selling
price/ton $1,690 $1,639 $1,465 3.1% 15.4%
---------- ------ ------ ------ --- ----
Average cost/
ton 1,419 1,316 1,142 7.8% 24.3%
------------- ----- ----- ----- --- ----
Average cost/
ton,
excluding
LIFO 1,392 1,317 1,156 5.7% 20.4%
------------- ----- ----- ----- --- ----
Second Quarter 2017 Major Product Metrics
Tons Shipped (Tons in thousands) Average Selling Price per
Ton Shipped
-----------
Second First Second Sequential Year- Sequential Year-Over-Year
Quarter Quarter Quarter Quarter Over- Quarter Change
2017 2017 2016 Change Year Change
Change
------
Carbon steel 390 374 385 4.3% 1.3% 4.4% 18.2%
------------ --- --- --- --- --- --- ----
Aluminum 52 50 50 4.0% 4.0% 2.6% 3.2%
-------- --- --- --- --- --- --- ---
Stainless steel 74 71 68 4.2% 8.8% 2.2% 18.2%
--------------- --- --- --- --- --- --- ----
Net Sales (Dollars in millions)
------------------------------
Second First Second Sequential Year-Over-
Quarter Quarter Quarter Quarter Year Change
2017 2017 2016 Change
---- ---- ---- ------
Carbon
steel $443 $407 $370 8.8% 19.7%
------ ---- ---- ---- --- ----
Aluminum 191 179 178 6.7% 7.3%
-------- --- --- --- --- ---
Stainless
steel 229 215 178 6.5% 28.7%
--------- --- --- --- --- ----
Six Months Ended June 30, 2017 Business Metrics
-----------------------------------------------
Six Months Ended Six Months Ended Year-Over-Year
June 30, 2017 June 30, 2016 Change
------------- ------------- ------
Tons shipped (In thousands) 1,015 983 3.3%
-------------------------- ----- --- ---
Average selling price/ton $1,665 $1,467 13.5%
------------------------- ------ ------ ----
Average cost/ton 1,368 1,151 18.9%
---------------- ----- ----- ----
Average cost/ton, excluding LIFO 1,355 1,173 15.5%
-------------------------------- ----- ----- ----
Six Months Ended June 30, 2017 Major Product Metrics
----------------------------------------------------
Tons Shipped (Tons in thousands) Average Selling
Price per Ton
Shipped
-------
Six Months Ended Six Months Ended Year- Year-Over-Year
June 30, 2017 June 30, 2016 Over-Year Change
Change
------
Carbon steel 764 750 1.9% 16.4%
------------ --- --- --- ----
Aluminum 102 97 5.2% 0.5%
-------- --- --- --- ---
Stainless steel 145 131 10.7% 15.3%
--------------- --- --- ---- ----
Sales (Dollars in millions)
--------------------------
Six Months Ended Six Months Ended Year-Over-Year
June 30, 2017 June 30, 2016 Change
------------- ------------- ------
Carbon steel $850 $717 18.5%
------------ ---- ---- ----
Aluminum 371 351 5.7%
-------- --- --- ---
Stainless
steel 443 347 27.7%
--------- --- --- ----
Earnings Call Information
Ryerson will host a conference call to discuss its second quarter 2017 results Friday, August 4, at 10 a.m. Eastern Time. Participants may access the conference call by dialing 877-201-0168 (Domestic) and 647-788-4901 (International) and using conference ID 43411640. The live online broadcast will be available on the Company's investor relations website, ir.ryerson.com. A replay will be available at the same website for 90 days.
About Ryerson
Ryerson is a leading value-added processor and distributor of industrial metals, with operations in the United States, Canada, Mexico, and China. Founded in 1842, Ryerson employs around 3,500 employees in approximately 100 locations. Visit Ryerson at www.ryerson.com.
Safe Harbor Provision
Certain statements made in this press release and other written or oral statements made by or on behalf of the Company constitute "forward-looking statements" within the meaning of the federal securities laws, including statements regarding our future performance, as well as management's expectations, beliefs, intentions, plans, estimates, or projections relating to the future. Such statements can be identified by the use of forward-looking terminology such as "believes," "expects," "may," "estimates," "will," "should," "plans" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. The Company cautions that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of various factors. Among the factors that significantly impact the metals distribution industry and our business are: the cyclicality of our business; the highly competitive, volatile, and fragmented market in which we operate; fluctuating metal prices; our substantial indebtedness and the covenants in instruments governing such indebtedness; the integration of acquired operations; regulatory and other operational risks associated with our operations located inside and outside of the United States; work stoppages; obligations under certain employee retirement benefit plans; the ownership of a majority of our equity securities by a single investor group; currency fluctuations; and consolidation in the metals producer industry. Forward-looking statements should, therefore, be considered in light of various factors, including those set forth above, and those set forth under "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2016, and in our other filings with the Securities and Exchange Commission. Moreover, we caution against placing undue reliance on these statements, which speak only as of the date they were made. The Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events or circumstances, new information or otherwise.
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
Selected Income and Cash Flow Data - Unaudited
(Dollars and Shares in Millions, except Per Share and Per Ton Data)
2017 2016 First Six Months Ended
---- ----
Second First Second June 30,
--------
Quarter Quarter Quarter 2017 2016
------- ------- ------- ---- ----
NET SALES $875.4 $814.5 $739.8 $1,689.9 $1,442.4
Cost of materials
sold 735.0 653.9 576.8 1,388.9 1,131.8
Gross profit 140.4 160.6 163.0 301.0 310.6
Warehousing,
delivery, selling,
general and
administrative 116.7 117.3 113.1 234.0 222.4
OPERATING PROFIT 23.7 43.3 49.9 67.0 88.2
Other income and
(expense), net (1) (0.9) 0.3 (18.3) (0.6) (13.0)
Interest and other
expense on debt (22.8) (21.8) (21.9) (44.6) (43.9)
INCOME BEFORE INCOME TAXES - 21.8 9.7 21.8 31.3
Provision (benefit)
for income taxes (0.8) 6.8 4.3 6.0 12.4
NET INCOME 0.8 15.0 5.4 15.8 18.9
Less: Net income (loss) attributable to noncontrolling
interest 0.2 0.2 (0.2) 0.4 (0.2)
--- --- ---- --- ----
NET INCOME ATTRIBUTABLE TO RYERSON HOLDING CORPORATION $0.6 $14.8 $5.6 $15.4 $19.1
==== ===== ==== ===== =====
EARNINGS PER SHARE
Basic $0.02 $0.40 $0.17 $0.41 $0.60
===== ===== ===== ===== =====
Diluted $0.02 $0.40 $0.17 $0.41 $0.59
===== ===== ===== ===== =====
Shares outstanding - basic 37.2 37.1 32.1 37.2 32.1
Shares outstanding - diluted 37.3 37.3 32.2 37.3 32.2
Supplemental Data :
Tons shipped
(000) 518 497 505 1,015 983
Shipping days 64 64 64 128 128
Average selling
price/ton $1,690 $1,639 $1,465 $1,665 $1,467
Gross profit/ton 271 323 323 297 316
Operating profit/
ton 46 87 99 66 90
LIFO expense
(income), net per
ton 27 (1) (14) 13 (22)
LIFO expense
(income), net $14.2 $(0.7) $(7.0) $13.5 $(21.8)
Depreciation and
amortization expense 11.5 10.7 10.7 22.2 21.6
Cash flow from
operating activities (48.6) (32.5) (44.4) (81.1) 2.6
Capital
expenditures (6.2) (4.0) (7.9) (10.2) (13.3)
(1) The second
quarter of 2016
includes a loss
of $15.1
million on the
repurchase of
debt and an
other-than-
temporary
charge of $2.8
million related
to our
investment in
an available-
for-sale
security. The
first six
months of 2016
include a loss
of $6.9 million
on the
repurchase of
debt and an
other-than-
temporary
impairment
charge of $2.8
million related
to our
investment in
an available-
for-sale
security.
See Schedule 1
for Condensed
Consolidated
Balance Sheets
See Schedule 2
for EBITDA and
Adjusted EBITDA
reconciliation
See Schedule 3
for EPS
reconciliation
Schedule 1
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Balance Sheets
(In millions, except shares)
June 30, December 31,
2017 2016
---- ----
Assets (unaudited)
Current assets:
Cash and cash equivalents $76.9 $80.7
Restricted cash 1.3 1.0
434.2 326.0
Receivable, less provision for
allowances, claims and doubtful
accounts of $5.7 in 2017 and
$4.6 in 2016
Inventories 648.0 563.4
Prepaid expenses and other
current assets 28.1 26.7
---- ----
Total current assets 1,188.5 997.8
Property, plant and equipment, at
cost 718.6 668.7
Less: accumulated depreciation 298.7 280.5
Property, plant and equipment,
net 419.9 388.2
Deferred income taxes 9.7 24.4
Other intangible assets 50.0 40.8
Goodwill 115.3 103.2
Deferred charges and other assets 4.4 4.3
Total assets $1,787.8 $1,558.7
======== ========
Liabilities
Current liabilities:
Accounts payable $349.6 $230.4
Salaries, wages and commissions 35.3 36.8
Other accrued liabilities 41.9 37.7
Short-term debt 23.3 19.2
Current portion of deferred
employee benefits 8.3 8.3
--- ---
Total current liabilities 458.4 332.4
Long-term debt 1,012.7 944.3
Deferred employee benefits 274.0 298.8
Taxes and other credits 65.3 32.5
Total liabilities 1,810.4 1,608.0
Commitments and contingencies
Equity
Ryerson Holding Corporation
stockholders' equity (deficit):
- -
Preferred stock, $0.01 par value;
7,000,000 shares authorized and
no shares issued at 2017 and
2016
0.4 0.4
Common stock, $0.01 par value;
100,000,000 shares authorized;
37,389,361 and 37,345,117 shares
issued at 2017 and 2016,
respectively
Capital in excess of par value 376.5 375.4
Accumulated deficit (96.8) (112.2)
Treasury stock, at cost -Common
stock of 212,500 shares in 2017
and 2016 (6.6) (6.6)
Accumulated other comprehensive
loss (298.3) (307.8)
------ ------
Total Ryerson Holding
Corporation
Stockholders' Equity (24.8) (50.8)
Noncontrolling interest 2.2 1.5
Total Equity (Deficit) (22.6) (49.3)
----- -----
Total Liabilities and
Stockholders' Equity $1,787.8 $1,558.7
======== ========
Schedule 2
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
Reconciliations of Net Income Attributable to Ryerson Holding Corporation to EBITDA and Gross profit to Gross profit excluding LIFO
(Dollars in millions)
2017 2016 First Six Months Ended
---- ----
Second First Second June 30,
--------
Quarter Quarter Quarter 2017 2016
------- ------- ------- ---- ----
Net income attributable to Ryerson Holding Corporation $0.6 $14.8 $5.6 $15.4 $19.1
Interest and other expense on debt 22.8 21.8 21.9 44.6 43.9
Provision (benefit) for income taxes (0.8) 6.8 4.3 6.0 12.4
Depreciation and amortization expense 11.5 10.7 10.7 22.2 21.6
---- ---- ---- ---- ----
EBITDA $34.1 $54.1 $42.5 $88.2 $97.0
Reorganization 1.4 0.5 1.8 1.9 3.1
Foreign currency transaction (gains) losses 0.7 (0.3) 0.3 0.4 3.2
Loss on retirement of debt - - 15.1 - 6.9
Impairment charges on assets 0.2 - 2.8 0.2 2.8
Purchase consideration and other transaction costs 0.9 0.7 0.4 1.6 1.9
Other adjustments - - 0.1 - 0.1
--- --- --- --- ---
Adjusted EBITDA $37.3 $55.0 $63.0 $92.3 $115.0
===== ===== ===== ===== ======
Adjusted EBITDA $37.3 $55.0 $63.0 $92.3 $115.0
LIFO expense (income), net 14.2 (0.7) (7.0) 13.5 (21.8)
Adjusted EBITDA, excluding LIFO income, net $51.5 $54.3 $56.0 $105.8 $93.2
===== ===== ===== ====== =====
Net sales $875.4 $814.5 $739.8 $1,689.9 $1,442.4
Adjusted EBITDA, excluding LIFO expense (income), net,
as a percentage of net sales 5.9% 6.7% 7.6% 6.3% 6.5%
=== === === === ===
Gross profit $140.4 $160.6 $163.0 $301.0 $310.6
Gross margin 16.0% 19.7% 22.0% 17.8% 21.5%
==== ==== ==== ==== ====
Gross profit $140.4 $160.6 $163.0 $301.0 $310.6
LIFO expense (income), net 14.2 (0.7) (7.0) 13.5 (21.8)
---- ---- ---- ---- -----
Gross profit, excluding LIFO expense (income), net $154.6 $159.9 $156.0 $314.5 $288.8
====== ====== ====== ====== ======
Gross margin, excluding LIFO expense (income), net 17.7% 19.6% 21.1% 18.6% 20.0%
==== ==== ==== ==== ====
Note: EBITDA
represents
net income
before
interest and
other
expense on
debt,
provision
for income
taxes,
depreciation
and
amortization.
Adjusted
EBITDA gives
further
effect to,
among other
things,
impairment
charges on
assets,
reorganization
expenses and
foreign
currency
transaction
gains and
losses. We
believe that
the
presentation
of EBITDA,
Adjusted
EBITDA and
Adjusted
EBITDA,
excluding
LIFO expense
(income),
net,
provides
useful
information
to investors
regarding
our
operational
performance
because they
enhance an
investor's
overall
understanding
of our core
financial
performance
and provide
a basis of
comparison
of results
between
current,
past and
future
periods. We
also
disclose the
metric
Adjusted
EBITDA,
excluding
LIFO expense
(income),
net, to
provide a
means of
comparison
amongst our
competitors
who may not
use the same
basis of
accounting
for
inventories.
EBITDA,
Adjusted
EBITDA and
Adjusted
EBITDA,
excluding
LIFO expense
(income),
net, are
three of the
primary
metrics
management
uses for
planning and
forecasting
in future
periods,
including
trending and
analyzing
the core
operating
performance
of our
business
without the
effect of
U.S.
generally
accepted
accounting
principles,
or GAAP,
expenses,
revenues and
gains
(losses)
that are
unrelated to
the day to
day
performance
of our
business. We
also
establish
compensation
programs for
our
executive
management
and regional
employees
that are
based upon
the
achievement
of pre-
established
EBITDA,
Adjusted
EBITDA and
Adjusted
EBITDA,
excluding
LIFO expense
(income),
net,
targets. We
also use
EBITDA,
Adjusted
EBITDA and
Adjusted
EBITDA,
excluding
LIFO expense
(income),
net, to
benchmark
our
operating
performance
to that of
our
competitors.
EBITDA,
Adjusted
EBITDA and
Adjusted
EBITDA,
excluding
LIFO expense
(income),
net do not
represent,
and should
not be used
as a
substitute
for, net
income or
cash flows
from
operations
as
determined
in
accordance
with
generally
accepted
accounting
principles,
and neither
EBITDA,
Adjusted
EBITDA and
Adjusted
EBITDA,
excluding
LIFO expense
(income),
net, is
necessarily
an
indication
of whether
cash flow
will be
sufficient
to fund our
cash
requirements.
This release
also
presents
gross
margin,
excluding
LIFO expense
(income),
net, which
is
calculated
as gross
profit plus
LIFO expense
(or minus
LIFO
income),
net, divided
by net
sales. We
have
excluded
LIFO expense
(income),
net from the
gross margin
and Adjusted
EBITDA as a
percentage
of net sales
metrics in
order to
provide a
means of
comparison
amongst our
competitors
who may not
use the same
basis of
accounting
for
inventories
as we do.
Our
definitions
of EBITDA,
Adjusted
EBITDA,
Adjusted
EBITDA,
excluding
LIFO expense
(income),
net, gross
margin,
excluding
LIFO expense
(income),
net, and
Adjusted
EBITDA,
excluding
LIFO expense
(income),
net, as a
percentage
of sales may
differ from
that of
other
companies.
Schedule 3
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
Reconciliation of Net Income and Earnings per Share Excluding
Impairment Charges
on Assets and Loss on Retirement of Debt
(Dollars and Shares in Millions, Except Per Share Data)
2017 2016 First Six Months Ended
---- ----
Second First Second June 30,
--------
Quarter Quarter Quarter 2017 2016
------- ------- ------- ---- ----
Net income attributable to Ryerson Holding Corporation $0.6 $14.8 $5.6 $15.4 $19.1
Impairment charges on assets 0.2 - 2.8 0.2 2.8
Loss on retirement of debt - - 15.1 - 6.9
Provision (benefit) for income taxes (0.1) - (6.6) (0.1) (3.7)
---- --- ---- ---- ----
$0.7 $14.8 $16.9 $15.5 $25.1
Net income attributable to Ryerson Holding Corporation,
excluding impairment charges on assets and loss on
retirement of debt
Earnings per share, excluding impairment charges on assets
and loss on retirement of debt
$0.02 $0.40 $0.53 $0.42 $0.78
Basic
$0.02 $0.40 $0.52 $0.42 $0.78
Diluted
Shares outstanding - basic 37.2 37.1 32.1 37.2 32.1
==== ==== ==== ==== ====
Shares outstanding - diluted 37.3 37.3 32.2 37.3 32.2
==== ==== ==== ==== ====
Note: Net income
and
Earnings
per share
excluding
impairment
charges on
assets and
loss on
retirement
of debt is
presented
to provide
a means of
comparison
with
periods
that do
not
include
impairment
charges on
assets and
losses on
retirement
of debt.
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SOURCE Ryerson Holding Corporation
