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| Statement |
|---|
| We've been doing the hard but necessary things to create a better operating model centered on value-add and speed-to-market to generate higher through-the-cycle earnings with less volatility when our investments fully phase-in and begin generating operating cash flow |
| TSA, headquartered in Houston, has been providing excellent tool processing capabilities for over 30 years and operates across the Midwest and Southern states |
| Through the fourth quarter and full year, our service center network became stronger, denser, and more robust as planned |
| As we look ahead to the first quarter and the rest of 2024 and over the rainbow, we firmly believe that our services, as a trusted partner to our customers, provides a greater good as recyclable industrial metals are the gifts that keep giving and which support and enable emergent trends of nearshoring technological advancement and sustainability |
| We expect current countercyclical conditions for non-ferrous industrial metals consumption to be transient as we're well into a non-ferrous bottoming, and we maintain a strong conviction around positive longer-term secular demand trends for aluminum and stainless and industrial metals writ large |
| Additionally, we increased book value per share to its highest level since Ryerson's IPO in 2014, increased the dividend, continued prudent share buybacks, generated strong free cash flow and free cash flow yields, grew PP&E by [Technical Difficulty] started up the Centralia Washington service center facility and finished construction at University Park, Illinois, with construction and equipment installation expected to be completed in Shelbyville, Kentucky by the end of 2024, while converting 17 of our service centers to SAP for ERP consistency throughout our general line service center business |
| The investments Ryerson is making throughout our network of intelligently connected industrial metal service centers is to deliver those great customer experiences with joy, speed, scale, value-added consistency to position Ryerson and its stakeholders well for an enduring and valuable future |
| Meanwhile, our earnings per share of $0.74 was notably higher than our guidance range of $0.18 to $0.22 share |
| During the fourth quarter, we exceeded our guidance on earnings per share, generated positive cash flow, maintained our net leverage ratio within range, and returned cash to shareholders through dividends and share repurchases while continuing to execute our organic and acquisition growth investments |
| Despite the decrease in overall tons, we saw full year shipment increases in our commercial ground transportation and oil and gas end markets, following the strength of Class 8 truck orders and rig counts |
| The investments we are making are expected to drive better customer experiences, enhance long-term potential of our equipment, improve asset utilization, increase productivity and provide a safer operating environment for our employees |
| We are very excited about the modernization efforts taking place across our network and the better customer experiences they will provide to our customer base |
| Throughout 2023, both organically and through acquisitions, Ryerson increased its value-added percentage of sales from 14% to 18% year-over-year, helping mitigate the harsh margin compression noted in stainless in Q4 and for the whole of 2023 |
| Gross margin of 22.2% was an expansion of 220 basis points versus the previous quarter |
| Our investments in modernized facilities, increased value-added services and ERP network integration are aligned with our long-term vision for Ryerson with the goal of adding value to our customers through greater levels of service, speed and efficiency, and providing the industry's best customer experience |
| The beat on earnings per share was driven largely by the LIFO income recognized over the quarter, which was driven by continued falling costs through the quarter and was representative of the continued market price declines realized in our bright metals franchise |
| As we close out the year, our value-add percent of sales has increased to 18%, growing from approximately 14% a year ago, and we reiterate our target of at least 20% |
| We welcomed three exceptional value-added businesses into our family of companies during the fourth quarter |
| Despite the challenges of navigating through a contractionary manufacturing environment, our business generated cash from our operating model as well as our balance sheet, invested in the growth of our network through new and enhanced service centers, acquisitions, and technological integrations to build out our next-generation operating model and prudently delivered returns to shareholders |
| Even more importantly, investment in industrial metals and manufacturing continues to show its undisputed magic in generating higher quality of life and well-being for humankind when we're smart enough to invest what is required |
| As we don't sell heavily into the automotive, aerospace, or non-residential construction end markets, which were industries with strong growth over 2023, our bright metals franchise outperformed the MSCI but was eclipsed by underperformance in heavier weighted carbon flat rolled products primarily weighted toward the consumer |
| In that regard, Norlen, TSA, and Hudson are great additions to our service offerings |
| Finally, I would like to note that we are continuously working to provide our customers with ever-better experiences through our products, network and services, while investing to meet customers' increasing needs from emergent trends through our modernized facilities and increased capabilities |
| As we reflect on the fourth quarter and full year of 2023 results, I want to start by recognizing our 4,600 strong Ryerson team for prioritizing a safe and productive operating environment for our over 110 facilities across North America and China |
| While Ryerson navigated the headwinds of this market cycle, we've remained resolute in continuing to invest in the modernization, expansion, and integration of our service center network, which serves as the engine of growth in our operating model |
| So, we'll have some adjustments in the first quarter, but all in good cause and for good effect |
| We appreciate your continued support and interest in Ryerson |
| Stay safe, be well |
| Ryerson's net leverage ratio ended the year at 1.7 times and remains within our leverage target range of 0.5 times to 2.0 times, while the company's available global liquidity remains healthy at $656 million |
| Looking to the first quarter of 2024, we expect volumes to be up sequentially compared to the fourth quarter, in line with normal seasonality and up 8% to 10% |
| Statement |
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| This came in just below the low end of our guidance range of $28 million to $32 million and was driven by pricing and margin pressure most acutely in our stainless steel franchise, which represents approximately 25% of our revenue |
| Ryerson sales volumes of 450,000 tons were 5.9% lower quarter-over-quarter and within our guidance expectations |
| Average sell price per ton was down 5.2% quarter-over-quarter at $2,472 per ton, which was slightly below the lower range of our guidance expectations, primarily due to weaker-than-expected conditions in stainless consuming end markets |
| In the fourth quarter of 2023, Ryerson reported net sales of $1.1 billion, which was 11% lower sequentially, driven by roughly an equal split of lower volume [Technical Difficulty] |
| Our bright metals franchise was affected by continued declining LME nickel and LME aluminum prices during the fourth quarter due to continued global oversupply |
| As we look at the full year 2023, it's evident that we faced a terrain change in the market landscape from 2022 with both consumer and industrial manufacturing-related end markets experiencing demand slowdowns, combined with corresponding challenges in metals commodities pricing related to global and domestic supply and demand imbalances |
| And while Ryerson grew market share in aluminum and stainless, the margin compression for stainless, in particular, was severe and unrelenting |
| Turning to the demand environment, broadly speaking, seasonal demand slowdowns impacted activity overall in the fourth quarter, as reflected by weak PMIs and a deceleration in industrial production |
| Volume decreases were led by a slowdown from end markets related to consumer goods and industrial manufacturing |
| Overall, in the fourth quarter of 2023 and when reflecting on all of 2023, Ryerson navigated through headwinds of mixed pricing and slow demand, which were characterized by a continuation of decreasing bright metals commodities prices driven by global oversupply, as well as a holiday-related slowdown in industrial and consumer purchasing activity |
| Commodity bellwether averages for carbon, aluminum and stainless all declined year-over-year |
| Excluding LIFO, gross margin fell 40 basis points from the third quarter to 16.9% as average selling price for our sales mix decreased faster than cost of goods sold |
| While we realized increases in spot pricing as the quarter progressed, our average sell price was lower quarter-over-quarter due to delayed pricing impact from our contractual customers |
| Countercycles are never enjoyable, particularly when undertaking significant operating model investments over a multi-year investment period |
| When looking at Ryerson through a year-over-year prism, I want to note that same-store expenses and headcount are both lower when comparing year-over-year benchmarks and same-store headcount is still 8% below pre-pandemic levels |
| 2023 and Q4 did not favor Ryerson's end markets, as automotive, aerospace, and non-residential outperformed consumer, general industrial, and machinery and equipment metal-consuming end markets |
| These risks include, but are not limited to, those set forth under risk factors in our annual report on Form 10-K for the year ended December 31, 2023, and in other filings with the Securities and Exchange Commission |
| For the full year 2023, MSCI shipments increased 1.5%, while Ryerson shipments decreased by 4.8% |
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