# Ryerson Holding Corp: Form 10-Q for the period ended Mar 31, 2024

- Company: [Ryerson Holding Corp](/companies/ryz.md) (CIK 1481582)
- Form: 10-Q
- Filed: 2024-04-30
- Accepted by EDGAR: Apr 30, 2024, 16:21 ET
- Period: 2024-03-31
- Accession: 0000950170-24-050548
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1481582/000095017024050548/ryi-20240331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1481582/000095017024050548/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-01-01 to 2024-03-31 | $1.24bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-01-01 to 2024-03-31 | $1.02bn | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-01-01 to 2024-03-31 | $217.6m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2024-01-01 to 2024-03-31 | $216.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-01-01 to 2024-03-31 | $800.0k | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-01-01 to 2024-03-31 | −$2.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-01-01 to 2024-03-31 | −$7.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.22 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-01-01 to 2024-03-31 | −$0.22 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-01-01 to 2024-03-31 | 34,023,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2024-01-01 to 2024-03-31 | −$47.8m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2024-01-01 to 2024-03-31 | $21.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2024-01-01 to 2024-03-31 | $6.4m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2024-01-01 to 2024-03-31 | $1.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-03-31 | $41.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-03-31 | $1.53bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-03-31 | $2.72bn | us-gaap:Assets |
| Current liabilities | at 2024-03-31 | $729.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-03-31 | $1.82bn | us-gaap:Liabilities |
| Current portion of debt | at 2024-03-31 | $3.7m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2024-03-31 | $888.5m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 37,135 characters.

This Quarterly Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of forward-looking terminology such as “objectives,” “goals,” “preliminary,” “range,” “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. Readers are cautioned 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 anticipated or implied in the forward-looking statements as a result of various factors. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should, therefore, be considered in light of various factors, including those set forth under “Special Note Regarding Forward-Looking Statements” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed on February 21, 2024 and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Industry and Operating Trends” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events.

The contents herein are provided for general information purposes only and do not constitute an offer to sell or buy, or a solicitation of an offer to buy, any security (“Security”) of Ryerson Holding or its affiliates in any jurisdiction. Ryerson does not intend to solicit and is not soliciting, any action with respect to any Security or any other contractual relationship with Ryerson. Nothing in this Form 10-Q, individually or taken in the aggregate, constitutes an offer of securities for sale or buy, or a solicitation of an offer to buy, any Security in the United States, or to US persons, or in any other jurisdiction in which such an offer or solicitation is unlawful.

The following Management’s Discussion and Analysis ("MD&A") of Financial Condition and Results of Operations is intended to help the reader understand the Company’s results of operations and financial condition as it is viewed by our management. The MD&A should be read in conjunction with our Condensed Consolidated Financial Statements and related Notes thereto in Item 1, “Financial Statements” in this Quarterly Report on Form 10-Q and our Consolidated Financial Statements and related Notes thereto for the year ended December 31, 2023, in our Annual Report on Form 10-K filed on February 21, 2024.

### Industry and Operating Trends

We are a metals service center providing value-added processing and distribution of industrial metals with operations in the United States, Canada, Mexico, and China. We purchase large quantities of metal products from primary producers and sell these materials in smaller quantities to a wide variety of metals-consuming industries. We carry a full line of nearly 75,000 products in stainless steel, aluminum, carbon steel, and alloy steels and a limited line of nickel and red metals in various shapes and forms. In addition to our metals products, we offer numerous value-added processing and fabrication services, and nearly 80% of the metals products we sell are processed by us by bending, beveling, blanking, blasting, burning, cutting-to-length, drilling, embossing, flattening, forming, grinding, laser cutting, machining, notching, painting, perforating, polishing, punching, rolling, sawing, scribing, shearing, slitting, stamping, tapping, threading, welding, or other techniques to process materials to a specified thickness, length, width, shape, and surface quality pursuant to specific customer orders.

Similar to other metals service centers, we maintain substantial inventories of metals to accommodate the short lead times and just-in-time delivery requirements of our customers. Accordingly, we purchase metals to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon customer forecasts, historic buying practices, supply agreements with customers, mill lead times, and market conditions. Our commitments to purchase metals are generally at prevailing market prices in effect at the time we place our orders. We may enter into swaps in order to mitigate our customers’ risk of volatility in the price of metals, as well as metal hedges to mitigate our own risk of volatility in the price of metals. We have no long-term, fixed-price metals purchase contracts. When metals prices decline, customer demands for lower prices and our competitors’ responses to those demands could result in lower sale prices and, consequently, lower gross profits and earnings as we sell existing metals inventory. When metals prices increase, competitive conditions will influence how much of the price increase we may pass on to our customers. Changes in average selling prices are primarily driven by commodity metals prices, which impact Ryerson’s selling prices over the subsequent three to six-month period.

The metals service center industry is cyclical, volatile in demand and pricing, and difficult to predict. In the first quarter of 2024, Ryerson experienced higher average selling prices of 0.8% and an increase in shipments of 10.4%, compared to the fourth quarter of 2023, as the period was characterized by sequential normal restocking demand and benefited from a higher pricing environment. In the first three months of 2024, Ryerson experienced lower average selling prices of 8.0% and a decrease in shipments of 4.2% compared to the first three months of 2023, due to the effects of contracting industrial manufacturing demand, which influenced both lower volumes as well as lower pricing.

Key steel industry economic indicators continued to report a contraction in industrial activity for most of the first quarter of 2024, with the first indication of a reversal or growth in March. This is evidenced by the Institute for Supply Management’s

Purchasing Managers’ Index (“PMI”), which reported growth in March of 2024 with a reading of 50.3% after marking sixteen consecutive months of contractionary factory activity through February of 2024, with readings below the growth threshold of 50%, indicating a slowdown in factory activity. Similarly, U.S. Industrial Production, which measures industrial sector business output, reported contractionary year-over-year output for January and February 2024 and zero growth in March.

According to the Metal Service Center Institute, North American service center volumes decreased by 4.1% in the first three months of 2024 compared to the first three months of 2023. On a North American basis, Ryerson's North American volumes decreased 6.1% over the same period. On a quarterly sequential basis, the industry volume increase of 7.0% was lower than Ryerson's North American volume increase of 13.7%. Compared to the fourth quarter of 2023, Ryerson's end market demand increased across almost all sectors, with the strongest growth from HVAC, Food Processing & Agriculture, and Industrial Machinery & Equipment.

### First Three Months 2024 vs. First Three Months 2023 Performance

|  |  |  |
| --- | --- | --- |
| **$1.2B** | **17.6%** | **$(7.6)M** |
| **Total Revenues** | **Gross Margin** | **Net Loss Attributable to Ryerson** |
| 12% decrease | 120bps decrease | $55M decrease |
| **$(0.22)** | **$(0.18)** | **$(47.8)M** |
| **Diluted Loss Per Share** | **Adj. Diluted Loss Per Share\*** | **Cash used in Operating Activities** |
| $1.49 decrease | $1.45 decrease | $128M decrease |

\*A reconciliation of the non-GAAP financial measure to the comparable GAAP measure is included in the subsequent table.

To provide greater insight into the Company’s operating trends apart from the period’s one-time transactions, Ryerson provides adjusted net income (loss) and adjusted diluted earnings (loss) per share figures, which are not U.S. generally accepted accounting principles (“GAAP”) financial measures, to compliment the reported GAAP net income (loss) and diluted earnings (loss) per share figures. Management uses these metrics to assess year-over-year performance excluding non-recurring transactions. Adjusted net income (loss) and adjusted diluted earnings (loss) per share do not represent, and should not be used as a substitute for, net income (loss) or diluted earnings (loss) per share determined in accordance with GAAP. As illustrated in the below table, the net loss attributable to Ryerson Holding Corporation of $7.6 million includes a pension settlement loss of $2.2 million and a $0.3 million curtailment gain related to various retirement benefit plans. After adjusting for these non-core business transactions and the related income taxes, the adjusted net loss attributable to Ryerson Holding Corporation for the first three months 2024 is $6.2 million, a decrease of $53.5 million compared to net income attributable to Ryerson Holding Corporation of $47.3 million in the first three months of 2023 which had no adjustments to net income attributable to Ryerson Holding Corporation.

*(Dollars and shares in millions, except per share data)*

|  | First Quarter 2024 | First Quarter 2023 |
| --- | ---: | ---: |
| **Net income (loss) attributable to Ryerson Holding Corporation** | **$(7.6)** | **$47.3** |
| Pension settlement loss | 2.2 | — |
| Benefit plan curtailment gain | (0.3) | — |
| Benefit for income taxes on above items | (0.5) | — |
| **Adjusted net income (loss) attributable to Ryerson Holding Corporation** | **$(6.2)** | **$47.3** |
| Diluted earnings (loss) per share | $(0.22) | $1.27 |
| Adjusted diluted earnings (loss) per share | $(0.18) | $1.27 |
| Shares outstanding – diluted | 34.0 | 37.2 |

19

### Recent Developments

On April 12, 2024, the U.S. and United Kingdom governments prohibited metal-trading exchanges from accepting new aluminum, copper, and nickel produced by Russia and barred the import of the metals into the U.S. and Britain. We anticipate these actions will provide support for metal commodity prices, but ultimately the impact on the Company's operations is unclear.

On February 24, 2023, the US government announced trade actions targeting goods and entities from Russia, which included a proclamation to impose 200% ad valorem tariffs on Russian-origin aluminum products and derivative products and other articles made from Russian primary aluminum or Russian aluminum castings. The duties will be imposed under section 232 of the Trade Expansion Act ("Section 232") and cited by the White House due to (1) challenges faced by US aluminum producers in the face of high levels of aluminum imports and high energy prices; (2) recent increases in imports of aluminum from Russia, whose market is especially export-oriented, by 53 percent between March and July 2022; and (3) the fact that the Russian aluminum industry is a key part of Russia's defense industrial base. Ryerson has communicated to all vendors that we will not accept any Russian originating metal. The trade actions announced by the US government should support prices for Ryerson's product sales mix as the underlying domestic and North American supply-demand balance is protected from oversupply.

### Components of Results of Operations

We generate substantially all of our revenue from sales of our metals products. The majority of revenue is recognized upon delivery of product to customers. The timing of shipment is substantially the same as the timing of delivery to customers given the proximity of our distribution sites to our customers. Revenues associated with products which we believe have no alternative use, and where the Company has an enforceable right to payment, are recognized on an over-time basis. Over-time revenues are recorded in proportion with the progress made toward completing the performance obligation.

Sales, cost of materials sold, gross profit, and operating expense control are the principal factors that impact our profitability.

*Net sales*. Our sales volume and pricing are driven by market demand, which is largely determined by overall industrial production and conditions in the specific industries in which our customers operate. Sales prices are also primarily driven by market factors such as overall demand and availability of product. Our net sales include revenue from product sales, net of returns, allowances, customer discounts, and incentives.

*Cost of materials sold*. Cost of materials sold includes metal purchase and in-bound freight costs, third-party processing costs, and direct and indirect internal processing costs. The cost of materials sold fluctuates with our sales volume and our ability to purchase metals at competitive prices. Increases in sales volume generally enable us to improve purchasing leverage with suppliers, as we buy larger quantities of metals inventories.

*Gross profit*. Gross profit is the difference between net sales and the cost of materials sold. Our sales prices to our customers are subject to market competition. Achieving acceptable levels of gross profit is dependent on our acquiring metals at competitive prices, our ability to manage the impact of changing prices, and efficiently managing our internal and external processing costs.

*Operating expenses*. Optimizing business processes and asset utilization to lower fixed expenses such as employee, facility, and truck fleet costs, which cannot be rapidly reduced in times of declining volume, and maintaining a low fixed cost structure in times of increasing sales volume, have a significant impact on our profitability. Operating expenses include costs related to warehousing and distributing our products as well as selling, general, and administrative expenses.

### Results of Operations

The following table sets forth our condensed consolidated statements of income data for the three months ended March 31, 2024 and 2023 (certain percentages may not calculate due to rounding):

*($ in millions)*

|  | Three Months Ended March 31, 2024 $% of Net Sales |  | 2023 $% of Net Sales |  |
| --- | ---: | ---: | ---: | ---: |
| Net sales | $1,239.2 | 100.0% | $1,406.1 | 100.0% |
| Cost of materials sold | 1,021.6 | 82.4 | 1,141.9 | 81.2 |
| Gross profit | 217.6 | 17.6 | 264.2 | 18.8 |
| Warehousing, delivery, selling, general, and administrative expenses | 216.8 | 17.5 | 194.2 | 13.8 |
| Operating profit | 0.8 | 0.1 | 70.0 | 5.0 |
| Other (expenses) and income | (10.3) | (0.8) | (7.7) | (0.5) |
| Income (loss) before income taxes | (9.5) | (0.8) | 62.3 | 4.4 |
| Provision (benefit) for income taxes | (2.1) | (0.2) | 14.8 | 1.1 |
| Net income (loss) | (7.4) | (0.6) | 47.5 | 3.4 |
| Less: Net income attributable to noncontrolling interest | 0.2 | — | 0.2 | — |
| Net income (loss) attributable to Ryerson Holding Corporation | $(7.6) | (0.6)% | $47.3 | 3.4% |
| Basic earnings (loss) per share | $(0.22) |  | $1.30 |  |
| Diluted earnings (loss) per share | $(0.22) |  | $1.27 |  |

21

#### Net sales

The following charts show the Company’s percentage of sales by major product lines for the three months ended March 31, 2024 and 2023:

*($ in millions)*

|  | March 31, 2024 2023 | Dollar change | Percentage change |
| --- | --- | --- | --- |
| Net sales | $1,239.2 $1,406.1 | $(166.9) | (11.9)% |
|  | **March 31,** | **Tons** | **Percentage** |
|  | **2024** **2023** | **change** | **change** |
|  | **(in thousands)** |  |  |
| Tons sold | 497 519 | (22) | (4.2)% |
|  | **March 31,** | **Price** | **Percentage** |
|  | **2024** **2023** | **change** | **change** |
| Average selling price per ton sold | $2,493 $2,709 | $(216) | (8.0)% |

Revenue for the three-month period ended March 31, 2024 decreased from the same period a year ago due to lower average selling prices caused by lower commodity prices and to lower volume caused by slower economic conditions in metal markets in 2024. Compared to the year ago period, average selling prices decreased for all of our product lines in the three-month period ended March 31, 2024 with the largest decreases in our stainless flat, stainless plate, and stainless long products. Tons sold decreased in the three-month period ended March 31, 2024, compared to the year ago period, for most of our product lines with the largest decreases in our aluminum long, carbon long, and stainless long product lines partially offset by an increase in aluminum plate tons sold.

#### Cost of materials sold

*($ in millions)*

|  | March 31, 2024 $% of Net Sales |  | 2023 $% of Net Sales |  | Dollar change | Percentage change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Cost of materials sold | $1,021.6 | 82.4% | $1,141.9 | 81.2% | $(120.3) | (10.5)% |

|  | March 31, 2024 | 2023 | Cost change | Percentage change |
| --- | ---: | ---: | ---: | ---: |
| Average cost of materials sold per ton sold | $2,056 | $2,200 | $(144) | (6.5)% |

The decrease in cost of materials sold in the three-month period ended March 31, 2024 compared to the year ago period is primarily due to a decrease in average cost of materials sold per ton and to lower tons sold. Compared to the year ago period the average cost of materials sold decreased across all product lines with the largest decreases in our stainless flat, stainless plate, and stainless long product lines. During the first quarter of 2024, LIFO expense was $1.0 million compared to LIFO expense of $4.0 million in the first quarter of 2023.

#### Gross profit

*($ in millions)*

|  | March 31, 2024 $% of Net Sales |  | 2023 $% of Net Sales |  | Dollar change | Percentage change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Gross profit | $217.6 | 17.6% | $264.2 | 18.8% | $(46.6) | (17.6)% |

Gross profit decreased in the three-month period ended March 31, 2024 compared to the year ago period as average selling price decreased faster than the decrease in the average cost of materials sold resulting in a decrease in gross margin. Gross profit decreased in the three-month period ended March 31, 2024 compared to the year ago period primarily due to the impact of lower metals commodity prices which reduced average selling prices and to lower tons shipped as economic conditions in metal markets slowed.

#### Operating expenses

*($ in millions)*

|  | March 31, 2024 $% of Net Sales |  | 2023 $% of Net Sales |  | Dollar change | Percentage change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Warehousing, delivery, selling, general, and administrative expenses | $216.8 | 17.5% | $194.2 | 13.8% | $22.6 | 11.6% |

Warehousing, delivery, selling, general, and administrative expenses increased in the three-month period ended March 31, 2024 compared to the year ago period with $9.4 million of the increase driven by including the expenses of companies acquired during 2023. Excluding the impact of acquisitions, expenses changed in the following categories:

- higher reorganization costs of $18.2 million in the first quarter of 2024 primarily due to start up costs associated with our new state of the art University Park location as well as system conversion activity;
- higher selling, general, and administrative expenses of $1.7 million resulting from higher consulting fees and higher travel and entertainment expenses;
- partially offset by lower incentive compensation expense of $2.5 million;
- lower overtime expense of $1.3 million due to less tons processed;
- lower delivery expense of $1.0 million resulting from the decrease in tons shipped; and
- lower operating expenses of $0.9 million in the first quarter of 2024.

#### Operating profit

*($ in millions)*

|  | March 31, 2024 $% of Net Sales |  | 2023 $% of Net Sales |  | Dollar change | Percentage change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating profit | $0.8 | 0.1% | $70.0 | 5.0% | $(69.2) | (98.9)% |

Our operating profit decreased in the three-month period ended March 31, 2024 compared to the three-month period ended March 31, 2023, primarily due to the decrease in average selling prices and gross profit discussed above.

#### Other expenses

*($ in millions)*

|  | March 31, 2024 $% of Net Sales |  | 2023 $% of Net Sales |  | Dollar change | Percentage change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest and other expense on debt | $(10.1) | (0.8)% | $(7.6) | (0.5)% | $2.5 | 32.9% |
| Other income and (expense), net | $(0.2) | — | $(0.1) | — | $(0.1) | (100.0)% |

Interest and other expense on debt increased in the three-month period ended March 31, 2024 compared to the year ago period primarily due to a higher level of borrowings outstanding under our $1.3 billion revolving credit facility (“the Ryerson Credit Facility”) and higher interest rates on the Ryerson Credit Facility borrowings in the first three months of 2024.

The other expense in the first quarter of 2024 includes a $2.2 million settlement loss resulting from the termination of the Ryerson Canada Bargaining Unit Pension Plan. Partially offsetting the $2.2 million settlement charge was a $0.5 million settlement gain and a $0.3 million curtailment gain related to lump-sum buyouts and a reduction in future years of service for certain Central Steel & Wire ("CSW") pension and other post-employment benefit plans resulting from workforce reductions at CSW related to the move of the CSW headquarters and main operations moving to a new facility in University Park, IL. Other income and (expense), net in the first quarter of 2024 also includes foreign currency translation gains of $1.2 million.

*Provision for income taxes*. Our effective income tax rate was 22.1% in the first quarter of 2024 compared to 23.8% in the first quarter of 2023. The differences between our effective income tax rates and the U.S. federal statutory rate of 21.0% were mainly due to state and foreign income taxes partially offset by the effects of certain discrete items recorded during the periods.

*Earnings (loss) per share*. Basic loss per share was $0.22 in the first quarter of 2024 compared to basic income per share of $1.30 in the first quarter of 2023. Diluted loss per share was $0.22 in the first quarter of 2024 compared to diluted income per share of $1.27 in the first quarter of 2023. The changes in earnings per share are due to the results of operations discussed above.

### Liquidity and Cash Flows

Our primary sources of liquidity are cash and cash equivalents, cash flows from operations, and borrowing availability under the Ryerson Credit Facility. Our principal source of operating cash is from the sale of metals and other materials. Our principal uses of cash are for payments associated with the procurement and processing of metals and other materials inventories, costs incurred for the warehousing and delivery of inventories, the selling and administrative costs of the business, and capital expenditures.

We had cash and cash equivalents of $41.9 million at March 31, 2024, compared to $54.3 million at December 31, 2023. Our total debt outstanding at March 31, 2024 increased to $497.3 million compared to $436.5 million at December 31, 2023. We had a debt-to-capitalization ratio of 36% and 32% at March 31, 2024 and December 31, 2023, respectively. We had total liquidity (defined as cash and cash equivalents and availability under the Ryerson Credit Facility and foreign debt facilities) of $684 million at March 31, 2024 versus $656 million at December 31, 2023. Our net debt (defined as total debt less cash and cash equivalents) was $455 million and $382 million at March 31, 2024 and December 31, 2023, respectively. Total liquidity and net debt are not U.S. generally accepted accounting principles (“GAAP”) financial measures. We believe that total liquidity provides additional information for measuring our ability to fund our operations. Total liquidity does not represent, and should not be used as a substitute for, net income or cash flows from operations as determined in accordance with GAAP and total liquidity is not necessarily an indication of whether cash flow will be sufficient to fund our cash requirements. We believe that net debt provides a clearer perspective of the Company’s overall debt profile. Net debt should not be used as a substitute for total debt outstanding as determined in accordance with GAAP.

Below is a reconciliation of cash and cash equivalents to total liquidity:

*(In millions)*

|  | March 31, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Cash and cash equivalents | $42 | $54 |
| Availability under Ryerson Credit Facility and foreign debt facilities | 642 | 602 |
| Total liquidity | $684 | $656 |

Below is a reconciliation of total debt to net debt:

*(In millions)*

|  | March 31, 2024 | December 31, 2023 |
| --- | ---: | ---: |
| Total debt | $497 | $436 |
| Less: cash and cash equivalents | (42) | (54) |
| Net debt | $455 | $382 |

Of the total cash and cash equivalents, as of March 31, 2024, $12.5 million was held in subsidiaries outside the U.S. which is deemed to be permanently reinvested. Ryerson does not currently foresee a need to repatriate earnings from its non-U.S. subsidiaries. Although Ryerson has historically satisfied needs for more capital in the U.S. through debt or equity issuances, Ryerson could elect to repatriate earnings held in foreign jurisdictions, which could result in higher effective tax rates. We have not recorded a deferred tax liability for the effect of a possible repatriation of these earnings as management intends to permanently reinvest these earnings outside of the U.S. Specific plans for reinvestment include funding for future international acquisitions and funding of existing international operations.

The following table summarizes the Company’s cash flows:

*(In millions)*

|  | Three Months Ended March 31, 2024 | 2023 |
| --- | ---: | ---: |
| Net income (loss) | $(7.4) | $47.5 |
| Depreciation and amortization | 17.4 | 13.7 |
| Non-cash gain from derivatives | (0.8) | (6.4) |
| Change in operating assets and liabilities: |  |  |
| Receivables | (82.1) | (94.8) |
| Inventories | (60.0) | 89.3 |
| Accounts payable | 109.8 | 59.0 |
| Accrued liabilities | (16.5) | (33.1) |
| Accrued taxes payable/receivable | (9.5) | 7.6 |
| All other operating cash flows | 1.3 | (2.4) |
| **Net cash provided by (used in) operating activities** | (47.8) | 80.4 |
| Acquisitions, net of cash acquired | — | (38.9) |
| Capital expenditures | (21.8) | (27.8) |
| Proceeds from sale of property, plant, and equipment | 1.4 | — |
| **Net cash used in investing activities** | (20.4) | (66.7) |
| Net proceeds of short-term borrowings | 61.0 | 28.3 |
| Net increase in book overdrafts | 6.5 | 22.9 |
| Dividends paid to shareholders | (6.4) | (6.0) |
| Share repurchases | (1.0) | (53.2) |
| Contingent payment related to acquisitions | (1.9) | — |
| All other financing cash flows | (2.0) | (1.9) |
| **Net cash provided by (used in) financing activities** | 56.2 | (9.9) |
| Effect of exchange rates on cash and cash equivalents | (0.4) | 0.7 |
| Net change in cash and cash equivalents | $(12.4) | $4.5 |

*Operating activities.* Working capital fluctuates throughout the year based on business needs. Working capital needs tend to be counter-cyclical, meaning that in periods of expansion the Company will use cash to fund working capital requirements, but in periods of contraction the Company will generate cash from reduced working capital requirements. In the first three months of 2024, working capital requirements increased due to an increase in accounts receivable from higher sales levels compared to the fourth quarter of 2023. Inventory levels also increased in the first quarter of 2024 as inventory was purchased to meet higher sales levels. Material purchases were higher at the end of the first quarter of 2024 compared to the end of the fourth quarter of 2023 resulting in an increase in accounts payable in the first quarter of 2024. In the first three months of 2023, working capital requirements decreased as the

Company reduced inventory levels in the first quarter of 2023 to more closely align with our long-term days of supply target of 70 to 75 days. Revenue increased in the first quarter of 2023 compared to the fourth quarter of 2022 causing an increase in accounts receivable while material purchases were higher at the end of the first quarter of 2023 resulting in an increase in accounts payable.

*Investing activities.* The Company's main investing activities are capital expenditures, acquisitions, and proceeds from the sale of property, plant, and equipment. Capital expenditures have decreased year-over-year to $21.8 million for the first three months of 2024 compared to $27.8 million in the first three months of 2023 as the Company is nearing completion of its investment in a new facility in University Park, Illinois, a project which began in 2022. The Company paid $38.5 million in the first three months of 2023 to acquire BLP Holdings, LLC. The Company sold property, plant, and equipment generating cash proceeds of $1.4 million in the first three months of 2024.

*Financing activities.* The Company's main source of liquidity to fund working capital requirements is borrowings on the Ryerson Credit Facility. In the first three months of 2024, we increased credit facility borrowings to fund our increase in working capital. In the first three months of 2023, we increased credit facility borrowings to fund the acquisition of BLP Holdings, LLC. Book overdrafts fluctuate based on the timing of payments. Cash dividends paid in the first three months of 2024 were $6.4 million compared to $6.0 million paid to shareholders in the first three months of 2023. We repurchased $1.0 million of common stock during the first three months of 2024 compared to $53.2 million of common stock repurchased in the first three months of 2023. In the first three months of 2024, the Company paid $1.9 million in holdback payments for the 2022 acquisition of Howard Precision Metals, Inc.

*Off-Balance Sheet Arrangements.* In the normal course of business with customers, vendors, and others, we have entered into off-balance sheet arrangements, such as letters of credit, which totaled $9 million as of March 31, 2024. We do not have any other material off-balance sheet financing arrangements. Our off-balance sheet arrangements are not likely to have a material effect on our current or future financial condition, results of operations, liquidity, or capital resources.

### Capital Resources

We believe that cash flow from operations and proceeds from the Ryerson Credit Facility will provide sufficient funds to meet our contractual obligations and operating requirements in the normal course of business.

Total debt in the Condensed Consolidated Balance Sheet increased to $497.3 million at March 31, 2024 from $436.5 million at December 31, 2023, mainly due to cash utilized in operating activities in the first three months of 2024 related to higher working capital.

Total debt outstanding as of March 31, 2024 consisted of the following amounts: $498.0 million of borrowings under the Ryerson Credit Facility, $1.9 million of foreign debt, and $1.8 million of other debt, less $4.4 million of unamortized debt issuance costs. For further information, see Note 7: Long Term Debt in Part I, Item I - Notes to Condensed Consolidated Financial Statements.

### Pension Funding

At December 31, 2023, pension liabilities exceeded plan assets by $63.9 million. Through the three months ended March 31, 2024, we have made $0.3 million in pension contributions and we anticipate an additional minimum required pension contribution of approximately $10.8 million in the remaining nine months of 2024 under the Employee Retirement Income Security Act of 1974 (“ERISA”) and Pension Protection Act in the U.S. and Ontario Pension Benefits Act in Canada. Future contribution requirements depend on the investment returns on plan assets, the impact of discount rates on pension liabilities, and changes in regulatory requirements. We are unable to determine the amount or timing of any such contributions required by ERISA or whether any such contributions would have a material adverse effect on our financial position or cash flows.

Due to the closure of CSW's headquarters in Chicago, IL and move to University Park, IL, a significant reduction in the service years of employees occurred between the fourth quarter of 2023 and first quarter of 2024, triggering curtailment accounting. The CSW Pension and Postretirement Benefits plans were remeasured as of February 29, 2024, resulting in a curtailment gain. As the curtailment was a net gain, the gain is required to be reflected in the periods in which the terminations occur, resulting in a curtailment gain of $0.3 million recognized in the first quarter of 2024 and $0.5 million recognized in the fourth quarter of 2023 for those terminations occurring during the respective periods. Additionally, the CSW Pension Plan is expecting lump sum payments for 2024 to be in excess of service cost and interest cost and therefore, a settlement gain of $0.5 million was recorded in the first quarter of 2024. The discount rate for measuring obligations of the CSW pension plan increased from 5.24% at December 31, 2023 to 5.57% as of February 29, 2024. The expected long-term rate of return on pension assets has remained unchanged from December 31, 2023 at 3.85%.

In the first quarter of 2024, the Ryerson Canada Bargaining Unit Pension Plan made $1.2 million of lump sum payments to plan participants and purchased $5.0 million of annuities on behalf of plan participants. The lump sum payments and annuity purchases consisted of all of the existing liabilities of the Ryerson Canada Bargaining Unit Pension Plan, resulting in the termination of the plan. The Ryerson Canada Bargaining Unit Pension Plan was fully funded as of the termination date, and as such, all lump sum payments and annuity purchases were funded with pension plan assets. As a result, the Company recorded a $2.2 million settlement loss in the February of 2024.

The net settlement loss and the curtailment gain were recorded within Other income and (expense), net in the Condensed Consolidated Statement of Comprehensive Income as of March 31,2024.

Changes in returns on plan assets may affect our plan funding, cash flows, and financial condition. Differences between actual plan asset returns and the expected long-term rate of return on plan assets impact the measurement of the following year’s pension expense and pension funding requirements. However, we believe that cash flow from operations and the Ryerson Credit Facility described above will provide sufficient funds to make the minimum required contributions.

### Material Cash Requirements

The Company expects to make approximately $502 million in principal payments to satisfy its debt obligations, consisting of $2 million of foreign debt and $2 million of other debt coming due within a year, and $498 million for the Ryerson Credit Facility coming due in 2027. Please refer to Part I, Item I - Notes to the Condensed Consolidated Financial Statements, Note 7: Long-term Debt for further information.

The Company expects to pay approximately $33 million of interest on the Ryerson Credit Facility, foreign debt, and other debt over the next 12 months and $74 million thereafter. Interest payments related to the variable rate debt were estimated using the weighted average interest rate for the respective debt instrument.

The Company leases various assets including real estate, trucks, trailers, mobile equipment, processing equipment, and IT equipment. We have noncancelable operating leases expiring at various times through 2043, and finance leases expiring at various times through 2030. The total amount of future lease payments is estimated to be $488 million, with $48 million over the next 12 months. We did not have material leases signed but not yet commenced as of March 31, 2024.

Purchase obligations with suppliers are entered into when we receive firm sales commitments with certain of our customers. As of March 31, 2024, we had outstanding purchase obligations of approximately $26 million expiring within a year.

### Income Taxes

We maintain a valuation allowance on certain foreign and U.S. federal deferred tax assets until such time as in management’s judgment, considering all available positive and negative evidence, and consistent with its past determinations, we determine that these deferred tax assets are more likely than not realizable.

## Market risk

As filed, 4,037 characters.

Our primary areas of market risk include changes in interest rates, foreign currency exchange rates, and commodity prices. We continually monitor these risks and develop strategies to manage them.

#### Interest rate risk

Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates. We are exposed to market risk related to our fixed-rate and variable-rate long-term debt. As of March 31, 2024 and December 31, 2023, we have no publicly traded debt. The carrying value of our debt was $497.3 million and $436.5 million at March 31, 2024 and December 31, 2023, respectively. The carrying value approximates our fair value due to the short-term nature of the underlying borrowings on the Ryerson Credit Facility.

We may use interest rate swaps to manage our exposure to interest rate changes. As of March 31, 2024, we have no outstanding interest rate swaps.

Less than 1% of our debt is at fixed interest rates as of March 31, 2024. A hypothetical 1% increase in interest rates on variable debt would have increased interest expense for the first three months of 2024 by approximately $1.3 million.

#### Foreign exchange rate risk

We are subject to foreign currency risks primarily through our operations in Canada, Mexico, and China and we use foreign currency exchange contracts to reduce our exposure to currency price fluctuations. Foreign currency contracts are principally used to purchase U.S. dollars. We had foreign currency contracts with a U.S. dollar notional amount of $2.8 million outstanding at March 31, 2024 and a fair value of zero. We do not currently account for these contracts as hedges but rather mark these contracts to market with a corresponding offset to current earnings. For the three months ended March 31, 2024, the Company recognized a $0.1 million gain associated with its foreign currency contracts. A hypothetical strengthening or weakening of 10% in the foreign exchange rates underlying the foreign currency contracts from the market rate as of March 31, 2024 would increase or decrease the fair value of the foreign currency contracts by $0.3 million.

The currency effects of translating the financial statements of our foreign subsidiaries are included in accumulated other comprehensive loss and will not be recognized in the Condensed Consolidated Statements of Comprehensive Income until there is a liquidation or sale of those foreign subsidiaries.

#### Commodity price risk

In general, we purchase metals in an effort to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon historic buying practices, customer contracts, and market conditions. Our commitments to purchase metals are generally at prevailing market prices in effect at the time we place our orders.

Metal prices can fluctuate significantly due to several factors including changes in foreign and domestic production capacity, raw material availability, metals consumption, and foreign currency rates. Derivative financial instruments are used to manage a limited portion of our exposure to fluctuations in the cost of certain commodities. No derivatives are held for trading purposes.

As of March 31, 2024, we had 69,418 tons of hot roll coil swap contracts with a net liability value of $0.2 million, 13,829 tons of aluminum swap contracts with a net liability value of $0.1 million, and 1,556 tons of nickel swap contracts with a net asset value of $8.9 million. We do not currently account for these swaps as hedges, but rather mark these contracts to market with a corresponding offset to current earnings. For the three months ended March 31, 2024, the Company recognized a loss of $0.9 million associated with its commodity derivatives.

A hypothetical strengthening or weakening of 10% in the commodity prices underlying the commodity derivative contracts from the market rate as of March 31, 2024 would increase or decrease the fair value of commodity derivative contracts by $1.5 million.

## Controls and procedures

As filed, 1,795 characters.

### Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2024.

### Changes in Internal Controls Over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting that have materially affected or are reasonably likely to materially affect the Company’s controls over financial reporting during the quarter ended March 31, 2024.

## Risk factors

As filed, 171 characters.

There have been no material changes relating to this Item from those set forth in Item 1A on the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Filed Apr 30, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-050548. Last ingested by Listed: Oct 24, 2026, 15:08 ET. No prices; not investment advice.