BANK OF AMERICA MERRILL LYNCH 2015 LEVERAGED FINANCE CONFERENCE. D e c e m b e r 3,

Transcription

1 BANK OF AMERICA MERRILL LYNCH 2015 LEVERAGED FINANCE CONFERENCE D e c e m b e r 3,

2 IMPORTANT INFORMATION ABOUT RYERSON HOLDING CORPORATION These materials do not constitute an offer or solicitation to purchase or sell securities of Ryerson Holding Corporation and no investment decision should be made based upon the information provided herein. Ryerson strongly urges you to review its filings with the Securities and Exchange Commission, which can be found at ir.ryerson.com/financial-info/sec-filings/. This site also provides additional information about Ryerson. SAFE HARBOR PROVISION Certain statements made in this presentation 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 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 regarding 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, 2014 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. NON-GAAP MEASURES Certain measures contained in these slides or the related presentation are not measures calculated in accordance with generally accepted accounting principles (GAAP). They should not be considered a replacement for GAAP results. Non-GAAP financial measures appearing in these slides are identified in the footnotes. A reconciliation of these non-gaap measures to the most directly comparable GAAP financial measures is included in the Appendix. A copy of this presentation is available on our website ir.ryerson.com, in the Events & Presentations section. B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 2

3 BUSINESS OVERVIEW E D D I E L E H N E R P r e s i d e n t a n d C h i e f E x e c u t i v e O f f i c e r B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 3

4 METAL SERVICE CENTER SUPPLY CHAIN SUPPLIERS Manufacture metals Produce in large volume Have long lead times SERVICE CENTERS Purchase in scale; ship smaller quantities Process more than half of products sold Same/next day delivery CUSTOMERS Purchase smaller quantities Require a variety of products and services B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 4

5 One of North America s largest metals processors and distributors, with 2014 sales of $3.6 billion More than 100 locations in U.S., Canada, Mexico, China and Brazil Founded in 1842; relisted on NYSE with IPO in August 2014 Distribute more than 70,000 products to 35,000 active customers Primary base metals: carbon, stainless and aluminum Primary shapes: sheet, plate and long bar B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 5

6 EXECUTIVE SUMMARY 1 Transformation yielding higher performance and potential 2 Industry-leading expense and working capital management 3 Successful shift to higher value mix and value-added processing 4 Building sustainable competitive advantages to fuel growth 5 Generating counter cyclical cash flow and deleveraging balance sheet B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 6

7 MACRO TRENDS: Lackluster Demand % 2% 3% U.S. Purchasing Managers Index (PMI) ~ Source: Institute of Supply Management B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 7

8 MACRO TRENDS: Highly Deflationary Base Metal Prices Source: LME and CRU B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 8

9 MACRO TRENDS: Well Below Pre-recession Levels U.S. CARBON and STAINLESS STEEL SHIPMENTS (M tons) 40% below prior peak Source: Metals Service Center Institute B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 9

10 Transformation Driving Industry-Leading Performance OPERATIONAL EFFICIENCY Structural cost reduction Expense control leadership Working capital leadership Best practice talent management MARGIN EXPANSION Shift product mix Optimize customer mix Value-driven pricing and value-added processing Supply chain innovation, architecture and leadership PROFITABLE GROWTH Leveraging scale in highly fragmented market Multi-channel sales and distribution platform Expansion of capabilities and greenfield investment Bolt-on acquisitions B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 10

11 PROVEN OPERATIONAL EFFICIENCY Expenses as a percent of sales (1) 16.3% 16.4% 17.7% 17.6% Working capital management Inventory days of supply (DOS) 10.5% 11.5% 12.5% 11.9% Competitor averages are based on Ryerson s analysis of financial information disclosed in competitors SEC filings. Competitor average includes Reliance Steel & Aluminum, A.M. Castle, Olympic Steel, Kloeckner Metals and Russel Metals. RYERSON COMPETITOR AVERAGE (1) Expenses exclude depreciation and amortization, impairments, restructuring, and other one-time items including Ryerson s one-time IPO expenses of $32.7 million. A reconciliation of these non-gaap financial measures to comparable GAAP measures is included in the Appendix. B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 11

12 HIGHER VALUE MIX to IMPROVE MARGINS PRODUCT MIX (PERCENTAGE OF SALES) 100% 4% 2% 90% 16% 80% 23% ~ 31% 42% 70% 15% 19% 60% 50% 40% 30% 65% 56% 20% 10% ~ ~ HIGHER MARGIN MIX Shift to higher margin plate and long products Increase value-added 10.3% 9.9% 9.5% processing 8.3% 6.7% 65% 56% Expand transactional businesses ~ ~ 10.6% 0% Source: SEC filings and company estimates. FLAT PLATE LONG OTHER B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 12

13 INVESTING IN THE BUSINESSES More than $100 million growth capex since 2010, expanding valueadded capabilities Six bolt-on acquisitions since 2010 Additive to earnings and margins Focus on value-added processing Broaden transactional customer portfolio B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 13

14 PERFORMANCE VERSUS PEERS Gross margin, excluding LIFO Adjusted EBITDA margin, excluding LIFO 25.0% 20.0% 15.0% 10.0% 5.0% 22.4% 22.1% 21.4% 21.5% 21.0% 16.9% 17.6% 15.2% 16.1% 15.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 3.4% 4.6% 5.8% 4.9% 4.7% 5.0% 4.9% 3.7% 6.0% 3.3% 0.0% % RYERSON COMPETITOR AVERAGE RYERSON COMPETITOR AVERAGE Ryerson has demonstrated Gross and EBITDA margin progress on an absolute basis and relative to public peers Gross margins, excluding LIFO and Adjusted EBITDA margin, excluding LIFO are non-gaap financial measures. A reconciliation of these non-gaap financial measures to comparable GAAP measures is included in the Appendix. Competitor averages are based on Ryerson s analysis of financial information disclosed in competitors SEC filings. Competitor average includes Reliance Steel & Aluminum, A.M. Castle, Olympic Steel, Kloeckner Metals and Russel Metals. B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 14

15 DIFFERENTIATED MODEL ONE RYERSON Single franchise One brand Speed Great customer experiences GLOBAL SCALE Global capabilities in local markets RYERSON Leveraging Scale and Integrated Network MULTI-CHANNEL SALES Local sales and service Customer service prospecting centers RyersonDirect e-commerce platform Capitalize on industry fragmentation CONNECTIVITY Technical knowledge Processing and fabrication Logistics Inventory services B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 15

16 FINANCIAL REVIEW E R I C H S C H N A U F E R I n t e r i m C h i e f F i n a n c i a l O f f i c e r B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 16

17 RYERSON FINANCIAL PRIORITIES 1. Support corporate transformation and weather current industry conditions 2. Reduce balance sheet leverage 3. Invest in high return growth capital projects and attractive bolt-on companies B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 17

18 STRONG EXECUTION IN A RECESSIONARY ENVIRONMENT Control what we can control expenses and inventory Continued expense management Implementing plan to achieve $20 million in additional expense savings by mid-2016 Continued strong working capital management / rapid inventory turnover Generate countercyclical cash flow Plan to realize more than $10 million from non-core asset sales Expect $20 million reduction in pension contribution in 2016 vs $5 million lower cash interest expense in 2016 vs Reduce debt Maintain positive net income and EBITDA B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 18

19 NINE MONTHS OF 2015: Impacted by Deflationary Pressure Net income attributable to Ryerson Holding Corp. ($M) Adjusted EBITDA, excluding LIFO ($M) $ $1.6 9 mos mos $ ($30.5) 1 50 $ mos mos Includes IPO-related and debt redemption expensesof $37.3 million, after tax, in the first nine months of Includes impairment charges on assets of $9.1 million, after tax, in the first nine months of Adjusted EBITDA, excluding LIFO, is a non-gaap financial measure. A reconciliation of this non-gaap financial measure to the comparable GAAP measure is included in the Appendix.. B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 19

20 COUNTER-CYCLICAL CASH FLOW AND DEBT REDUCTION Cash Flow From Operations ($M) First Nine Months of ($34.7) $ mos mos.2015 Repurchased $60 million principal amount of long-term notes $162.9 $53.2 Reduced total debt $165 million or 13% B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 20

21 CONCLUSION E D D I E L E H N E R P r e s i d e n t a n d C h i e f E x e c u t i v e O f f i c e r B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 21

22 CONCLUSION 1 Transformation yielding higher performance and potential 2 Industry-leading expense and working capital management 3 Successful shift to higher value mix and value-added processing 4 Building sustainable competitive advantages to fuel growth 5 Generating counter cyclical cash flow and deleveraging balance sheet B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 22

23 BANK OF AMERICA MERRILL LYNCH 2015 LEVERAGED FINANCE CONFERENCE D e c e m b e r 3, B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 23

24 APPENDIX B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 24

25 NON-GAAP RECONCILIATION 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 the payment of management fees. We believe that the presentation of EBITDA, Adjusted EBITDA and Adjusted EBITDA, excluding LIFO expense (income), 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), 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), 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), targets. We also use EBITDA, Adjusted EBITDA and Adjusted EBITDA, excluding LIFO expense (income), to benchmark our operating performance to that of our competitors. EBITDA, Adjusted EBITDA and Adjusted EBITDA, excluding LIFO expense (income) 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), is necessarily an indication of whether cash flow will be sufficient to fund our cash requirements. This presentation also presents gross margin, excluding LIFO expense (income), which is calculated as gross profit plus LIFO expense (or minus LIFO income), divided by net sales. We have excluded LIFO expense (income) 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. We also have disclosed the metric warehousing, delivery, selling, general and administrative expenses excluding depreciation and amortization and IPO-related expenses, to provide a means of comparison to our prior periods that do not include IPO-related expenses. Our definitions of EBITDA, Adjusted EBITDA, Adjusted EBITDA, excluding LIFO expense (income), gross margin, excluding LIFO expense (income), and Adjusted EBITDA, excluding LIFO expense (income), as a percentage of sales may differ from that of other companies. B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 25

26 NON-GAAP RECONCILIATION Figures may not add due to rounding. ($M) Net Sales $3,896 $4,730 $4,025 $3,460 $3,622 Gross Profit LIFO Expense (Income) $ (63) 617 (33) Gross Profit, excluding LIFO Gross Margin, excluding LIFO Warehousing, delivery, selling, general and administrative expenses IPO-related expenses Depreciation and amortization expense $592 $707 $ % 15.0% 16.1% $ $ % $ % Warehousing, delivery, selling, general and administrative expenses excluding Depreciation and Amortization and IPO-related expenses Expense excluding Depreciation and Amortization, impairment, restructuring, and IPO-related expenses % of Net Sales Net Income (loss) attributable to Ryerson Holding Interest and other expense on debt Provision (benefit) for income taxes Depreciation and amortization expense $ % ($104) $ % ($8) 123 (11) 43 $ % $ (6) 47 $ % $ (112) 47 $ % $(26) 107 (1) 46 EBITDA Reorganization Advisory Service Fee Loss on Retirement of Debt Foreign Currency Transaction (Gains) Losses (4) Impairment Charges on Fixed Assets and Goodwill Gain on Bargain Purchase 1-9 (6) Purchase Consideration - - Other Adjustments (2) 1 $ $ $ (1) $ $ (5) (2) Adjusted EBITDA LIFO Expense (Income) $81 52 $ $265 (63) $203 (33) $ Adjusted EBITDA, excluding LIFO Adjusted EBITDA Margin, excluding LIFO $ % $ % $ % $ % $ % B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 26

27 NON-GAAP RECONCILIATION ($M) 9 mos mos Net Income attributable to Ryerson Holding Interest and other expense on debt Provision for income taxes Depreciation and amortization expense $(30.5) $ EBITDA Reorganization Advisory Service Fee (Gain) Loss on Retirement of Debt $ $ (0.3) Foreign Currency Transaction Gains (2.9) (1.2) Impairment Charges on Fixed Assets and Goodwill Purchase Consideration Other Adjustments (1.4) (0.2) Adjusted EBITDA LIFO Expense (Income) $ $165.1 (70.3) Adjusted EBITDA, excluding LIFO $177.4 $94.8 B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 27

28 NET DEBT to ADJUSTED EBITDA, excl. LIFO RECONCILIATION ($M) Trailing 12-mos. (as of 9/30/15) Cash and Cash Equivalents $63 $62 $71 $74 $60 $48 Marketable Securities Total Debt 1,211 1,316 1,305 1,295 1,259 1,094 Net Debt $1,128 $1,244 $1,214 $1,200 $1,188 $1,043 Adjusted EBITDA, excluding LIFO $133 $223 $202 $170 $218 $135 Net Debt to Adjusted EBITDA, excluding LIFO 8.5x 5.6x 6.0x 7.1x 5.5x 7.7x Figures may not add due to rounding. B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 28

29 CAPITALIZATION Cash and Cash Equivalents Marketable Securities Current Rate 9/30/15 Book Value ($M) $48 3 Figures may not add due to rounding. Trailing 12-mos. Adj. EBITDA, excl. LIFO Multiple (as of 9/30/15) Availability under Revolver and Foreign Debt Facilities Total Liquidity ABL Revolver due 2017 Senior Secured Notes due 2017 Senior Notes Due 2018 Foreign Debt Total Debt Net Debt 218 $269 $ x 9.00% % $1, $1, No debt maturities until 2017 Flexible debt covenant package B A N K O F A M E R I C A M E R R I L L L Y N C H L E V E R A G E D F I N A N C E C O N F E R E N C E 29