Ryerson(US:RYI)2023-02-22 21:18Operations and Facilities - The company operates approximately 96 facilities in North America and four in China, serving around 40,000 customers across various manufacturing end-markets[14]. - The company maintains a decentralized operating structure, enabling efficient delivery systems and just-in-time delivery capabilities[42]. - The company operates a private trucking fleet for deliveries, which may face increased costs due to future regulations[67]. Acquisitions and Growth Strategy - In 2022, the company completed significant acquisitions, including Excelsior, Inc. and Howard Precision Metals, enhancing its processing capabilities and product offerings[17]. - The company’s growth strategy includes both organic growth and strategic acquisitions to enhance service, product, and geographic diversification[15]. - The company has invested in expanding existing facilities and adding processing equipment to support organic growth[50]. Financial Performance and Capital Expenditures - The company reported capital expenditures of $274.6 million over the five-year period ending December 31, 2022, focusing on increasing value-added processing capabilities[38]. - The company anticipates capital expenditures of up to approximately $95 million for 2023, focusing on strategic initiatives and IT infrastructure investment[50]. - In 2022, net capital change amounted to an increase of $134.6 million, with additions of $105.1 million and retirements of $8.3 million[51]. Customer Base and Sales - The customer base consists of approximately 40,000 across various industries, with no single customer accounting for more than 6% of sales, and the top 10 customers representing about 16% of total sales[41]. - International sales accounted for 8.8% of consolidated net sales in 2022, totaling $558.6 million[44]. - Sales in tonnage traditionally peak in the first two quarters of the year, with lower sales in July, November, and December due to seasonal slowdowns[45]. Product and Service Offerings - Approximately 80% of the products sold by the company are processed to meet specific customer requirements, indicating a strong emphasis on value-added services[14]. - The company has a broad product mix, carrying nearly 75,000 products in various metals, which allows it to serve a diverse customer base and fulfill over 1,000,000 orders annually[29]. Supplier Relationships - The company maintains strong relationships with suppliers, often being one of the largest customers, which helps secure favorable pricing and service[31]. - Approximately 78% of purchase dollars in 2022 were accounted for by the top 25 suppliers, ensuring material requirements are met through a diverse supplier base[47]. Cost Management and Expenses - The company’s warehousing, selling, general, and administrative expenses increased by $24.0 million in 2022 compared to 2021, but decreased as a percentage of sales by 90 basis points, demonstrating effective cost management[28]. Market Trends and Challenges - The Institute for Supply Management's PMI indicated a slowdown in manufacturing activity, with a reading of 47.4% in January 2023, suggesting potential challenges ahead for the industry[33]. - The company is focused on expanding its presence in growing markets, including electric vehicles and renewable energy, to capitalize on emerging opportunities[25]. Environmental, Health, and Safety - The company has implemented safeguards to mitigate environmental, health, and safety risks, although future regulations may impose additional costs[53]. - In 2022, Ryerson's OSHA recordable injuries per 200,000 labor hours were 3.03, better than the industry average reported by the Bureau of Labor Statistics[76]. - Ryerson's commitment to a zero-injury workplace is driven by its Environmental, Health, and Safety policy[76]. Employee Engagement and Benefits - The company offers competitive compensation and expanded benefits, including a newly implemented parental leave policy[73]. - Ryerson's DEI Council focuses on employee engagement and community outreach to foster an inclusive environment[74]. Financial Instruments and Risks - The carrying value of Ryerson's long-term debt was $367.0 million as of December 31, 2022, approximating its fair value due to the short-term nature of the borrowings[280]. - A hypothetical 1% increase in interest rates on variable debt would have increased interest expense for the twelve months of 2022 by approximately $4.3 million[283]. - Ryerson had foreign currency contracts with a U.S. dollar notional amount of $2.3 million outstanding at December 31, 2022, with a value of zero[284]. - As of December 31, 2022, Ryerson had 40,036 tons of hot roll coil swap contracts with a net asset value of $1.1 million[288]. - The company recognized a loss of $5.3 million associated with its commodity derivatives for the twelve months ended December 31, 2022[288]. - A hypothetical strengthening or weakening of 10% in commodity prices would increase or decrease the fair value of the commodity derivative contracts by $2.4 million[289].