Ryerson Holding Corporation — FY 2023 Form 10-K
Business context and reporting period. Annual report for the fiscal year ended December 31, 2023; figures below are full-year, not standalone fourth-quarter results. Ryerson distributes and processes industrial metals, serving about 40,000 customers through facilities in North America and China. Nearly 80% of products sold are processed for customers.
Key financial metrics
| Metric | FY 2023 | FY 2022 |
|---|---|---|
| Net sales | $5,108.7 million | $6,323.6 million |
| Gross profit / margin | $1,021.6 million / 20.0% | $1,310.1 million / 20.7% |
| Operating profit / margin | $228.1 million / 4.5% | $578.7 million / 9.2% |
| Net income attributable to Ryerson / diluted EPS | $145.7 million / $4.10 | $391.0 million / $10.21 |
| Cash from operating activities | $365.1 million | $501.2 million |
- Shipments fell 4.2% to 1.943 million tons; average selling price per ton declined 15.7% to $2,629.
- At year-end, cash was $54.3 million; total debt was $436.5 million, including $433.0 million under the revolving credit facility. Net debt was $382 million.
- Total liquidity was $656 million, including $560 million of availability under the revolving facility. The facility matures in 2027; its year-end weighted-average borrowing rate was 6.6%.
- Capital expenditures were $121.9 million. Ryerson paid $24.8 million in dividends and reported $113.9 million of share repurchases during 2023.
Material changes versus prior year
- Sales declined 19.2%, reflecting lower metals prices and weaker demand. Management attributed the price decline to commodity markets and the shipment decline to slower industrial conditions.
- Gross margin contracted 70 basis points as selling prices fell faster than inventory costs. Operating expenses increased $58.3 million, including acquired-company costs and higher reorganization and facility start-up expenses; lower incentive compensation partly offset the increases.
- Operating profit fell 60.6% and attributable net income declined from $391.0 million to $145.7 million. Operating cash flow decreased by $136.1 million.
- Ryerson acquired BLP, Norlen, TSA Processing, and Hudson Tool Steel for $127.5 million, net of cash acquired, and purchased ExOne assets for $9.7 million. The acquisitions contributed $43.2 million in sales and $1.8 million in net income from their respective acquisition dates.
Outlook, risks, contingencies, and unusual items
- Outlook: No specific earnings or revenue guidance is provided. Management anticipates 2024 capital expenditures of up to approximately $110 million, funded from operating cash flow, and minimum pension contributions of approximately $11 million. Management may reduce capital spending if economic conditions warrant.
- Management described a soft manufacturing environment: the PMI remained below 50 throughout 2023, and high inflation and interest rates weighed on industrial demand. Ryerson’s North American volumes declined 4.8%, while the industry’s service-center volumes increased 1.5%.
- Key risks include cyclical demand, volatile metal prices and inventory margins, competition, supplier concentration, floating-rate debt, acquisition integration, and currency, cybersecurity, environmental, and labor risks. A 100-basis-point increase in variable rates would have increased 2023 interest expense by approximately $4.7 million.
- At year-end, disclosed unfunded liabilities were $63.9 million for pension plans and $35.7 million for other postretirement benefits. Ryerson expects additional pension curtailment gains in early 2024; a Canadian bargaining-unit pension plan was terminated after year-end, resulting in a $2.2 million settlement loss in the first quarter of 2024.
- Ryerson is a potentially responsible party at the Portland Harbor Superfund Site. Cost allocation remains unresolved, and management cannot estimate a potential loss. Other pending claims were not expected by management to have a material adverse effect.
- 2023 included $98 million of LIFO income as metal prices declined and a $0.8 million benefit-plan curtailment gain. Adjusted diluted EPS, a non-GAAP measure, was $4.08 versus $10.54 in 2022. The 2022 comparison included a $21.3 million loss on retirement of debt, a $3.8 million gain on asset sales, and a $0.6 million bargain purchase gain.
- The annual goodwill impairment test found no impairment. The auditor issued an unqualified opinion on the financial statements and internal controls; the control assessment excluded the four 2023 acquisitions.
Important facts for investors to verify
- Whether demand, shipment volumes, and selling prices stabilize, and whether gross margin recovers as inventory costs adjust.
- Whether higher operating costs, acquisition integration, and the new University Park facility affect 2024 profitability and cash generation.
- Revolver availability, borrowing-base capacity, covenant headroom, floating-rate exposure, and refinancing needs ahead of the 2027 facility maturity.
- The timing and amount of pension contributions, the effects of the CSW workforce changes, and progress on Portland Harbor cost allocation.
- Capital allocation plans, including the remaining share-repurchase authorization and whether future dividends are maintained; future dividends remain at the Board’s discretion.