Ryerson Reports Fourth Quarter and Full-Year 2016 Results

Increased Earnings with Market Share Gains and Improved Capital Structure

2016 Highlights: 

• Reported net income attributable to Ryerson Holding Corporation of $18.7 million, or $0.54 per diluted share. Generated Adjusted EBITDA, excluding LIFO of $178 million, up 63 percent from $109 million in 2015.
• Increased gross margin by 210 basis points and gross margin, excluding LIFO by 370 basis points.
• Gained market share with shipments up 0.3 percent versus a 6.2 percent industry volume decline according to the Metals Service Center Institute (MSCI).
• Improved capital structure with total debt reduced by $60 million, or 5.9 percent, and extended debt maturities to 2021. 

CHICAGO – March 13, 2017 – Ryerson Holding Corporation (NYSE: RYI), a leading distributor and value-added processor of industrial metals, today reported results for the fourth quarter and full-year ended December 31, 2016.

Eddie Lehner, Ryerson’s President and Chief Executive Officer said, “I want to send a resounding thank you to our customers for giving us the opportunity to earn their business and support their growth. I also want to thank the Ryerson Team for a job well done in navigating through persistent demand contraction and selling price deflation through the first half of 2016.  Our improved financial performance is the result of our passion for the customer experience, as we continue our company transformation as an intelligent network of service centers whose common core is built around speed, scale, value-add, culture, and analytics. During 2016 Ryerson increased market share, expanded gross margins, reduced costs, reduced interest expense, grew net income and EBITDA, improved working capital efficiency, reduced debt, and strengthened our capital structure, a list worthy of repeating on an annual basis.” 

2016 Results
Revenues were $2.9 billion in 2016, down 9.7 percent from 2015, as average selling price per ton declined by 10.0 percent.        

Gross margin increased to 20.0 percent in 2016, compared to 17.9 percent in 2015. Included in cost of materials sold was net LIFO income of $6.6 million in 2016 and $59.5 million in 2015. Gross margin, excluding LIFO increased to 19.7 percent in 2016, compared with 16.0 percent in 2015. 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 by $14.4 million, or 3.2 percent in 2016, compared to the year-ago period, reflecting continued expense management and operational efficiencies.  

Net income attributable to Ryerson Holding Corporation improved to $18.7 million, or $0.54 per diluted share, in 2016, compared with a loss of $0.5 million, or $0.02 per diluted share, in 2015. Excluding restructuring and other charges, impairment charges on assets, and gains or losses on the retirement of debt, net income attributable to Ryerson Holding Corporation increased to $28.0 million, or $0.81 per diluted share, in 2016 compared to $16.1 million, or $0.50 per diluted share, in 2015. A reconciliation of net income attributable to Ryerson Holding Corporation and earnings per share, excluding restructuring and other charges, impairment charges on assets and gains or losses on retirement of debt is included below in this news release.

Adjusted EBITDA, excluding LIFO increased 63.3 percent to $178.0 million in 2016, compared to $109.0 million in 2015. Reconciliations of Adjusted EBITDA, excluding LIFO and net income attributable to Ryerson Holding Corporation are included below in this news release.

Balance Sheet Deleveraging and Working Capital Management
In 2016, Ryerson issued $650 million of Senior Secured Notes due 2022, issued common stock with net proceeds of $71.5 million used to further pay down debt, and amended its credit facility, thereby extending the maturity date to November 2021. “We’ve significantly improved our capital structure by reducing our debt by $279 million, or 22.4 percent, since 2014,” said Erich Schnaufer, Ryerson’s Chief Financial Officer.

In 2016, Ryerson’s inventory balance stood at 76 days of supply compared to 80 days in the year-ago period. “Our continued industry-leading working capital management provides financial flexibility and allows us to effectively adapt in volatile metal pricing environments,” continued Schnaufer.  

Fourth Quarter 2016 Results
Revenues were $682.2 million for the fourth quarter of 2016, up 2.0 percent from the year-ago period. Tons shipped per day increased 1.4 percent with one fewer shipping day in the fourth quarter of 2016, and the average selling price per ton increased 2.2 percent from the fourth quarter of 2015.

Gross margin increased to 16.8 percent for the fourth quarter of 2016, compared to 15.2 percent for the year-ago period. Included in cost of materials sold was net LIFO expense of $13.8 million for the fourth quarter of 2016 and $10.8 million for the fourth quarter of 2015. Gross margin, excluding LIFO increased to 18.8 percent for the fourth quarter of 2016, compared with 16.8 percent for the year-ago period. A reconciliation of gross margin to gross margin, excluding LIFO is included below in this news release.  

Warehousing, delivery, selling, general and administrative expense declined by $2.5 million, or 2.3 percent, for the fourth quarter of 2016 compared to the year-ago period, reflecting continued progress on expense management and operational efficiencies.

The net loss attributable to Ryerson Holding Corporation was $8.6 million, or $0.23 per diluted share, for the fourth quarter of 2016, compared to a net loss of $20.5 million, or $0.64 per diluted share, in the fourth quarter of 2015. Excluding restructuring and other charges, impairment charges on assets, and gains or losses on the retirement of debt, the net loss attributable to Ryerson Holding Corporation was $7.1 million, or $0.19 per diluted share, for the fourth quarter of 2016, compared to a loss of $12.9 million, or $0.40 per diluted share, in the fourth quarter of 2015.  

Adjusted EBITDA, excluding LIFO was $36.0 million in the fourth quarter of 2016, compared to $14.2 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 restructuring and other charges, impairment charges on assets, and gains or losses on retirement of debt to net income attributable to Ryerson Holding Corporation are included below in this news release.

2017 Acquisitions
In January 2017, Ryerson announced the acquisition of The Laserflex Corporation, a metal fabricator specializing in laser fabrication and welding services, with annual revenue of approximately $25 million. In addition, Ryerson announced a second acquisition in February 2017 of Guy Metals, Inc., a metal service center processing stainless and nickel alloy products, with annual revenue of approximately $35 million.  “The acquisition of these competitively differentiated companies that offer industry-leading fabrication, polishing, and processing capabilities perfectly aligns with our transformational strategy. These organizations are well matched to our common core of speed, scale, value-add, culture, and analytics.  We are excited to add their products and capabilities across our North American service center network,” said Lehner.   

2017 Commentary
Ryerson intends to issue first quarter 2017 guidance in early April after LIFO and LCM reserve outcomes can be more accurately estimated given significant increases in industrial metals prices over the past four months.  Qualitatively, demand has improved in oil & gas most notably while other end markets in aggregate are showing modest if unspectacular improvement.  The better story thus far is supply side stabilization as policy lines have drawn a playing field in which prices are better supported as we move through the quarter.  

Fourth Quarter 2016 Business Metrics

Fourth Quarter 2016 Major Product Metrics

Twelve Months Ended December 31 Business Metrics

Twelve Months Ended December 31 Major Product Metrics

Earnings Call Information
Ryerson will host a conference call to discuss its fourth quarter 2016 results Tuesday, March 14, at 10 a.m. Eastern Time. Participants may access the conference call by dialing 877-419-6590 (U.S., Canada) and 719-325-4845 (International) and using conference ID 8006725. The call will also be broadcast live in the Investor Relations section of Ryerson’s internet site, ir.ryerson.com. A replay will be available at the same website for 90 days.  

About Ryerson
Ryerson is a leading distributor and value-added processor of industrial metals with operations in the United States, Canada, Mexico, and China. Ryerson serves a variety of industries, including customers making products or equipment for commercial ground transportation, metal fabrication and machine shops, industrial, consumer durable, HVAC, construction, food processing and agriculture, as well as oil & gas. Founded in 1842, Ryerson is headquartered in the United States and has approximately 3,500 employees in around 100 locations.

Certain statements made in this 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.

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