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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with the audited Consolidated Financial Statements of Ryerson Holding Corporation and Subsidiaries and the Notes thereto in Item 8. “Financial Statements and Supplementary Data.” This discussion contains forward-looking statements that involve risks and uncertainties. See the section entitled “Special Note Regarding Forward-Looking Statements.” Our actual results and the timing of selected events could differ materially from those discussed in these forward-looking statements as a result of certain factors, including those discussed in Item 1A. “Risk Factors” and elsewhere in this Form 10-K.

This section of this Form 10-K generally discusses 2022 and 2021 items and year-over-year comparisons between 2022 and 2021. Discussions of 2021 items and year-over-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Overview

Business

Ryerson Holding Corporation (“Ryerson Holding”), a Delaware corporation, is the parent company of Joseph T. Ryerson & Son, Inc. (“JT Ryerson”), a Delaware corporation. Affiliates of Platinum Equity, LLC (“Platinum”) own approximately 15,924,478 shares of our common stock, which is approximately 43% of our issued and outstanding common stock.

We are a leading value-added processor and distributor of industrial metals with operations in the United States ("U.S") through JT Ryerson and other U.S. subsidiaries, in Canada through our indirect wholly-owned subsidiary Ryerson Canada, Inc., a Canadian corporation (“Ryerson Canada”), and in Mexico through our indirect wholly-owned subsidiary Ryerson Metals de Mexico, S. de R.L. de C.V., a Mexican corporation (“Ryerson Mexico”). In addition to our North American operations, we conduct metal processing and distribution operations in China through an indirect wholly-owned subsidiary, Ryerson China Limited, a Chinese limited liability company (“Ryerson China”). Unless the context indicates otherwise, Ryerson Holding, JT Ryerson, Ryerson Canada, Ryerson Mexico, and Ryerson China together with their subsidiaries, are collectively referred to herein as “Ryerson,” “we,” “us,” “our,” or the “Company.”

Industry and Operating Trends

We are a metals service center providing value-added processing and distribution of industrial metals with operations in the U.S., Canada, Mexico, and China. We purchase large quantities of metal products from primary producers and sell these materials in smaller quantities to a wide variety of metals-consuming industries. We carry a full line of nearly 75,000 products in stainless steel, aluminum, carbon steel, and alloy steels and a limited line of nickel and red metals in various shapes and forms. In addition to our metals products, we offer numerous value-added processing and fabrication services, and nearly 80% of the metals products we sell are processed by us by bending, beveling, blanking, blasting, burning, cutting-to-length, drilling, embossing, flattening, forming, grinding, laser cutting, machining, notching, painting, perforating, polishing, punching, rolling, sawing, scribing, shearing, slitting, stamping, tapping, threading, welding, or other techniques to process materials to a specified thickness, length, width, shape, and surface quality pursuant to specific customer orders.

Similar to other metals service centers, we maintain substantial inventories of metals to accommodate the short lead times and just-in-time delivery requirements of our customers. Accordingly, we purchase metals to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon customer forecasts, historic buying practices, supply agreements with customers, mill lead times, and market conditions. Our commitments to purchase metals are generally at prevailing market prices in effect at the time we place our orders. At the request of our customers, we have entered into swaps in order to mitigate our customers’ risk of volatility in the price of metals and we have entered into metals hedges to mitigate our own risk of volatility in the price of metals. We have no long-term, fixed-price metals purchase contracts. When metals prices decline, customer demands for lower prices and our competitors’ responses to those demands could result in lower sale prices and, consequently, lower gross profits and earnings as we sell existing metals inventory. When metals prices increase, competitive conditions will influence how much of the price increase we may pass on to our customers.

The metals service center industry is cyclical and volatile in both demand and pricing, and difficult to predict. In 2022, Ryerson experienced higher average selling prices of 15.1% and lower shipments of 3.2%, as global demand outpaced supply availability in the first half of 2022. This dynamic reversed in the second half of 2022 due to higher inflation and high interest rates putting downward pressure on economic conditions. Changes in average selling prices are primarily driven by commodity metals prices, which impact Ryerson’s selling prices over the subsequent three to six-month period.

Throughout 2022, indicators in the key steel industry end markets reported slowing growth. This is evidenced by the Institute for Supply Management’s Purchasing Managers’ Index (“PMI”), which reported decreasing activity during the year with readings declining despite still holding above 50%, indicating decelerating expansion in factory activity. This trend continued to a reading below 50% in November and December of 2022, indicating contraction in factory activity. Similarly, U.S. Industrial Production, which reports year-over-year industrial sector business output, reported slowing growth in output for most of the year.

According to the Metal Service Center Institute, North American service center volumes decreased by 2.3% in 2022 compared to 2021. On a North American basis, Ryerson's North American volumes declined 1.9% over the same period, outpacing the industry. While most sectors experienced declines in volumes, Ryerson experienced demand growth in commercial ground transportation, oil & gas, HVAC, and construction equipment on a year-over-year basis.

2022 Performance Highlights

These key metrics illustrate Ryerson’s financial performance for the full year 2022 compared to 2021:

11% increase 50bps increase $97M increase

Diluted EPS Adjusted Diluted EPS Cash from Operating Activities

A reconciliation of diluted EPS to adjusted diluted EPS is provided below.

Domestic steel demand started strong in the first half of 2022 driven by macroeconomic factors such as the Russia/Ukraine war which caused a surge in demand due to concerns about resource scarcity, but inflation and rising interest rates in the second half of the year dampened demand. Compared to 2021, average selling prices increased by 15.1% and tons shipped decreased by 3.2%, resulting in a year-over-year revenue increase of 11.4%. Gross margin expanded by 50 bps from 2021 as rapidly increasing market prices, and therefore selling prices, outpaced inventory costs. Warehousing, delivery, selling, general, and administrative expenses for 2022 increased by $24.0 million compared to 2021 driven by increased selling, general, and administrative costs, primarily due to increased delivery costs and expenses from acquired businesses. However, expenses as a percentage of sales decreased from 12.5% to 11.6% as the Company was able to mitigate inflationary pressures and achieve expense leverage. As a result of the Company’s exceptional performance, evidenced by record revenue, average selling prices, and gross profit,we generated record net income attributable to Ryerson Holding Corporation of $391.0 million, or $10.21 per diluted share, in 2022. This compares to net income attributable to Ryerson Holding Corporation of $294.3 million, or earnings of $7.56 per diluted share, for 2021.

To provide greater insight into the Company’s 2022 operating trends apart from the year’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 earnings per share determined in accordance with GAAP. Illustrated in the below table, the 2022 net income attributable to Ryerson Holding Corporation of $391.0 million includes $21.3 million of expenses related to the redemption of $300.0 million of the 8.50% senior secured notes due 2028 (the “2028 Notes”), a $3.8 million gain on the sale of assets, and a $0.6 million bargain purchase gain related to the acquisition of Ford Tool Steels, Inc. After adjusting for these non-core business transactions and the related provision for income taxes, the adjusted net income attributable to Ryerson Holding Corporation for 2022 is $403.6 million, an increase of $113.6 million compared to the prior year’s adjusted net income attributable to Ryerson Holding Corporation of $290.0 million which included adjustments for a $109.6 million gain related to the sale-leaseback transactions completed during 2021, $98.3 million of nonrecurring pension settlement expenses driven by a partial annuitization of our pension liabilities, $5.5 million of expenses related to the redemption of $100.0 million of the 2028 Notes, and related income taxes.

(Dollars and shares in millions, except per share data) 2022 2021

Net income attributable to Ryerson Holding Corporation $ 391.0 $ 294.3

Gain on bargain purchase (0.6 ) —

Gain on sale of assets (3.8 ) (109.6 )

Loss on retirement of debt 21.3 5.5

Pension settlement charge — 98.3

Provision (benefit) for income taxes (4.3 ) 1.5

Adjusted net income attributable to Ryerson Holding Corporation $ 403.6 $ 290.0

Diluted earnings per share $ 10.21 $ 7.56

Adjusted diluted earnings per share $ 10.54 $ 7.46

Shares outstanding - diluted 38.3 38.9

Ryerson generated cash from operating activities of $501.2 million in 2022, an increase compared to $35.0 million generated in 2021 driven by net income from operations.

Ryerson’s 2022 Strategy Achievements

Ryerson’s market strategy focuses on providing excellent customer experiences consistently with speed at scale. Our culture is based on our trademarked “say yes, figure it out” mantra as we strive to grow volume and sustainably expand margins by increasing our fabrication business and improving our speed through our use of both tools and analytics.

Ryerson’s financial strategy includes a focus on generating cash from operating activities and continuously improving a “through the cycle” operating model in order to maintain a strong balance sheet, re-invest in the growth of the business, and generate returns to shareholders. In 2022, the Company achieved major milestones in its financial strategy. During the year, Ryerson successfully eliminated its high yield debt through redemption of all the outstanding principal of the 2028 Notes, creating annual interest savings of approximately $25.5 million. As a result of strong operating cash flow, total debt decreased from $639 million as of December 31, 2021 to $367 million as of December 31, 2022 and net debt (defined as total debt less cash and cash equivalents) decreased from $588 million to $328 million. Net debt is not a GAAP financial measure. We believe that net debt provides a clearer perspective of the Company’s overall debt situation. Net debt should not be used as a substitute for total debt outstanding as determined in accordance with GAAP. A reconciliation of debt to net debt is provided with the “Liquidity and Capital Resources” discussion below

In addition, Ryerson amended and upsized its revolving credit facility to $1.3 billion from $1.0 billion on improved pricing terms while extending the maturity to June 2027, allowing for balance sheet flexibility on improved availability of liquidity to match business needs.

Throughout the year, Ryerson’s Board of Directors increased the quarterly cash dividend consecutively across all four quarters. During this period, the Company also completed its $50 million share repurchase authorization fourteen months ahead of schedule, including repurchasing 1.6 million shares from its largest shareholder, Platinum Equity, which increased the free float of shares to 57% of shares outstanding, up from 46%. In August, the Board also approved a new share repurchase program authorizing the Company to purchase up to an aggregate of $75 million of common stock over the following two years, expiring in August 2024. These accomplishments, along with the retirement of high yield debt represent the transformation of Ryerson’s capital structure and reflect the Company’s commitment of delivering value to shareholders and underscore its confidence in its transformed balance sheet and improved operating model while also providing the ability to purchase shares below intrinsic value. Further underscoring this commitment and confidence, Ryerson’s Board of Directors approved a one-cent increase to the dividend to $0.17 per share of common stock in February of 2023. In 2022, the Company repurchased approximately 1.7 million shares, resulting in a return to shareholders of approximately $50.0 million. Combined with distributed dividend payments, Ryerson returned approximately $70 million to shareholders in 2022.

In recognition of the Company’s substantially reduced debt, Ryerson received credit upgrades from two of its covering agencies in 2022 and received a credit rating upgrade from the third in February of 2023. Moody’s upgraded Ryerson’s corporate rating to Ba3 from B1, Standard & Poor’s (“S&P”) upgraded it to BB- from B+, and Fitch issued an upgrade to BB from BB-. The following table summarizes the Company’s ratings by agency as of February 22, 2023.

Agency Corporate Revolving Credit Facility Outlook

Moody's Ba3 Ba3 Stable

S&P BB- N/A Stable

Fitch BB BBB- Stable

During the year, the Company invested in optimizing its service center network through organic growth investments as well as strategic acquisitions. In August, construction completed on a new 214,000 square foot service center facility in Centralia, Washington, which will serve the Pacific Northwest market and feature advanced processing capabilities for sheet, plate, and long products. In June, Ryerson broke ground on a new 900,000 square foot service center facility for its wholly-owned subsidiary, Central Steel & Wire Company, located in University Park, IL, which will feature expanded bar and tube processing capabilities and is expected to be operational by the middle of 2023.

In addition, Ryerson augmented its service center network through the acquisition of four companies, Apogee Steel Fabrication Incorporated, Ford Tool Steels, Inc., Howard Precision Metals, Inc., and Excelsior, Inc. These additions bring advanced value-added processing capabilities, enhance supply chain networks and service points, and broaden Ryerson’s transactional customer portfolio and exposure to secular end markets including electric vehicles and renewable energy.

In December, Ryerson published its inaugural Environmental, Social, and Governance ("ESG") report, which describes the Company’s ESG governance and commitment to making meaningful progress in five key focus areas: diversity, equity and inclusion, energy and emissions, talent and future workforce, circular economy, and data security. Additionally, the report highlights Ryerson’s scope 1 and 2 emissions, relative emissions comparisons to metals and distribution peers, commitment to employee safety and continued outperformance of industry average OSHA rates, as well as initiatives by the Company’s talent management office to develop its workforce.

Industry Developments

After the Russian forces invaded Ukraine on February 24, 2022, the Biden administration issued executive orders prohibiting the importation of goods from covered regions related to Ukraine and Russia. Ryerson takes this very seriously and has reviewed our direct and indirect material purchases to ensure compliance. On April 8, 2022, President Biden signed into law the Suspending Normal Trade Relations with Russia and Belarus Act, which denies "most-favored nation" tariff treatment to products of Russia and Belarus and extends the President’s authority to impose sanctions under the Global Magnitsky Human Rights Accountability Act. Beginning April 9, 2022, the Act imposes a 10.5% import duty on unalloyed primary aluminum and 11.0% on value-add aluminum products. The import duties are not expected to have a meaningful impact on the availability of aluminum for Ryerson. In 2022, the Company has not purchased material from Russia or the named Ukrainian regions and has no open purchases orders issued to Russian suppliers as of December 31, 2022.

On August 10, 2021, the Senate passed the Infrastructure Investment and Jobs Act, a $1.2 trillion bill which features $550 billion in new federal spending over five years. Included in this spending is investment in roads, bridges, and major projects, passenger and freight rail, electrical grid improvements, expansion of broadband access, transit systems, infrastructure for electric vehicles, and improvements to water systems. This bill was signed into law on November 15, 2021. The Company believes that the

additional government spending on infrastructure projects under the Infrastructure Investment and Jobs Act may generate additional demand for our products especially within the industrial equipment, construction, green energy, and transportation industries. Accordingly, we anticipate that the Infrastructure Investment and Jobs Act will be beneficial to the Company, but ultimately the impact on the Company’s operations is unclear.

On April 22, 2021, the U.S. International Trade Commission (“USITC”) confirmed the Department of Commerce’s affirmative antidumping duty determinations and injury determinations regarding US imports of common alloy aluminum sheet. As a result, the USITC has issued final antidumping duty orders on U.S. imports of common alloy aluminum sheet from the following sixteen countries: Bahrain, Brazil, Croatia, Egypt, Germany, India, Indonesia, Italy, Oman, Romania, Serbia, Slovenia, South Africa, Spain, Taiwan, and Turkey. Antidumping rates differ greatly depending on country of origin and producing mill and range from the low single digits to as high as 243%. Ryerson anticipates that the actions of the USITC will support the prices of domestically produced aluminum sheet and therefore benefit the Company’s average selling prices.

On March 1, 2018, the White House announced a 25% tariff on all imported steel products and 10% tariff on all imported aluminum products for an indefinite amount of time under Section 232 of the Trade Expansion Act (“Section 232”). These tariffs, while in effect, have discouraged metal imports from non-exempt countries and have had a favorable impact on the prices of the products we sell and our results of operations. In October 2021, the US and European Union agreed to revise Section 232 tariffs applied to the import of European steel and aluminum, allowing for the duty-free import of European steel and aluminum into the US, subject to tariff rate quotas. Specifically, the tariff rate quota includes the duty-free import of 3.3 million metric tons of steel melted and poured in the European Union, 18 thousand metric tons of unwrought aluminum, and 366 thousand metric tons of semi-finished aluminum. The revision was applied on January 1, 2022. Tariff rate quotas have since been implemented for Japan and the United Kingdom at 1.25 million metric tons and 0.5 million metric tons, respectively. The effective dates for the revisions were April 1, 2022 for Japan and June 1, 2022 for the United Kingdom.

Acquisitions and Investments

On February 28, 2022, Ryerson Canada acquired substantially all of the assets of Apogee Steel Fabrication Incorporated (“Apogee”), a sheet metal fabricator located in Mississauga, Ontario, Canada. Apogee is a full-line fabrication company providing sheering, punching, forming, and laser cut processing in addition to welding and hardware assembly services. Apogee provides complex fabrication assemblies in stainless steel, aluminum, and carbon sheet and adds to Ryerson’s value-added processing capabilities. Total amount paid by Ryerson Canada for the acquisition amounted to $3.1 million.

On August 31, 2022, JT Ryerson acquired Howard Precision Metals, Inc. (“Howard”), one of the largest aluminum distributors in the Midwest. Based in Milwaukee, Wisconsin, Howard specializes in value-added processing services including high-quality precision-cut aluminum plate and saw-cut extruded aluminum bar distribution. The total amount paid by JT Ryerson for the acquisition amounted to $19.2 million.

Components of Results of Operations

We generate substantially all of our revenue from sales of our metals products. The majority of revenue is recognized upon delivery of product to customers. The timing of shipment is substantially the same as the timing of delivery to customers given the proximity of our distribution sites to our customers. Revenues associated with products which we believe have no alternative use, and where the Company has an enforceable right to payment, are recognized on an over-time basis. Over-time revenues are recorded in proportion with the progress made toward completing the performance obligation.

Sales, cost of materials sold, gross profit, and operating expense control are the principal factors that impact our profitability:

Net Sales. Our sales volume and pricing are driven by market demand, which is largely determined by overall industrial production and conditions in specific industries in which our customers operate. Sales prices are also primarily driven by market factors such as overall demand and availability of product. Our net sales include revenue from product sales, net of returns, allowances, customer discounts, and incentives.

Cost of materials sold. Cost of materials sold includes metal purchase and in-bound freight costs, third-party processing costs, and direct and indirect internal processing costs. The cost of materials sold fluctuates with our sales volume and our ability to purchase metals at competitive prices. Increases in sales volume generally enable us to improve purchasing leverage with suppliers as we buy larger quantities of metals inventories.

Gross profit. Gross profit is the difference between net sales and the cost of materials sold. Our sales prices to our customers are subject to market competition. Achieving acceptable levels of gross profit is dependent on our acquiring metals at competitive prices, our ability to manage the impact of changing prices, and efficiently managing our internal and external processing costs.

Operating expenses. Optimizing business processes and asset utilization to lower fixed expenses such as employee, facility, and truck fleet costs, which cannot be rapidly reduced in times of declining volume, and maintaining low fixed cost structure in times of increasing sales volume, have a significant impact on our profitability. Operating expenses include costs related to warehousing and distributing our products as well as selling, general, and administrative expenses.

Results of Operations

The following table sets forth our Consolidated Statements of Operations data (certain percentages may not calculate due to rounding):

Gain on sale of assets (3.8 ) (0.1 ) (109.6 ) (1.9 )

Less: Net income attributable to noncontrolling interest 0.5 — 1.1 —

Basic earnings per share $ 10.41 $ 7.67

Diluted earnings per share $ 10.21 $ 7.56

The following charts show the Company’s percentage of sales by major product lines for 2022 and 2021:

Comparison of the year ended December 31, 2022 with the year ended December 31, 2021

Net Sales

Year Ended December 31, Dollar Percentage

($ in millions)

Year Ended December 31, Tons Percentage

(in thousands)

Year Ended December 31, Price Percentage

Revenue for the year ended December 31, 2022, increased from the same period a year ago due to higher average selling prices caused by higher commodity prices and supply constraints in the first half of 2022. Compared to the year ago period, average selling price increased for all of our product lines in 2022 with the largest increases in our stainless long, aluminum flat, aluminum long, and aluminum plate products. Tons sold decreased in 2022 overall, with the largest decreases in our stainless flat, stainless plate, and stainless long product lines partially offset by an increase in our carbon plate shipments. Tons sold per ship day were 8,084 in 2022 as compared to 8,313 in 2021.

Cost of Materials Sold

Year Ended December 31,

$ % of NetSales $ % of NetSales Dollar change Percentage change

($ in millions)

Year Ended December 31, Dollar Percentage

The increase in cost of materials sold in 2022 compared to the year ago period is primarily due to the increase in average cost of materials sold per ton driven by higher commodity prices due to supply constraints in the first half of 2022 partially offset by lower tons sold. The average cost of materials sold increased across all of our product lines with the average cost of materials sold for our stainless plate, stainless flat, and stainless long product lines increasing more than our other product lines during 2022.

During 2022, LIFO income was $58 million related to a decrease in pricing for carbon product lines, partially offset by increases in pricing in stainless and aluminum products as well as the impact of a reduction in carbon tons in inventory, which led to the liquidation of older LIFO layers that were at a higher cost. During 2021, LIFO expense was $366 million related to increases in pricing for all product lines with the largest impact from carbon products.

Gross Profit

Year Ended December 31,

$ % of NetSales $ % of NetSales Dollar change Percentage change

($ in millions)

Gross profit dollars increased in 2022 compared to 2021 as average selling price increased faster than the increase in the average cost of materials sold resulting in an increase in gross margin.

Operating Expenses

Year Ended December 31,

$ % of NetSales $ % of NetSales Dollar change Percentage change

($ in millions)

Warehousing, delivery, selling, general, and administrative expenses increased $24.0 million in 2022 compared to 2021. The increase in expenses in 2022 was primarily due to changes in the following categories:

•

higher selling, general, and administrative expenses of $16.9 million resulting from higher consulting fees and higher travel and entertainment expenses;

•

higher delivery expenses of $14.2 million due to increased fuel and delivery costs;

•

higher operating expenses of $11.1 million primarily due to higher repair & maintenance costs, higher operating supplies, higher rent expense after the leaseback of facilities sold in 2021 and the new lease on the Centralia, Washington facility which began in the third quarter of 2022, and higher information technology costs;

•

higher reorganization costs of $3.4 million primarily due to increased system implementation activity;

•

higher depreciation and amortization expense of $2.9 million from increased capital expenditures in 2022; and

•

partially offset by lower compensation expenses of $22.6 million, which comprises lower sales incentive expense of $35.4 million, partially offset by an increase of $12.8 million in salaries and wage expense due to compensation increases and increased headcount resulting from acquisitions.

In 2022, we recorded a gain on sale of assets of $3.8 million from the sale of a facility in Texas that Ryerson had an option to purchase. In 2021, we recognized a gain of $87.4 million on the sale and leaseback of twelve facilities across the U.S. in the second quarter and we recognized a gain on sale of assets of $20.3 million from the sale and leaseback of our Renton, Washington facility in the first quarter.

On a per ton basis, total operating expenses increased to $360 per ton in 2022 from $287 per ton in 2021.

Operating Profit

Year Ended December 31,

$ % of NetSales $ % of NetSales Dollar change Percentage change

($ in millions)

Our operating profit increased in 2022 compared to 2021 primarily due to increases in average selling prices and higher gross margins.

Other Expenses

Year Ended December 31,

$ % of NetSales $ % of NetSales Dollar change Percentage change

($ in millions)

Other income and (expense), net $ (1.3 ) — $ (0.9 ) — $ (0.4 ) 44.4 %

Pension settlement charges $ — — $ (98.7 ) (1.7 )% $ 98.7 (100.0 )%

Interest and other expense on debt decreased in 2022 compared to 2021 primarily due to the redemption and repurchase of $300.0 million principal amount of our 8.50% senior secured notes due 2028 (the “2028 Notes”) during the first nine months of 2022 and the repurchase in July 2021 of $150.0 million of the 2028 Notes. Partially offsetting the impact of the redemption of the 2028 Notes was higher interest expense in 2022 on a higher level of borrowings outstanding under our $1.3 billion revolving credit facility (“the Ryerson Credit Facility”) and to higher interest rates on credit facility borrowings compared to the prior year. Interest expense in 2022 included $2.6 million in charges to write-off unamortized bond issuance costs related to the $300.0 million of 2028 Notes redeemed in 2022. Interest expense in 2021 included a $2.8 million charge to write-off unamortized bond issuance costs related to the $150.0 million of 2028 Notes redeemed in July 2021.

The year 2022 includes losses of $21.3 million on the redemption and repurchase of $300.0 million of the 2028 Notes. In addition, the other income and (expense), net in 2022 includes foreign currency translation losses of $1.3 million, and a $0.3 million charge from net periodic benefit cost other than service cost. The year 2021 includes a $98.7 million pension settlement loss due to the annuitization and lump-sum payouts of a portion of our pension liability and a $5.5 million loss on the repurchase of $150.0 million of the 2028 Notes. In addition, the other income and (expense), net in 2021 includes a $2.1 million loss from the change in the fair value of an embedded derivative within the 2028 Notes indenture, and a $0.7 million credit from net periodic benefit cost other than service cost. See the Pension Funding section below for further details on the transactions that resulted in the pension settlement loss in 2021.

Provision for Income Taxes

The $131.4 million income tax provision in 2022 primarily represents taxes at federal and local statutory rates where the Company operates, but generally excludes any tax benefit for losses in jurisdictions with historical losses.

The $93.7 million income tax provision in 2021 primarily represents taxes at federal and local statutory rates where the Company operates, but generally excludes any tax benefit for losses in jurisdictions with historical losses. During 2021, the Company

recorded a $1.6 million benefit as a result of releasing valuation allowances on certain state and foreign net operating losses, and a $0.8 million benefit related to the statute of limitations expiring on an uncertain tax position.

Noncontrolling Interest

In both 2022 and 2021, Ryerson China’s results of operations was income and the portion attributable to the noncontrolling interest was $0.5 million and $1.1 million, respectively.

Earnings Per Share

Basic and diluted earnings per share was $10.41 and $10.21, respectively, in 2022. Basic and diluted earnings per share was $7.67 and $7.56, respectively, in 2021. The changes in earnings per share are due to the results of operations discussed above.

Liquidity and Capital Resources

The Company’s primary sources of liquidity are cash and cash equivalents, cash flows from operations, and borrowing availability under the Ryerson Credit Facility that matures on November 5, 2025. Our principal source of operating cash is from the sale of metals and other materials. Our principal uses of cash are for payments associated with the procurement and processing of metals and other materials inventories, costs incurred for the warehousing and delivery of inventories, the selling and administrative costs of the business, capital expenditures, and for interest payments on debt.

We had cash and cash equivalents of $39.2 million at December 31,2022, compared to $51.2 million at December 31, 2021. Our total debt outstanding at December 31, 2022 decreased to $367 million compared to $639 million of total debt outstanding at December 31, 2021 due to income from operations in 2022. We had a debt-to-capitalization ratio of 29% and 54% at December 31, 2022 and at December 31, 2021, respectively. We had total liquidity (defined as cash and cash equivalents, and availability under the Ryerson Credit Facility and foreign debt facilities) of $909 million at December 31, 2022 versus $741 million at December 31, 2021. Our net debt (defined as total debt less cash and cash equivalents) was $328 million and $588 million at December 31, 2022 and December 31, 2021, 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 situation. Net debt should not be used as a substitute for total debt outstanding as determined in accordance with GAAP.

Below is a reconciliation of cash and cash equivalents to total liquidity:

(In millions)

Cash and cash equivalents $ 39 $ 51 $ 61

Below is a reconciliation of total debt to net debt:

(In millions)

Less: cash and cash equivalents (39 ) (51 ) (61 )

Of the total cash and cash equivalents, as of December 31, 2022, $8.1 million was held in subsidiaries outside the U.S. that 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 and a significant portion of the earnings held in foreign jurisdictions is deemed to have been repatriated under the 2017 U.S. Tax Cuts and Jobs Act, Ryerson could elect to repatriate additional earnings, which could result in foreign withholding taxes and potential U.S. state income taxes. 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.

The following table summarizes the Company’s cash flows:

Year Ended December 31,

(In millions)

Depreciation and amortization 59.0 55.9

Pension settlement charge — 98.7

Loss on retirement of debt 21.3 5.5

Gain on sale of assets (3.8 ) (109.6 )

Change in operating assets and liabilities:

Accrued liabilities (17.5 ) 32.0

Deferred employee benefit costs (7.7 ) (25.0 )

Other operating asset and liability balances (33.7 ) 1.9

All other operating cash flows (2.4 ) 37.0

Net cash provided by operating activities 501.2 35.0

Capital expenditures (105.1 ) (59.3 )

Proceeds from sale of property, plant, and equipment 8.0 166.3

Other investing activities (5.9 ) 1.9

Net cash provided by (used in) investing activities (160.0 ) 94.4

Net proceeds from short-term borrowings 26.1 45.8

Net increase (decrease) in book overdrafts 29.6 (7.7 )

Dividends paid to shareholders (19.9 ) (6.4 )

Share repurchases (50.0 ) (1.8 )

All other financing cash flows (14.6 ) (10.5 )

Net cash used in financing activities (350.1 ) (137.9 )

Effect of exchange rates on cash and cash equivalents (3.0 ) (1.6 )

Net decrease in cash and cash equivalents $ (11.9 ) $ (10.1 )

Operating activities. Annual average selling prices were 15.1% higher in 2022 than in 2021 resulting in significantly higher operating profits and higher cash generated from operations of $501.2 million compared to $35.0 million 2021. 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. Working capital requirements in 2022 decreased due to lower shipments and a decline in average selling prices in the fourth quarter of 2022 compared to the fourth quarter of 2021, which resulted in lower sales and the related accounts receivable. Inventory quantities on hand decreased to align with softer demand conditions. The lower inventory investment also decreased accounts payable balances. In 2021, working capital requirements increased significantly as improved economic conditions increased demand and supply constraints increased metals pricing, which increased sales and the related accounts receivable. Inventory quantities were increased to meet the higher demand and inventory costs increased due to rising metal prices throughout 2021. The higher inventory investment also increased accounts payable balances. The Company made contributions of $6.8 million in 2022 to the Company’s pension plans compared to contributions of $23.7 million in 2021. Pension contributions were lower in 2022 than in 2021 as the Company's contributions in 2021 included $12 million of U.S. contributions deferred in 2020 as permitted under the CARES Act that was passed in March 2020. Interest paid to third parties was $12.8 million lower in 2022 compared to 2021 due to lower outstanding debt, mainly due to the repurchase in 2022 of the outstanding $300 million balance of our 2028 Notes, partially offset by higher borrowings and interest rates on our revolving line of credit.

Investing activities. The Company's main investing activities are capital expenditures and proceeds from the sale of property, plant, and equipment. Capital expenditures increased year-over-year to $105.1 million in 2022 compared to $59.3 million in 2021 as the capital expenditure budget for 2022 was increased to partially utilize the proceeds from two of the 2021 sale-leaseback transactions to modernize operations and to invest in two new facilities in 2022. The Company sold property, plant, and equipment and assets held for sale generating cash proceeds of $8.0 million and $166.3 million during 2022 and 2021, respectively. See Note 5: Property, Plant, and Equipment within Part II, Item 8 of this report, for further discussion of the 2021 sale-leaseback transaction. The Company paid $57.0 million in 2022 to acquire Apogee Steel Fabrication Incorporated, Ford Tool Steels, Inc., Howard Precision Metals, Inc., and Excelsior, Inc. See Note 2: Acquisitions within Part II, Item 8 of this report, for further discussion of the acquisitions.

Financing activities. The Company's main source of liquidity to fund working capital requirements is borrowings on our credit facility. In 2022, we repurchased, redeemed, and retired $300.0 million principal of our 2028 Notes, which was partially offset by an increase of $49.0 million in Credit Facility borrowings. In 2021, we redeemed $150.0 million of our 2028 Notes, which was partially offset by an increase of $31 million credit facility borrowings. In 2022, we repurchased $50.0 million of our common stock compared to $1.8 million in 2021. The Company started paying quarterly cash dividends in the third quarter of 2021 resulting in $6.4 million in dividends paid in 2021 and $19.9 million paid to shareholders in 2022. Book overdrafts fluctuate based on the timing of payments.

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 $20 million as of December 31, 2022. 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.

Total Debt

Total debt at December 31, 2022 decreased $272.3 million to $367.0 million from $639.3 million at December 31, 2021, mainly due to cash flow generated from operating activities in 2022.

Total debt outstanding as of December 31, 2022 consisted of the following amounts: $365.0 million borrowings under the Ryerson Credit Facility, $4.0 million of foreign debt, and $4.0 million of other debt, less $6.0 million of unamortized debt issuance costs. Availability under the Ryerson Credit Facility was $826 million and $670 million at December 31, 2022 and December 31, 2021, respectively. For further information, see Note 10: Debt in Part II, Item 8 – Financial Statements and Supplementary Data.

Pension Funding

The Company made contributions of $6.8 million in 2022, $23.7 million in 2021, and $7.1 million in 2020 to improve the Company’s pension plans funded status. At December 31, 2022, as reflected in Part II. Item 8, Financial Statements and Supplementary Data, Note 11, pension liabilities exceeded plan assets by $73.0 million. The Company anticipates that it will have a minimum required pension contribution of approximately $8.6 million in 2023 under the Employee Retirement Income Security Act of 1974 (“ERISA”), Pension Protection Act in the U.S., and the Ontario Pension Benefits Act in Canada. The expected future contributions reflect pension funding relief measures under the American Rescue Plan Act (“ARPA”) passed in March 2021. Future contribution requirements depend on the investment returns on plan assets, the impact of discount rates on pension liabilities, and changes in regulatory requirements. The Company is 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 the Company’s financial position or cash flows.

Changes in returns on plan assets may affect our plan funding, cash flows, and financial condition. Differences between actual plan asset returns and the expected long-term rate of return on plan assets impact the measurement of the following year’s pension expense and pension funding requirements. However, we believe that cash flow from operations and the Ryerson Credit Facility described above will provide sufficient funds to make the minimum required contributions.

Income Tax Payments

The Company made income tax payments of $176.9 million in 2022, $70.2 million in 2021, and received income tax refunds of $5.7 million in 2020. Income tax payments in 2022 increased as the Company fully utilized previously existing federal income tax net operating loss carryforwards during 2021 in addition to increased pre-tax income year over year. See Part II. Item 8, Financial Statements and Supplementary Data, Note 19: Income Taxes for further discussion.

Material Cash Requirements

The Company expects to make approximately $373 million in principal payments to satisfy its debt obligations, consisting of $4 million in foreign debt coming due in 2023, $4 million of other debt coming due between 2023 and 2024, and $365 million for the Ryerson Credit Facility coming due in 2027. Please refer to Part II. Item 8, Financial Statements and Supplementary Data, Note 10: Debt for further information.

The Company expects to pay approximately $21 million of interest on the Ryerson Credit Facility, foreign debt, and other debt over the next 12 months and $73 million thereafter. Interest payments related to the variable rate debt were estimated using the weighted average interest rate for the Ryerson Credit Facility.

The Company leases various assets including real estate, trucks, trailers, cars, mobile equipment, processing equipment, and IT equipment. We have noncancelable operating leases expiring at various times through 2042, and finance leases expiring at various times through 2028. The total amount of future lease payments is estimated to be $317 million with $38 million for the next 12

months. Including leases signed but not yet commenced as of December 31, 2022, total lease payments are $445 million. Please refer to Part II, Item 8 – Financial Statements and Supplementary Data, Note 6: Leases for further information.

Purchase obligations with suppliers are entered into when we receive firm sales commitments with certain of our customers. As of December 31, 2022, we had outstanding purchase obligations of approximately $19 million expiring in 2023.

Restructuring

2022

During 2022, the Company paid $0.1 million of tenancy-related costs for a facility closed in 2015. The remaining reserve balance of $0.6 million is expected to be paid through 2025.

2021

During 2021, the Company paid the remaining $0.5 million of employee-related costs related to prior year staff reductions.

2020

In 2020, the Company recorded a $2.2 million charge for employee-related costs primarily for severance costs for corporate staff reductions. The Company paid $1.9 million of the employee costs related to these actions. In addition, the Company paid $0.8 million related to 2019 staff reductions.

During 2020, the Company also paid $0.3 million for costs related to facilities closed in prior years and recorded an addition of $0.1 million to the reserve for tenancy-related costs, which was charged to warehousing, delivery, selling, general, and administrative expense in the Consolidated Statements of Operations.

Deferred Tax Amounts

At December 31, 2022, the Company had a net deferred tax liability of $114 million comprised primarily of a deferred tax asset of $20 million related to pension liabilities, a deferred tax asset related to postretirement benefits other than pensions of $10 million, deferred tax assets of $7 million related to state, local, and foreign tax loss carryforwards, and $24 million of other deferred taxes relating to accrued compensation and other items, offset by a valuation allowance of $5 million and deferred tax liabilities of $61 million related to fixed assets, $99 million related to inventory, and $10 million related to intangibles. We may experience fluctuations in our forecasted earnings before income taxes as a result of events which cannot be predicted, which could affect our deferred tax balances.

In accordance with ASC Topic 740, “Income Taxes,” the Company assesses the realizability of its deferred tax assets. The Company records a valuation allowance when, based upon the evaluation of all available evidence, it is more-likely-than-not that all or a portion of the deferred tax assets will not be realized. In making this determination, we analyze, among other things, our recent history of earnings, the nature and timing of reversing book-tax temporary differences, tax planning strategies, and future income. As of December 31, 2020, the Company had a valuation allowance of $6.6 million, a decrease of $7.1 million from the prior year mainly related to expiring NOLs and changes to U.S foreign tax credits previously recorded. As of December 31, 2021, the Company had a valuation allowance of $5.0 million, a decrease of $1.6 million from the prior year mainly related to a release of a valuation allowance on state NOL deferred tax assets, which we now expect to realize due to improved profitability. The valuation allowance did not change during 2022, remaining at $5.0 million as of December 31, 2022 related to U.S. federal tax credit deferred tax assets and foreign tax assets.

As described in Note 1 to the Consolidated Financial Statements, the Company assesses the need for a valuation allowance considering all available positive and negative evidence, including past operating results, projections of future taxable income, and the feasibility of ongoing tax planning strategies.

The Company will continue to maintain a valuation allowance on certain U.S. federal and foreign deferred tax assets until such time as in management’s judgment, considering all available positive and negative evidence, the Company determines that these deferred tax assets are more likely than not realizable.

Critical Accounting Estimates

Preparation of this Form 10-K requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of sales and

expenses during the reporting period. Our critical accounting policies, including the assumptions and judgments underlying them, are disclosed in Item 8 within Note 1: Summary of Accounting and Financial Policies. These policies have been consistently applied and address such matters as revenue recognition, depreciation methods, inventory valuation, asset impairment recognition, and pension and postretirement expense. While policies associated with estimates and judgments may be affected by different assumptions or conditions, we believe our estimates and judgments associated with the reported amounts are appropriate in the circumstances. Actual results may differ from those estimates.

We consider the policies discussed below as critical to an understanding of our financial statements, as application of these policies places the most significant demands on management’s judgment, with financial reporting results relying on estimation of matters that are uncertain.

Provision for allowances, claims, and doubtful accounts: We perform ongoing credit evaluations of customers and set credit limits based upon review of the customers’ current credit information, payment history, and the current economic and industry environments. We monitor customer payments and maintain a provision for estimated credit losses based on historical experience and specific customer collection issues that we have identified. Estimation of such losses requires adjusting historical loss experience for current economic conditions and judgments about the probable effects of economic conditions on certain customers. We cannot guarantee that the rate of future credit losses will be similar to past experience. Provisions for allowances and claims are based upon historical rates, expected trends, and estimates of potential returns, allowances, customer discounts, and incentives. We consider all available information when assessing the adequacy of the provision for allowances, claims, and doubtful accounts.

Inventory valuation: Our inventories are stated at the lower of cost or market. The valuation of our inventories at the lower of cost or market could be subject to certain estimates; however, the measurement is primarily based on historical purchasing and sales information rather than forecasted metals pricing. Inventory costs reflect metal and in-bound freight purchase costs, third-party processing costs, and internal direct and allocated indirect processing costs. Cost is primarily determined by the LIFO method. We regularly review inventory on hand and record provisions for obsolete and slow-moving inventory based on historical and current sales trends. Changes in product demand and our customer base may affect the value of inventory on hand which may require higher provisions for obsolete inventory.

Income Taxes: Our income tax expense, deferred tax assets and liabilities, and reserve for uncertain tax positions reflect our best estimate of taxes to be paid. The Company is subject to income taxes in the U.S. and several foreign jurisdictions. The determination of the consolidated income tax expense requires judgment and estimation by management. It is possible that actual results could differ from the estimates that management has used to determine its consolidated income tax expense.

We record operating loss and tax credit carryforwards and the estimated effect of temporary differences between the tax basis of assets and liabilities and the reported amounts in the Consolidated Balance Sheets. We follow detailed guidelines in each tax jurisdiction when reviewing tax assets recorded on the balance sheet and provide for valuation allowances as required. Deferred tax assets are reviewed for recoverability based on historical taxable income, the expected reversals of existing temporary differences, tax planning strategies, and on forecasts of future taxable income. The forecasts of future taxable income require assumptions regarding volume, selling prices, margins, expense levels, and industry cyclicality. If we are unable to generate sufficient future taxable income in certain tax jurisdictions, we may be required to record additional valuation allowances against our deferred tax assets related to those jurisdictions.

The Company’s income tax provisions are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. Although the Company believes that the positions taken on filed tax returns are reasonable, it has established tax and interest reserves in recognition that various taxing authorities may challenge the positions taken. For uncertain tax positions, the Company applies the provisions of relevant authoritative guidance, which requires application of a “more likely than not” threshold to the recognition and derecognition of tax positions. The Company’s ongoing assessments of the more likely than not outcomes of tax authority examinations and related tax positions require significant judgment and can increase or decrease the Company’s effective tax rate.

Long-lived Assets and Other Intangible Assets: Long-lived assets held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment is recognized. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which undiscounted cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount, and the asset’s residual value, if any. Any related impairment loss is calculated based upon comparison of the fair value to the carrying value of the asset. Separate intangible assets that have finite useful lives are amortized over their useful lives. An impaired long-lived or intangible

asset would be written down to fair value, based on various available valuation techniques, including the discounted cash flow method.

Goodwill: We assess the recoverability of the carrying value of recorded goodwill annually in the fourth quarter of each year or whenever indicators of potential impairment exist. We test for impairment of goodwill by assessing various qualitative factors with respect to developments in our business and the overall economy. Factors that may be considered indicators of impairment include: deterioration in general economic conditions; declines in the market conditions of our products, including metals prices; a sustained significant decline in our share price and market capitalization; reduced future cash flow estimates; and slower growth rates in our industry, among others. If we determine that it is more likely than not that the fair value of a reporting unit is less than the carrying value based on our qualitative assessment, we will proceed to the goodwill impairment test. We compare the fair value of the reporting unit in which goodwill resides to its carrying value. If the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of the goodwill. The fair value of the reporting unit is estimated using a combination of an income approach and a market approach as this combination is deemed to be the most indicative of our fair value in an orderly transaction between market participants. An income approach based on discounted future cash flows requires us to estimate income from operations based on projected results and discount rates based on a weighted average cost of capital of comparable companies. A market approach estimates fair value using market multiples of various financial measures of comparable public companies. If these estimates or their related assumptions for commodity prices and demand change in the future, we may be required to record impairment charges for these assets.

Based on the impairment test performed on October 1, 2022, the Company concluded that the fair value of the reporting units tested for impairment exceeded the carrying value. The discount rate was estimated to be 16% at October 1, 2022. The Company determines a discount rate based on an estimate of a reasonable risk-adjusted return an investor would expect to realize on an investment in the reporting unit. Deterioration in market conditions in our industry or products, changes in expected future cash flows, expected growth rates, or to discount rates could result in impairment charges in future periods.

Purchase Price Accounting: Business combinations are accounted for using the acquisition method of accounting. This method requires the Company to record assets and liabilities of the business acquired at their estimated fair market values as of the acquisition date. Any excess of the cost of the acquisition over the fair value of the net assets acquired is recorded as goodwill. Any shortfall in the cost of the acquisition compared to the fair value of the net assets acquired is recorded in the Consolidated Statements of Operations as a bargain purchase gain. The Company uses valuation specialists, where necessary, to perform appraisals and assist in the determination of the fair values of the assets acquired and liabilities assumed. These valuations require management to make estimates and assumptions that are critical in determining the fair values of the assets and liabilities.

Pension and postretirement benefit plan assumptions: We sponsor various benefit plans covering a portion of our employees for pension and postretirement medical costs. Statistical methods are used to anticipate future events when calculating expenses and liabilities related to the plans. The statistical methods include assumptions about, among other things, the discount rate, expected return on plan assets, rate of increase of health care costs, and the rate of future compensation increases. Our actuarial consultants also use subjective factors such as withdrawal and mortality rates when estimating expenses and liabilities. The discount rate used for U.S. plans reflects the market rate for high-quality fixed-income investments on our annual measurement date (December 31) and is subject to change each year. The discount rate was determined by matching, on an approximate basis, the coupons and maturities for a portfolio of corporate bonds (rated Aa or better by Moody’s Investor Services or AA or better by Standard and Poor’s) to the expected plan benefit payments defined by the projected benefit obligation. The discount rates used for plans outside the U.S. are based on the yield of long term high quality corporate bonds, the duration of the liability, and appropriate judgment.

When calculating pension expense for 2022, we assumed the pension plans’ assets would generate a long-term rate of return of 4.85% for the JT Ryerson plan and 1.80% for the Central Steel and Wire Company plan, and between 2.25% and 4.25% for the Canadian plans. The expected long-term rate of return assumption was developed based on historical experience and input from the trustee managing the plans’ assets. The expected long-term rate of return on plan assets is based on a target allocation of assets, which is based on a goal of earning the highest rate of return while maintaining risk at acceptable levels. Our projected long-term rate of return for the JT Ryerson pension plan is slightly higher than some market indices due to the active management of our plans’ assets, and is supported by the historical returns on our plans’ assets. The plans strive to have assets sufficiently diversified so that adverse or unexpected results from one security class will not have an unduly detrimental impact on the entire portfolio. We regularly review actual asset allocation and the pension plans’ investments are periodically rebalanced to the targeted allocation when considered appropriate. Pension expense increases as the expected rate of return on plan assets decreases. Lowering the expected long-term rate of return on plan assets by 50 basis points would have increased 2022 pension expense by approximately $1 million.

Future pension obligations for the U.S. plans were discounted using rates between of 5.28% and 5.45% at December 31, 2022. Future pension obligations for the Canadian plans were discounted using 5.17% at December 31, 2022. Lowering the discount rate by 50 basis points would increase the pension liability at December 31, 2022 by approximately $16 million.

The calculation of other postretirement benefit obligations requires the use of a number of assumptions, including the assumed discount rate for measuring future payment obligations. A decrease in the weighted average discount rate of 50 basis points would increase the postretirement benefit liability by approximately $2 million.

The assumptions used in the actuarial calculation of expenses and liabilities may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates, or longer or shorter life spans of participants. These differences may result in a significant impact on the amount of pension or postretirement benefit expense we may record in the future.

Legal contingencies: We are involved in a number of legal and regulatory matters including those discussed in Item 8 within Note 13: Commitments and Contingencies. We determine whether an estimated loss from a loss contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. We analyze our legal matters based on available information to assess potential liability. We consult with outside counsel involved in our legal matters when analyzing potential outcomes. We cannot determine at this time whether any potential liability related to this litigation would materially affect our financial position, results of operations, or cash flows.

Recent Accounting Pronouncements

Recent accounting pronouncements are discussed within Note 1: Summary of Accounting and Financial Policies in Part II, Item 8 Financial Statements and Supplementary Data.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Our primary areas of market risk include changes in interest rates, foreign currency exchange rates, and commodity prices. We continually monitor these risks and develop strategies to manage them.

Interest rate risk

Market risk is the potential loss arising from adverse changes in market rates and prices, such as interest rates. We are exposed to market risk related to our fixed-rate and variable-rate long-term debt. At December 31, 2021, the estimated fair value of our long-term debt and the current portions thereof using quoted market prices of Company debt securities recently traded and market-based prices of similar securities for those securities not recently traded was $666.8 million as compared with the carrying value of $639.3 million. As of December 31, 2022, we have no publicly traded debt. The carrying value of our debt was $367.0 million at December 31, 2022. The carrying value approximates our fair value due to the short-term nature of the underlying borrowings on the Ryerson Credit Facility.

We may use interest rate swaps to manage our exposure to interest rate changes In June 2019, we entered into a forward agreement for $60 million of "pay fixed" interest at 1.729% through June 2022. In November 2019, we entered into a forward agreement for $100 million of “pay fixed” interest at 1.539% through November 2022; this swap was terminated in August 2022. As of December 31, 2022, we have no outstanding interest rate swaps.

Effective November 1, 2020, the Company de-designated its interest rate swaps as cash flow hedges and terminated its hedge accounting treatment. Prior to de-designation, the Company would mark these interest rate swaps to market with all changes in fair value recorded in accumulated other comprehensive income. Subsequent to de-designation, changes in fair value are recorded in current earnings. The Company recognized a gain of $1.4 million related to mark-to-market changes and interest expense of $0.6 million in current earnings for the twelve months ended December 31, 2022. After de-designation, the amounts reclassified from other comprehensive income relate to prior gains and losses that are being amortized into income as the forecasted interest payments affect earnings. The amount reclassified from other comprehensive income for the twelve months ended December 31, 2022 into earnings was a loss of $1.9 million.

Approximately 1% of our debt is at fixed interest rates as of December 31, 2022. 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.

Foreign exchange rate risk

We are subject to foreign currency risks primarily through our operations in Canada, Mexico, and China and we use foreign currency exchange contracts to reduce our exposure to currency price fluctuations. Foreign currency contracts are principally used to purchase U.S. dollars. We had foreign currency contracts with a U.S. dollar notional amount of $2.3 million outstanding at December 31, 2022 and a value of zero. We do not currently account for these contracts as hedges but rather mark these contracts to market with a corresponding offset to current earnings. For the year ended December 31, 2022, the Company recognized zero gain or loss associated with its foreign currency contracts. A hypothetical strengthening or weakening of 10% in the foreign exchange rates

underlying the foreign currency contracts from the market rate as of December 31, 2022 would increase or decrease the fair value of the foreign currency contracts by $0.2 million and $0.3 million, respectively.

The currency effects of translating the financial statements of our foreign subsidiaries are included in accumulated other comprehensive loss and will not be recognized in the statement of operations until there is a liquidation or sale of those foreign subsidiaries.

Commodity price risk

In general, we purchase metals in an effort to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon historic buying practices, customer contracts, and market conditions. Our commitments to purchase metals are generally at prevailing market prices in effect at the time we place our orders.

Metal prices can fluctuate significantly due to several factors including changes in foreign and domestic production capacity, raw material availability, metals consumption, and foreign currency rates. Derivative financial instruments have been used to manage a limited portion of our exposure to fluctuations in the cost of certain commodities. No derivatives are held for trading purposes.

As of December 31, 2022, we had 40,036 tons of hot roll coil swap contracts with a net asset value of $1.1 million, 21,116 tons of aluminum swap contracts with a net asset value of $1.1 million, 1,525 tons of nickel swap contracts with a net liability value of $5.8 million, and 70,000 gallons of diesel fuel contracts with a net asset value of $0.1. We do not currently account for these swaps as hedges, but rather mark these contracts to market with a corresponding offset to current earnings. For the twelve months ended December 31, 2022, the Company recognized a loss of $5.3 million associated with its commodity derivatives.

A hypothetical strengthening or weakening of 10% in the commodity prices underlying the commodity derivative contracts from the market rate as of December 31, 2022 would increase or decrease the fair value of the commodity derivative contracts by $2.4 million.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Index to Consolidated Financial Statements

Page

Financial Statements

Management’s Report on Internal Control over Financial Reporting 48

Reports of Independent Registered Public Accounting Firm 49

Notes to Consolidated Financial Statements 57

Financial Statements Schedule

II—Valuation and Qualifying Accounts 92

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Ryerson Holding Corporation (“the Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements under all potential conditions. Therefore, effective internal control over financial reporting provides only reasonable, and not absolute, assurance with respect to the preparation and presentation of financial statements.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Based on its assessment under that framework and the criteria established therein, the Company’s management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2022.

Ernst & Young LLP, an independent registered public accounting firm, has audited the Company’s internal control over financial reporting as of December 31, 2022, as stated in their report, which is included herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Ryerson Holding Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Ryerson Holding Corporation and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and financial statement schedule listed in the Index at 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 framework, and our report dated February 22, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Defined Benefit Pension Obligation

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2006.

Chicago, Illinois

February 22, 2023

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Ryerson Holding Corporation

Opinion on Internal Control over Financial Reporting

We have audited Ryerson Holding Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Ryerson Holding Corporation and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2022 consolidated financial statements of the Company and our report dated February 22, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Chicago, Illinois

February 22, 2023

RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except per share data)

Year Ended December 31,

Warehousing, delivery, selling, general, and administrative 735.2 711.2 554.3

Gain on sale of assets (3.8 ) (109.6 ) —

Restructuring and other charges — — 2.2

Other income (expense):

Interest and other expense on debt (33.2 ) (51.0 ) (76.4 )

Pension settlement charges — (98.7 ) (65.9 )

Loss on retirement of debt (21.3 ) (5.5 ) (17.7 )

Other income and (expense), net (1.3 ) (0.9 ) 5.3

Provision (benefit) for income taxes 131.4 93.7 (24.8 )

Less: Net income attributable to noncontrolling interest 0.5 1.1 0.5

Basic earnings (loss) per share $ 10.41 $ 7.67 $ (1.73 )

Diluted earnings (loss) per share $ 10.21 $ 7.56 $ (1.73 )

Dividends declared per share $ 0.535 $ 0.165 $ —

See Notes to Consolidated Financial Statements

RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

Year Ended December 31,

Other comprehensive income (loss), before tax:

Foreign currency translation adjustments (7.8 ) (2.1 ) 1.6

Gain (loss) on cash flow hedges 1.9 2.1 (3.8 )

Other comprehensive income, before tax 32.7 142.4 39.6

Comprehensive income (loss), after tax 412.2 402.2 (35.2 )

Less: Comprehensive income attributable to noncontrolling interest 0.5 1.1 0.5

See Notes to Consolidated Financial Statements

RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

Year Ended December 31,

Operating activities:

Stock-based compensation 9.1 5.5 1.9

Deferred income taxes 7.4 0.6 (16.6 )

Provision for allowances, claims, and doubtful accounts 0.2 3.2 (0.7 )

Restructuring and other charges — — 2.2

Gain on sale of assets (3.8 ) (109.6 ) —

Gain on bargain purchase (0.6 ) — —

Non-cash (gain) loss from derivatives (17.9 ) 27.6 (10.6 )

Pension settlement charge — 98.7 65.9

Change in operating assets and liabilities, net of effects of acquisitions:

Other assets and liabilities 19.2 (23.3 ) 13.0

Accrued taxes payable/receivable (52.9 ) 25.2 (1.2 )

Deferred employee benefit costs (7.7 ) (25.0 ) (10.6 )

Net cash provided by operating activities 501.2 35.0 277.9

Investing activities:

Acquisitions, net of cash acquired (57.0 ) (14.5 ) —

Proceeds from sale of property, plant, and equipment 8.0 166.3 0.1

Investment in subsidiary (2.0 ) — —

Other investing activities (3.9 ) 1.9 —

Net cash provided by (used in) investing activities (160.0 ) 94.4 (25.9 )

Financing activities:

Long term debt issued — — 500.0

Net proceeds (repayments) of short-term borrowings 26.1 45.8 (93.8 )

Bond issuance costs — — (10.9 )

Credit facility issuance costs (2.7 ) — (4.9 )

Net increase (decrease) in book overdrafts 29.6 (7.7 ) 27.4

Principal payments on finance lease obligations (9.2 ) (10.5 ) (13.1 )

Dividends paid to shareholders (19.9 ) (6.4 ) —

Dividends paid to non-controlling interest — — (0.2 )

Share repurchases (50.0 ) (1.8 ) —

Tax withholdings on stock-based compensation awards (2.7 ) — —

Net cash used in financing activities (350.1 ) (137.9 ) (250.2 )

Net change in cash, cash equivalents, and restricted cash (11.9 ) (10.1 ) 2.7

Cash, cash equivalents, and restricted cash—beginning of period 52.4 62.5 59.8

Cash, cash equivalents, and restricted cash—end of period $ 40.5 $ 52.4 $ 62.5

Supplemental disclosures:

Cash paid (received) during the period for:

Interest paid to third parties, net $ 38.3 $ 51.1 $ 62.0

Noncash investing activities:

Asset additions under operating leases 61.6 129.6 1.6

Asset additions under finance leases and failed sale-leasebacks 3.9 15.8 3.6

See Notes to Consolidated Financial Statements

RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(In millions, except shares and per share data)

At December 31,

Assets

Current assets:

Cash and cash equivalents $ 39.2 $ 51.2

Restricted cash (Note 3) 1.3 1.2

Prepaid expenses and other current assets 88.2 77.7

Other intangible assets (Note 7) 50.9 42.2

Deferred charges and other assets 13.7 6.9

Liabilities

Current liabilities:

Accrued liabilities:

Salaries, wages, and commissions 67.3 76.6

Other accrued liabilities 77.7 133.4

Current portion of operating lease liabilities (Note 6) 25.2 24.9

Current portion of deferred employee benefits (Note 11) 4.8 6.1

Noncurrent operating lease liabilities (Note 6) 215.1 184.8

Other noncurrent liabilities 14.3 17.3

Commitments and contingencies (Note 13)

Equity

Ryerson Holding Corporation stockholders’ equity:

Capital in excess of par value 397.7 388.6

Accumulated other comprehensive loss (Note 16) (144.4 ) (165.1 )

Total Ryerson Holding Corporation stockholders’ equity 885.1 537.2

Noncontrolling interest 7.9 7.4

See Notes to Consolidated Financial Statements

RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except shares in thousands)

Ryerson Holding Corporation Stockholders

Accumulated Other ComprehensiveIncome (Loss)

Net income (loss) — — — — — (65.8 ) — — — 0.5 (65.3 )

Foreign currency translation — — — — — — 1.6 — — — 1.6

Stock-based compensation expense 334 — — — 1.9 — — — — — 1.9

Dividends paid to noncontrolling interest — — — — — — — — — (0.2 ) (0.2 )

Foreign currency translation — — — — — — (2.1 ) — — — (2.1 )

Share repurchases — — (80 ) (1.8 ) — — — — — — (1.8 )

Stock-based compensation expense 357 — — — 5.5 — — — — — 5.5

Cash dividends and dividend equivalents — — — — — (6.4 ) — — — — (6.4 )

Foreign currency translation — — — — — — (7.8 ) — — — (7.8 )

Share repurchases — — (1,701 ) (50.0 ) — — — — — — (50.0 )

Stock-based compensation expense 372 — (77 ) (2.7 ) 9.1 — — — — — 6.4

Cash dividends and dividend equivalents — — — — — (20.2 ) — — — — (20.2 )

See Notes to Consolidated Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Summary of Accounting and Financial Policies

Business Description and Basis of Presentation. Ryerson Holding Corporation (“Ryerson Holding”), a Delaware corporation, is the parent company of Joseph T. Ryerson & Son, Inc. (“JT Ryerson”), a Delaware corporation. Affiliates of Platinum Equity, LLC (“Platinum”) own approximately 15,924,478 shares of our common stock, which is approximately 43% of our issued and outstanding common stock. On May 13, 2022, Platinum sold 3,500,000 shares of its common stock through an underwritten secondary offering. Concurrently, Ryerson Holding completed a share repurchase from Platinum of 1,613,022 shares of common stock for $47.7 million. Following the close of those transactions, Platinum's ownership of our common stock decreased from approximately 54% to approximately 43%. Ryerson Holding is no longer a “controlled company” within the meaning of the corporate governance standards of The New York Stock Exchange.

We are a leading value-added processor and distributor of industrial metals with operations in the U.S. through JT Ryerson and other U.S. subsidiaries, in Canada through our indirect wholly-owned subsidiary Ryerson Canada, Inc., a Canadian corporation (“Ryerson Canada”), and in Mexico through our indirect wholly-owned subsidiary Ryerson Metals de Mexico, S. de R.L. de C.V., a Mexican corporation (“Ryerson Mexico”). In addition to our North American operations, we conduct materials processing and distribution operations in China through an indirect wholly-owned subsidiary, Ryerson China Limited, a Chinese limited liability company (“Ryerson China”). Unless the context indicates otherwise, Ryerson Holding, JT Ryerson, Ryerson Canada, Ryerson Mexico, and Ryerson China together with their subsidiaries, are collectively referred to herein as “Ryerson,” “we,” “us,” “our,” or the “Company.”

Principles of Consolidation. The Company consolidates entities in which it owns or controls more than 50% of the voting shares. All significant intercompany balances and transactions have been eliminated in consolidation.

Equity Investments. Investments in affiliates in which the Company’s ownership is 20% to 50% are accounted for by the equity method. Equity income is reported in other income and (expense), net in the Consolidated Statements of Operations. Equity income during the years ended December 31, 2022, 2021 and 2020 totaled zero.

Business Segments. Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280, “Segment Reporting” (“ASC 280”), establishes standards for reporting information on operating segments in interim and annual financial statements. Our Board of Directors, which includes our Chief Executive Officer, serve as our Chief Operating Decision Maker (“CODM”). Our CODM reviews our financial information for purposes of making operational decisions and assessing financial performance. The CODM views our business globally as metals service centers. We have one operating and reportable segment, metal service centers, in accordance with the criteria set forth in ASC 280.

Use of Estimates. The preparation of financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes to the financial statements. Changes in such estimates may affect amounts reported in future periods.

Revenue Recognition. Revenue is recognized in accordance with FASB ASC 606, “Revenue from Contracts with Customers” (“ASC 606”). Revenue is recognized based on the consideration expected to be received for delivery of as-is or processed metal products when, or as, the Company satisfies its contractual obligation to transfer control of a product to a customer, which we refer to as a performance obligation. See Note 17: Revenue Recognition for further details.

Provision for allowances, claims, and doubtful accounts. The Company follows the guidance under ASC 326 “Financial Instruments – Credit Losses” (“ASC 326”). The Company monitors customer payments and maintains a provision for estimated credit losses based on historical experience and specific customer collection issues that the Company has identified. Estimation of such losses requires adjusting historical loss experience for current economic conditions and judgments about the probable effects of economic conditions on certain customers. See Note 18: Provision for Credit Losses for further details.

Shipping and Handling Fees and Costs. Shipping and handling fees billed to customers are classified in net sales in our Consolidated Statement of Operations. Shipping and handling costs are classified in warehousing, delivery, selling, general, and administrative expenses in our Consolidated Statement of Operations. These costs totaled $137.8 million, $125.2 million, and $113.7 million for the years ended December 31, 2022, 2021, and 2020, respectively. In accordance with ASC 606,the Company has elected to treat shipping and handling costs as an activity necessary to fulfill the performance obligation to transfer product to the customer and not as a separate performance obligation. Shipping and handling costs are estimated at quarter end in proportion to revenue recognized for transactions where actual costs are not yet known.

Benefits for Retired Employees. The Company recognizes the funded status of its defined benefit pension and other postretirement plans in the Consolidated Balance Sheets, with changes in the funded status recognized through accumulated other comprehensive income (loss), in the year in which the changes occur. Service cost is included in warehousing, delivery, selling, general, and administrative expenses and all other components of net benefit costs are recognized in other income and (expense), net, in the Consolidated Statement of Operations. The estimated cost of the Company’s defined benefit pension plan and its postretirement medical benefits are determined annually or upon plan remeasurement after considering information provided by consulting actuaries. Key factors used in developing estimates of these liabilities include assumptions related to discount rates, rates of return on investments, mortality rates, future compensation costs, healthcare cost trends, benefit payment patterns, and other factors. The cost of these benefits for retirees is accrued during their term of employment. Pensions are funded primarily in accordance with the requirements of the Employee Retirement Income Security Act (“ERISA”) of 1974 and the Pension Protection Act of 2006. Costs for retired employee medical benefits are funded when claims are submitted. Certain employees are covered by a defined contribution plan, for which the cost is expensed in the period earned.

Cash Equivalents. Cash equivalents reflected in the financial statements are highly liquid, short-term investments with original maturities of three months or less. Checks issued in excess of funds on deposit at the bank represent “book” overdrafts. We reclassified $106.8million and $77.3million to accounts payable at December 31, 2022 and 2021, respectively.

Inventory Valuation. Inventories are stated at the lower of cost or market value. We primarily use the last-in, first-out (“LIFO”) method for valuing our domestic inventories. We use the moving average cost and the specific cost methods for valuing our foreign inventories.

Property, Plant, and Equipment. Property, plant, and equipment, including land use rights and finance lease assets, are depreciated for financial reporting purposes using the straight-line method over the estimated useful lives of the assets. The provision for depreciation in all periods presented is based on the following estimated useful lives of the assets:

Land improvements 20 years

Buildings 45 years

Machinery and equipment 10-15 years

Furniture and fixtures 10 years

Transportation equipment 3-6 years

Software 5 years

Land use rights 50 years

Expenditures for normal repairs and maintenance are charged against income in the period incurred.

Internal-Use Software. Software is recognized in accordance with FASB ASC 350-40, "Internal - Use Software" (ASC 350-40). The Company has various software that is acquired, internally developed, or modified solely to meet the Company's internal needs, and software that the Company obtains access to in a cloud computing arrangement that includes internal-use software licenses. Software developments costs are capitalized when the preliminary project stage is complete and the development stage of the project commences, it is probable that the project will be complete, and the software will be used to perform the function intended. Costs associated with preliminary project stage activities, training, maintenance, and all other post implementation stage activities are expensed as incurred. The capitalization policy provides for the capitalization of certain payroll costs for employees who are directly associated with developing internal-use software as well as certain external direct costs. Capitalized employee costs are limited to the time directly spent on such projects. We also capitalize certain costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Our cloud computing arrangements that include a license to an internal use software which doesn't meet the criteria as defined by ASC 350-40 are accounted for as service contracts and do not constitute a purchase of a software or license to a software and as such are accounted as prepaid expenses and are amortized over the prepayment period. As of December 31, 2022 and 2021 we had $2.0 million and $1.8 million of software in prepaid expenses and other current assets on the Consolidated Balance Sheets, respectively. See Note 5: Property Plan and Equipment, for further details.

Leases. Leases are recognized in accordance with FASB ASC 842, “Leases” (“ASC 842”). TheCompany leases various assets including real estate, trucks, trailers, mobile equipment, processing equipment, and IT equipment. See Note 6: Leases, for further details.

Goodwill. In accordance with FASB ASC 350, “Intangibles – Goodwill and Other” (“ASC 350”), goodwill is reviewed at least annually for impairment or whenever indicators of potential impairment exist. We test for impairment of goodwill by assessing various qualitative factors with respect to developments in our business and the overall economy. If we determine that it is more likely than not that the fair value of a reporting unit is less than the carrying value based on our qualitative assessment, we will proceed to

the quantitative goodwill impairment test, in which we compare the fair value of the reporting unit where the goodwill resides to its carrying value. If the carrying amount of goodwill exceeds its implied fair value, an impairment loss is recognized in an amount equal to that excess, not to exceed the carrying amount of the goodwill. The fair value of the reporting unit is estimated using a combination of an income approach and a market approach as this combination is deemed to be the most indicative of fair value in an orderly transaction between market participants.

Long-lived Assets and Other Intangible Assets. Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company estimates the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the asset, an impairment is recognized. Any related impairment loss is calculated based upon comparison of the fair value to the carrying value of the asset. Separate intangible assets that have finite useful lives are amortized over their useful lives. An impaired intangible asset would be written down to fair value, using the discounted cash flow method.

Accrued Vacation Liability. The Company's vacation policy is such that employees earn their vacation for the current year as work is performed throughout the year and forfeit any unused vacation at the end of the year, with the exception of a partial rollover allowance subject to a cap.

Deferred Financing Costs. Deferred financing costs associated with the issuance of debt are being amortized using either the effective interest method or straight line method over the life of the debt in accordance with FASB ASC 470, “Debt” (“ASC 470”). Deferred financing costs related to a recognized debt liability are presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability.

Foreign Currency. The Company translates assets and liabilities of its foreign subsidiaries, where the functional currency is the local currency, into U.S. dollars at the current rate of exchange on the last day of the reporting period. Revenues and expenses are translated at the average monthly exchange rates prevailing during the year.

For foreign currency transactions, the Company translates these amounts to the Company’s functional currency at the exchange rate effective on the invoice date. If the exchange rate changes between the time of purchase and the time actual payment is made, a foreign exchange transaction gain or loss results which is included in determining net income (loss) for the year. The Company recognized $1.6 million exchange loss, $0.2 million exchange loss, and zero exchange gains/losses for the years ended December 31, 2022, 2021, and 2020, respectively. These amounts are classified either in Other income and (expense), net or Warehousing, delivery, selling, general, and administrative expense in our Consolidated Statements of Operations.

Income Taxes. Deferred tax assets or liabilities reflect temporary differences between amounts of assets and liabilities for financial and tax reporting. Such amounts are adjusted, as appropriate, to reflect changes in enacted tax rates expected to be in effect when the temporary differences reverse. A valuation allowance is established to offset any deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The determination of the amount of a valuation allowance to be provided on recorded deferred tax assets involves estimates regarding (1) the timing and amount of the reversal of taxable temporary differences, (2) expected future taxable income, (3) the impact of tax planning strategies, and (4) the ability to carry back tax losses to offset prior taxable income. In assessing the need for a valuation allowance, the Company considers all available positive and negative evidence, including past operating results, projections of future taxable income, and the feasibility of ongoing tax planning strategies. The projections of future taxable income include a number of estimates and assumptions regarding volume, pricing, costs, and industry cyclicality.

Significant judgment is required in determining income tax provisions and in evaluating tax positions. In the normal course of business, the Company and its subsidiaries are examined by various federal, state, and foreign tax authorities. The Company records the impact of a tax position, if that position is more likely than not (i.e., greater than 50% likely) to be sustained in audit, based on the technical merits of the position. The Company regularly assesses the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of our provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, the current tax liability, and deferred taxes in the period in which the facts that give rise to a revision become known.

The Company recognizes the benefit of tax positions when a benefit is more likely than not to be sustained on its technical merits. Recognized tax benefits are measured at the largest amount that is more likely than not to be sustained, based on cumulative probability, in final settlement of the position. The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

Earnings Per Share Data. Basic earnings per share (“EPS”) is computed by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share is computed by giving effect to all dilutive potential common shares that were outstanding during the period, unless inclusion of the potential common shares would have an antidilutive effect. Basic earnings per share excludes the dilutive effect of common stock equivalents such as stock options and warrants, while diluted earnings per share, assuming dilution, includes such dilutive effects.

Stock-Based Compensation. All of our stock-based compensation plans are classified as equity awards. The fair value of restricted stock units (“RSUs”) and performance stock units (“PSUs”) is determined based on the fair value of our common stock on the grant date. The fair value of stock options is estimated based on a Monte Carlo simulation and considers variables such as volatility, dividend yield, risk-free rate, and the expected exercise multiple in computing the value of the options. The fair value of stock options, RSUs, and PSUs is expensed on a straight-line basis over their respective vesting periods. We have elected to recognize forfeitures as they occur. See Note 12: Stock-Based Compensation for further details.

Recent Accounting Pronouncements

Impact of Recently Issued Accounting Standards–Adopted

No accounting pronouncements have been issued that impact our financial statements.

Impact of Recently Issued Accounting Standards–Not Yet Adopted

We consider the applicability and impact of all Accounting Standard Updates (“ASUs”). We assessed the ASUs and determined that they either were not applicable or were not expected to have a material impact on our financial statements. Therefore, there are no accounting pronouncements have been issued that we have not yet adopted.

Note 2: Acquisitions

On February 28, 2022, Ryerson Canada acquired substantially all of the assets of Apogee Steel Fabrication Incorporated (“Apogee”), a sheet metal fabricator located in Mississauga, Ontario, Canada. Apogee is a full-line fabrication company providing sheering, punching, forming, and laser cut processing in addition to welding and hardware assembly services. Apogee provides complex fabrication assemblies in stainless steel, aluminum, and carbon sheet and adds to Ryerson’s value-added processing capabilities. The total amount paid by Ryerson Canada for the acquisition amounted to $3.1 million. The acquisition is not material to our consolidated financial statements.

On May 9, 2022, JT Ryerson paid $2.0 million to acquire a 30% ownership interest in FreeFORM Manufacturing, LLC (“FreeFORM”), an additive manufacturing and engineering company specializing in metal additive manufacturing including metal binder jet 3D printing and metal injection molding. Founded in 2020, FreeFORM serves manufacturers in a multitude of industries and strategically aligns with Ryerson's current and future customer base. This investment is accounted for using the equity method of accounting in accordance with Accounting Standards ASC 323, "Investments - Equity Method and Joint Ventures". The investment is not material to our consolidated financial statements.

On May 31, 2022, JT Ryerson paid $2.9 million to acquire Ford Tool Steels, Inc. (“FTS”), a tool steel processor located in St. Louis, Missouri. FTS serves customers across the Midwest U.S. with tool steel and alloys, as well as cut-to-length sawing, plate sawing, and grinding and milling services. The transaction resulted in a bargain purchase gain primarily due to higher property, plant, and equipment fair values compared to book values. The Company used a third-party real estate firm to estimate the fair value of the acquired building and internal resources to estimate the fair value of the machinery and equipment. The gain of $0.6 million is included in Other income and (expense), net in the Consolidated Statements of Operations. The acquisition is not material to our consolidated financial statements.

On November 1, 2022, JT Ryerson paid $31.8 million to acquire Excelsior, Inc. (“Excelsior”). Based in Fresno, California, Excelsior is a full-service fabrication and machining company with advanced processing capabilities including machining centers, laser and waterjet cutting, welding, and complex assemblies that are a value-add to Ryerson's processing capabilities. The acquisition is not material to our consolidated financial statements. The company has not yet finalized the process of measuring the fair value of Excelsior assets acquired and liabilities assumed in accordance with ASC 805, "Business Combinations" as of December 31, 2022 due to the timing of the acquisition in relation to the reporting date.

Note 3: Cash, Cash Equivalents, and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the beginning and ending cash balances shown in the Consolidated Statements of Cash Flows:

At December 31,

(In millions)

Cash and cash equivalents $ 39.2 $ 51.2

Restricted cash 1.3 1.2

Total cash, cash equivalents, and restricted cash $ 40.5 $ 52.4

We had cash restricted for the purposes of covering letters of credit that can be presented for potential insurance claims.

Note 4: Inventories

The Company primarily uses the last-in, first-out (LIFO) method of valuing inventory. Inventories, at stated LIFO value, were classified at December 31, 2022 and 2021 as follows:

At December 31,

(In millions)

In process and finished products $ 798.5 $ 832.1

If current cost had been used to value inventories, such inventories would have been $245 million higher and $303 million higher than reported at December 31, 2022 and 2021, respectively. Approximately 90% and 88% of inventories are accounted for under the LIFO method at December 31, 2022 and 2021, respectively. Non-LIFO inventories consist primarily of inventory at our foreign facilities using the moving average cost and the specific cost methods. Substantially all of our inventories consist of finished products.

The Company has consignment inventory at certain customer locations, which totaled $7.4 million and $8.8 million at December 31, 2022 and 2021, respectively.

Note 5: Property, Plant, and Equipment

Property, plant, and equipment consisted of the following at December 31, 2022 and 2021:

At December 31,

(In millions)

Land and land improvements $ 66.1 $ 65.0

Buildings and leasehold improvements 158.4 141.2

Machinery, equipment, and other 532.0 475.8

Construction in progress 83.4 47.4

Less: Accumulated depreciation (440.2 ) (404.5 )

Net property, plant, and equipment $ 458.4 $ 388.3

The Company recognized gains on the sale of assets classified as held for sale of $0.4 million, zero, and zero for the years ended December 31, 2022, 2021, and 2020 respectively. The Company had zero and $1.2 million of assets held for sale classified within “Prepaid expenses and other current assets” on the Consolidated Balance Sheet as of December 31, 2022 and 2021, respectively.

During the year ended December 31, 2021, the Company completed several asset sales in the form of sale-leasebacks to generate cash proceeds that were, in part, utilized to redeem a portion of the 8.50% senior secured notes due 2028 (the “2028 Notes”), and also in a continued effort to optimize our facility footprint. Each of these sale-leasebacks were for varying periods of time, ranging from 21 months to 15 years, and therefore the Company recorded right of use assets of $95.1 million and lease liabilities of $86.4 million. See Note 6: Leases for further discussion of the individually significant leaseback transaction. As a result of these transactions, $65.4 million of land and building assets, net of accumulated depreciation, were sold for net cash proceeds of $163.2 million, resulting in a total gain of $107.7 million.

The Company also had normal course asset sale activity which generated additional cash proceeds of $8.0 million, $3.1 million, and $0.1 million at December 31, 2022, 2021 and 2020, respectively.

Note 6: Leases

The Company leases various assets including real estate, trucks, trailers, cars, mobile equipment, processing equipment, and IT equipment. The Company has noncancelable operating leases expiring at various times through 2042, and finance leases expiring at various times through 2028.

Policy Elections & Practical Expedients

The Company has made an accounting policy election not to record leases with an initial term of twelve months or less (“short term leases”) on the balance sheet as allowed within ASC 842. Short term lease expense is recognized on a straight-line basis over the lease term. The Company has elected to apply the practical expedient that allows for the combination of lease and non-lease components for all asset classes.

Significant Judgments

Many of our real estate leases include one or more options to renew, with renewal terms that can extend the lease term from one to 5 years or more. To determine the expected lease term, we include any noncancelable periods within the lease agreement as well as any periods covered by an option to extend the lease if we are reasonably certain to exercise the option. The equipment leases do not typically include options for renewal but may include options for purchase at the end of the lease. We determine the likelihood of exercising the option for purchase by assessing the option price versus the estimated fair value at the end of the lease term to determine if the option price is advantageous that we are reasonably certain to exercise it. The depreciable life of finance lease assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Lease payments include fixed payments, the exercise price of a purchase option that is reasonably certain of exercise, variable payments based on a known index, and the amount probable that the Company will owe under a residual value guarantee. Variable lease payments that are not based on a known index are not included in lease payments and are expensed as incurred.

The discount rate used to determine the amount of right of use assets, lease liabilities, and lease classification is the interest rate implicit in the lease, when known. If the rate implicit in the lease is not known, the Company will use its incremental borrowing rate defined as the interest rate swap rate that approximates the lease term plus the long-term expected spread on the $1.3 billion revolving credit facility amended as of June 29, 2022 (the “Ryerson Credit Facility”).

In June 2021, we sold and leased back a group of service center properties located in Delaware, Florida, Kentucky, Minnesota, Missouri, Oklahoma, Pennsylvania, Tennessee, Texas, and Virginia for net proceeds of approximately $104 million. The total annual rent for the properties starts at approximately $6.4 million per year, with the amount increasing at 1.5% annually over the 15-year lease term, including, without limitation, during any renewal term. Under the terms of the lease agreement, the Company is responsible for all taxes, insurance, and utilities and is required to adequately maintain the properties for the lease term. The lease includes two renewal options for five years each.

The 2021 transaction met the requirements for sale leaseback accounting under ASC 842 and ASC 606. Accordingly, the Company recognized the sale of the properties, which resulted in a gain of approximately $62.5 million recorded in the Consolidated Statement of Operations. The related land and buildings were removed from property, plant, and equipment and operating lease assets and liabilities of $84.4 million, respectively, were recorded in the Consolidated Balance Sheet.

In the third quarter of 2022, a long-term operating lease commenced for a new state-of-the-art facility in Centralia, Washington. The starting annual rent is approximately $2.8 million per year, with annual increases of 2.25% over the 20-year lease term and any renewal terms. The lease includes two renewal options of five years each. Under the terms of the lease agreement, the Company is responsible for all taxes, insurance, and utilities, as well as adequately maintaining the property for the lease term. The initial right of

use asset and operating lease liability recorded in the Consolidated Balance Sheet was $51.2 million and $46.1 million, respectively, the difference of $5.1 million is related to a lease prepayment.

The following table summarizes the location and amount of lease assets and lease liabilities reported in our Consolidated Balance Sheets as of December 31, 2022 and 2021:

At December 31,

(In millions)

Assets

Operating lease assets Operating lease assets $ 240.5 $ 211.1

Finance lease assets Property, plant, and equipment, net(a) 26.5 41.2

Liabilities

Current

Operating Current portion of operating lease liabilities $ 25.2 $ 24.9

Finance Other accrued liabilities 7.1 12.5

Noncurrent

Operating Noncurrent operating lease liabilities 215.1 184.8

Finance Other noncurrent liabilities 12.0 16.0

(a)

Finance lease assets are recorded net of accumulated amortization of $12.6 million and $15.6 million as of December 31, 2022 and 2021, respectively.

The following table summarizes the location and amount of lease expense reported in our Consolidated Statements of Operations for the twelve months ended December 31, 2022, 2021 and, 2020:

Year Ended December 31,

Lease Expense Location of Lease Expense Recognized in Income 2022 2021 2020

(In millions)

Finance lease expense

Interest on lease liabilities Interest and other expense on debt 0.8 1.0 1.2

The following table presents the maturity analysis of lease liabilities at December 31, 2022:

Maturity of Lease Liabilities Operating Leases(a) Finance Leases

(In millions)

Less: Interest(b) (57.7 ) (1.1 )

Present value of lease liabilities(c) $ 238.7 $ 19.1

(a)

There were no operating leases with options to extend lease terms that are reasonably certain of being exercised, and the lease payments excluded an estimated amount of $128.8 million of legally binding lease payments for leases signed but not yet commenced.

(b)

Calculated using the discount rate for each lease.

(c)

Includes the current portion of $25.2 million for operating leases and $7.1 million for finance leases. The operating lease payments are net of $1.6 million of prepayments, which are recorded within the Right of Use Asset line of the Consolidated Balance Sheet.

The following table shows the weighted-average remaining lease term and discount rate for operating and finance leases, respectively, at December 31, 2022 and 2021:

At December 31,

Weighted-average remaining lease term (years)

Finance leases 3.2 2.9

Weighted-average discount rate

Operating leases 3.6 % 3.2 %

Finance leases 3.5 % 3.4 %

Information reported in our Consolidated Statement of Cash Flows for the twelve months ended December 31, 2022, 2021, and 2020 is summarized below:

Year Ended December 31,

(In millions)

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows from operating leases $ 34.3 $ 29.7 $ 25.3

Operating cash flows from finance leases 0.8 1.0 1.2

Financing cash flows from finance leases 9.2 10.5 13.1

Assets obtained in exchange for lease obligations:

Note 7: Definite-Lived Intangible Assets

The following summarizes the components of definite-lived intangible assets at December 31, 2022 and 2021:

(In millions)

Amortizable intangible assets

Developed technology / product know-how 9.4 4.8 (3.6 ) 1.2 4.8 (3.3 ) 1.5

Amortization expense related to intangible assets reported in warehousing, delivery, selling, general, and administrative expense in our Consolidated Statements of Operations for the years ended December 31, 2022, 2021, and 2020 was $7.2million, $6.7 million, and $7.4 million, respectively.

Estimated amortization expense related to intangible assets at December 31, 2023, for each of the years in the five year period ending December 31, 2027 and thereafter is as follows:

EstimatedAmortization Expense

(In millions)

For the years ended thereafter 16.6

Note 8: Goodwill

Goodwill represents the excess of cost over the fair value of net assets acquired. The following is a summary of changes in the carrying amount of goodwill for the years ended December 31, 2022 and 2021:

Cost AccumulatedImpairment CarryingAmount

(In millions)

Acquisitions 3.8 — 3.8

Acquisitions 5.1 — 5.1

In 2022, the Company recognized $4.7 million of goodwill within the US Reporting unit and $0.4 million of goodwill within the Canada Reporting unit. All of the goodwill is deductible for income tax purposes with the exception of goodwill related to the Howard acquisition amounting to $0.2 million. See Note 2: Acquisitions for further information.

Pursuant to ASC 350, “Intangibles – Goodwill and Other,” we review the recoverability of goodwill annually as of October 1 or whenever significant events or changes occur which might impair the recovery of recorded amounts. Based on our October 1, annual goodwill impairment test, we determined there was no goodwill impairment in 2022.

Note 9: Restructuring and Other Charges

The following summarizes restructuring accrual activity for the years ended December 31, 2022, 2021, and 2020:

EmployeeRelatedCosts Tenancyand OtherCosts TotalRestructuringCosts

(In millions)

Restructuring charges 2.2 — 2.2

Cash payments (2.7 ) (0.3 ) (3.0 )

Addition to reserve — 0.1 0.1

Cash payments (0.5 ) — (0.5 )

Cash payments — (0.1 ) (0.1 )

2022

During 2022, the Company paid $0.1 million of tenancy-related costs for a facility closed in 2015. The remaining reserve balance of $0.6 million is expected to be paid through 2025.

RYZ US Equity

RYZ · 10-K · period ended 2022-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

RYZ US Equity☆

RYZ · 10-K · period ended 2022-12-31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

RYZ US Equity