Ryerson Holding Corporation — 2021 Form 10-K
Business context and reporting period. This annual report covers the fiscal year ended December 31, 2021; it is not a standalone fourth-quarter report. Ryerson distributes and processes industrial metals through operations in the U.S., Canada, Mexico, and China. It serves about 40,000 customers, and nearly 80% of products sold receive processing. The filing reports one operating segment.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Net sales | $5,675.3 million | $3,466.6 million |
| Gross profit / gross margin | $1,146.8 million / 20.2% | $621.1 million / 17.9% |
| Operating profit / operating margin | $545.2 million / 9.6% | $64.6 million / 1.9% |
| Net income (loss) attributable to Ryerson Holding | $294.3 million | $(65.8) million |
| Diluted EPS | $7.56 | $(1.73) |
| Cash from operating activities | $35.0 million | $277.9 million |
| Total debt at year-end | $639.3 million | $740.0 million |
- Sales increased 63.7%; shipments rose 4.3% to 2.095 million tons and average selling price per ton increased 57.0% to $2,709. Management attributed the increase to strong demand, limited supply, and higher metal prices.
- Operating expenses were $711.2 million, up $156.9 million, but declined to 12.5% of sales from 16.0%. Operating profit includes a $109.6 million gain on asset sales.
- Management reported adjusted net income attributable to Ryerson Holding of $290.0 million and adjusted diluted EPS of $7.46, excluding specified non-core items. These are non-GAAP measures.
- Operating cash flow fell to $35.0 million, principally as receivables and inventory absorbed cash during the recovery and rising metal prices. Cash and cash equivalents were $51.2 million; reported total liquidity was $741 million, including $670 million of availability under the revolving credit facility and foreign facilities.
- Year-end debt included $316.0 million under the revolving facility and $300.0 million of 8.50% notes due 2028. Net debt, a non-GAAP measure, was $588 million. The debt-to-capitalization ratio declined to 54% from 84%.
- Capital expenditures were $59.3 million. The company reported a $95.8 million unfunded pension liability and expected minimum pension contributions of approximately $5.8 million in 2022.
Material changes versus 2020
- Ryerson returned to strong profitability after a 2020 net loss, as sales prices and volumes improved and gross margin expanded by 230 basis points.
- Operating cash generation declined by $242.9 million, reflecting higher working-capital investment, notably increases in receivables and inventory.
- The company sold and leased back properties for net proceeds of approximately $163.2 million, recording a $109.6 million gain. It used proceeds and cash to redeem $150 million of 2028 notes; debt fell by $100.7 million year over year and annual interest expense was reduced by about $17 million.
- A $206.6 million pension annuitization resulted in a reported $98.7 million pension settlement charge. The pension obligation and plan assets both declined substantially following settlements and benefit payments.
- LIFO expense was $366 million in 2021, compared with $12 million of LIFO income in 2020, reflecting rising metal prices.
Outlook, commentary, risks, and contingencies
- Outlook: The filing gives no specific earnings or sales guidance. Management anticipated up to approximately $100 million of 2022 capital expenditures, with nearly half expected to be funded by sale-leaseback proceeds and the balance from operations and available borrowings. Spending could be reduced if economic conditions weaken. Management cited manufacturing expansion indicators and potential infrastructure-related demand, while noting the impact of proposed infrastructure spending was uncertain.
- Operating environment: Management said COVID-19-related supply-chain tightness and disruptions persisted amid stronger demand. Metals distribution is cyclical; volatility in metal prices, availability, and the timing of passing cost changes to customers can affect margins, liquidity, and earnings.
- Debt and interest-rate exposure: The revolving facility matures in 2025 and is subject to borrowing-base availability and covenants, including a fixed-charge coverage test if availability falls to a specified level. A 100-basis-point increase in floating rates was estimated to raise annual interest expense by about $2 million, after swaps. LIBOR replacement by SOFR was scheduled for 2023.
- Environmental contingency: Ryerson is among the potentially responsible parties for the Portland Harbor Superfund Site. Responsibility has not been allocated; the company said it could not predict its liability or estimate a loss range. Other pending claims were not considered likely to have a material adverse effect by management.
- Other risks and unusual items: Risks include supplier concentration (top 25 suppliers represented about 77% of purchases), inflation, labor availability and costs, cybersecurity, pension funding, foreign exchange, and goodwill impairment. Commodity derivatives generated a reported $47.3 million loss in 2021. Sale-leasebacks increased lease commitments; future lease payments were estimated at $278 million, plus $193.6 million for signed leases not yet commenced.
- The Board initiated a $50 million share repurchase authorization; 2021 repurchases totaled $1.8 million. Ryerson paid dividends of $0.08 and $0.085 per share in the third and fourth quarters, respectively. The Board later declared a $0.10-per-share dividend for March 2022, subject to the stated terms.
Most important facts for investors to verify
- How much of 2021 earnings and operating profit is sustainable after excluding the sale-leaseback gain, pension settlement, debt redemption costs, and unusually large LIFO expense.
- Whether working-capital needs normalize and operating cash flow recovers as metal prices and demand change.
- Current borrowing-base availability, covenant headroom, refinancing plans, and the effects of variable rates and the LIBOR-to-SOFR transition.
- Potential liability and timing for the Portland Harbor matter, for which the filing provides no estimable loss range.
- The economics and ongoing lease obligations from property sale-leasebacks, and whether planned capital spending delivers expected returns.
- The filing reports annual results; standalone Q4 financial values are not clearly provided in the supplied text.