Third Quarter 2016 Highlights:
CHICAGO - November 2, 2016 - Ryerson Holding Corporation (NYSE: RYI), a leading distributor and processor of metals, today reported results for the third quarter of 2016.
“The Ryerson Team performed well in a challenging environment,” said Ryerson’s President and Chief Executive Officer Eddie Lehner. “While industrial metals demand continued to contract year over year and decline sequentially more than indicative historical trends, and spot carbon sheet index pricing fell almost 20% in the quarter, Ryerson was able to increase gross margin, net income, and earnings per share in the third quarter compared to prior year. I want to thank our customers for their continued support as we continue building a Ryerson known for exceptional customer experiences. Despite an industrial metals climate characterized by deflation and demand contraction, under-investment in many of the world’s largest economies, most notably the U.S., is receiving the attention if not action it deserves as the deleterious impacts of break-fix and haphazard investment result in declining productivity and stagnation. Over the longer term, the execution of our strategy centered upon the elements of speed, scale, value-add, culture and analytics will accrete value for all Ryerson stakeholders as investments in productivity-enhancing machinery & equipment and infrastructure are expected to return to required norms.”
Third Quarter 2016 Results
Revenues were $735.1 million for the third quarter of 2016, essentially unchanged from the second quarter, as a 5.0 percent decline in tons shipped was partially offset by a 4.5 percent increase in the average selling price per ton.
Gross margin increased to 19.8 percent for the third quarter of 2016, compared to 19.0 percent for the year-ago period, and decreased from 22.0 percent in the second quarter of 2016. Included in cost of materials sold was net LIFO expense of $1.4 million for the third quarter of 2016, compared to net LIFO income of $21.3 million for the third quarter of 2015 and $7.0 million for the second quarter of 2016. Gross margin, excluding LIFO increased to 20.0 percent for the third quarter of 2016, compared with 16.3 percent in the year-ago period, and decreased from 21.1 percent in the second 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 in the third quarter of 2016 declined 3.3 percent year over year and 3.5 percent sequentially reflecting the results of our continued expense management and realized operational efficiencies.
Net income attributable to Ryerson Holding Corporation increased to $8.2 million, or $0.23 per diluted share, for the third quarter of 2016, compared to $6.7 million, or $0.21 per diluted share, in the third quarter of 2015 and $5.6 million, or $0.17 per diluted share in the second quarter of 2016. 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 $10.0 million, or $0.28 per diluted share, for the third quarter of 2016 compared to $6.5 million, or $0.20 per diluted share, for the third quarter of 2015 and decreased from $16.9 million, or $0.52 per diluted share, for the second quarter of 2016. 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.
Balance Sheet Deleveraging and Working Capital Management
In July 2016, Ryerson issued 5,000,000 shares of common stock at a public offering price of $15.25 per share, with net proceeds of $71.5 million being used to reduce our debt balance. On October 15, 2016, Ryerson redeemed all remaining 11.25% Senior Notes due 2018, thereby extending our next significant debt maturities to 2020.
In the third quarter of 2016, Ryerson’s inventory stood at 78 days of supply, compared to 77 days in the year ago period. “Given the weaker demand experienced in the third quarter and normal seasonal volume declines expected in the fourth quarter, Ryerson expects to align inventories to demand to generate counter-cyclical cash flows in the fourth quarter while providing working capital optionality moving into the first quarter of 2017,” stated Erich Schnaufer, Ryerson’s Chief Financial Officer.
First Nine Months 2016 Results
Revenues for the first nine months of 2016 were $2.2 billion, down 12.8 percent from the first nine months of 2015, as a 0.5 percent increase in tons shipped was more than offset by a 13.3 percent decline in the average selling price per ton. Year to date, Ryerson shipment gains outpaced the industry by a noticeable margin, as measured by the Metals Service Center Institute (MSCI), which declined 6.9 percent through the first nine months of 2016.
Net income attributable to Ryerson Holding Corporation increased to $27.3 million, or $0.82 per diluted share, in the first nine months of 2016 compared to $20.0 million, or $0.62 per diluted share, for the same period of 2015. Excluding restructuring and other charges, impairment charges on assets, and gains or losses on retirement of debt, net income attributable to Ryerson Holding Corporation increased to $35.1 million, or $1.05 per diluted share, in the first nine months of 2016 compared to $28.9 million, or $0.90 for the same period of 2015.
Adjusted EBITDA, excluding LIFO increased 49.8 percent to $142.0 million in the first nine months of 2016, compared to $94.8 million in the first nine months of 2015. 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.
Earnings Call Information
The company will host a conference call to discuss its third quarter 2016 results on Thursday, November 3, at 10 a.m. Eastern Daylight Time. Participants may access the conference call by dialing 800-862-9098 (U.S., Canada) and 785-424-1051 (International) and using conference ID 6688203. The call will also be broadcast live in the Investor Relations section of the company’s Internet site, ir.ryerson.com. A replay will be available on the site for 90 days.
About Ryerson
Ryerson is a processor and distributor of metals with operations in the United States, Canada, Mexico and China. The company serves a variety of industries, including customers making products or equipment for the 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 3,400 employees in around 100 locations. For more information, visit Ryerson at www.ryerson.com.
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, 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, 2015 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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