Strong Execution Generates Robust Cash Flows, Reduces Debt and Enhances Competitive Position
Ryerson Holding Corporation (NYSE: RYI), a leading distributor and processor of metals, today reported results for the fourth quarter and full-year 2015.
“Despite one of the harshest and most difficult metals environments we have seen in terms of magnitude and duration, Ryerson continued making impressive strides in its transformation as seen in our year and quarter results and our Q1 2016 outlook. While the industry has seldom been worse, Ryerson has never been better as seen through our cost reduction actions, our working capital management, cash generation and industry market share gains. Although difficult conditions in the industry persist as shown in various metrics such as Institute of Supply Management readings, Chicago Purchasing Manager Index, and industry shipments for January, my Ryerson colleagues continue building a better Ryerson regardless of business conditions. I want to thank each and every Ryerson teammate for rowing through this turbulence unfailingly with passion, purpose, intelligence and grit,” said Eddie Lehner, Ryerson’s president and chief executive officer.
2015 Results
Revenues for 2015 were $3.2 billion, down 12.6 percent from 2014, comprised of a 6.7 percent reduction in the average selling price per ton and a 6.3 percent decline in tons shipped. For reference, MSCI shipments contracted year over year by 8%.
Gross margin was 17.9 percent for 2015, compared to 16.4 percent for 2014. Included in cost of materials sold was LIFO income, net of $59.5 million for 2015 and LIFO expense of $42.3 million for 2014. Gross margin, excluding LIFO was 16.0 percent for 2015 compared to 17.6 percent for 2014. A reconciliation of gross margin, excluding LIFO to gross margin is included below in this news release.
Warehousing, delivery, selling, general and administrative expense was $450.8 million in 2015, compared with $509.2 million in 2014. Excluding Initial Public Offering (IPO)-related expenses of a $25.0 million charge to terminate the advisory services agreement with Platinum Equity and $7.7 million of compensation expense from the year-ago period, warehousing, delivery, selling, general and administrative expense was down 5.4 percent year-over-year.
Net loss attributable to Ryerson Holding Corporation was $0.5 million, or a loss of $0.02 per share for 2015, compared to a loss of $25.7 million, or a loss of $1.01 per share for 2014. Excluding asset impairment charges, net income attributable to Ryerson Holding Corporation was $14.3 million or $0.45 per share, for 2015. Net income attributable to Ryerson Holding Corporation in 2014 was $11.6 million, or $0.46 per share, excluding the aforementioned IPO-related expenses as well as $12.4 million of debt redemption expenses. A reconciliation of net income attributable to Ryerson Holding Corporation and earnings per share, excluding impairment charges on assets and IPO-related and debt redemption charges, to net loss attributable to Ryerson Holding Corporation is included below in this news release.
Adjusted EBITDA, excluding LIFO, net was $109.0 million for 2015, compared to $217.5 million for 2014. A reconciliation of Adjusted EBITDA, excluding LIFO net to net income attributable to Ryerson Holding Corporation is included below in this news release.
Expense Control and Working Capital Management
In the third quarter 2015 earnings release, Ryerson announced an expense reduction initiative. The company achieved its plan to capture annualized expense savings of $20 million and realized proceeds of $10 million from the sales of non-core assets and settlements.
During 2015, Ryerson reduced its inventories $183 million, or 25 percent, and generated cash flow from operations of $259 million. “Strong working capital management and operating cash flows enabled the company to reduce debt $225 million, or 18 percent,” stated Erich Schnaufer, Ryerson’s chief financial officer.
Fourth Quarter 2015 Results
Revenues for the fourth quarter of 2015 were $668.8 million, down 23.0 percent from the fourth quarter of 2014 and down 15.3 percent from the third quarter of 2015. On a year-over-year basis, average selling price per ton fell 17.7 percent while tons shipped per day declined 6.4 percent. Sequentially, tons per day declined 6.0 percent and the average selling price per ton declined 5.5 percent.
Gross margin was 15.2 percent for the fourth quarter of 2015, compared to 19.0 percent for the third quarter of 2015 and 16.4 percent for the fourth quarter of 2014. The fourth quarter of 2015 cost of materials sold included $10.8 million of LIFO expense, consisting of $18.1 million of LIFO income and a lower of cost or market charge of $28.9 million. Gross margin, excluding LIFO, net was 16.8 percent for the fourth quarter of 2015, compared to 16.3 percent for the third quarter of 2015 and 16.4 percent for the fourth quarter of 2014. A reconciliation of gross margin, excluding LIFO, net to gross margin is included below in this news release.
Warehousing, delivery, selling, general and administrative expense was $107.4 million for the fourth quarter of 2015, down from $112.8 million for the third quarter of 2015 and $117.1 million for the fourth quarter of 2014.
Net loss attributable to Ryerson Holding Corporation was $20.5 million, or a loss of $0.64 per share during the fourth quarter of 2015, compared to net income attributable to Ryerson Holding Corporation of $4.8 million, or $0.15 per share during the fourth quarter of 2014, and $6.7 million, or $0.21 per share, during the third quarter of 2015. Excluding the asset impairment charges, net loss attributable to Ryerson Holding Corporation was $14.8 million, or a loss of $0.46 per share, for the fourth quarter of 2015.
Adjusted EBITDA, excluding LIFO, net was $14.2 million in the fourth quarter of 2015, compared to $40.1 million in the year-ago period and $29.7 million in the third quarter of 2015.
First Quarter 2016 Outlook
“While industry metal prices and year over year shipments remain at depressed and declining levels, there are signs of stabilization,” said Lehner. “Ryerson’s execution around its business model continues to drive confidence in our performance. With expected gross margin improvement, ongoing expense control and continued market share gains, we anticipate the first quarter of 2016 Adjusted EBITDA, excluding LIFO to exceed the fourth quarter of 2015 results and first quarter 2015 levels.”
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