Ryerson Holding Corp
For the period ended Jun 30, 2024. Filed Jul 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 30, 2024
RYZ$27.60+3.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-30.
0000950170-24-050548
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-30.
0000950170-24-087880
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 76 previous paragraphs and 78 current paragraphs.
35 unchanged; 34 reworded; 9 added; 5 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 13 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
According to the Metal Service Center Institute, North American service center volumes decreased by 3.3% in the first six months of 2024 compared to the first six months of 2023. Ryerson's North American volumes decreased 2.5% over the same period. Compared to the first six months of 2023, Ryerson's overall consolidated end market demand, as measured by sales volumes, has decreased by 1.0% for the first six months of 2024, with decreased volumes in Consumer Durables, Industrial Machinery & Equipment, Commercial Ground Transportation, and Construction Equipment sectors. Decreases in these end-markets were partially offset by increased volumes in Food Processing & Agriculture, HVAC, and the Metal Fabrication & Machine Shops sectors. On a quarterly sequential basis, the industry volume decreased 0.2% compared to an increase in Ryerson's North American volume of 1.7%. On a quarterly sequential basis, Ryerson's overall consolidated volumes have increased by 2.2%, with the largest increases in HVAC, Construction Equipment, Consumer Durable, and the Oil & Gas sectors.
Current report
On July 11, 2024, the US government announced that it will impose a “melt and pour” requirement for imports of steel products from Mexico and will impose section 232 tariffs of 25% for steel products that are melted and poured in a country other than Mexico, Canada, or the US. The move is expected to help close a loophole in section 232 of the Trade Expansion Act ("Section 232") that has allowed steel produced outside of North America to avoid the tariffs by shipping via Mexico for further processing before being exported to the US. Additionally, the US will impose a “smelt and cast” requirement for aluminum imports from Mexico. Specifically, any product from Mexico whose “primary country of smelt, secondary country of smelt, or country of most recent cast” is China, Russia, Belarus, or Iran will be subject to 10% 232 duties upon entering the US. We believe the impact of these regulatory measures are supportive of US domestic supply and may be beneficial to Ryerson’s volumes and average selling prices.
Current report
On May 14, 2024, the U.S. government announced trade actions that increased tariffs across strategic sectors such as steel and aluminum, semiconductors, electric vehicles, batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products. The tariff rate on certain steel and aluminum products under Section 301 of the Trade Act of 1974 ("Section 301") will increase from between zero to 7.5% to 25% in 2024. We anticipate that these actions will provide limited support for metal commodity prices, given China steel and aluminum imports represent a small portion of overall U.S. imports at 2.2% and 3.6%, respectively, in 2023.
Current report
Warehousing, delivery, selling, general, and administrative expenses declined $3.6 million in the second quarter of 2024 compared to the second quarter of 2023 while expenses increased $19.0 million in the six-month period ended June 30, 2024 compared to the year ago period . Expenses in the second quarter of 2024 included $7.2 million of expenses from companies acquired during 2023, while the first six months of 2024 included expenses of $15.1 million from companies acquired in 2023. Excluding the impact of acquisitions, expenses decreased $10.8 million in the second quarter of 2024 compared to the second quarter of 2023 and expenses increased $3.9 in the six-month period ended June 30, 2024 compared to the year ago period. On a same-store basis, expenses in the three-month and six-month periods changed in the following categories from the prior year periods:
Current report
lower selling, general, and administrative expenses of $0.7 million in the second quarter of 2024 compared to the second quarter of 2023 as travel and entertainment expenses decreased while selling, general, and administrative expenses were $2.1 million higher in the first six months of 2024 resulting from higher credit loss accruals and higher consulting fees;
Current report
lower benefit expense of $3.8 million in the second quarter of 2024 and $4.4 million in the first six months of 2024 primarily due to lower medical expense;
Current report
lower overtime and temporary help expense of $3.1 million in the second quarter of 2024 and $4.3 million in the first six months of 2024;
Current report
lower delivery expense of $0.3 million in the second quarter and $1.4 million in the first six months of 2024.
Current report
The three month and six month periods ended June 30, 2024 include a restructuring charge of $1.7 million related to severance costs for headcount reductions as we work on optimizing our operating model and improving productivity.
Removed paragraphs (5)
Previous report
According to the Metal Service Center Institute, North American service center volumes decreased by 4.1% in the first three months of 2024 compared to the first three months of 2023. On a North American basis, Ryerson's North American volumes decreased 6.1% over the same period. On a quarterly sequential basis, the industry volume increase of 7.0% was lower than Ryerson's North American volume increase of 13.7%. Compared to the fourth quarter of 2023, Ryerson's end market demand increased across almost all sectors, with the strongest growth from HVAC, Food Processing & Agriculture, and Industrial Machinery & Equipment.
Previous report
Warehousing, delivery, selling, general, and administrative expenses increased in the three-month period ended March 31, 2024 compared to the year ago period with $9.4 million of the increase driven by including the expenses of companies acquired during 2023. Excluding the impact of acquisitions, expenses changed in the following categories:
Previous report
higher selling, general, and administrative expenses of $1.7 million resulting from higher consulting fees and higher travel and entertainment expenses;
Previous report
lower overtime expense of $1.3 million due to less tons processed;
Previous report
lower delivery expense of $1.0 million resulting from the decrease in tons shipped; and
Reworded paragraphs (34)
Previous wording
The metals service center industry is cyclical, volatile in demand and pricing, and difficult to predict. In the first quarter of 2024, Ryerson experienced higher average selling prices of 0.8% and an increase in shipments of 10.4%, compared to the fourth quarter of 2023, as the period was characterized by sequential normal restocking demand and benefited from a higher pricing environment. In the first three months of 2024, Ryerson experienced lower average selling prices of 8.0% and a decrease in shipments of 4.2% compared to the first three months of 2023, due to the effects of contracting industrial manufacturing demand, which influenced both lower volumes as well as lower pricing.
Current wording
The metals service center industry is cyclical, volatile in demand and pricing, and difficult to predict. In the second quarter of 2024, Ryerson experienced lower average selling prices of 3.2% and an increase in shipments of 2.2%, compared to the first quarter of 2024, as the period was characterized by sequential restocking demand, offset by a lower pricing environment. In the first six months of 2024, Ryerson experienced lower average selling prices of 9.5% and a decrease in shipments of 1.0% compared to the first six months of 2023, due to the effects of contracting industrial manufacturing demand, which influenced both lower volumes as well as lower pricing.
Previous wording
Purchasing Managers’ Index (“PMI”), which reported growth in March of 2024 with a reading of 50.3% after marking sixteen consecutive months of contractionary factory activity through February of 2024, with readings below the growth threshold of 50%, indicating a slowdown in factory activity. Similarly, U.S. Industrial Production, which measures industrial sector business output, reported contractionary year-over-year output for January and February 2024 and zero growth in March.
Current wording
Key steel industry economic indicators continued to report a contraction in industrial activity during the second quarter of 2024. This is evidenced by the Institute for Supply Management’s Purchasing Managers’ Index (“PMI”), which reported readings below the growth threshold of 50, with a reading of 48.5 in June and readings of 48.7 and 49.2 in May and April, respectively, after indicating growth in March of 2024 with a reading of 50.3. The March 2024 growth reading was preceded by sixteen consecutive months of contractionary factory activity. U.S. Industrial Production, which measures industrial sector business output, reported contractionary year-over-year output for most of the second quarter, with a May reading of 0.4% as the first increase in five months.
Previous wording
First Three Months 2024 vs. First Three Months 2023 Performance
Current wording
First Six Months 2024 vs. First Six Months 2023 Performance
Previous wording
To provide greater insight into the Company’s operating trends apart from the period’s one-time transactions, Ryerson provides adjusted net income (loss) and adjusted diluted earnings (loss) per share figures, which are not U.S. generally accepted accounting principles (“GAAP”) financial measures, to compliment the reported GAAP net income (loss) and diluted earnings (loss) per share figures. Management uses these metrics to assess year-over-year performance excluding non-recurring transactions. Adjusted net income (loss) and adjusted diluted earnings (loss) per share do not represent, and should not be used as a substitute for, net income (loss) or diluted earnings (loss) per share determined in accordance with GAAP. As illustrated in the below table, the net loss attributable to Ryerson Holding Corporation of $7.6 million includes a pension settlement loss of $2.2 million and a $0.3 million curtailment gain related to various retirement benefit plans. After adjusting for these non-core business transactions and the related income taxes, the adjusted net loss attributable to Ryerson Holding Corporation for the first three months 2024 is $6.2 million, a decrease of $53.5 million compared to net income attributable to Ryerson Holding Corporation of $47.3 million in the first three months of 2023 which had no adjustments to net income attributable to Ryerson Holding Corporation.
Current wording
To provide greater insight into the Company’s operating trends apart from the period’s one-time transactions, Ryerson provides adjusted net income and adjusted diluted earnings per share figures, which are not U.S. generally accepted accounting principles (“GAAP”) financial measures, to compliment the reported GAAP net income and diluted earnings per share figures. Management uses these metrics to assess year-over-year performance excluding non-recurring transactions. Adjusted net income and adjusted diluted earnings per share do not represent, and should not be used as a substitute for, net income or diluted earnings per share determined in accordance with GAAP. As illustrated in the below table, the net income attributable to Ryerson Holding Corporation of $2.3 million includes a restructuring charge of $1.7 million, as well as a pension settlement loss of $2.2 million and a $0.3 million curtailment gain related to various retirement benefit plans. After adjusting for these non-core business transactions and the related income taxes, the adjusted net income attributable to Ryerson Holding Corporation for the first six months 2024 is $5.0 million, a decrease of $79.9 million compared to net income attributable to Ryerson Holding Corporation of $84.9 million in the first six months of 2023 which had no adjustments.
Previous wording
On February 24, 2023, the US government announced trade actions targeting goods and entities from Russia, which included a proclamation to impose 200% ad valorem tariffs on Russian-origin aluminum products and derivative products and other articles made from Russian primary aluminum or Russian aluminum castings. The duties will be imposed under section 232 of the Trade Expansion Act ("Section 232") and cited by the White House due to (1) challenges faced by US aluminum producers in the face of high levels of aluminum imports and high energy prices; (2) recent increases in imports of aluminum from Russia, whose market is especially export-oriented, by 53 percent between March and July 2022; and (3) the fact that the Russian aluminum industry is a key part of Russia's defense industrial base. Ryerson has communicated to all vendors that we will not accept any Russian originating metal. The trade actions announced by the US government should support prices for Ryerson's product sales mix as the underlying domestic and North American supply-demand balance is protected from oversupply.
Current wording
On February 24, 2023, the US government announced trade actions targeting goods and entities from Russia, which included a proclamation to impose 200% ad valorem tariffs on Russian-origin aluminum products and derivative products and other articles made from Russian primary aluminum or Russian aluminum castings. The duties will be imposed under Section 232 and cited by the White House due to (1) challenges faced by US aluminum producers in the face of high levels of aluminum imports and high energy prices; (2) recent increases in imports of aluminum from Russia, whose market is especially export-oriented, by 53 percent between March and July 2022; and (3) the fact that the Russian aluminum industry is a key part of Russia's defense industrial base. Ryerson has communicated to all vendors that we will not accept any Russian originating metal. The trade actions announced by the US government should support prices for Ryerson's product sales mix as the underlying domestic and North American supply-demand balance is protected from oversupply.
Previous wording
The following table sets forth our condensed consolidated statements of income data for the three months ended March 31, 2024 and 2023 (certain percentages may not calculate due to rounding):
Current wording
The following table sets forth our condensed consolidated statements of income data for the three-month and six-month periods ended June 30, 2024 and 2023 (certain percentages may not calculate due to rounding):
Previous wording
The following charts show the Company’s percentage of sales by major product lines for the three months ended March 31, 2024 and 2023:
Current wording
The following charts show the Company’s percentage of sales by major product lines for the six months ended June 30, 2024 and 2023:
Previous wording
Revenue for the three-month period ended March 31, 2024 decreased from the same period a year ago due to lower average selling prices caused by lower commodity prices and to lower volume caused by slower economic conditions in metal markets in 2024. Compared to the year ago period, average selling prices decreased for all of our product lines in the three-month period ended March 31, 2024 with the largest decreases in our stainless flat, stainless plate, and stainless long products. Tons sold decreased in the three-month period ended March 31, 2024, compared to the year ago period, for most of our product lines with the largest decreases in our aluminum long, carbon long, and stainless long product lines partially offset by an increase in aluminum plate tons sold.
Current wording
Revenue for the three-month and six-month periods ended June 30, 2024 decreased from the same periods a year ago due to lower average selling prices caused by lower commodity prices in 2024. Compared to the year ago periods, average selling prices decreased for all of our product lines in the three-month and six-month periods ended June 30, 2024 with the largest decreases in our stainless flat, stainless plate, stainless long, and carbon plate products. Tons sold decreased slightly in the six-month period while increasing in the three-month period ended June 30, 2024, compared to the year ago periods. The product lines with the largest decreases in tons sold in 2024 are our carbon long and aluminum long product lines partially offset by an increase in carbon flat tons sold in the three-month and six-month periods ended June 30, 2024 and in carbon plate tons sold in the second quarter of 2024.
Previous wording
The decrease in cost of materials sold in the three-month period ended March 31, 2024 compared to the year ago period is primarily due to a decrease in average cost of materials sold per ton and to lower tons sold. Compared to the year ago period the average cost of materials sold decreased across all product lines with the largest decreases in our stainless flat, stainless plate, and stainless long product lines. During the first quarter of 2024, LIFO expense was $1.0 million compared to LIFO expense of $4.0 million in the first quarter of 2023.
Current wording
The decrease in cost of materials sold in the three-month and six-month periods ended June 30, 2024 compared to the year ago periods is primarily due to a decrease in average cost of materials sold per ton. Compared to the year ago periods the average cost of materials sold decreased across all product lines with the largest decreases in our stainless flat, stainless plate, stainless long, and carbon plate product lines. During the second quarter of 2024, LIFO income was $10.0 million compared to LIFO income of $9.0 million in the second quarter of 2023. During the first six months of 2024, LIFO income was $9.0 million compared to LIFO income of $5.0 million in the first six months of 2023.
Previous wording
Gross profit decreased in the three-month period ended March 31, 2024 compared to the year ago period as average selling price decreased faster than the decrease in the average cost of materials sold resulting in a decrease in gross margin. Gross profit decreased in the three-month period ended March 31, 2024 compared to the year ago period primarily due to the impact of lower metals commodity prices which reduced average selling prices and to lower tons shipped as economic conditions in metal markets slowed.
Current wording
Gross profit decreased in the three-month and six-month periods ended June 30, 2024 compared to the year ago period as average selling price decreased faster than the decrease in the average cost of materials sold, resulting in a decrease in gross margin. The decrease in averaged selling prices reflected the impact of lower metals commodity prices in the first six months of 2024.
Previous wording
higher reorganization costs of $18.2 million in the first quarter of 2024 primarily due to start up costs associated with our new state of the art University Park location as well as system conversion activity;
Current wording
higher reorganization costs of $6.1 million in the second quarter of 2024 and $24.3 million in the first six months of 2024 primarily due to start up costs associated with our new state of the art University Park location as well as system conversion activity;
Previous wording
partially offset by lower incentive compensation expense of $2.5 million;
Current wording
lower incentive compensation expense of $3.7 million in the second quarter of 2024 and $6.2 million in the first six months of 2024;
Previous wording
lower operating expenses of $0.9 million in the first quarter of 2024.
Current wording
lower operating expenses of $3.5 million in the second quarter of 2024 and $4.1 million in the first six months of 2024; and
Previous wording
Our operating profit decreased in the three-month period ended March 31, 2024 compared to the three-month period ended March 31, 2023, primarily due to the decrease in average selling prices and gross profit discussed above.
Current wording
Our operating profit decreased in the three-month and six month periods ended June 30, 2024 compared to the three-month and six-month periods ended June 30, 2023, primarily due to the decrease in average selling prices and gross profit discussed above.
Previous wording
Interest and other expense on debt increased in the three-month period ended March 31, 2024 compared to the year ago period primarily due to a higher level of borrowings outstanding under our $1.3 billion revolving credit facility (“the Ryerson Credit Facility”) and higher interest rates on the Ryerson Credit Facility borrowings in the first three months of 2024.
Current wording
Interest and other expense on debt increased in the three-month and six-month period ended June 30, 2024 compared to the year ago period primarily due to a higher level of borrowings outstanding under our $1.3 billion revolving credit facility (“the Ryerson Credit Facility”) and higher interest rates on the Ryerson Credit Facility borrowings in the first six months of 2024.
Previous wording
The other expense in the first quarter of 2024 includes a $2.2 million settlement loss resulting from the termination of the Ryerson Canada Bargaining Unit Pension Plan. Partially offsetting the $2.2 million settlement charge was a $0.5 million settlement gain and a $0.3 million curtailment gain related to lump-sum buyouts and a reduction in future years of service for certain Central Steel & Wire ("CSW") pension and other post-employment benefit plans resulting from workforce reductions at CSW related to the move of the CSW headquarters and main operations moving to a new facility in University Park, IL. Other income and (expense), net in the first quarter of 2024 also includes foreign currency translation gains of $1.2 million.
Current wording
The other expense in the first six months of 2024 includes a $2.2 million settlement loss resulting from the termination of the Ryerson Canada Bargaining Unit Pension Plan. Partially offsetting the $2.2 million settlement loss was a $1.1 million settlement gain and a $0.3 million curtailment gain related to lump-sum buyouts and a reduction in future years of service for the Central Steel & Wire ("CSW") pension and other post-employment benefit plans resulting from workforce reductions at CSW related to the move of the CSW headquarters and main operations to a new facility in University Park, IL. Other income and (expense), net in the first six months of 2024 also includes foreign currency translation gains of $1.6 million. Other income and (expense), net in the first six months of 2023 is primarily related to foreign currency translation losses.
Previous wording
Provision for income taxes. Our effective income tax rate was 22.1% in the first quarter of 2024 compared to 23.8% in the first quarter of 2023. The differences between our effective income tax rates and the U.S. federal statutory rate of 21.0% were mainly due to state and foreign income taxes partially offset by the effects of certain discrete items recorded during the periods.
Current wording
Provision for income taxes. Our effective income tax rate was 22.6% in the second quarter of 2024 and 23.7% in the first six months of 2024 compared to 24.4% in the second quarter of 2023 and 24.0% in the first six months of 2023. The differences between our effective income tax rates and the U.S. federal statutory rate of 21.0% were mainly due to state and foreign income taxes partially offset by the effects of certain discrete items recorded during the periods.
Previous wording
Earnings (loss) per share. Basic loss per share was $0.22 in the first quarter of 2024 compared to basic income per share of $1.30 in the first quarter of 2023. Diluted loss per share was $0.22 in the first quarter of 2024 compared to diluted income per share of $1.27 in the first quarter of 2023. The changes in earnings per share are due to the results of operations discussed above.
Current wording
Earnings (loss) per share. Basic income per share was $0.29 in the second quarter of 2024 and $0.07 in the first six months of 2024 compared to basic earnings per share of $1.07 in the second quarter of 2023 and $2.38 in the first six months of 2023. Diluted income per share was $0.29 in the second quarter of 2024 and $0.07 in the first six months of 2024 compared to diluted earnings per share of $1.06 in the second quarter of 2023 and $2.33 in the first six months of 2023. The changes in earnings per share are due to the results of operations discussed above as well as having fewer shares outstanding in the second quarter of 2024 and the first six months of 2024 after the repurchase of 1,068,566 shares of common stock since July 1, 2023.
Previous wording
We had cash and cash equivalents of $41.9 million at March 31, 2024, compared to $54.3 million at December 31, 2023. Our total debt outstanding at March 31, 2024 increased to $497.3 million compared to $436.5 million at December 31, 2023. We had a debt-to-capitalization ratio of 36% and 32% at March 31, 2024 and December 31, 2023, respectively. We had total liquidity (defined as cash and cash equivalents and availability under the Ryerson Credit Facility and foreign debt facilities) of $684 million at March 31, 2024 versus $656 million at December 31, 2023. Our net debt (defined as total debt less cash and cash equivalents) was $455 million and $382 million at March 31, 2024 and December 31, 2023, respectively. Total liquidity and net debt are not U.S. generally accepted accounting principles (“GAAP”) financial measures. We believe that total liquidity provides additional information for measuring our ability to fund our operations. Total liquidity does not represent, and should not be used as a substitute for, net income or cash flows from operations as determined in accordance with GAAP and total liquidity is not necessarily an indication of whether cash flow will be sufficient to fund our cash requirements. We believe that net debt provides a clearer perspective of the Company’s overall debt profile. Net debt should not be used as a substitute for total debt outstanding as determined in accordance with GAAP.
Current wording
We had cash and cash equivalents of $28.0 million at June 30, 2024, compared to $54.3 million at December 31, 2023. Our total debt outstanding at June 30, 2024 increased to $525.4 million compared to $436.5 million at December 31, 2023. We had a debt-to-capitalization ratio of 37% and 32% at June 30, 2024 and December 31, 2023, respectively. We had total liquidity (defined as cash and cash equivalents and availability under the Ryerson Credit Facility and foreign debt facilities) of $585 million at June 30, 2024 versus $656 million at December 31, 2023. Our net debt (defined as total debt less cash and cash equivalents) was $497 million and $382 million at June 30, 2024 and December 31, 2023, respectively. Total liquidity and net debt are not U.S. generally accepted accounting principles (“GAAP”) financial measures. We believe that total liquidity provides additional information for measuring our ability to fund our operations. Total liquidity does not represent, and should not be used as a substitute for, net income or cash flows from operations as determined in accordance with GAAP and total liquidity is not necessarily an indication of whether cash flow will be sufficient to fund our cash requirements. We believe that net debt provides a clearer perspective of the Company’s overall debt profile. Net debt should not be used as a substitute for total debt outstanding as determined in accordance with GAAP.
Previous wording
Of the total cash and cash equivalents, as of March 31, 2024, $12.5 million was held in subsidiaries outside the U.S. which is deemed to be permanently reinvested. Ryerson does not currently foresee a need to repatriate earnings from its non-U.S. subsidiaries. Although Ryerson has historically satisfied needs for more capital in the U.S. through debt or equity issuances, Ryerson could elect to repatriate earnings held in foreign jurisdictions, which could result in higher effective tax rates. We have not recorded a deferred tax liability for the effect of a possible repatriation of these earnings as management intends to permanently reinvest these earnings outside of the U.S. Specific plans for reinvestment include funding for future international acquisitions and funding of existing international operations.
Current wording
Of the total cash and cash equivalents as of June 30, 2024, $7.6 million was held in subsidiaries outside the U.S. which is deemed to be permanently reinvested. Ryerson does not currently foresee a need to repatriate earnings from its non-U.S. subsidiaries. Although Ryerson has historically satisfied needs for more capital in the U.S. through debt or equity issuances, Ryerson could elect to repatriate earnings held in foreign jurisdictions, which could result in higher effective tax rates. We have not recorded a deferred tax liability for the effect of a possible repatriation of these earnings as management intends to permanently reinvest these earnings outside of the U.S. Specific plans for reinvestment include funding for future international acquisitions and funding of existing international operations.
Previous wording
Operating activities. Working capital fluctuates throughout the year based on business needs. Working capital needs tend to be counter-cyclical, meaning that in periods of expansion the Company will use cash to fund working capital requirements, but in periods of contraction the Company will generate cash from reduced working capital requirements. In the first three months of 2024, working capital requirements increased due to an increase in accounts receivable from higher sales levels compared to the fourth quarter of 2023. Inventory levels also increased in the first quarter of 2024 as inventory was purchased to meet higher sales levels. Material purchases were higher at the end of the first quarter of 2024 compared to the end of the fourth quarter of 2023 resulting in an increase in accounts payable in the first quarter of 2024. In the first three months of 2023, working capital requirements decreased as the
Current wording
Operating activities. Working capital fluctuates throughout the year based on business needs. Working capital needs tend to be counter-cyclical, meaning that in periods of expansion the Company will use cash to fund working capital requirements, but in periods of contraction the Company will generate cash from reduced working capital requirements. In the first six months of 2024, working capital requirements increased due to an increase in accounts receivable from higher sales levels compared to the fourth quarter of 2023. Partially offsetting the increase in accounts receivable was a decrease in inventory, as market prices for metals decreased in the first six months of 2024, which also decreased accounts payable balances. In the first six months of 2023, working capital requirements decreased as inventory costs declined as market prices for metals decreased in the first six months of 2023. Revenue increased in the second quarter of 2023 compared to the fourth quarter of 2022 causing an increase in accounts receivable while material purchases were higher at the end of the second quarter of 2023 compared to the end of the fourth quarter of 2022 resulting in an increase in accounts payable.
Previous wording
Investing activities. The Company's main investing activities are capital expenditures, acquisitions, and proceeds from the sale of property, plant, and equipment. Capital expenditures have decreased year-over-year to $21.8 million for the first three months of 2024 compared to $27.8 million in the first three months of 2023 as the Company is nearing completion of its investment in a new facility in University Park, Illinois, a project which began in 2022. The Company paid $38.5 million in the first three months of 2023 to acquire BLP Holdings, LLC. The Company sold property, plant, and equipment generating cash proceeds of $1.4 million in the first three months of 2024.
Current wording
Investing activities. The Company's main investing activities are capital expenditures and acquisitions. Capital expenditures have decreased year-over-year to $44.5 million for the first six months of 2024 compared to $74.1 million in the first six months of 2023 as the Company is nearing completion of its investment in a new facility in University Park, Illinois, a project which began in 2022. In the first six months of 2023, the Company paid $39.9 million to acquire BLP Holdings, LLC and $9.7 million to purchase certain assets from ExOne Operating, LLC. See Note 6: Acquisitions within Part I, Item I of this report, for further discussion of the 2023 acquisitions.
Previous wording
Financing activities. The Company's main source of liquidity to fund working capital requirements is borrowings on the Ryerson Credit Facility. In the first three months of 2024, we increased credit facility borrowings to fund our increase in working capital. In the first three months of 2023, we increased credit facility borrowings to fund the acquisition of BLP Holdings, LLC. Book overdrafts fluctuate based on the timing of payments. Cash dividends paid in the first three months of 2024 were $6.4 million compared to $6.0 million paid to shareholders in the first three months of 2023. We repurchased $1.0 million of common stock during the first three months of 2024 compared to $53.2 million of common stock repurchased in the first three months of 2023. In the first three months of 2024, the Company paid $1.9 million in holdback payments for the 2022 acquisition of Howard Precision Metals, Inc.
Current wording
Financing activities. The Company's main source of liquidity to fund working capital requirements is borrowings on the Ryerson Credit Facility. In the first six months of 2024, we increased credit facility borrowings to fund our increase in working capital requirements and capital expenditures. In the first six months of 2023, we increased credit facility borrowings to fund the acquisition of BLP Holdings, LLC and the asset purchase from ExOne Operating, LLC. Book overdrafts fluctuate based on the timing of payments. Cash dividends paid in the first six months of 2024 were $12.8 million compared to $12.2 million paid to shareholders in the first six months of 2023. We repurchased $15.0 million of common stock during the first six months of 2024 compared to $103.6 million of common stock repurchased in the first six months of 2023. In the first six months of 2024, the Company paid $1.9 million and $3.4 million in holdback payments for the 2022 acquisitions of Howard Precision Metals, Inc. and Excelsior, Inc., respectively.
Previous wording
Off-Balance Sheet Arrangements. In the normal course of business with customers, vendors, and others, we have entered into off-balance sheet arrangements, such as letters of credit, which totaled $9 million as of March 31, 2024. We do not have any other material off-balance sheet financing arrangements. Our off-balance sheet arrangements are not likely to have a material effect on our current or future financial condition, results of operations, liquidity, or capital resources.
Current wording
Off-Balance Sheet Arrangements. In the normal course of business with customers, vendors, and others, we have entered into off-balance sheet arrangements, such as letters of credit and surety bonds which totaled $3 million and $12 million, respectively as of June 30, 2024. We do not have any other material off-balance sheet financing arrangements. Our off-balance sheet arrangements are not likely to have a material effect on our current or future financial condition, results of operations, liquidity, or capital resources.
Previous wording
Total debt in the Condensed Consolidated Balance Sheet increased to $497.3 million at March 31, 2024 from $436.5 million at December 31, 2023, mainly due to cash utilized in operating activities in the first three months of 2024 related to higher working capital.
Current wording
Total debt in the Condensed Consolidated Balance Sheet increased to $525.4 million at June 30, 2024 from $436.5 million at December 31, 2023, mainly due to cash utilized in operating activities in the first six months of 2024 related to higher working capital as well as cash utilized in investing activities related to capital expenditures.
Previous wording
Total debt outstanding as of March 31, 2024 consisted of the following amounts: $498.0 million of borrowings under the Ryerson Credit Facility, $1.9 million of foreign debt, and $1.8 million of other debt, less $4.4 million of unamortized debt issuance costs. For further information, see Note 7: Long Term Debt in Part I, Item I - Notes to Condensed Consolidated Financial Statements.
Current wording
Total debt outstanding as of June 30, 2024 consisted of the following amounts: $528.0 million of borrowings under the Ryerson Credit Facility, $1.4 million of foreign debt, less $4.0 million of unamortized debt issuance costs. For further information, see Note 7: Long Term Debt in Part I, Item I - Notes to Condensed Consolidated Financial Statements.
Previous wording
At December 31, 2023, pension liabilities exceeded plan assets by $63.9 million. Through the three months ended March 31, 2024, we have made $0.3 million in pension contributions and we anticipate an additional minimum required pension contribution of approximately $10.8 million in the remaining nine months of 2024 under the Employee Retirement Income Security Act of 1974 (“ERISA”) and Pension Protection Act in the U.S. and Ontario Pension Benefits Act in Canada. Future contribution requirements depend on the investment returns on plan assets, the impact of discount rates on pension liabilities, and changes in regulatory requirements. We are unable to determine the amount or timing of any such contributions required by ERISA or whether any such contributions would have a material adverse effect on our financial position or cash flows.
Current wording
At December 31, 2023, pension liabilities exceeded plan assets by $63.9 million. Through the six months ended June 30, 2024, we have made $3.1 million in pension contributions and we anticipate an additional minimum required pension contribution of approximately $8.0 million in the remaining six months of 2024 under the Employee Retirement Income Security Act of 1974 (“ERISA”) and Pension Protection Act in the U.S. and Ontario Pension Benefits Act in Canada. Future contribution requirements depend on the investment returns on plan assets, the impact of discount rates on pension liabilities, and changes in regulatory requirements. We are unable to determine the amount or timing of any such contributions required by ERISA or whether any such contributions would have a material adverse effect on our financial position or cash flows.
Previous wording
Due to the closure of CSW's headquarters in Chicago, IL and move to University Park, IL, a significant reduction in the service years of employees occurred between the fourth quarter of 2023 and first quarter of 2024, triggering curtailment accounting. The CSW Pension and Postretirement Benefits plans were remeasured as of February 29, 2024, resulting in a curtailment gain. As the curtailment was a net gain, the gain is required to be reflected in the periods in which the terminations occur, resulting in a curtailment gain of $0.3 million recognized in the first quarter of 2024 and $0.5 million recognized in the fourth quarter of 2023 for those terminations occurring during the respective periods. Additionally, the CSW Pension Plan is expecting lump sum payments for 2024 to be in excess of service cost and interest cost and therefore, a settlement gain of $0.5 million was recorded in the first quarter of 2024. The discount rate for measuring obligations of the CSW pension plan increased from 5.24% at December 31, 2023 to 5.57% as of February 29, 2024. The expected long-term rate of return on pension assets has remained unchanged from December 31, 2023 at 3.85%.
Current wording
Due to the closure of the CSW headquarters in Chicago, IL and move to University Park, IL, a significant reduction in the service years of employees occurred between the fourth quarter of 2023 and first quarter of 2024, triggering curtailment accounting. The CSW Pension and Postretirement Benefits plans were remeasured as of February 29, 2024, resulting in a curtailment gain. As the curtailment was a net gain, the gain is required to be reflected in the periods in which the terminations occur, resulting in a curtailment gain of $0.3 million recognized in the first quarter of 2024 and $0.5 million recognized in the fourth quarter of 2023 for those terminations occurring during the respective periods. Additionally, the CSW Pension Plan is expecting lump sum payments for 2024 to be in excess of service cost and interest cost and therefore, a settlement gain of $1.1 million was recorded in the first six months of 2024. The discount rate for measuring obligations of the CSW pension plan increased from 5.24% at December 31, 2023 to 5.57% as of February 29, 2024. The expected long-term rate of return on pension assets has remained unchanged from December 31, 2023 at 3.85%.
Previous wording
In the first quarter of 2024, the Ryerson Canada Bargaining Unit Pension Plan made $1.2 million of lump sum payments to plan participants and purchased $5.0 million of annuities on behalf of plan participants. The lump sum payments and annuity purchases consisted of all of the existing liabilities of the Ryerson Canada Bargaining Unit Pension Plan, resulting in the termination of the plan. The Ryerson Canada Bargaining Unit Pension Plan was fully funded as of the termination date, and as such, all lump sum payments and annuity purchases were funded with pension plan assets. As a result, the Company recorded a $2.2 million settlement loss in the February of 2024.
Current wording
In the first quarter of 2024, the Ryerson Canada Bargaining Unit Pension Plan made $1.2 million of lump sum payments to plan participants and purchased $5.0 million of annuities on behalf of plan participants. The lump sum payments and annuity purchases consisted of all of the existing liabilities of the Ryerson Canada Bargaining Unit Pension Plan, resulting in the termination of the plan. The Ryerson Canada Bargaining Unit Pension Plan was fully funded as of the termination date, and as such, all lump sum payments and annuity purchases were funded with pension plan assets. As a result, the Company recorded a $2.2 million settlement loss in February of 2024.
Previous wording
The net settlement loss and the curtailment gain were recorded within Other income and (expense), net in the Condensed Consolidated Statement of Comprehensive Income as of March 31,2024.
Current wording
The net settlement loss and the curtailment gain were recorded within Other income and (expense), net in the Condensed Consolidated Statement of Comprehensive Income as of June 30, 2024.
Previous wording
The Company expects to make approximately $502 million in principal payments to satisfy its debt obligations, consisting of $2 million of foreign debt and $2 million of other debt coming due within a year, and $498 million for the Ryerson Credit Facility coming due in 2027. Please refer to Part I, Item I - Notes to the Condensed Consolidated Financial Statements, Note 7: Long-term Debt for further information.
Current wording
The Company expects to make approximately $529 million in principal payments to satisfy its debt obligations, consisting of $1 million of foreign debt coming due within a year, and $528 million for the Ryerson Credit Facility coming due in 2027. Please refer to Part I, Item I - Notes to the Condensed Consolidated Financial Statements, Note 7: Long-term Debt for further information.
Previous wording
The Company expects to pay approximately $33 million of interest on the Ryerson Credit Facility, foreign debt, and other debt over the next 12 months and $74 million thereafter. Interest payments related to the variable rate debt were estimated using the weighted average interest rate for the respective debt instrument.
Current wording
The Company expects to pay approximately $35 million of interest on the Ryerson Credit Facility and foreign debt over the next 12 months and $70 million thereafter. Interest payments related to the variable rate debt were estimated using the weighted average interest rate for the respective debt instrument.
Previous wording
The Company leases various assets including real estate, trucks, trailers, mobile equipment, processing equipment, and IT equipment. We have noncancelable operating leases expiring at various times through 2043, and finance leases expiring at various times through 2030. The total amount of future lease payments is estimated to be $488 million, with $48 million over the next 12 months. We did not have material leases signed but not yet commenced as of March 31, 2024.
Current wording
The Company leases various assets including real estate, trucks, trailers, mobile equipment, processing equipment, and IT equipment. We have noncancelable operating leases expiring at various times through 2043 and finance leases expiring at various times through 2030. The total amount of future lease payments is estimated to be $486 million, with $47 million due over the next 12 months. We did not have material leases signed but not yet commenced as of June 30, 2024.
Previous wording
Purchase obligations with suppliers are entered into when we receive firm sales commitments with certain of our customers. As of March 31, 2024, we had outstanding purchase obligations of approximately $26 million expiring within a year.
Current wording
Purchase obligations with suppliers are entered into when we receive firm sales commitments with certain of our customers. As of June 30, 2024, we had outstanding purchase obligations of approximately $32 million expiring within a year.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Key steel industry economic indicators continued to report a contraction in industrial activity for most of the first quarter of 2024, with the first indication of a reversal or growth in March. This is evidenced by the Institute for Supply Management’s
Previous report — wording carried elsewhere
Company reduced inventory levels in the first quarter of 2023 to more closely align with our long-term days of supply target of 70 to 75 days. Revenue increased in the first quarter of 2023 compared to the fourth quarter of 2022 causing an increase in accounts receivable while material purchases were higher at the end of the first quarter of 2023 resulting in an increase in accounts payable.