Ryerson Holding Corporation

Please stand by. We are about to begin. Good day and welcome to the Ryerson Holding Corporation's fourth quarter and full year 2023 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 1 on your telephone keypad at any time. Again, that is star 1 to ask a question. At this time, I would like to turn the conference over to Mr. Pratham Deer, Manager of Investor Relations. Please go ahead, sir.

Good morning. Thank you for joining Ryerson Holding Corporation's fourth quarter and full year 2023 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, Mike Hamilton, our Vice President of Corporate Supply Chain, and Jorge Berestain, our Vice President of Finance, will be joining us for Q&A. Certain comments on this call will 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. 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 31st, 2023, and in 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 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 measures to the most directly comparable GAAP financial measures is provided in our earnings release filed on Form 8K yesterday and also available on the Investor Relations section of our website. I'll now turn the call over to Eddie.

Thank you Pratham and thank you all for joining us this morning. 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 operative environment for our over 110 facilities across North America and China. Through the fourth quarter and full year, our service center network became stronger, denser, and more robust as planned. Since 2021, Ryerson has embarked on its largest investment and shareholder return cycle in more than a generation and is an important marker in our 182-year history. As much as I wish we could microwave it, we are timing our investments to the next industry upturn while managing the business intelligently. 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. Commodity bellwether averages for carbon, aluminum, and stainless all declined year over year. And while Ryerson grew market share in aluminum and stainless, the margin compression for stainless in particular was severe and unrelenting. We expect current counter cyclical 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. 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. 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 20%. 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. Now, this is not the entire list, but a point of emphasis that there is no growth of any meaning or magnitude without some growing pains. 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. Despite the noted counter cyclical conditions that pervaded Q4 and 2023 overall, I want to share several proof points. We welcomed three exceptional value-added businesses into our family of companies during the fourth quarter. Norlin Incorporated, which we introduced on our last call, is joined by TSA Processing and Hudson Tool Steel Corporation. TSA, headquartered in Houston, has been providing excellent tool processing capabilities for over 30 years and operates across the Midwest and southern states. Hudson Tool Steel, headquartered in Cerritos, California, has been supplying high-quality and specially-grade carbon and alloy tool steels for 20 years and has operations on the East Coast as well as the Midwest. The addition of Hudson allows Ryerson to create a tool steel center of excellence by combining the skill sets of Hudson with Ford Tool Steel and Southern Tool Steel. 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. Counter-cycles are never enjoyable, particularly when undertaking significant operating model investments over a multi-year investment period. Keeping to the bigger picture with clarity and focus, we're skating to where the puck is going, and then we plan on parking it in the net as we transition back to an industrial metals upturn whose precise timing we don't know, but when it comes, we'll be ready to make the most of it to the benefit of Ryerson stakeholders. With that, I'll now turn the call over to our Chief Operating Officer, Mike Burbach, to further discuss the pricing and demand environment.