Ryerson Reports Second Quarter 2016 Results

Captures Further Margin Expansion and Market Share Gains With Effective Strategy and Strong Execution 

 Second Quarter 2016 Highlights:

• Reported net income attributable to Ryerson Holding Corporation of $5.6 million, or $0.17 per diluted share. Net income attributable to Ryerson Holding Corporation, excluding impairment charges on assets and loss on retirement of debt was $16.9 million, or $0.52 per diluted share.
• Expanded gross margin 230 basis points and gross margin, excluding LIFO 580 basis points year over year.
• Continued market share gains with year-over-year volume up 3.5 percent versus a 5.3 percent industry decline as per MSCI reported shipments.
• Posted adjusted EBITDA, excluding LIFO of $56 million, up from $37 million in the first quarter of 2016 and $29 million in the year-ago period.
• Issued $650 million of 11% Senior Secured Notes due 2022 during the second quarter, extending debt maturities.
• Issued 5,000,000 shares of common stock at a public offering price of $15.25 per share in July 2016, to further deleverage the balance sheet.

Ryerson Holding Corporation (NYSE: RYI), a leading distributor and processor of metals, today reported results for the second quarter of 2016.

 “Our second quarter results are a clear and continuing demonstration of the strength of our strategy and quality of our execution”, said Ryerson’s President and Chief Executive Officer Eddie Lehner. “We made significant improvements to our balance sheet while gaining market share, expanding margins, controlling costs and increasing inventory velocity. I want to thank each and every Ryerson teammate for their excellent work, as our passion for creating great customer experiences burns brighter every day.” 

Second Quarter 2016 Results

Revenues were $739.8 million for the second quarter of 2016, down 12.0 percent from the year-ago period due to a 14.9 percent decline in the average selling price per ton. Tons shipped increased 3.5 percent, compared to a decline of 5.3 percent for the industry, as measured by Metals Service Center Institute (MSCI) results. Sequentially, revenues increased 5.3 percent from the first quarter of 2016. The 0.3 percent decline in the average selling price per ton was more than offset by a 5.6 percent increase in tons shipped, which compared favorably to the industry, which increased 2.0 percent.     

Gross margin was 22.0 percent for the second quarter of 2016, compared to 19.7 percent for the year-ago period and 21.0 percent in the first quarter of 2016. Included in cost of materials sold was net LIFO income of $7.0 million for the second quarter of 2016, $37.0 million for second quarter of 2015, and $14.8 million for the first quarter of 2016. Gross margin, excluding LIFO was 21.1 percent for the second quarter of 2016, an expansion of 580 basis points from the second quarter of 2015, and 220 basis points higher than the first quarter of 2016. A reconciliation of gross margin, excluding LIFO to gross margin is included below in this news release.   

Warehousing, delivery, selling, general and administrative expense declined $1.1 million, or 1.0 percent, year-over-year. Sequentially, warehousing delivery, selling, general and administrative expense increased $3.8 million, or 3.5 percent, due to higher volume and associated variable expenses.     

Net income attributable to Ryerson Holding Corporation was $5.6 million, or $0.17 per diluted share, for the second quarter of 2016, compared to $15.8 million, or $0.49 per diluted share, in the second quarter of 2015 and $13.5 million, or $0.42 per diluted share in the first quarter of 2016. Excluding impairment charges on assets and gains or losses on the retirement of debt, net income attributable to Ryerson Holding Corporation was $16.9 million, or $0.52 per diluted share, for the second quarter of 2016 compared to $17.2 million, or $0.54 per diluted share, for the second quarter of 2015 and $8.2 million, or $0.26 per diluted share, for the first quarter of 2016. A reconciliation of net income attributable to Ryerson Holding Corporation and earnings per share, excluding impairment charges on assets and gains or losses on retirement of debt is included below in this news release.

Balance Sheet Deleveraging and Working Capital Management

In May 2016, Ryerson issued $650 million of 11% Senior Secured Notes due 2022, redeemed all of the 9% Senior Secured Notes due in 2017 and repurchased $95 million of the 11.25% Senior Notes due in 2018. In July 2016, Ryerson issued 5,000,000 shares of common stock at a public offering price of $15.25 per share. Net proceeds of approximately $70.6 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by Ryerson, will be used to repurchase, redeem, defease or otherwise repay portions of Ryerson’s outstanding indebtedness, including but not limited to, the remaining 11.25% Senior Notes due 2018, from time to time.

“After the repurchase or redemption of the remaining 11.25% Senior Notes due 2018, expected to occur before the end of 2016, Ryerson will have no significant debt maturities until 2020,” stated Erich Schnaufer, Ryerson’s Chief Financial Officer. “Moreover, the debt and equity offerings enhance the company’s credit profile and will fund growth initiatives while putting us on the path to further deleverage our balance sheet.” A pro forma presentation of the net debt structure is included below in this news release.  

In the second quarter of 2016, Ryerson’s inventory stood at 74 days of supply (DOS), compared to 76 days in the year-ago period.  

First Six Months 2016 Results

Revenues for the first six months of 2016 were $1.4 billion, down 15.6 percent from the first six months of 2015, as a 2.0 percent increase in tons shipped was more than offset by a 17.2 percent decline in the average selling price per ton. Net income attributable to Ryerson Holding Corporation was $19.1 million, or $0.59 per diluted share, compared to $13.3 million, or $0.41 per diluted share, for the same period of 2015. Excluding impairment charges on assets and gains or losses on retirement of debt, earnings per diluted share were $0.78 in the first six months of 2016 compared to $0.70 for the same period of 2015. Adjusted EBITDA, excluding LIFO increased 43.2 percent to $93.2 million in the first half of 2016, compared to $65.1 million in the first half of 2015.  Reconciliations of Adjusted EBITDA, excluding LIFO and net income attributable to Ryerson Holding Corporation and earnings per share, excluding impairment charges on assets and gains or losses on retirement of debt to net income attributable to Ryerson Holding Corporation are included in this news release on the investor relations website.