Ryerson Holding Corporation

And ladies and gentlemen, please stand by. Good day and welcome to the Ryerson Holdings Corporation's third quarter 2022 conference call. Today's conference is being recorded. There will be a question and answer session later. If you would like to ask a question, please press star one on your telephone keypad at any time. Again, that is star one to ask a question. At this time, I would like to turn the conference over to Jorge Beristain. Please go ahead.

Good morning. Thank you for joining Ryerson Holding Corporation's third quarter 2022 earnings call. On our call, we have Eddie Lehner, Ryerson's President and Chief Executive Officer, Mike Burbach, our Chief Operating Officer, Jim Clausen, our Chief Financial Officer, and Molly Cannon, our Chief Accounting Officer and Corporate Controller. John Orth, our Executive Vice President of Operations, will also be joining us for Q&A. Certain comments on this call contain forward-looking statements within the meaning of the federal securities laws. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements and are not limited to those set forth under risk factors in our annual report on Form 10-K for the year ended December 31st, 2021. Our quarterly report on Form 10-Q for the quarter ended September 30th, 2022 and in our other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date they are made and are not guarantees of future performance. In addition, our remarks today refer to several non-GAAP financial measures that are intended to supplement but not substitute for the most directly comparable GAAP measures, a reconciliation of non-GAAP to the most directly comparable GAAP financial measures is provided in our earnings release filed on Form 8K yesterday, also available on the investor relations section of our website. I'll now turn the call over to Eddie.

Thank you, Jorge, and thank you all for joining us this morning to discuss our third quarter 2022 results. I want to start by expressing my heartfelt appreciation to our 4,000-plus strong Ryerson team for their hard work and continued dedication toward delivering a safe work environment while working with great passion on delivering great customer experiences. This year and this month, we celebrate Ryerson's 180th anniversary as a company, a rare milestone for any business. As we celebrate and embrace our long and distinguished history, It is the present and future vision we have for Ryerson that we believe has so much to offer to all of our stakeholders. That vision is simply stated as delivering great customer experiences across the industrial metals landscape with speed, scale, value add, enjoyment, and consistency throughout our network of intelligently connected industrial metals service centers. As we estimate that there are more than 25 million of these experiences to be provided annually in our part of the industry, there is significant opportunity and growth available to Ryerson in providing the best customer experience in our competitive space. Additionally, we continue to innovate, grow, and invest for the future by adding new capabilities, modernizing our facilities, providing new value-added services to our customers, and growing our family of companies. This was on full display throughout the quarter as we continue preparing two new state-of-the-art service centers to come online in Centralia, Washington, and University Park, Illinois in 2022 and 2023, respectively, while also acquiring Howard Precision Aluminum in August of this year. This is in addition to acquisitions made earlier in the year when we acquired Apogee Steel Fabrication and Ford Tool Steel while making a strategic investment in additive manufacturing company Freeform Technologies. I am also pleased to welcome Excelsior Metals to the Ryerson family of companies as we announced via press release this past Tuesday. This is in addition to investments we have made in growth CapEx around productivity and quality, enhancing our machinery and equipment capabilities, as well as ongoing investments in digital infrastructure and future state customer experience systems from quoting to final mile delivery. We'll get to the counter cycle in a minute, but wanted to illuminate the actions we're taking to improve through the cycle earnings potential and preparing Ryerson for the next upturn. Bringing it back to the third quarter of 2022, we recognized and responded skillfully to the unmistakable conditions marking the onset of an industry counter cycle. We managed expenses well. Inventory management is progressing toward our targets and replacement cost gross margins are tracking higher than average cost gross margins. I would note that through my time with Ryerson, this is my fourth counter cycle. And although each one is unique in its own way, we have excelled as an organization in bettering Ryerson through every one of them. This counter cycle now underway is showing significant dollar strength, commodity price reversions, transient average cost gross margin compression, inventory restocking, reduced mill operating rates, and demand declines as the world continues grappling with extremes, distortions, shortages, and excesses engendered by the pandemic, war, climate, geopolitics, as well as asynchronous and contrasting policy choices that have all mixed together