RYZ US Equity☆

ITEM 1A. RISK FACTORS.

Our business faces many risks. You should carefully consider the risks and uncertainties described below, together with the other information in this report, including the consolidated financial statements and notes to consolidated financial statements. We cannot assure you that any of the events discussed in the risk factors below will not occur. These risks could have a material and adverse impact on our business, results of operations, financial condition, and cash flows.

RISKS RELATED TO THE CORONAVIRUS (COVID-19) PANDEMIC

The effects of the COVID-19 pandemic have had, and are expected to continue to have, an adverse impact on our business, operating results, and financial condition.

The global outbreak of a novel strain of coronavirus (“COVID-19”) was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020 and has negatively affected the U.S. and global economies, disrupted global supply chains, resulted in significant travel and transport restrictions, mandated closures and stay-at-home orders, and created significant disruptions in the financial markets. We continue to monitor the impact of the COVID-19 pandemic across our business. The global spread of COVID-19, and the various governmental, industry, and consumer actions related thereto, have had, and are expected to continue to have negative impacts on our business and operations, including softening demand for our products,

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disruptions in our supply chain and operations, and related restrictions on our employees, including quarantines, stay-at-home orders, and restrictions on travel.

In response to the COVID-19 pandemic, we have implemented several policies and procedures to protect the health and welfare of our employees first and foremost, while operating as an essential business, and maintaining our liquidity. We have communicated and enforced social distancing practices by alternating employee shifts, eliminating congregation, suspending non-essential travel, and by implementing work from home arrangements for those employees able to work remotely. COVID-19 has disrupted our internal operations, including by heightening the risk that our employees will suffer illness or otherwise not be permitted to work and exposing us to cybersecurity and other risks associated with a large number of our employees working remotely. In 2020, certain of our facilities have experienced temporary work disruptions as a result of COVID-19, and we cannot predict whether these will continue or if our facilities will experience more significant or frequent disruptions in the future. Furthermore, we have and may need to further reduce our workforce as a result of declines in our business caused by COVID-19, and any such reduction would cause us to incur costs. Moreover, there can be no assurance that we would be able to rehire our workforce in the event our business experiences a subsequent recovery.

On the whole, because manufacturing demand is tied closely to overall economic strength, economic uncertainty and/or increased unemployment that results from the COVID-19 pandemic or measures undertaken in response have led and could continue to lead to lower demand for our products. Although our end-markets are diverse, concerns regarding and measures implemented in response to the COVID-19 pandemic have and could further negatively influence overall demand, particularly for the consumer durable sector, resulting in cancellations or deferrals of orders and/or decreases in new deliveries.

COVID-19 has also led to disruption and volatility in the capital markets, which depending on future developments could adversely impact our capital resources and liquidity in the future.

We are also monitoring the impacts of the COVID-19 pandemic on the fair value of our assets. While we do not currently anticipate any material impairments of our assets as a result of COVID-19, future changes in expectations for sales, earnings, and cash flows related to intangible assets and goodwill below our current projections could cause these assets to be impaired.

We are continuing to monitor the impact of the COVID-19 pandemic across our business and will take appropriate actions in an effort to mitigate adverse consequences. The full extent to which the COVID-19 pandemic and measures taken in response thereto adversely impacts our business, financial condition, and results of operations will depend on numerous evolving factors and future developments, which are highly uncertain, rapidly changing, and cannot be predicted, including: the duration and scope of the outbreak; governmental, business, and individual actions that have been and continue to be taken in response to the outbreak, including travel restrictions, quarantines, social distancing, vaccine rollouts, work-at-home and stay-at-home orders; the impact of the outbreak on the financial markets and economic activity generally; the effect of the outbreak on our customers, suppliers, and other business partners; our ability to access usual sources of liquidity on reasonable terms; and our ability to comply with the financial covenants in our $1 billion revolving credit facility (the “Ryerson Credit Facility”) if a material economic downturn results in increased indebtedness or substantially lower EBITDA. All of the foregoing will likely impact our business, financial condition, results of operations, and forward-looking expectations.

The impact of the COVID-19 pandemic may also exacerbate the other risks discussed in this Form 10-K and in other filings we make from time to time with the SEC.

RISKS RELATED TO OUR INDUSTRY

Weakness in the economy, market trends, and other conditions affecting the profitability and financial stability of our customers could negatively impact our sales growth and results of operations.

Economic and industry trends affect our business environments. We serve several metals-consuming industries in which the demand for our products and services is sensitive to the production activity, capital spending, and demand for products and services of our customers. Many of these customers operate in markets that are subject to highly cyclical fluctuations resulting from seasonality, market uncertainty, costs of goods sold, currency exchange rates, foreign competition, offshoring of production, oil and natural gas prices, geopolitical developments, and a variety of other factors beyond our control. Any of these factors could cause customers to idle or close facilities, delay purchases, reduce production levels, or experience reductions in the demand for their own products or services.

Any of these events could impair the ability of our customers to make full and timely payments or reduce the volume of products and services these customers purchase from us and could cause increased pressure on our selling prices and terms of sale.

We do not expect the cyclical nature of our industry to change and any downturn in our customers’ industries could reduce our revenues and profitability or a significant or prolonged slowdown in activity in the United States (U.S.), Canada, or any other major world economy, or a segment of any such economy, could negatively impact our sales growth and results of operations.

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The metals services business is very competitive and increased competition could reduce our revenues and gross margins.

We face competition in all markets we serve, from metals producers that sell directly to certain customers or segments of the market, to other metal services companies. The metals services industry itself is highly fragmented and competitive. There are a few large competitors, but most of the market is served by small local and regional competitors. Competition is based principally on price, service, quality, production capabilities, inventory availability, and timely delivery.

We are experiencing increased pressure from online businesses that compete with price transparency. We expect technological advancements and the increased use of e-commerce solutions within the industry to continue to evolve at a rapid pace. As a result, our ability to effectively compete requires us to respond and adapt to new industry trends and developments, and implement new technology and innovations that may result in unexpected costs or may take longer than expected.

To remain competitive, we must be willing and able to respond to market pressures. These pressures, and the implementation, timing, and results of our strategic pricing and other responses, could have a material effect on our sales and profitability. If we are unable to grow sales or reduce costs, among other actions, to wholly or partially offset the effect on profitability of our pricing actions, our results of operations and financial condition may be adversely affected.

Changing metals prices may have a significant impact on our liquidity, net sales, gross margins, operating income, and net income.

The metals services industry as a whole is cyclical and, at times, pricing and availability of metal can be volatile due to numerous factors beyond our control, including general domestic and international economic conditions, labor costs, sales levels, competition, levels of inventory held by other metals service centers, consolidation of metals producers, higher raw material costs for the producers of metals, import duties and tariffs, and currency exchange rates. This volatility can significantly affect the availability and cost of materials for us. Our ability to pass on increases in costs in a timely manner depends on market conditions and may result in lower gross margins. In addition, higher prices could impact demand for these products, resulting in lower sales volumes. Moreover, we maintain substantial inventories of metal to accommodate the short lead times and just-in-time delivery requirements of our customers. Accordingly, we purchase metals in an effort to maintain inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon historic buying practices, contracts with customers, and market conditions. Commitments for metal purchases are generally at prevailing market prices in effect at the time orders are placed or at the time of shipment. During periods of rising metal prices, we may be negatively impacted by delays between the time of increases in the cost of metals to us and increases in the prices that we charge for our products if we are unable to pass these increased costs on to our customers. In addition, when metal prices decline, this could result in lower selling prices for our products and, as we use existing inventory that we purchased at higher metal prices, lower gross profit margins. Declines in prices or further reductions in sales volumes could adversely impact our ability to maintain our liquidity and to remain in compliance with certain financial covenants under our Ryerson Credit Facility, as well as result in us incurring inventory or goodwill impairment charges. Consequently, changing metals prices could significantly impact our liquidity, net sales, gross margins, operating income, and net income.

Unexpected product shortages could negatively impact customer relationships, resulting in an adverse impact on results of operations.

Disruptions could occur due to factors beyond our control, including economic downturns, political unrest, port slowdowns, trade issues, including increased export or import duties or trade restrictions, health crises, and other factors, any of which could adversely affect a supplier’s ability to manufacture ordeliver products to us. Public health problems may result in quarantines, business closures, transportation restrictions, import and export complications, and otherwise cause shortages in the supply of materials, higher costs for available supplies, or cause other disruptions within our operations and supply chain. Public health problems currently cause and may continue to cause increased costs of certain supplies and disruptions and delays within our supply chain, and public health problems may expose us to unanticipated liability or require us to change our business practices.

Any disruption resulting from these events could cause significant delays in shipments of products or difficulties in obtaining products, any of which may expose us to unanticipated liability or require us to change our business practices in a manner materially adverse to our business, results of operations, and financial condition. For our sources of lower cost products from Asia and other areas of the world, the effect of disruptions is typically increased due to the additional lead time required and distances involved. Further, the risk of disruption is increased due to the current political climate seeking trade reform. In addition, we have strategic relationships with a number of vendors. In the event we are unable to maintain those relations, there might be a loss of competitive pricing advantages which could, in turn, adversely affect results of operations.

Changes in customer or product mix could cause the gross margin percentage to decline.

From time to time, we experience changes in customer and product mix that affect gross margin. Changes in customer and product mix result primarily from business acquisitions, changes in customer demand, customer acquisitions, selling and marketing

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activities, and competition. If rapid growth with lower margin customers occurs, we will face pressure to maintain current gross margins, as these customers receive more discounted pricing due to their higher sales volume. There can be no assurance that we will be able to maintain historical gross margins in the future.

We may not be able to retain or expand our customer base if the North American manufacturing industry continues to erode through moving offshore or through acquisition and merger or consolidation activity in our customers’ industries.

Our customer base primarily includes manufacturing and industrial firms. Some of our customers operate in industries that are undergoing consolidation through acquisition and merger activity; some are considering or have considered relocating production operations overseas or outsourcing particular functions overseas; and some customers have closed as they were unable to compete successfully with overseas competitors. Our facilities are predominately located in the United States and Canada. To the extent that our customers cease U.S. operations, relocate, or move operations overseas to regions in which we do not have a presence, we could lose their business. Acquirers of manufacturing and industrial firms may have suppliers of choice that do not include us, which could impact our customer base and market share.

Global metal overcapacity and imports of metal products into the United States have adversely affected, and may again adversely affect, United States metal prices, which could impact our sales and results of operations.

At times, global metal production capacity may exceed global consumption of metal products. Such excess capacity sometimes results in metal manufacturers in certain countries exporting steel at prices that are lower than prevailing domestic prices and sometimes at or below their cost of production. Excessive imports of metal into the United States, such as in recent years, have exerted and may exert in the future, downward pressure on United States steel prices which may negatively affect our results of operations.

The U.S. government enacted several trade actions in 2018 and 2019 including tariffs on imported steel and aluminum products under Section 232 of the Trade Expansion Act. It is expected that these trade actions, while in effect, will limit metal imports from nonexempt countries. If these trade actions are relaxed, repealed, or if relatively higher U.S. metal prices make it attractive for foreign metal producers to export their products to the U.S., despite the presence of duties or tariffs, the resurgence of substantial imports of foreign steel could create downward pressure on U.S. metal prices which could have a material adverse effect on sales prices and future results of operations. To the extent these tariffs and other trade actions result in a decrease in demand for steel and aluminum, or products manufactured therefrom and, produced in the United States, or otherwise negatively impact demand for our products, our business may be adversely impacted.

Lead time and the cost of our products could increase if we were to lose one of our primary suppliers.

If, for any reason, our primary suppliers of aluminum, carbon steel, stainless steel, or other metals should curtail or discontinue their delivery of such metals in the quantities needed and at prices that are competitive, our business could suffer. The number of available suppliers could be reduced by factors such as industry consolidation and bankruptcies affecting steel and metal producers. For the year ended December 31, 2020, our top 25 suppliers represented approximately 73% of our purchases. We could be significantly and adversely affected if delivery were disrupted from a major supplier. If, in the future, we were unable to obtain sufficient amounts of the necessary metals at competitive prices and on a timely basis from our traditional suppliers, we may not be able to obtain such metals from alternative sources at competitive prices to meet our delivery schedules, which could have a material adverse effect on our sales and profitability.

RISKS RELATED TO MARKET AND ECONOMIC VOLATILITY

Changes in inflation may adversely affect gross margins.

Inflation impacts the costs at which we can procure product and the ability to increase prices to customers over time. Prolonged periods of deflation could adversely affect the degree to which we are able to increase sales through price increases.

The volatility of the market could result in a material impairment of goodwill.

We evaluate goodwill annually on October 1 and whenever events or changes in circumstances indicate potential impairment. Events or changes in circumstances that could trigger an impairment review include significant underperformance relative to our historical or projected future operating results, significant changes in the manner or the use of our assets or the strategy for our overall business, and significant negative industry or economic trends. We test for impairment of goodwill by assessing various qualitative factors with respect to development in our business and the overall economy and calculating the fair value of a reporting unit using a combination of an income approach based on discounted future cash flows and a market approach at the date of valuation, as necessary. Under the discounted cash flow method, the fair value of each reporting unit is estimated based on expected future

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economic benefits discounted to a present value at a rate of return commensurate with the risk associated with the investment. Projected cash flows are discounted to present value using an estimated weighted average cost of capital, which considers both returns to equity and debt investors.Please refer to the Section titled “Critical Accounting Estimates - Goodwill,” of Item 7, “Management’s Discussion and Analysis of Financial Conditions and Results of Operations,” and Note 1 — “Summary of Accounting and Financial Policies” of Part II, Item 8 "Financial Statements and Supplementary Data" for further information.

Poor investment performance or other factors could require us to make significant unplanned contributions to our pension plan and future funding for postretirement employee benefits other than pensions also may require substantial payments from current cash flow.

We provide defined benefit pension plans for certain eligible employees and retirees. The performance of the debt and equity markets affect the value of plan assets. A decline in the market value may increase the funding requirements for these plans. The cost of providing pension benefits is also affected by other factors, including interest rates used to measure the required minimum funding levels, the rate of return on plan assets, discount rates used in determining future benefit obligations, future government regulation, and prior contributions to the plans. Significant unanticipated changes in any of these factors may have an adverse effect on our financial condition, results of operations, liquidity, and cash flows.

RISKS RELATED TO EXPANSION AND INTERNATIONAL OPERATIONS

We may not be able to successfully consummate and complete the integration of future acquisitions, and if we are unable to do so, it could disrupt operations and cause unanticipated increases in costs and/or decreases in revenues and results of operations.

We have grown through a combination of internal expansion, acquisitions, and joint ventures. We intend to continue to grow through selective acquisitions, but we may not be able to identify appropriate acquisition candidates, obtain financing on satisfactory terms, consummate acquisitions, or integrate acquired businesses effectively and profitably into our existing operations. Restrictions contained in the agreements governing our notes, the Ryerson Credit Facility, or our other existing or future debt may also inhibit our ability to make certain investments, including acquisitions, and participations in joint ventures.

Acquisitions, partnerships, joint ventures, and other business combination transactions, both foreign and domestic, involve various inherent risks, such as uncertainties in assessing value, strengths, weaknesses, liabilities, and potential profitability. There is also risk relating to our ability to achieve identified operating and financial synergies anticipated to result from the transactions. Additionally, problems could arise from the integration of acquired businesses, including unanticipated changes in the business or industry or general economic conditions that affect the assumptions underlying the acquisition. Our future success will depend on our ability to complete the integration of these future acquisitions successfully into our operations. Specifically, after any acquisition, customers may choose to diversify their supply chains to reduce reliance on a single supplier for a portion of their metals needs. We may not be able to retain all of our and an acquisition’s customers, which may adversely affect our business and sales. Integrating acquisitions, particularly large acquisitions, requires us to enhance our operational and financial systems and employ additional qualified personnel, management, and financial resources, and may adversely affect our business by diverting management away from day-to-day operations. Further, failure to successfully integrate acquisitions may adversely affect our profitability by creating significant operating inefficiencies that could increase our operating expenses as a percentage of sales and reduce our operating income. In addition, we may not realize expected cost savings from acquisitions. Any one or more of these factors could cause us to not realize the benefits anticipated or have a negative impact on the fair value of the reporting units. Accordingly, goodwill and intangible assets recorded as a result of acquisitions could become impaired.

Certain of our operations are located outside of the United States, which subjects us to risks associated with international activities.

Certain of our operations are located outside of the United States, primarily in Canada, China, and Mexico. We are subject to the Foreign Corrupt Practices Act (“FCPA”), which generally prohibits U.S. companies and their intermediaries from making corrupt payments or otherwise corruptly giving anything of value to foreign officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment, and requires companies to maintain adequate record-keeping and internal accounting practices. The FCPA applies to covered companies, individual directors, officers, employees, and agents. Under the FCPA, U.S. companies may be held liable for some actions taken by strategic or local partners or representatives. If we or our intermediaries fail to comply with the requirements of the FCPA, governmental authorities in the United States could seek to impose civil and/or criminal penalties.

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Our international operations and potential joint ventures may cause us to incur costs and risks that may distract management from effectively operating our North American business, and such operations or joint ventures may not be profitable.

We maintain foreign operations in Canada, China, and Mexico. International operations are subject to certain risks inherent in conducting business in, and with, foreign countries, including price controls, exchange controls, export controls, economic sanctions, duties, tariffs, limitations on participation in local enterprises, nationalization, expropriation and other governmental action, and changes in currency exchange rates. In addition, we may be subject to business disruptions created by health crises and outbreaks of communicable diseases, including the outbreak of COVID-19. While we believe that our current arrangements with local partners provide us with experienced business partners in foreign countries, events or issues, including disagreements with our partners, may occur that require attention of our senior executives and may result in expenses or losses that erode the profitability of our foreign operations or cause our capital investments abroad to be unprofitable.

We may be adversely affected by currency fluctuations in the U.S. dollar versus the Canadian dollar, the Chinese renminbi, and the Hong Kong dollar.

We have significant operations in Canada which incur the majority of their metal supply costs in U.S. dollars but earn the majority of their sales in Canadian dollars. Additionally, we have significant assets in China. We may from time to time experience losses when the value of the U.S. dollar strengthens against the Canadian dollar, the Chinese renminbi, or the Hong Kong dollar, which could have a material adverse effect on our results of operations. In addition, we are subject to translation risk when we consolidate our Canadian and Chinese subsidiaries’ net assets into our balance sheet. Fluctuations in the value of the U.S. dollar versus the Canadian dollar, Chinese renminbi, or the Hong Kong dollar could reduce the value of these assets as reported in our financial statements, which could, as a result, reduce our stockholders’ equity.

The Chinese government exerts substantial influence over the manner in which we must conduct our business activities, particularly with regards to the land our facilities are located on.

The Chinese government has exercised and continues to exercise substantial control over the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property, and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Moreover, the Chinese court system does not provide the same property and contract right guarantees as do courts in the United States and, accordingly, disputes may be protracted and resolution of claims may result in significant economic loss.

Additionally, there is no private ownership of land in China and all land ownership is held by the government of China, its agencies, and collectives, which issue land use rights that are generally renewable. We lease the land where our Chinese facilities are located from the Chinese government. If the Chinese government decided to terminate our land use rights agreements, our assets could become impaired and our ability to meet customer orders could be impacted.

RISKS RELATED TO CYBERSECURITY

Damage to our information technology infrastructure could harm our business.

The unavailability of any of our computer-based systems for any significant period of time could have a material adverse effect on our operations. In particular, our ability to manage inventory levels successfully largely depends on the efficient operation of our computer hardware and software systems. We use management information systems to track inventory information at individual facilities, communicate customer information, and aggregate daily sales, margin, and promotional information. Difficulties associated with upgrades, installations of major software or hardware, and integration with new systems could have a material adverse effect on results of operations. We could be required to expend substantial resources to integrate our information systems with the systems of companies we have acquired. The integration of these systems may disrupt our business or lead to operating inefficiencies. In addition, these systems are vulnerable to, among other things, damage or interruption from fire, flood, tornado, and other natural disasters, power loss, computer system and network failures, operator negligence, physical and electronic loss of data, or security breaches and computer viruses.

We are subject to cybersecurity risks and may incur increasing costs in an effort to minimize those risks.

We depend on the proper functioning and availability of our information technology platform, including communications and data processing systems, in operating our business. These systems include software programs that are integral to the efficient operation of our business. We have established security measures, controls, and procedures, including established recovery procedures for

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critical systems and business functions, to safeguard our information technology systems and to prevent unauthorized access to such systems and any data processed or stored in such systems, and we periodically evaluate and test the adequacy of such systems, measures, controls, and procedures; however, there can be no guarantee that such systems, measures, controls, and procedures will be effective. Security breaches could expose us to a risk of loss or misuse of our information, litigation, and potential liability. In addition, cyber incidents that impact the availability, reliability, speed, accuracy, or other proper functioning of these systems could have a significant impact on our operations, and potentially on our results. We may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyberattacks. A significant cyber incident, including system failure, security breach, disruption by malware, or other damage could interrupt or delay our operations, result in a violation of applicable privacy and other laws, damage our reputation, cause a loss of customers, or give rise to monetary fines and other penalties, which could be significant.

RISKS RELATED TO OPERATING OUR BUSINESS

Any significant work stoppages can harm our business.

As of December 31, 2020, we employed approximately 3,600 persons in North America and 300 persons in China. Our North American workforce was comprised of approximately 1,600 office employees and approximately 2,000 plant employees. Eighteen percent of our plant employees were members of various unions, including the United Steel Workers and The International Brotherhood of Teamsters.

Nine renewal contracts and one initial contract covering approximately 196 employees were successfully negotiated in 2020. Six contracts covering 96 employees are currently scheduled to expire in 2021.

Certain employee retirement benefit plans are underfunded and the actual cost of those benefits could exceed current estimates, which would require us to fund the shortfall.

As of December 31, 2020, our pension plan had an unfunded liability of $154 million. Our actual costs for benefits required to be paid may exceed those projected and future actuarial assessments to the extent that those costs exceed the current assessment. Under those circumstances, the adjustments required to be made to our recorded liability for these benefits could have a material adverse effect on our results of operations and financial condition and cash payments to fund these plans could have a material adverse effect on our cash flows. We may be required to make substantial future contributions to improve the plan’s funded status.

Any prolonged disruption of our processing centers could harm our business.

We have dedicated processing centers that permit us to produce standardized products in large volumes while maintaining low operating costs. We may suffer prolonged disruption in the operations of any of these facilities, whether due to labor or technical difficulties, destruction, or damage to any of the facilities or otherwise, which could adversely affect our operating results.

If we are unable to retain, attract, and motivate management and key personnel, it may adversely affect our business.

In order to compete and have continued growth, we must attract, retain, and motivate executives and other key employees, including those in managerial, technical, sales, marketing, and support positions. We believe that our success is due, in part, to our experienced management team. Losing the services of one or more members of our management team such as our CEO, Edward J. Lehner, could adversely affect our business and possibly prevent us from improving our operational, financial, and information management systems and controls. We compete to hire employees and then must train them and develop their skills and competencies. In the future, we may need to retain and hire additional qualified sales, marketing, administrative, operating, and technical personnel, and to train and manage new personnel. Our ability to implement our business plan is dependent on our ability to retain, hire, and train a large number of qualified employees each year. Our results of operations could be adversely affected by increased costs due to increased competition for employees, higher employee turnover, or increased employee benefit costs.

Our risk management strategies may result in losses.

From time to time, we may use fixed-price and/or fixed-volume supplier contracts to offset contracts with customers. Some of our existing supply agreements have required minimum purchase quantities. Under adverse economic conditions, those minimums may exceed our needs. Absent exceptions for force majeure and other circumstances affecting the legal enforceability of the agreements, these minimum purchase requirements may compel us to purchase quantities of raw materials that could significantly exceed our anticipated needs or pay damages to the supplier for shortfalls. In these circumstances, we would attempt to negotiate agreements for new purchase quantities. There is a risk, however, that we would not be successful in reducing purchase quantities, either through negotiation or litigation. If that occurred, we would likely be required to purchase more of a particular raw material in a particular year than we need, negatively affecting our results of operations and cash flows.

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Additionally, we may use commodity contracts, foreign exchange contracts, and interest rate swaps to manage our exposure to commodity price risk, foreign currency exchange risk, and interest rate risk. These risk management strategies pose certain risks, including the risk that losses on a hedge position may exceed the amount invested in such instruments. Moreover, a party in a hedging transaction may be unavailable or unwilling to settle our obligations, which could cause us to suffer corresponding losses. A hedging instrument may not be effective in eliminating all of the risks inherent in any particular position. Our profitability may be adversely affected during any period as a result of use of such instruments.

RISKS RELATED TO REGULATORY AND LEGAL MATTERS

We could incur substantial costs related to environmental, health, and safety laws.

Our operations are subject to increasingly stringent environmental, health, and safety laws. These include laws that impose limitations on the discharge of pollutants into the air and water and establish standards for the treatment, storage, and disposal of regulated materials, and the investigation and remediation of contaminated soil, surface water, and groundwater. Failure to maintain or achieve compliance with these laws or with the permits required for our operations could result in substantial increases in operating costs and capital expenditures. In addition, we may be subject to fines and civil or criminal sanctions, third party claims for property damage or personal injury, worker’s compensation or personal injury claims, cleanup costs, or temporary or permanent discontinuance of operations. Certain of our facilities are located in industrial areas, have a history of heavy industrial use, and have been in operation for many years and, over time, we and other predecessor operators of these facilities have generated, used, handled, and disposed of hazardous and other regulated wastes. Environmental liabilities could exist, including cleanup obligations at these facilities or at off-site locations where materials from our operations were disposed of, which could result in future expenditures that cannot be currently quantified and which could have a material adverse effect on our financial position, results of operations, or cash flows. Such liabilities may be imposed without regard to fault or the legality of a party’s conduct and may, in certain circumstances, be joint and several. Future changes to environmental, health, and safety laws, including those related to climate change, could result in material liabilities and costs, constrain operations, or make such operations more costly for us, our suppliers, and our customers.

In October 2011, the United States Environmental Protection Agency (the “EPA”) named JT Ryerson as one of more than 100 businesses that may be a potentially responsible party for the Portland Harbor Superfund Site. See Item 3 “Legal Proceedings.”

As the EPA has not yet allocated responsibility for the contamination among the potentially responsible parties, including JT Ryerson, we do not currently have sufficient information available to us to determine whether the Record of Decision will be executed as currently stated, whether and to what extent JT Ryerson may be held responsible for any of the identified contamination, and how much (if any) of the final plan’s costs might ultimately be allocated to JT Ryerson. Therefore, management cannot predict the ultimate outcome of this matter or estimate a range of potential loss at this time.

Regulations related to conflict-free minerals may force us to incur additional expenses and place us at a competitive disadvantage.

On August 22, 2012, under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), the United States SEC adopted new requirements for reporting companies that use certain minerals and metals, known as “conflict minerals”, in their products, whether or not these products are manufactured by third parties. These requirements require companies to diligence, disclose, and report whether or not such minerals originate from the Democratic Republic of Congo and adjoining countries. Since our supply chain is complex, we may not be able to conclusively verify the origins for all metals used in our products and we may face reputational challenges with our customers. Additionally, as there may be only a limited number of suppliers offering “conflict free” metals, we cannot be sure that we will be able to obtain necessary metals from such suppliers in sufficient quantities or at competitive prices. Accordingly, we could incur significant cost related to the compliance process, including potential difficulty or added costs in satisfying the disclosure requirements. Moreover, we may encounter challenges to satisfy those customers who require that all of the components of our products be certified as conflict free which could place us at a competitive disadvantage if we are unable to do so.

Tax changes could affect our effective tax rate, the value of our deferred tax assets, and future profitability.

Our future results could be adversely affected by changes in the effective tax rate or changes in the treatment of deferred tax assets as a result of changes in Ryerson’s overall profitability, changes in the mix of earnings in countries with differing statutory tax rates, changes in tax legislation, the results of the examination of previously filed tax returns, and continuing assessment of the Company’s tax exposures. In particular, although the passage of the Tax Cut and Jobs Act of 2017 reduced the U.S. tax rate to 21%, our future earnings could be negatively impacted by changes in tax legislation including changing tax rates and tax base such as limiting, phasing-out, or eliminating deductions or tax credits, changing rules for earnings repatriations, and changing other tax laws in the U.S. or other countries.

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We are subject to litigation that could strain our resources and distract management.

From time to time, we are involved in a variety of claims, lawsuits, and other disputes arising in the ordinary course of business. These suits concern issues including product liability, contract disputes, employee-related matters, and personal injury matters. It is not feasible to predict the outcome of all pending suits and claims, and the ultimate resolution of these matters as well as future lawsuits that could have a material adverse effect on our business, financial condition, results of operations, cash flows, or reputation.

We may face product liability claims that are costly and create adverse publicity.

If any of the products that we sell cause harm to any of our customers, we could be exposed to product liability lawsuits. If we were found liable under product liability claims, we could be required to pay substantial monetary damages. Further, even if we successfully defended ourselves against this type of claim, we could be forced to spend a substantial amount of money in litigation expenses, our management could be required to spend valuable time in the defense against these claims, and our reputation could suffer.

Changes in the method of determining the London Interbank Offered Rate (“LIBOR”), or the replacement of LIBOR with an alternative reference rate, may adversely affect interest rates on our outstanding variable rate indebtedness.

Certain of our variable rate debt, including the Ryerson Credit Facility, currently uses LIBOR as a benchmark for establishing certain interest rates. LIBOR is the subject of recent proposals for reform and on July 27, 2017, the U.K. Financial Conduct Authority announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Federal Reserve Bank of New York has begun publishing a Secured Overnight Funding Rate (“SOFR”), which is intended to replace U.S. dollar LIBOR, and central banks in several other jurisdictions have also announced plans for alternative reference rates for other currencies. These reforms may cause LIBOR to perform differently than in the past or to disappear entirely. The consequences of these developments with respect to LIBOR cannot be entirely predicted but may result in an increase in the interest cost of our variable rate indebtedness. In the future, we may need to renegotiate our outstanding indebtedness or incur other indebtedness, and the phase-out of LIBOR may negatively impact the terms of such indebtedness. In addition, the overall financial market may be disrupted as a result of the phase-out or replacement of LIBOR. Disruption in the financial market could have a material adverse effect on our financial position, results of operations, and liquidity.

RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK

The market price for our common stock may be volatile.

Historically, there has been volatility in the market price for our common stock. Furthermore, the market price of our common stock could fluctuate substantially in the future in response to a number of factors, including, but not limited to, the risk factors described herein. Examples include:

• changes in commodity prices, especially metals;

• sales of our common stock by large or controlling shareholders;

• the amount of shares acquired for short-term investments;

In the past, the stock market has experienced significant price and volume fluctuations. This volatility has had a significant effect on the market prices of securities issued by many companies for reasons unrelated to their specific operating performance. These factors may adversely affect the trading price of our common stock, regardless of actual operating performance.

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In addition, stock markets from time to time experience extreme price and volume fluctuations that may be unrelated or disproportionate to the operating performance of companies. In the past, some shareholders have brought securities class action lawsuits against companies following periods of volatility in the market price of their securities. In the future we may be the target of similar litigation. Securities litigation, regardless of whether our defense is ultimately successful, could result in substantial costs and divert management’s attention and resources.

We have not paid cash dividends since our initial public offering in 2014 and any future dividend payments are at the discretion of our Board of Directors.

We have not declared or paid cash dividends on our common stock or any other equity security since our initial public offering in 2014. The amounts that may be available to us to pay cash dividends are restricted under our debt agreements. Any payment of cash dividends on our common stock in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, financial condition, future prospects, contractual restrictions, and other factors deemed relevant by our Board of Directors. Therefore, you should not rely on dividend income from shares of our common stock. For more information, see “Dividend Policy.” Your only opportunity to achieve a return on your investment in us may be if the market price of our common stock appreciates and you sell your shares at a profit, but there is no guarantee that the market price for our common stock will ever exceed the price that you pay for our common stock.

Our corporate documents and Delaware law contain provisions that could discourage, delay, or prevent a change in control of the Company.

Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult without the approval of our Board of Directors. These provisions:

These anti-takeover provisions and other provisions under Delaware law could discourage, delay, or prevent a transaction involving a change in control of our company, even if doing so would benefit our stockholders. These provisions could also discourage proxy contests and make it more difficult for our stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire.

Any issuance of preferred stock could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock, which could depress the price of our common stock.

Our Board of Directors will have the authority to issue preferred stock and to determine the preferences, limitations, and relative rights of shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by our stockholders. Our preferred stock could be issued with voting, liquidation, dividend, and other rights superior to the rights of our common stock. The potential issuance of preferred stock may delay or prevent a change in control of us, discouraging bids for our common stock at a premium over the market price, and adversely affect the market price and the voting and other rights of the holders of our common stock.

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RISKS RELATED TO OUR CAPITAL STRUCTURE

We have a substantial amount of indebtedness, which could adversely affect our financial position and prevent us from fulfilling our financial obligations.

We currently have a substantial amount of indebtedness. As of December 31, 2020, our total indebtedness was approximately $740.0 million and we had approximately $277 million of unused capacity under the Ryerson Credit Facility. Our substantial indebtedness may:

We may also incur additional indebtedness in the future. The terms of the Ryerson Credit Facility and the indenture governing our outstanding notes restrict but do not prohibit us from doing so, and the indebtedness incurred in compliance with these restrictions could be substantial. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify.

The covenants in the Ryerson Credit Facility and the indenture governing our notes impose, and covenants contained in agreements governing indebtedness that we incur in the future may impose, restrictions that may limit our operating and financial flexibility.

The Ryerson Credit Facility and the indenture governing our outstanding notes contain a number of significant restrictions and covenants that limit our ability and the ability of our restricted subsidiaries, including JT Ryerson, to:

• incur additional debt;

• pay dividends on our capital stock or repurchase our capital stock;

• make certain investments or other restricted payments;

• create liens or use assets as security in other transactions;

• engage in transactions with affiliates.

The terms of the Ryerson Credit Facility require that, in the event availability under the facility declines to a certain level, we maintain a minimum fixed charge coverage ratio at the end of each fiscal quarter. Total credit availability is limited by the amount of eligible accounts receivable, inventory, and qualified cash pledged as collateral under the agreement insofar as the Company is subject to a borrowing base comprised of the aggregate of these three amounts, less applicable reserves. As of December 31, 2020, total credit availability was $277 million. See discussion regarding the Ryerson Credit Facility in Note 10: “Debt” of Part II, Item 8 “Financial Statements and the Supplemental Data” as well as the discussion within the “Liquidity and Capital Resources” section of Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Additionally, subject to certain exceptions, the indenture governing the outstanding notes restricts JT Ryerson’s ability to pay Ryerson Holding dividends. Our future indebtedness may contain covenants more restrictive in certain respects than the restrictions contained in the Ryerson Credit Facility and the indenture governing the notes. Operating results below current levels or other adverse factors, including a significant increase in interest rates, could result in our being unable to comply with financial covenants that are contained in the Ryerson Credit Facility or that may be contained in any future indebtedness. In addition, complying with these covenants may also cause us to take actions that are not favorable to holders of our notes and may make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions.

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We may not be able to generate sufficient cash to service all of our indebtedness.

We are highly leveraged. Our ability to make payments on our indebtedness depends on our ability to generate cash in the future. Our outstanding notes, the Ryerson Credit Facility, and our other outstanding indebtedness are expected to account for significant cash interest expenses. Accordingly, we will have to generate significant cash flows from operations to meet our debt service requirements. If we do not generate sufficient cash flow to meet our debt service and working capital requirements, we may be required to sell assets, seek additional capital, reduce capital expenditures, restructure or refinance all or a portion of our existing indebtedness, or seek additional financing. Moreover, insufficient cash flow may make it more difficult for us to obtain financing on terms that are acceptable to us, or at all.

The right to receive payment on the 2028 Notes and the guarantees will be subordinated to the liabilities of non-guarantor subsidiaries.

The notes and related guarantees are structurally subordinated to all indebtedness of our subsidiaries that are non-guarantors of the 2028 Senior Secured Notes (the “2028 Notes”). While the indenture governing the 2028 Notes limits the indebtedness and activities of these non-guarantor subsidiaries, holders of indebtedness of, and trade creditors of, non-guarantor subsidiaries, including lenders under bank financing agreements, are entitled to payments of their claims from the assets of such subsidiaries before those assets are made available for distribution to any guarantor, as direct or indirect shareholder. While the non-guarantor subsidiaries have agreed under the indenture not to pledge or encumber their assets (other than with respect to permitted liens) without equally and ratably securing the notes, they will not guarantee the 2028 Notes notwithstanding any such pledge or encumbrance in favor of the 2028 Notes.

The non-guarantor subsidiaries represented, respectively, 10.9% and 52.5% of our net sales and EBITDA for the fiscal year ended December 31, 2020. In addition, these non-guarantor subsidiaries represented respectively, 12.2% and 7.7% of our assets and liabilities, as of December 31, 2020.

Accordingly, in the event that any of the non-guarantor subsidiaries or joint venture entities become insolvent, liquidates, or otherwise reorganizes:

Because a portion of our indebtedness bears interest at rates that fluctuate with changes in certain prevailing short-term interest rates, we are vulnerable to interest rate increases.

A portion of our indebtedness, including the Ryerson Credit Facility, bears interest at rates that fluctuate with changes in certain short-term prevailing interest rates. As of December 31, 2020, we had $285.0 million of outstanding borrowings under the Ryerson Credit Facility, with an additional $277 million available for borrowing under such facility. Assuming a consistent level of debt through-out 2020, a 100 basis point change in the interest rate on our floating rate debt effective from the beginning of the year would increase or decrease our interest expense under the Ryerson Credit Facility by approximately $2.5 million on an annual basis. If interest rates increase dramatically, we could be unable to service our debt, which could have a material adverse effect on our business, financial condition, results of operations, or cash flows.

Changes in our credit ratings and outlook may reduce access to capital and increase borrowing costs.

Our credit ratings are based on a number of factors, including our financial strength and factors outside of our control, such as conditions affecting our industry generally or the introduction of new rating practices and methodologies. We cannot provide assurances that our current credit ratings will remain in effect or that the ratings will not be lowered, suspended, or withdrawn entirely by the rating agencies. If rating agencies lower, suspend, or withdraw the ratings, the market price or marketability of our securities may be adversely affected. In addition, any negative change in ratings could make it more difficult for us to raise capital on acceptable terms, impact the ability to obtain adequate financing, and result in higher interest costs for our existing credit facilities, including the Ryerson Credit Facility, or on future financings.

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RISKS RELATED TO OUR STOCKHOLDER BASE

Platinum owns a significant percentage of our stock and has the right to nominate a majority of the members of the Corporation’s board and will be able to exert control over matters subject to stockholder approval.

Platinum owns approximately 21,037,500 shares of our common stock, which is approximately 55% of our issued and outstanding common stock. Therefore, Platinum may be able to determine all matters requiring stockholder approval. For example, Platinum may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that our stockholders may believe are in their best interest as stockholders.

The Company is party to an investor rights agreement (the “Investor Rights Agreement”) with certain affiliates of Platinum which provides, among other things, that for so long as Platinum collectively beneficially owns (i) at least 30% of the voting power of the outstanding capital stock of the Company, Platinum will have the right to nominate for election to the board of directors of the Company no fewer than that number of directors that would constitute a majority of the number of directors if there were no vacancies on the board, (ii) at least 15% but less than 30% of the voting power of the outstanding capital stock of the Company, Platinum will have the right to nominate two directors, and (iii) at least 5% but less than 15% of the voting power of the outstanding capital stock of the Company, Platinum will have the right to nominate one director. The agreement also provides that if the size of the board of directors is increased or decreased at any time, Platinum’s nomination rights will be proportionately increased or decreased, respectively, rounded up to the nearest whole number. As a result of Platinum’s ownership of a majority of the Company’s outstanding capital stock as well its board nomination rights pursuant to the Investor Rights Agreement, Platinum may significantly influence or effectively control our policies and operations, including the appointment of management, future issuances of our common stock or other securities, and the payment of dividends. In addition, Platinum has significant control over our decisions to enter into any other corporate transaction.

The interests of Platinum may not in all cases be aligned with the interests of the other holders of our common stock. For example, a sale of a substantial number of shares of stock in the future by Platinum could cause our stock price to decline. Further, Platinum could cause us to make acquisitions that increase the amount of the indebtedness that is secured or senior to the Company’s existing debt or sell revenue-generating assets, impairing our ability to make payments under such debt. Additionally, Platinum is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. Accordingly, Platinum may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. In addition, Platinum may have an interest in pursuing acquisitions, divestitures, and other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to holders of our common stock.

We are exempt from certain corporate governance requirements because we are a “controlled company” within the meaning of the NYSE rules and, as a result, our stockholders do not have the protections afforded by these corporate governance requirements.

Because Platinum controls more than 50% of the voting power of our common stock, we are considered to be a “controlled company” for purposes of the New York Stock Exchange (“NYSE”) listing requirements. Under the NYSE rules, a “controlled company” may elect not to comply with certain NYSE corporate governance requirements, including (1) the requirement that a majority of our Board of Directors consist of independent directors, (2) the requirement that the nominating and corporate governance committee of our Board of Directors be composed entirely of independent directors, (3) the requirement that the compensation committee of our Board of Directors be composed entirely of independent directors, and (4) the requirement for an annual performance evaluation of the nomination/corporate governance and compensation committees. Given that Platinum controls a majority of the voting power of our common stock, we are permitted, and have elected, to opt out of compliance with certain NYSE corporate governance requirements. Accordingly, holders of our common stock do not have the same protections afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 2. PROPERTIES.

As of December 31, 2020, the Company’s facilities are set forth below:

Operations in the United States

JT Ryerson maintains 80 operational facilities, including 5 locations that are dedicated to administration services. All of our metals service center facilities are in good condition and are adequate for JT Ryerson’s existing operations. Approximately 50% of

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these facilities are leased. The lease terms expire at various times through 2032. JT Ryerson’s properties and facilities are adequate to serve its present and anticipated needs.

Location Own/Lease

Birmingham, AL Owned

Mobile, AL Owned

Fort Smith, AR Owned

Hickman, AR** Leased

Little Rock, AR** Leased

Phoenix, AZ Leased

Dos Palos, CA Leased

Fresno, CA Leased

Livermore, CA Leased

Vernon, CA Owned

Commerce City, CO Owned

South Windsor, CT Leased/Vacated

Wilmington, DE Owned

Jacksonville, FL Owned

Tampa Bay, FL Owned

Lavonia, GA Leased

Norcross, GA Leased/Vacated

Norcross, GA** Owned

Des Moines, IA Owned

Eldridge, IA** Leased

Marshalltown, IA Owned

Chicago, IL (Headquarters)* Leased

Chicago, IL Owned

Chicago, IL Leased/Vacated

Chicago, IL Leased/Vacated

Dekalb, IL Leased

Elgin, IL Leased

Lisle, IL* Leased

Burns Harbor, IN Owned

Indianapolis, IN Owned

Portage, IN** Leased

Wichita, KS Leased

Shelbyville, KY** Owned

Shreveport, LA Owned

St. Rose, LA Owned

Devens, MA Owned

Grand Rapids, MI* Leased

Lansing, MI Leased

Minneapolis, MN Owned

Plymouth, MN Owned

Maryland Heights, MO Leased

North Kansas City, MO Owned

Jackson, MS Owned

Charlotte, NC** Owned

Charlotte, NC Leased

Greensboro, NC (2) Owned

Pikeville, NC Leased

Youngsville, NC Leased

Omaha, NE Owned

Lancaster, NY Leased

Cincinnati, OH Owned

Columbus, OH Leased

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Hamilton, OH* Leased

Hilliard, OH Leased

Streetsboro, OH Leased

Strongsville, OH Leased

Oklahoma City, OK Owned

Tulsa, OK Owned

Tigard, OR Leased

Ambridge, PA** Owned

Fairless Hills, PA Leased

Charleston, SC** Owned

Greenville, SC Owned

Wellford, SC Owned

Chattanooga, TN Owned/Vacated

Chattanooga, TN Leased

Gallatin, TN Leased

Knoxville, TN* Leased

Memphis, TN Owned

Dallas, TX Leased

El Paso, TX Leased

Houston, TX Owned

Houston, TX (2) Leased

McAllen, TX Leased

Odessa, TX Leased/Vacated

Salt Lake City, UT Leased

Pounding Mill, VA Leased

Richmond, VA Owned

Renton, WA Owned

Spokane, WA Leased

Green Bay, WI Owned

Green Bay, WI Leased

Hammond, WI Leased

Milwaukee, WI Owned

* Office space only

** Processing centers

Operations in Canada

Ryerson Canada, a wholly-owned indirect Canadian subsidiary of Ryerson Holding, has nine operational facilities in Canada. All of the metals service center facilities are in good condition and are adequate for Ryerson Canada’s existing and anticipated operations. Four facilities are leased. The lease terms expire at various times through 2025.

Location Own/Lease

Calgary, AB Owned

Edmonton, AB Owned

Richmond, BC Owned

Winnipeg, MB Owned

Winnipeg, MB Leased

Saint John, NB Owned

Brampton, ON Leased

Burlington, ON (includes Canadian Headquarters) Leased

Vaudreuil, QC Leased

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Operations in China

Ryerson China, an indirect wholly owned subsidiary of Ryerson Holding, has four service and processing centers in China, in Guangzhou, Dongguan, Kunshan, and Tianjin, performing coil processing, sheet metal fabrication, and plate processing. Ryerson China’s headquarters office building is located in Kunshan. We own all of our China facilities and have purchased the related land use rights. All of the facilities are in good condition and are adequate for Ryerson China’s existing and anticipated operations.

Operations in Mexico

Ryerson Mexico, an indirect wholly owned subsidiary of Ryerson Holding, has four facilities in Mexico. We have service centers in Monterrey, Tijuana, Hermosillo, and Queretaro, all of which are leased. The facilities are in good condition and are adequate for Ryerson Mexico’s existing and anticipated operations.

ITEM 3. LEGAL PROCEEDINGS.

In October 2011, the United States Environmental Protection Agency (the “EPA”) named JT Ryerson as one of more than 100 businesses that may be a potentially responsible party (“PRP”) for the Portland Harbor Superfund Site (the “PHS Site”). On January 6, 2017, the EPA issued an initial Record of Decision (“ROD”) regarding the site. The ROD includes a combination of dredging,capping, and enhanced natural recovery that would take approximately thirteen years to construct plus additional time for monitored natural recovery, at an estimated present value cost of $1.05 billion. In a change from its prior stance, at a meeting on December 4, 2018, the EPA indicated that it expected PRPs to submit a plan during 2019 to start remediation of the river and harbor per the original ROD within the next two to three years. The EPA also indicated that it expected allocation of amounts among the parties to be determined in the same two to three-year time frame. The EPA invited certain PRPs to a May 2, 2019 meeting to discuss starting the remedial design process. The EPA did not include JT Ryerson in those meetings.

On December 9, 2019, a PRP group met with Administrator Wheeler, the head of the EPA, to discuss updating the ROD as recent testing indicates that the levels of contamination have “drastically improved” and, thus, remediation should be much less drastic than that in the current ROD. Administrator Wheeler directed regional EPA staff to again review the ROD before moving forward with any enforcement action. On March 3, 2020, the regional EPA issued a letter to the PRP group, essentially rejecting the request but noting that new data would be used for fine-tuning the implementation of the remedy and to that extent could result in less active remediation.

The EPA indicated in a January 2, 2020 “progress update” letter that it is negotiating with certain parties to perform remedial design work at five unspecified areas which comprise 52% of the overall acreage subject to remediation. In late March 2020, the EPA issued a Unilateral Administrative Order for Remedial Design to Schnitzer Steel, ordering it to develop a remedial design plan for the river area which includes the area where our former facilities were. Schnitzer filed a petition for relief from the remedy required by the ROD as well as disclosures required by the EPA. Schnitzer’s 2020 disclosures made no mention of JT Ryerson and acknowledged that Schnitzer is the legal successor to the prior operator in the designated area.

The EPA has stated that it is willing to consider de minimis settlements, which JT Ryerson is trying to pursue; however, the EPA has not begun meeting with any of the smaller parties who have requested de minimis or de micromis status, stating that it does not have sufficient information to determine whether any parties meet such criteria and does not intend to begin those considerations until after the remedial design work is completed. It has met with selected parties that we believe to be larger targets. JT Ryerson has not been invited to meet with the EPA. As a result of the ongoing negotiations and filings over the ROD and the EPA’s decision not to meet with smaller parties, we cannot determine how allocations will be made and whether a de minimus settlement can be reached with the EPA.

As the EPA has not yet allocated responsibility for the contamination among the potentially responsible parties, including JT Ryerson, we do not currently have sufficient information available to us to determine whether the ROD will be executed as currently stated, whether and to what extent JT Ryerson may be held responsible for any of the identified contamination, and how much (if any) of the final plan’s costs might ultimately be allocated to JT Ryerson. Therefore, management cannot predict the ultimate outcome of this matter or estimate a range of potential loss at this time.

There are various other claims and pending actions against the Company. The amount of liability, if any, for those claims and actions as of December 31, 2020 is not determinable but, in the opinion of management, such liability, if any, will not have a material adverse effect on the Company’s financial position, results of operations, or cash flows. We maintain liability insurance coverage to assist in protecting our assets from losses arising from or related to activities associated with business operations.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

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PART II

Market Information for Common Stock

Our common stock has been listed on the New York Stock Exchange under the symbol “RYI” and was first traded on August 13, 2014.

Holders

As of February 24, 2021, there were 2 stockholders of record of our common stock. Because many shares of our common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial stockholders represented by these record holders.

Dividend Policy

We have not declared any cash dividends for the past two years. Any payment of cash dividends on our common stock in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, financial condition, future prospects, contractual restrictions, including under the Ryerson Credit Facility and our outstanding notes, and other factors deemed relevant by our Board of Directors.

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Performance Graph

The following graph and accompanying table show the cumulative total return to stockholders of Ryerson Holding’s common stock relative to the cumulative total returns of the S&P 500 and a metals service center peer group (the “Peer Group”). The graph tracks the performance of a $100 investment in each of the indices (with reinvestment of dividends) from December 31, 2015 to December 31, 2020. While there is no nationally-recognized industry index consisting of metals service center companies, Ryerson considers its Peer Group to consist of Reliance Steel & Aluminum Co. and Olympic Steel Inc., each of which has securities listed for trading on the NASDAQ; and Russel Metals Inc., which has securities listed for trading on the Toronto Stock Exchange. The returns of each member of the Peer Group are weighted according to that member’s stock market capitalization. The stock price performance included in this graph is not necessarily indicative of future stock price performance.

Comparison of 5 Year Cumulative Total Return

Assumes Initial Investment of $100

This graph is not deemed to be “filed” with the U.S. Securities and Exchange Commission (“SEC”) or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934 (“the Exchange Act”), and should not be deemed to be incorporated by reference into any of our prior or subsequent filings under the Securities Act of 1933 or the Exchange Act.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Recent Sale of Unregistered Securities and Use of Proceeds

None.

ITEM 6. RESERVED.

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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 2020 and 2019 items and year-over-year comparisons between 2020 and 2019. Discussions of 2018 items and year-over-year comparisons between 2019 and 2018 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, 2019.

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 21,037,500 shares of our common stock, which is approximately 55% of our issued and outstanding common stock.

We are a leading metals service center, value-added processor, and distributor of industrial metals with operations in the United States through JT Ryerson, 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 processing and distribution operations in China through an indirect wholly-owned subsidiary, Ryerson China Limited (“Ryerson China”), a Chinese limited liability company. Unless the context indicates otherwise, Ryerson Holding, JT Ryerson, Ryerson Canada, Ryerson China, and Ryerson Mexico, 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 United States, 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 more than 75% 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 2020, Ryerson experienced both weaker pricing and demand compared to 2019, with shipments 15.6% lower and average selling prices 8.7% lower, affected by the economic impacts of the novel coronavirus (“COVID-19”) in North America and China and end-market weakness in the U.S. prior to the start of the pandemic. Changes in average selling prices are primarily driven by commodity metals prices, which

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impact Ryerson’s selling prices over the subsequent three to six-month period. During the first quarter of 2021, mill lead times continue to extend. Although mill capacity utilization has increased to nearly Q1 2020 levels, many mills are recovering from unplanned outages in Q4 2020 and supply is likely to remain tight in the near future. In the meantime, Ryerson will continue to rely on the support of its long-term supply chain partners and leverage its North American interconnected network of services centers to react and respond to customer requirements.

In the second half of 2020, indicators in the key steel industry end markets that reported weakness as demand conditions were impacted by temporary customer closures as a result of the COVID-19 pandemic began to improve and, in some cases, inflect. This is evidenced by the Institute for Supply Management’s Purchasing Managers’ Index (“PMI”), which reported strength in the last seven months of the year with readings above 50%, indicating general expansion in factory activity. This strength has continued into 2021 with a January reading of 58.7. However, while PMI reports an increase in month-over-month activity, U.S. Industrial Production, while improved from historically low levels reported in April and May of 2020, reported contraction through the end of 2020. This indicates that conditions have improved recently, but are still well below year-ago levels.

According to the Metal Service Center Institute, North American service center volumes declined by 10.7% in 2020 compared to 2019. On a North American basis, we experienced demand contraction more severe than the industry, with tons sold down by 17.0% over the same period. Demand softness was experienced across all of Ryerson’s end-markets, but most significantly in oil and gas, commercial ground transportation, and food processing and agricultural equipment sectors on a year-over-year basis. When customer demand falls, our operations typically generate countercyclical cash flow as our working capital needs decrease.

COVID-19

The global outbreak of COVID-19 was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020 and has negatively affected the U.S. and global economies, disrupted global supply chains, resulted in significant travel and transport restrictions, mandated closures and stay-at-home orders, and created significant disruption of the financial markets. As of the date of this filing, COVID-19 continues to be a substantial risk factor for business operations and the Company continues to monitor and address these risks and uncertainties as conditions develop.

In response to the COVID-19 pandemic, Ryerson implemented several policies and procedures to protect the health and welfare of our employees first and foremost, while operating as an essential business and maintaining our liquidity.

At the beginning of the pandemic, we communicated and enforced social distancing practices by alternating employee shifts, eliminating congregation, suspending non-essential travel, and implementing work from home arrangements for those that could work remotely. We also mobilized a task force and engaged our communications team to establish open lines of communications for our employees to ensure that all members of the Ryerson team are informed and supported throughout the pandemic.

Even as the pandemic continues into the beginning of 2021, we remain resilient and committed to protecting our workforce. Led by our dedicated COVID-19 response team, we continue to follow CDC and other relevant governmental guidance appropriate for our business, carefully monitor COVID-19 data in the areas in which we operate, and strive to be safe and nimble in executing our internal response. While some of our locations are more likely to progress through our phased “back to normal business activity” approach more quickly than others, we remain committed to operating our business under COVID-19 safety policies until we are certain that related risks have subsided. To support the sustainability of current circumstances, we are supporting our workforce by reinforcing the importance of mental health and promoting the use of existing benefits such as prescription delivery and telemedicine. Further, we are encouraging our workforce to receive the flu vaccine and, in some locations, we are providing the opportunity to receive the flu vaccine on-site. Additionally, we are encouraging our workforce to receive the COVID-19 vaccine when it is available. Our workforce in our warehouse facilities is classified as group 1b, as described by the CDC, as essential workers, and in many jurisdictions are now eligible to take the vaccine when supply is available.

The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic, vaccine rollouts, and related actions taken by government officials to prevent disease spread, all of which are uncertain and cannot be predicted. Certain of our facilities have experienced temporary work disruptions as a result of COVID-19, but we have generally continued to operate during stay-at-home mandates due to our business being deemed essential by state and local government authorities. While the majority of our customers that announced temporary closures have at this time resumed operations, our business and the business of our customers continues to be impacted by economic pressures and the ultimate impact of COVID-19 remains uncertain.

Furthermore, we deployed a dedicated COVID-19 team to closely monitor all critical areas daily including cash positioning and credit line availability and projections as well as our debt covenant requirements and working capital needs. We continue to actively manage relationships with our customers and vendors to ensure that we balance our receivables and payables cycles. Examples of

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specific actions taken in response to COVID-19 include increased focus on working capital management with targeted inventory reductions, receivables risk assessment, limiting discretionary spending, temporarily furloughing employees or reducing work hours, reducing executive and salaried employee pay, delaying salary increases, eliminating non-essential travel, delaying or reducing hiring activities, deferring certain discretionary capital expenditures, payroll tax and pension contribution deferrals, and accelerating Alternative Minimum Tax credit refunds as provided for under the Coronavirus Aid, Relief, and Economic Security Act (“The CARES Act”). We intend to continue to assess the effect of ongoing government guidance related to COVID-19 that may be issued and intend to take advantage of opportunities that support our balance sheet. With respect to liquidity, we took the actions listed above to bolster our financial condition and have contingency plans in place to reduce costs while supporting business operations. During the fourth quarter, Ryerson restored employee salaries to their previous levels, brought back furloughed employees, and increased work hours to service strengthening business. The Company will also resume limited hiring activities. Ryerson continues to closely monitor its liquidity position as the economy begins to improve.

2020 Performance Highlights

These key metrics illustrate Ryerson’s financial performance for the full year 2020 compared to 2019:

Total Revenues Gross Margin Net Loss Attributable to Ryerson

23% decrease 50bps decrease $148M decrease

Diluted EPS Diluted Adj. EPS Cash from Operating Activities

$3.90 decrease $1.87 decrease $85M increase

Compared to 2019, Ryerson’s revenues decreased by 23% as tons shipped decreased by 15.6% and average selling prices decreased by 8.7%, affected by pandemic induced demand shocks and commodity price deflation. However, both pricing and demand environments improved as the year progressed, leading to fourth quarter 2020 volume and pricing growth of 0.6% and 2.0%, respectively, compared to the third quarter of 2020. Gross margin decreased 50 bps from 2019 due to a $57 million reduction in LIFO income during the year caused by falling costs in inventory, offset by impacts of significantly reduced inventory levels and selling from higher costed LIFO layers as the Company lowered inventory levels in line with demand. Warehousing, delivery, selling, general, and administrative expenses for 2020 decreased by $82.5 million, or 13.0%, compared to 2019 primarily due to lower salaries and wages due to workforce and compensation reductions of $36.4 million in response to the outbreak of COVID-19. Net loss attributable to Ryerson Holding Corporation was $65.8 million, or a loss of $1.73 per diluted share, in 2020 compared to $82.4 million of net income attributable to Ryerson Holding Corporation, or $2.17 per diluted share, for 2019.

To provide greater insight into the Company’s 2020 operating trends apart from the year’s one-time transactions, Ryerson provides adjusted net income (loss) and diluted adjusted earnings (loss) per share figures, which are not U.S. generally accepted accounting principles (“GAAP”) financial measures, to compliment the reported GAAP net income (loss) and diluted earnings (loss) per share figures. Management uses these metrics to assess year over year performance excluding non-recurring transactions. Adjusted net income (loss) and adjusted diluted earnings (loss) per share do not represent, and should not be used as a substitute for, net income or earnings per share determined in accordance with GAAP. Illustrated in the below table, the 2020 net loss attributable to Ryerson of $65.8 million includes $17.7 million of expenses largely related to the redemption price paid to creditors as well as unamortized debt issuance costs written off related to the refinance of the 11.0% senior secured notes due 2022 (“2022 Notes”) as well as the redemption of $50.0 million of the 8.50% senior secured notes due 2028 (the “2028 Notes”) completed in the fourth quarter. It also includes $64.6 million of nonrecurring pension settlement expenses driven by the third quarter partial annuitization of our pension liabilities and a lump sum settlement offering in the fourth quarter. See “Pension Funding” discussion below for further details on these transactions. After adjusting for these non-core business transactions, the related benefit for income taxes, and $2.2 million of restructuring expenses, the adjusted net loss attributable to Ryerson for 2020 is $3.1 million, a decrease of $71.0 million compared to the prior year’s adjusted net income attributable to Ryerson of $67.9 million which included adjustments for a gain on sale of assets

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related to the fourth quarter 2019 sale and leaseback transaction, an insurance settlement gain, restructuring, loss on retirement of debt, and related income taxes.

(Dollars and shares in millions, except per share data) 2020 2019

Net income (loss) attributable to Ryerson Holding Corporation $ (65.8) $ 82.4

Gain on sale of assets — (20.6)

Gain on insurance settlement — (1.5)

Restructuring and other charges 2.2 2.4

Loss on retirement of debt 17.7 0.2

Nonrecurring pension settlement charge 64.6 —

Provision (benefit) for income taxes (21.8) 5.0

Diluted earnings (loss) per share $ (1.73) $ 2.17

Diluted adjusted earnings (loss) per share (0.08) 1.79

Shares outstanding - diluted 38.0 38.0

Driven by successful working capital management throughout the year, Ryerson generated strong cash from operating activities in 2020 of $278 million, an increase of $85 million over the previous year.

As previously discussed, throughout 2020 in response to the COVID-19 market environment, Ryerson took early and decisive actions to protect the liquidity and recovery capacity of the organization. As a result of these actions, Ryerson ended 2020 with a strong global liquidity of $373 million, composed of $312 million of availability under the Ryerson Credit Facility and foreign debt facilities, and $61 million of cash and cash equivalents. The below bar chart illustrates Ryerson’s liquidity position compared to previous years. Total liquidity is not a GAAP financial measure. 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.

Ryerson’s 2020 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 strong cash from operating activities, enabled by industry-leading working capital management and a stronger through the cycle operating model to effectively decrease both net debt and fixed cash commitments. Throughout 2020, the Company made substantial progress on this strategy. In July, Ryerson successfully refinanced its

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2022 Notes and issued $500 million in 8.50% 2028 Notes. The reduced interest rate and principal amount is expected to save approximately $16 million in annual interest expenses. ​In the refinance, Ryerson also secured favorable redemption terms, which will allow the Company to reduce the outstanding principalamount by up to $100 million at 104% plus accrued and unpaid interest, if any, to, but not including the redemption date,with proceeds from a property sale and up to 10% of the original principalamount during each twelve-month period commencing on July 22, 2020 through August 1, 2023 at 103% plus accrued and unpaid interest, if any, to, but not including the redemption date.​ In October, Ryerson exercised the first of these options to redeem $50 million in outstanding Notes at a price of 103%, plus accrued and unpaid interest through, but not including the redemption date. This redemption is expected to provide Ryerson $4.3 million in additional annual interest rate savings. ​In November 2020, Ryerson completed an amendment and extension of its $1.0 billion revolving credit facility(asamended, the “Ryerson Credit Facility”). The amendment and five-year extension of the credit facility marked another important advancement in improving Ryerson’s balance sheet and cost of debt capital following the bond refinance.See Part II, Item 8 “Financial Statements and Supplementary Data”, Note 10: Debt for a full description of the 2028 Notes and redemption options, and the Ryerson Credit Facility.

Total debt was $740 million and $982 million as of December 31, 2020 and 2019, respectively. Throughout the year, Ryerson reduced the outstanding balance on the Ryerson Credit Facility utilizing the cash flows generated by operating activities. Coupled with the reduction in outstanding notes principal achieved through open market repurchases, the July refinance, and October redemption, total debt decreased by $242 million in 2020 and net debt decreased in 2020 by $244 million compared to December 31, 2019. 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.

As a result of the 2020 net debt reduction, cash interest payments in 2020 totaled $62 million, compared to $88 million in 2019. Pension and retiree medical contributions also decreased compared to the prior year as Ryerson has deferred $12 million of pension contributions to early 2021 as allowed under the CARES Act. Additionally, as part of Ryerson’s “dual mandated” response to COVID-19, the Company decreased its capital expenditure budget in 2020 from approximately $45 million to approximately $25 million, driving cash contributions to maintenance capital expenditures down to $15 million for the year. In all, fixed cash commitments totaled $88 million in 2020, significantly down from $142 million in the previous year and showing even more substantial improvement compared to 2014, the Company’s first year on the public market. Ryerson’s annual fixed cash commitments are illustrated in the below bar chart.

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Industry Developments

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. Subsequently, the White House announced steel quotas, in lieu of tariffs, with South Korea. On May 1, 2018, the White House further announced agreements-in-principle with Argentina, Australia, and Brazil for permanent exemptions from the tariffs in exchange for export quotas or voluntary export restraints, with the exception of Australia which has not agreed to quotas at the time of this report. In May 2019, steel tariffs put in place on Turkey in August of 2018 with the intention of offsetting the weakening Turkish Lira were revised down to 25% from 50%.

Further trade actions announced by the U.S. under Section 301 of the Trade Act of 1974 imposed various levels of tariffs and duties on imported Chinese goods with China reciprocating in kind on American goods. Currently, effective as of February 14, 2020, the Phase one trade deal reduced U.S. duties from 15% to 7.5% on $120 billion worth of Chinese products while still leaving other tariffs on $250 billion in Chinese products in place. Since the agreement, China has unveiled new tariff exemptions and the countries reaffirmed their phase one trade deal in early May 2020. However, negotiations with China are ongoing and subject to change based on the policies of the Biden administration. If these or other tariffs or duties expire or if others are relaxed or repealed, or if relatively higher U.S. metal prices make it attractive for foreign metal producers to export their products to the U.S., despite the presence of duties or tariffs, the resurgence of substantial imports of foreign steel could create downward pressure on U.S. metal prices which could have a material adverse effect on our potential earnings and future results of operations.

The U.S.-Mexico-Canada-Agreement (“USMCA”), which is designed to replace the North American Free Trade Agreement (“NAFTA”), was ratified by all three countries as of March 13, 2020, and became effective on July 1, 2020. Ryerson expects that implementation of the USMCA will support demand for North American steel through strengthening of rules of origin for steel-intensive goods and will continue to provide tariff-free trade access in North American markets.

In August 2020, President Trump re-imposed a tariff of 10% on some aluminum goods imported from Canada, after having lifted the tariffs in May 2019. However, on September 15, 2020, the administration determined that the imports of Canadian aluminum would normalize, and based on this assumption, the administration decided to remove the 10% tariffs. Additionally, the import quota set for Brazil was lowered in September 2020 for shipments of semi-finished steel for the remainder of 2020. According to the Steel Manufacturers Association, the remaining quota for Brazilian semi-finished steel products has been lowered to 60,000 metric tons, down from 350,000 metric tons.

Further, on October 9, 2020, the U.S. Department of Commerce issued affirmative preliminary antidumping duty determinations on common alloy aluminum sheet from 18 countries, including Bahrain, Brazil, Croatia, Egypt, Germany, Greece, India, Indonesia, Italy, Oman, Romania, Serbia, Slovenia, South Africa, South Korea, Spain, Taiwan, and Turkey. The alleged dumping margins range from single digits up through triple digits. The Department of Commerce will investigate whether or not common alloy aluminum sheet is being unfairly dumped or subsidized and whether or not the U.S. is being harmed by the imports of these countries. Preliminary determinations are to be made by the Department of Commerce on or before April 23, 2021.

Acquisitions

On April 2, 2018, we acquired Fanello Industries (“Fanello”), a privately-owned metal service company located in Lavonia, Georgia. Fanello is a processor and service provider that supplies blanking, stamping, laser cutting, bending, and machining metal solutions to a diverse group of industries in the Southeastern United States.

On July 2, 2018, JT Ryerson acquired Central Steel and Wire Company (“CS&W”). CS&W is a leading metal service center with locations across the Central and Eastern United States offering a wide selection of products and capabilities, with a commercial portfolio centered on bar, tube, plate, and steel products. Our combined commercial, operational, and processing strengths provide a broader and deeper array of products to our customers in the Midwest and Northeast United States. The fair value of the consideration totaled $163.5 million. Please refer to Note 2 — “Acquisitions” of Part II, Item 8 "Financial Statements and Supplementary Data" for further information on our 2018 acquisition of CS&W.

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.

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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 both 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 condensed consolidated statements of operations data:

Gain on sale of assets — — (20.6 ) (0.5 )

Gain on insurance settlement — — (1.5 ) —

Restructuring and other charges 2.2 — 2.4 0.1

Income (loss) before income taxes (90.1 ) (2.6 ) 115.2 2.6

Provision (benefit) for income taxes (24.8 ) (0.7 ) 32.5 0.8

Less: Net income attributable to noncontrolling interest 0.5 — 0.3 —

Basic earnings (loss) per share $ (1.73 ) $ 2.19

Diluted earnings (loss) per share $ (1.73 ) $ 2.17

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The following charts show the Company’s percentage of sales by major product lines for 2020 and 2019:

Comparison of the year ended December 31, 2020 with the year ended December 31, 2019

Net Sales

Year Ended December 31, Dollar Percentage

($ in millions)

Year Ended December 31, Tons Percentage

(in thousands)

Year Ended December 31, Price Percentage

Average selling price per ton sold $ 1,726 $ 1,891 $ (165 ) (8.7 )%

Revenue for the year ended December 31, 2020 decreased from the same period a year agoreflecting the impact of the global outbreak of COVID-19 and a slowdown in the metals market that was a continuation from the decline in the industry in 2019. Tons sold decreased in 2020 for all of our product lines with the largest decreases in our carbon long, carbon plate, aluminum flat, and stainless flat product lines. Tons sold per ship day were 7,941 in 2020 as compared to 9,448 in 2019. Prices decreased for all of our product lines in 2020 compared to 2019 as demand and commodity prices were negatively impacted by the pandemic. Average selling price per ton decreased for all of our product lines in 2020 with the largest decreases in our carbon plate, aluminum plate, carbon flat, and aluminum flat products. Both pricing and demand environments improved in the later part of 2020, leading to fourth quarter 2020 volume and pricing growth of 0.6% and 2.0%, respectively, compared to the third quarter of 2020.

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Cost of Materials Sold

Year Ended December 31,

$ % of Net Sales $ % of Net Sales Dollar change Percentage change

($ in millions)

Year Ended December 31, Dollar Percentage

Average cost of materials per ton sold $ 1,417 $ 1,543 $ (126 ) (8.2 )%

The decrease in cost of materials sold in 2020 compared to the year ago period is primarily due to the decrease in tons sold and to a decrease in average cost of materials sold per ton. The average cost of materials sold decreased across almost all product lines with the average cost of materials sold for our carbon plate, carbon flat, carbon long, and aluminum flat product lines decreasing more than our other product lines during 2020.

During 2020, LIFO income was $12 million related to decreases in pricing for all product lines. In addition, there was a significant reduction in tons in inventory to manage working capital throughout the pandemic, which led to the liquidation of older LIFO layers that were at a higher cost. During 2019, LIFO income was $69 million related to decreases in pricing for all product lines.

Gross Profit

Year Ended December 31,

$ % of Net Sales $ % of Net Sales Dollar change Percentage change

($ in millions)

Gross profit dollars decreased in 2020 compared to 2019 reflecting the impact of the global outbreak of COVID-19, which led to a decrease in tons sold and average selling prices. While our revenue per ton decreased during 2020, our cost of materials sold decreased at a slower pace resulting in lower gross margins compared to the prior year.

Operating Expenses

Year Ended December 31,

$ % of Net Sales $ % of Net Sales Dollar change Percentage change

($ in millions)

Gain on sale of assets $ — — $ (20.6 ) (0.5 )% $ 20.6 (100.0 )%

Gain on insurance settlement $ — — $ (1.5 ) — $ 1.5 (100.0 )%

Restructuring and other charges $ 2.2 — $ 2.4 0.1 % $ (0.2 ) (8.3 )%

Total operating expenses in 2020 were $60.6 million lower than in 2019. The decrease in operating expenses in 2020 was primarily due to lower salaries and wages due to workforce and compensation reductions of $36.4 million in response to the outbreak of COVID-19. The lower headcount also reduced employee benefit expenses by $12.3 million in 2020. In addition, expenses were impacted by changes in the following categories:

• lower delivery expenses of $10.8 million due to lower shipments;

• lower operating supplies of $7.7 million;

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• lower depreciation of $4.2 million; and

The year 2019 included a gain on the sale of assets of $20.6 million related to a sale and leaseback transaction for nine of our service center real estate assets. In addition, the lower operating expenses in 2020 were partially offset by an increase in rent expense of $3.3 million in 2020 primarily due to the leaseback of the properties sold in the fourth quarter of 2019. The year 2019 also included a reduction of $11.0 million in accrued vacation expense after changes to our vacation policy were adopted in 2019 such that vacation is accrued as it is earned instead of in advance of work performed as under the prior policy and a gain on an insurance settlement of $1.5 million.

On a per ton basis, operating expenses increased to $277 per ton in 2020 from $259 per ton in 2019.

Operating Profit

Year Ended December 31,

$ % of Net Sales $ % of Net Sales Dollar change Percentage change

($ in millions)

Our operating profit decreased in 2020 compared to 2019 primarily due to the decrease in tons sold and gross margin discussed above.

Other Expenses

Year Ended December 31,

$ % of Net Sales $ % of Net Sales Dollar change Percentage change

($ in millions)

Other income and (expense), net $ 5.3 0.1 % $ (0.6 ) — $ 5.9 (983.3 )%

Interest and other expense on debt decreased in 2020 compared to 2019 primarily due to the redemption of the $530.3 million outstanding balance of our 11.00% Senior Secured Notes due 2022 (the “2022 Notes”) in August 2020, which was preceded by the redemption of $57.6 million of the 2022 Notes during the first six months of 2020. The 2022 Notes were replaced by a lower level of debt at a lower interest rate with the issuance of $500.0 million of the 2028 Notes at 8.50% (the “2028 Notes”). In October 2020, $50.0 million of the 2028 Notes were redeemed. In addition, interest and other expense on debt was lower in 2020 due to a lower level of credit facility borrowings outstanding compared to 2019 related to lower working capital requirements resulting from a slowing metals market, and lower interest rates on credit facility borrowings. Credit facility borrowings were at a lower level in 2020 compared to 2019 despite having borrowed between $40 million and $166 million of excess funds during 2020 to maintain access to cash during the COVID-19 pandemic. Interest expense in 2020 included a $1.0 million charge to writeoff unamortized bond issuance costs related to the $50.0 million of 2028 Notes repurchased in October 2020 and a $0.4 million charge to writeoff unamortized bond issuance costs related to the $57.6 million of 2022 Notes repurchased during the first six months of 2020.

The other income and (expense), net in 2020 includes a $65.9 million pension settlement loss, a $16.2 million loss on the repurchase and redemption of the 2022 Notes, and a $1.5 million loss on the repurchase of $50.0 million of the 2028 Notes. In addition, other income and (expense), net included a $2.3 million gain on the recognition of the fair value of an embedded derivative in the 2028 Notes indenture and $2.1 million credit from net periodic benefit cost other than service cost. See Pension Funding section below for further details on the transactions that resulted in the pension settlement loss. The other expense in 2019 included $1.1 million of foreign currency losses, $1.0 million of expense from net periodic benefit cost other than service cost, and a $0.2 million loss on the redemption of debt.

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Provision for Income Taxes

The $24.8 million income tax benefit in 2020 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 2020, the Company recorded a benefit of $1.8 million related to the statute of limitations expiring on an uncertain tax position.

The $32.5 million income tax provision in 2019 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 2019, the Company recorded a benefit of $0.4 million to reduce valuation allowances previously recorded against certain foreign deferred tax assets.

Noncontrolling Interest

In both 2020 and 2019, Ryerson China’s results of operations was income andthe portion attributable to the noncontrolling interest was $0.5 million and $0.3 million, respectively.

Earnings Per Share

Basic loss per share was $1.73 in 2020 and basic earnings per share was $2.19 in 2019. Diluted loss per share was $1.73 in 2020 and diluted earnings per share was $2.17 in 2019. 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.

The global COVID-19 pandemic has led to disruption and volatility in the global capital markets, which, depending on future developments, could adversely impact our capital resources and liquidity in the future. As a proactive, precautionary measure, we borrowed approximately $166 million under the Ryerson Credit Facility in the first quarter of 2020 to maintain access to cash during the COVID-19 pandemic. We reduced this balance to approximately $40 million as of December 31, 2020. Accordingly, we had cash and cash equivalents of $61.4 million at December 31, 2020, compared to $11.0 million at December 31, 2019. Despite the extra borrowing, our total debt outstanding at December 31, 2020 decreased to $740 million compared to $982 million of total debt outstanding at December 31, 2019 due to decreased working capital requirements. We had a debt-to-capitalization ratio of 84% and 85% at December 31, 2020 and at December 31, 2019, respectively. We had total liquidity (defined as cash and cash equivalents, restricted cash from sales of property, plant, and equipment, and availability under the Ryerson Credit Facility and foreign debt facilities) of $373 million at December 31, 2020 versus $439 million at December 31, 2019. Our net debt (defined as total debt less cash and cash equivalents, and restricted cash from sales of property, plant, and equipment) was $679 million and $923 million at December 31,2020 and December 31, 2019, 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 given the excess borrowings discussed above. 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 61 $ 11 $ 23

Restricted cash from sales of property, plant, and equipment — 48 —

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Below is a reconciliation of total debt to net debt:

(In millions)

Less: cash and cash equivalents (61 ) (11 ) (23 )

Less: restricted cash from sales of property, plant, and equipment — (48 ) —

Of the total cash and cash equivalents, as of December 31, 2020, $15.2 million was held in subsidiaries outside the United States which is deemed to be permanently reinvested. Ryerson does not currently foresee a need to repatriate earnings from its non-U.S. subsidiaries. Although Ryerson has historically satisfied needs for more capital in the U.S. through debt or equity issuances, Ryerson could elect to repatriate earnings held in foreign jurisdictions, which could result in higher effective tax rates. We have not recorded a deferred tax liability for the effect of a possible repatriation of these earnings as management intends to permanently reinvest these earnings outside of the U.S. Specific plans for reinvestment include funding for future international acquisitions and funding of existing international operations.

The following table summarizes the Company’s cash flows:

Year Ended December 31,

(In millions)

Net income (loss) $ (65.3 ) $ 82.7

Depreciation and amortization 53.9 58.4

Deferred income taxes (16.6 ) 48.0

Pension settlement charge 65.9 1.6

Change in operating assets and liabilities:

Accrued liabilities 16.7 (34.6 )

Deferred employee benefit costs (10.6 ) (29.4 )

Other operating asset and liability balances 11.8 (2.7 )

All other operating cash flows 10.7 (11.1 )

Net cash provided by operating activities 277.9 193.1

Capital expenditures (26.0 ) (45.8 )

Proceeds from sale of property, plant, and equipment 0.1 70.4

Proceeds from insurance settlement — 1.8

Net cash provided by (used in) investing activities (25.9 ) 26.4

Long term debt issued 500.0 —

Net repayments of short-term borrowings (93.8 ) (164.6 )

Bond issuance costs (10.9 ) —

Net increase (decrease) in book overdrafts 27.4 0.1

All other financing cash flows (18.2 ) (6.6 )

Net cash used in financing activities (250.2 ) (183.8 )

Effect of exchange rates on cash and cash equivalents 0.9 (0.2 )

Net increase (decrease) in cash and cash equivalents $ 2.7 $ 35.5

Operating activities. Working capital fluctuates throughout the year based on business needs. Working capital needs tend to be counter-cyclical, meaning that in periods of expansion the Company will use cash to fund working capital requirements, but in periods of contraction the Company will generate cash from reduced working capital requirements. Inventory levels decreased significantly in 2020 as the Company brought inventory levels in line with the weak market conditions resulting from the COVID-19 pandemic in 2020. Accounts receivable also decreased in 2020 as a result of lower sales levels due to the weak market conditions in 2020. In comparison, inventory also decreased in 2019 as prices weakened during 2019 while accounts receivable decreased in 2019 as sales levels decreased during the fourth quarter of 2019 compared to the fourth quarter of 2018. The increase in accounts payable for 2020 is related to increased purchases and operating activities compared to the fourth quarter of the prior year and compared to a decrease in

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accounts payable in 2019 as purchases and operating activity decreased compared to the fourth quarter of 2018. In 2020, we recorded a non-cash pension settlement charge of $65.9 million compared to a charge of $1.6 million in 2019. The increase in the charge in 2020 resulted primarily from the purchase of annuities by the Ryerson Pension Plan on behalf of a portion of plan participants which resulted in a settlement loss of $52.5 million in the third quarter of 2020 and to a settlement loss of $10.5 million resulting from the offer of a lump sum window to terminated vested participants in the fourth quarter of 2020. The Company made contributions of $7.1 million in 2020to the Company’s pension plans compared to contributions of $25.7 million in 2019. The Company elected in 2020 to defer $12 million of U.S. contributions due in 2020 to 2021, as permitted under the CARES Act that was passed in March 2020.

Investing activities. The Company's main investing activities are capital expenditures and proceeds from the sale of property, plant, and equipment. Capital expenditures have decreased year-over-year as the Company reduced the annual capital expenditures budget due to the COVID-19 pandemic. In December 2019, we sold and leased back a group of properties for net proceeds of approximately $61.5 million.

Financing activities. The Company's main source of liquidity to fund working capital requirements is borrowings on its credit facility. While the Company anticipates its current cash balances, cash flows from operations, and available sources of liquidity will be sufficient to meet its cash requirements, approximately $40 million of excess funds were borrowed at December 31, 2020 to maintain access to cash during the COVID-19 pandemic. This borrowing was offset by credit facility repayments from the operating cash flow that was generated in 2020. In addition, during 2020 we redeemed and repurchased the outstanding principal amount of $587.9 million of our 2022 Notes compared to repurchases of $12.7 million in 2019. In the third quarter of 2020, we issued $500 million of our 2028 Notes to replace the 2022 Notes at a lower interest rate and debt level and paid $10.9 million of issuance fees on the transaction. In the fourth quarter of 2020, we redeemed $50.0 million of our 2028 Notes. Book overdrafts fluctuate based on the timing of payments.

As market conditions warrant and subject to our contractual restrictions, liquidity position, and other factors, we may from time to time seek to repurchase or retire our outstanding debt through cash purchases and/or exchanges for other debt or equity securities in open market transactions, privately negotiated transactions, by tender offer, or otherwise. Any such cash repurchases by us may be funded by cash on hand or incurring new debt. The amounts involved in any such transactions, individually or in the aggregate, may be material. Furthermore, any such repurchases or exchanges may result in our acquiring and retiring a substantial amount of such indebtedness, which would impact the trading liquidity of such indebtedness.

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 $17 million as of December 31, 2020. 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, 2020 decreased $241.8 million to $740.0 million from $981.8 million at December 31, 2019, mainly due to the net cash provided by operating activities in 2020.

Total debt outstanding as of December 31, 2020 consisted of the following amounts: $285.0 million borrowing under the Ryerson Credit Facility, $450.0 million under the 2028 Notes, $12.1 million of foreign debt, and $7.8 million of other debt, less $14.9 million of unamortized debt issuance costs. Availability under the Ryerson Credit Facility was $277 million and $348 million at December 31, 2020 and December 31, 2019, 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 $7.1 million in 2020, $25.7 million in 2019, and $27.0 million in 2018 to improve the Company’s pension plans funded status. At December 31, 2020, as reflected in Part II. Item 8, Financial Statements and Supplementary Data, Note 11, pension liabilities exceeded plan assets by $154 million. The Company elected in 2020 to defer the remaining $12.1 million of U.S. contributions due in 2020 to 2021, as permitted under the CARES Act that was passed in March 2020. The Company anticipates that it will have a minimum required pension contribution of approximately $29.7 million, including the 2020 deferred contributions, in 2021 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. 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. The Company believes that cash flow from operations and the Ryerson Credit Facility will provide sufficient funds to make the minimum required contribution in 2021.

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Effective September 28, 2020, the Ryerson Pension Plan purchased annuities on behalf of a portion of plan participants which resulted in settlement accounting. The purchase price was $95.2 million, and the benefit obligation settled was $99.5 million. The pension plan was remeasured as of September 30, 2020. The remeasurement resulted in a settlement loss of $52.5 million which was recorded within Other income and (expense), net in the Statement of Operations as of September 30, 2020. As a result of the remeasurement, the discount rate decreased from3.15% to 2.59% and the expected long-term rate of return on pension assets decreased from 5.75% to 5.25%.

Effective December 1, 2020, Ryerson offered a lump sum payout to terminated vested participants of the Ryerson Pension Plan. Lump sums of $19.7 million were paid out to plan participants that elected the lump sum option in early December 2020 and the benefit obligation settled was $21.6 million. The pension plan was remeasured as of November 30, 2020. The remeasurement resulted in a settlement loss of $10.5 million which was recorded within Other income and (expense), net in the Consolidated Statement of Operations as of December 31, 2020. As a result of the remeasurement, the discount rate decreased from 2.59% to 2.42% and the expected long-term rate of return on pension assets decreased from 5.25% to 5.15%.

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 in 2021.

Income Tax Payments

The Company received income tax refunds of $5.7 million and $6.6 million in 2020 and 2019, respectively, and made income tax payments of $2.1 million in 2018.

Material Cash Requirements

The Company expects to make approximately $755 million in principal payments to satisfy its debt obligations, consisting of $12 million in foreign debt coming due in 2021, $8 million of other debt coming due between 2021 through 2024, $285 million for the Ryerson Credit Facility coming due in 2025, and $450 million for the 2028 Notes due in 2028. Please refer to Part II. Item 8, Financial Statements and Supplementary Data, Note 10: Debt for further information.

The Company leases various assets including real estate, trucks, trailers, mobile equipment, processing equipment, and IT equipment. We have noncancelable operating leases expiring at various times through 2032, and finance leases expiring at various times through 2027. The total amount of future lease payments is estimated to be $153 million with $34 million for the next 12 months. Please refer to Part II. Item 8, Financial Statements and Supplementary Data, Note 6: Leases for further information.

The Company expects to pay approximately $47 million of interest on the 2028 Notes, Ryerson Credit Facility, foreign debt, and other debtover the next 12 months and $285 million thereafter. Interest payments related to the variable rate debt were estimated using the weighted average interest rate for the Ryerson Credit Facility, including the effect of the interest rate swap.

Purchase obligations with suppliers are entered into when we receive firm sales commitments with certain of our customers. As of December 31, 2020, we had outstanding purchase obligations of approximately $8 million with $7 million expiring in 2021.

Restructuring

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. The remaining $0.5 million of employee-related costs are expected to be paid in 2021.

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. The remaining $0.7 million of tenancy-related costs are expected to be paid through 2025.

2019

In 2019, the Company recorded a $2.1 million charge for employee-related costs primarily for severance costs for corporate staff reductions. The Company paid $1.2 million for employee costs related to these actions. In addition, the Company paid $0.3 million related to 2018 staff reductions.

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During 2019, the Company also recorded a $0.3 million charge to increase the reserve for tenancy-related costs for a facility closed in 2013. The Company paid $0.9 million in 2019 for costs related to facilities closed in prior years.

2018

In 2018, the Company recorded a $3.6 million charge for employee-related costs primarily for severance costs for corporate staff reductions and two facility closures. The Company paid $3.2 million of the employee costs related to these actions.

During 2018, the Company also recorded a $0.6 million charge to increase the reserve for tenancy-related costs for a facility closed in 2013. The Company paid $0.8 million in costs related to this facility closure.

Deferred Tax Amounts

At December 31, 2020, the Company had a net deferred tax liability of $58 million comprised primarily of a deferred tax asset of $43 million related to pension liabilities, a deferred tax asset related to postretirement benefits other than pensions of $18 million, and deferred tax assets of $48 million related to federal, local, and foreign tax loss carryforwards, offset by a valuation allowance of $7 million and deferred tax liabilities of $63 million related to fixed assets and $100 million related to inventory. The Company’s deferred tax assets include $29 million related to U.S. federal net operating loss (“NOL”) carryforwards, $18 million related to state NOL carryforwards, and $1 million related to foreign NOL carryforwards at December 31, 2020. Due to the volatile macro-economic conditions associated with the COVID-19 pandemic, 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. After considering both the positive and negative evidence available, in the second quarter of 2009, the Company determined that it was more-likely-than-not that it would not realize a portion of its U.S. deferred tax assets. As a result, the Company established a valuation allowance against a portion of its U.S. deferred tax assets. The Company released a portion of the valuation allowance related to one of its U.S. subsidiaries, JT Ryerson, during 2012. The Company released most of the remaining U.S. related valuation allowance during 2013. In 2018, the Company further reduced its valuation allowance related to state and foreign net operating losses. As of December 31, 2018, the Company had a valuation allowance of $29.3 million. As of December 31, 2019, the Company had a valuation allowance of $13.7 million, a decrease of $15.6 million from the prior year mainly related to expiring NOLs and changes to U.S. foreign tax credits previously recorded.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 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 state 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.

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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 Sheet. 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 and calculating the fair value of a reporting unit using the discounted cash flow method, as necessary. 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

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to exceed the carrying amount of the goodwill. The fair value of the reporting units 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, 2020, the Company concluded that the fair value of the reporting unit tested for impairment exceeded the carrying value. The discount rate for the reporting unit was estimated to be 15.0% at October 1, 2020. 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 Statement of Operations as a bargain 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 2020, we assumed the pension plans’ assets would generate a long-term rate of return between 5.15% and 5.75% for the JT Ryerson plan (adjusted for two remeasurements in 2020) and 3.20% for the CS&W plan, and between 3.00% and 4.75% 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 2020 pension expense by approximately $3 million.

Future pension obligations for the U.S. plans were discounted using rates between of 2.42% and 3.09% at December 31, 2020. Future pension obligations for the Canadian plans were discounted using rates between 2.32% and 2.34% at December 31, 2020. Lowering the discount rate by 50 basis points would increase the pension liability at December 31, 2020 by approximately $38 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 $3 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 Note 12 in the Consolidated Financial Statements. We determine whether an estimated loss from a loss contingency should be accrued by assessing

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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 in the Consolidated Financial Statements.

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. Changes in interest rates may affect the market value of our fixed-rate debt. 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 $800.3 million at December 31, 2020 and $1,014.4 million at December 31, 2019 as compared with the carrying value of $740.0 million and $981.8 million at December 31, 2020 and 2019, respectively. We manage interest rate risk in our capital structure by holding a combination of variable and fixed-rate debt.

We use interest rate swaps to manage our exposure to interest rate changes. As of December 31, 2020, we have two receive variable, pay fixed, interest rate swaps to manage the exposure to variable interest rates of the Ryerson Credit Facility. In June 2019, we entered into a forward agreement for $60 million of “pay fixed” interest at 1.729% through June 2022, and in November 2019, we entered into a forward agreement for $100 million of “pay fixed” interest at 1.539% through November 2022.

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 fair value of the interest rate swaps as of December 31, 2020 was a net liability of $4.0 million. From November 1, 2020 through December 31, 2020, the Company recognized a mark-to-market gain of $0.3 million in current earnings, which was offset by a $0.2 million loss reclassified from other comprehensive income. 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.

After considering the effects of our interest rate swaps, 81% of our debt was at fixed interest rates as of December 31, 2020. Considering the impact of interest rate swaps, a hypothetical 1% increase in interest rates on variable debt would have increased interest expense for 2020 by approximately $2.5 million.

Foreign exchange rate risk