First Quarter 2017 Highlights:
CHICAGO – May 3, 2017 – Ryerson Holding Corporation (NYSE: RYI), a leading distributor and value-added processor of industrial metals, today reported results for the first quarter ended March 31, 2017.
Eddie Lehner, Ryerson’s President and Chief Executive Officer said, “Ryerson continues to execute well upon our business model and strategy built around speed, scale, value-add, culture, and analytics to provide great and profitable customer experiences that resulted in vastly improved financial results year-over-year and sequentially. In the first quarter of 2017 Ryerson grew revenues with increased shipment volumes at higher selling prices and achieved higher gross margins, excluding LIFO, generating better net income and Adjusted EBITDA, excluding LIFO while improving our working capital days ratios compared to the first quarter of 2016. We also welcomed Laserflex and Guy Metals to our integrated network of service centers, expanding our value-added capabilities and product offerings.”
First Quarter 2017 Financial Results
Revenues were $814.5 million for the first quarter of 2017, up 15.9 percent from the year-ago period, driven by an increase in average selling price per ton of 11.5 percent and higher volume of 4.0 percent compared to the first quarter of 2016.
Ryerson achieved gross margin of 19.7 percent for the first quarter of 2017, compared to 21.0 percent for the year-ago period. Included in cost of materials sold was net LIFO income of $0.7 million for the first quarter of 2017 and $14.8 million for the first quarter of 2016. Gross margin, excluding LIFO increased to 19.6 percent for the first quarter of 2017, compared with 18.9 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 increased by $8.0 million, or 7.3 percent, for the first quarter of 2017 compared to the year-ago period, reflecting the increased shipments during the quarter. Ryerson demonstrated expense leverage in the first quarter of 2017 as warehousing, delivery, selling, general and administrative expenses declined to 14.4 percent of sales compared to 15.4 percent in the fourth quarter of 2016 and 15.5 percent in the first quarter of 2016.
Net income attributable to Ryerson Holding Corporation was $14.8 million, or $0.40 per diluted share, for the first quarter of 2017, compared to net income of $13.5 million, or $0.42 per diluted share, in the first quarter of 2016. Excluding a gain on the retirement of debt, net income attributable to Ryerson Holding Corporation in the first quarter of 2016 was $8.2 million, or $0.26 per diluted share.
Adjusted EBITDA, excluding LIFO, was $54.3 million in the first quarter of 2017, compared to $37.2 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.
First Quarter 2017 Acquisitions
In January 2017, Ryerson acquired The Laserflex Corporation, a metal fabricator specializing in laser cutting 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 processor and polisher of stainless steel products, with annual revenue of approximately $35 million.
First Quarter 2017 Working Capital and Liquidity
In the first quarter of 2017, Ryerson’s inventory balance stood at 69.1 days of supply compared to 74.5 days in the year-ago period. Erich Schnaufer, Ryerson’s Chief Financial Officer said, “We continue managing our inventory to maintain financial flexibility and adapt to changing metals pricing and consumption dynamics. Our interconnected network of service centers allows us to optimize inventory investments across our locations to better satisfy customer demand.”
Ryerson maintained ample liquidity in the first quarter of 2017. As of March 31, 2017, borrowings were $334 million on our primary revolving credit facility with additional availability of $250 million. Including cash, marketable securities, and availability from foreign sources, Ryerson's total liquidity was $302 million compared to $301 million in the fourth quarter of 2016, higher sequentially even with the recent acquisitions of Guy Metals and Laserflex.
Second Quarter 2017 Commentary
Ryerson intends to issue second quarter 2017 guidance in the second half of June. Qualitatively, demand has improved most notably in oil & gas and construction end markets while other industries in aggregate are showing more modest improvement. Given the increased metal consumption and price stabilization experienced in the first quarter, Ryerson anticipates higher average selling prices in the second quarter of 2017.
First Quarter 2017 Business Metrics
|
|
First Quarter |
Fourth Quarter |
First Quarter |
Sequential Quarter Change |
Year-Over-Year Change |
|
Tons shipped (In thousands) |
497 |
440 |
478 |
13.0% |
4.0% |
|
Average selling price/ton |
$1,639 |
$1,550 |
$1,470 |
5.7% |
11.5% |
|
Average cost/ton |
1,316 |
1,290 |
1,161 |
2.0% |
13.4% |
|
Average cost/ton, excluding LIFO |
1,317 |
1,259 |
1,192 |
4.6% |
10.5% |
First Quarter 2017 Major Product Metrics
| Tons Shipped (Tons in thousands) | Average Selling Price per Ton Shipped | ||||||
|
|
First |
Fourth Quarter 2016 |
First Quarter 2016 |
Sequential Quarter Change |
Year-Over-Year Change |
Sequential Quarter Change |
Year-Over-Year Change |
|
Carbon steel |
374 |
332 |
367 |
12.7% |
1.9% |
4.4% |
12.8% |
|
Aluminum |
50 |
43 |
46 |
16.3% |
8.7% |
1.9% |
-3.1% |
|
Stainless steel |
71 |
64 |
62 |
10.9% |
14.5% |
12.0% |
13.1% |
| Net Sales (Dollars in millions) | |||||
|
|
First |
Fourth |
First |
Sequential Quarter Change |
Year-Over- |
|
Carbon steel |
$407 |
$346 |
$354 |
17.6% |
15.0% |
|
Aluminum |
179 |
151 |
170 |
18.5% |
5.3% |
|
Stainless steel |
215 |
173 |
166 |
24.3% |
29.5% |
Earnings Call Information
Ryerson will host a conference call to discuss its first quarter 2017 results Thursday, May 4, at 10 a.m. Eastern Time. Participants may access the conference call by dialing 877-201-0168 (Domestic) and 647-788-4901 (International) and using conference ID 2102975. 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 approximately 100 locations. For more information, visit Ryerson at www.ryerson.com.
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.
For full release details see ir.ryerson.com.