Q4 2020 Ryerson Holding Corp Earnings Call
Yes.
[music].
Ladies and gentlemen, and good day and welcome to the Ryerson holding Corporation fourth quarter, 'twenty and 'twenty Conference call Today's conference is being recorded and the.
The ask a question you May press star one on your telephone keypad at.
At this time I would like to turn the conference over to Justine Carlson with Ryerson Investor Relations Department. Please go ahead ma'am.
Good morning, Thank you for joining Ryerson holding corporation fourth quarter, and full year, 'twenty and 'twenty earnings call I'm glad the Florida with other later.
Evident and Chief Executive Officer, and Jim Claussen, Our executive Vice President and Chief Financial Officer, and President of GAAP and W.
Kevin Richardson and Mike Burbach, our other North American regional President John <unk>, Our executive Vice President of operations, and Molly can and our controller and Chief accounting officer will be joining us for Q&A.
Before we get started and let me remind you that certain comments, we make on the call contain forward looking statements within the meaning of the federal Securities laws.
Forward looking statements involve a number of risks and uncertainties, including the impact of COVID-19.
And the related economic conditions that could cause actual results to differ materially from those implied at the forward looking statements.
Such risks and uncertainties include but are not limited to those set forth under risk factors and our annual report on form 10-K for the year ended December 31, 'twenty and 'twenty.
You are cautioned not to place undue reliance on these forward looking statements, which speak only as a good day, they're made and are not guarantees of future performance.
In addition.
Marks today refer to several non-GAAP financial measures that are in terms of supplement but not substitute for the most directly comparable GAAP measures.
The reconciliation of the non-GAAP financial measures discussed for today's call the.
The most directly comparable GAAP measures and server.
And our fourth quarter, 'twenty and 'twenty earnings release.
And on form 8-K yesterday, which is available on the Investor Relations section of our website.
I'll now turn the call at the time.
Thank you Justin and thank you all for joining us this morning, and discuss our fourth quarter and for.
Full year 2020 of the Walsh.
I hope this call and why you all say well.
And we completed a quarter and a year without compare.
I take my Ryerson teammates for coherent and push of yours should be the theory of adversities and calendar with dwell of.
2020.
We extend our heartfelt thanks to all of the essential workers each of them.
And look afterwards and response to the COVID-19 pandemic will long be remembered and.
And we emerged stronger.
Period for fat loss.
Ryerson, we adapted and felt greater purpose and progress and all.
The efforts to recover and build enduring value.
And as Asia.
And for all of other stakeholders.
In summary for the full year of 2020, and Q4, 'twenty and 'twenty, we put punctuation on balance sheet.
And operating model improvements because of me.
And of the year with our lowest outstanding net debt and.
More than 10 years, while continuing to Derisk legacy liabilities.
We've significantly reduced our fixed cash commitments.
Refinance the bonds and vastly improved terms.
Standard R E D L.
The normalized around a lower.
More.
Variable and performance based cost structure and income.
It is difficult ERP conversion and C S and W.
We work safer as evidenced by our best safety performance.
And more than 10 years of.
Our operating cash flow and free cash flow yield performance was excellent and our working capital management has never been better.
We obtained a cash conversion cycle of 62 days in Q4 of.
29 day improvement from Q2.
Taken altogether.
We have reached the point, where we have a clear line of sight and.
Execution path.
Do you see net debt the one times the two times adjusted EBITDA, excluding LIFO over the next 18 to 36 months with further improvements in the operating model driving profitable growth.
Well the IOC group of companies.
Moving through year end and passed the midpoint of Q1.
Weekend severely said it's for.
For a multitude of well reported reasons for me.
And and capacity utilization, while still below pre COVID-19 levels.
Our exceeding supply chain capabilities to meet that demand.
The reality, whether it seemed you of lens of lumber steel and semiconductor constraints.
And then just a few.
And we have as an economy of major hits and our catalog.
Before we could even get.
For a point in time.
The labor and.
Of supply and demand we have to restock first and that has proved difficult over the past six months since hot rolled carbon steel sheet prices bottomed the $434 per ton for the field you index of in August and now are at their highest levels since 2007.
And 2008.
There is pent up demand and the system.
Supply side constraints had been very slow to release and.
The base case, the seems higher prices for longer and.
Until we see some price erosion for the 10 year averages.
By the mid fourth quarter of 2021.
And the absence of another one she economic shock.
Current price conditions appear to have more staying power and the previously bought the supply side constraints or intensified, especially following the extreme weather events of the past week.
Additionally.
Probabilities are increasing.
The we are moving into a period of higher cyclical demand for our industry.
And the Dallas holding Corp.
Desperately needed infrastructure investment, while favorable demographics, and societal and savings rate dynamics, along with stimulant of economic policies and appear to be creating strong post pandemic economic recovery prospects.
Despite recent severe weather disruptions the men and so far recovered and nearly 95 per cent of pre pandemic levels and.
And previously wagging and markets.
As machinery and equipment.
And commercial truck and trailer are seen orders and backlogs increase.
Yeah.
While experts debate the continuum between skepticism and conviction and.
Around the duration of current conditions are empirical view.
Some of them between the Cinderella ball and the Austin Jinxed commodity Super cycle.
And at the very least it doesn't feel to close the midnight.
Before providing more depth of wound back when the conditions and end markets.
I would like to welcome Jim Claussen per.
President of Central steel <unk> wire and wireless and the new executive Vice President and Chief Financial Officer.
Jim has been the Flyers and for over 18 years, and I've had the pleasure of working with him during his part the CFO of the northwest region Jenna.
General manager of virus, and corporate M&A and business development function.
And most recently as president of C. S. W.
Jim's experience and talents, particularly within the operations.
Corporate development system and F P and a is a well timed addition in concert with our next stage transformative objectives, returning to the commodity environment.
Supply side tightness amidst the improving demand environment drove pricing increases across all product categories.
Carbon hot rolled prices increase the aggressively throughout the fourth quarter and continue to increase and the first quarter two historically unparalleled levels.
Now, let me allude and ended the fourth quarter of more than 15% of.
At the end of the third well element of nickel increased by more than 13% and the same period.
As of the first quarter.
The midpoint the element of nickel and aluminum for picked up the pace as both the metals have reached 12 month highs.
At this time, we anticipate that these prices.
And the well above the 10 year averages two of the third quarter of this year.
And the average median price for versions will be gradual given all the expectation that stimulus post pandemic recovery.
And the carbonization of acceleration trends should strengthen demand while supply chains repair and normalized.
Turning to the demand environment.
Macroeconomic indicators and the fourth quarter reflected continued recovery for.
Fourth quarter, and North American industry shipments of <unk>.
Measured by the metal Service Center Institute or MSCI improved from 10, 9% below the year ago period.
And the third quarter, 2.9% below the year ago period of the fourth quarter and incrementally improving and throughout the quarter.
And to match the 10 year monthly average volume.
And by December of 'twenty and 'twenty.
Ryerson as North American customer activity and continued to improve on balance throughout the fourth quarter.
Compared to the prior quarter, we note shipment of improvement across nearly all of our end markets on a sequential credit basis, and we are encouraged by what we've seen the art.
Early recovery of stories, and the auto and construction.
Even logging and secondarily depressed verticals, such as oil and gas of stabilized and our incrementals and the Hyatt.
Although supply side of shortages and constraints, our current obstacles to smooth the demand backlog turnover the recovery of cross license verticals, the Paris broadbased with inventory restocking.
And the most relevant current friction point.
Although pandemic driven uncertainties persist Ryerson is optimistic about early 2021 demand fundamentals within the end markets and anticipates average selling price increases.
Given returning demand and persistent tightness and the supply environment across all three of Ryerson and primary commodities.
Additionally.
The recent commodity mix the most of them and composition is very well suited for the current environment, given concurrent strength across carbon steel aluminum and stainless markets. Therefore, ryerson anticipates first quarter 2021 revenues.
The one point of <unk> billion, the $1 1 billion, assuming sequential average selling price for.
Of 13% to 15% and shipment growth of 11% to 13%.
LIFO expense for the first quarter is expected to be and the range of 49 to 52 million provided the placement costs continue to increase relative to average inventory cost.
Given these expectations adjusted the EBITDA, excluding LIFO is expected to be in the range of 100 and choose the $106 million and earnings per diluted share are expected to be of the range of 81 cents and not and few cents.
That I will turn the call over to Jim for the introduction and discussion of our fourth quarter and full year financial highlights.
Thank you Eddie and good morning, everyone.
As Eddie mentioned I've been with Ryerson for nearly 20 years and adult positions throughout the organization and finance operations and so.
The T J leadership for I've developed a passion for both of the industry.
And the transformative progress underway of Ryerson.
I would also like to take this opportunity and thank our controller and Chief Accounting Officer, Molly Canada for her leadership and.
Current principal financial officer for the past year during which he led the company through both the bond repaying items and ABL amendment extend well successfully implementing our Covid response.
These achievements are not only of impressive there.
They are also representative the.
Hard working dedicated sales.
The culture of our riders and people, who I am proud and that'll be sobering and leading into our next phase of growth as CFO.
Turning to our performance and the fourth quarter of 2020.
What are some of achieved revenues of $853 million and.
And increase of two six per cent.
Compared to 831 $5 million and.
And the third quarter of 2020.
With tons shipped.
6% and average selling price of up 2%.
On a per day basis shipments increased by five 6% sequentially, which exceeds the expectation of 2% to 4% communicated on our third quarter earnings call.
Compared to the fourth quarter of 2019.
Revenues were down by $185 million or 11, 3%.
With tons shipped nine 1% lower and average selling prices 2.4 per cent.
Affected by the lagging contracted price resets and the ongoing restructuring activities and see us and W.
Gross margin contracted sequentially to 18%.
Fourth quarter of 2020.
For the $18 seven per cent of the third.
Third quarter of 2020 and $18 eight per cent for the same quarter last year.
Included in the fourth quarter 2020, gross margin is LIFO expense of $10 $7 billion, which represents a $27.6 million swing compared to the third quarter. When we reported LIFO income of $16 $9 million.
This unfavorable swing.
Coupled with the equal in size and favorable swing of <unk>.
$31 million reported last quarter illustrates the extreme pricing conditions, and navigated and 'twenty and 'twenty.
And the fourth quarter of 'twenty and 'twenty gross margin, excluding LIFO of expanded considerably the 19, 3% up 260 basis points from 16, 7% and the third quarter.
Compared with the same quarter last year.
Gross margin, excluding LIFO expanded by 120 basis points.
Fourth quarter warehousing delivery, selling general and administrative expenses rose by $23 7 million or 18, 9% compared with the prior quarter.
Paired with the same quarter last year warehousing delivery, selling general and administrative expenses rose by $6 2 million or four three per cent.
During the fourth quarter, we restored pandemic induced the compensation reductions across our organization to pre pandemic rates well, bringing back production capacity to meet the improving demand.
Given improving conditions through the fourth quarter of.
And it's also met various variable incentive compensation and obtain the thresholds will be noted increases the delivery expense and ERP related conversion expenses, let's see of some value.
With the C S and W. ERP conversion behind us and with the enhanced operating leverage and realize the pandemic response actions taken and we begin 2021 and well positioned for a cyclical recovery.
Fourth quarter net loss attributable to Ryerson holding corporation was $16 $7 million for a loss of 44 cents per diluted share.
Paired to a net loss of $39 $9 million for a loss of $1.05 per diluted share in the prior year period.
Included in fourth quarter net loss was a nonrecurring $12 $1 billion pension settlement charge driven by an offer of lump sum payouts the terminated vested pension plan participants during the quarter.
Adjusted net loss attributable for Ryerson holding corporation, excluding gain on sale of assets restructuring and other charges.
Loss of retirement of debt nonrecurring pension settlement charges and the.
Youll see it of income taxes on these items was $6 $6 million for the fourth quarter of 'twenty and 'twenty or a loss of 17 cents per diluted share.
Compared to $11.6 million of adjusted net income or 30 cents per diluted share in the prior year period.
Ryerson achieved adjusted EBITDA, excluding LIFO of $33 $6 million and the fourth quarter of 2020.
A decrease of $13 $3 million compared to the fourth quarter of 2019, and the increase of $2 $2 million compared to the third quarter of 2020.
And even with the previously mentioned rollbacks of compensation related cost reductions and variable incentive compensation earned for exceptional performance and the recovery from the pandemic and boost economic shock.
Turning to our full year results 'twenty and 'twenty of of revenues were $3 $47 billion a decrease of 23%.
The 2019.
As fun ship decreased $15 six per cent and average selling prices decreased $8 seven per cent.
Net loss attributable to Ryerson holding corporation for $65 $8 million for a loss of $1.73 per diluted share.
The 'twenty and 'twenty compared to $82 $4 million of net income or income of $2.17 per diluted share for 2019.
Adjusted net loss attributable to Ryerson holding corporation, excluding the gain on sale of assets.
And on insurance settlement restructuring and other charges loss on retirement of debt nonrecurring pension settlement charges and the associated income taxes on these items was $3 $1 million for 'twenty, and 'twenty or a loss of eight cents per diluted share.
Compared to 67 $9 billion of income or income of $1 79 per diluted share for 2019.
Adjusted EBITDA, excluding LIFO was the $120 million and 'twenty and 'twenty compared to $191 million and 2019.
Ryerson continues to illustrate strong working capital management and the fourth quarter of the company maintained inventory days of supply of 68 days.
Consistent with the prior quarter and in line with the current market environment.
This compares with BT for inventory days of supply for the fourth quarter of 2019.
The company also continued to improve receivable and payable cycles and the fourth quarter.
Moving to our cash conversion cycle of 62 days for the period.
The 70 days for the third quarter and 86 days for the year ago period.
And the fourth quarter, Ryerson used $18 $8 million and cash from operations, primarily to finance working capital.
This compares to operating cash flow generation of $126 million and the prior period and generation of $62 $6 million and of a year ago period.
We began the shift from counter cyclical to the emerging cyclical conditions.
And our full year basis, Ryerson and excellent working capital management generated significant cash from operating activities of $277.9 billion.
This led to 'twenty and 'twenty free cash flow calculated as cash flow from operating activities and.
Asset sales less capital expenditures of $252 million and resulted in the cash flow yield of $48 five per cent.
The company again reduced its outstanding net debt during the fourth quarter decreasing by approximately $13 million during the fourth quarter and $679 million as of December 31, 2020.
Do you think its lowest net debt and 10 years for the third consecutive quarter.
On October 30 of 'twenty, and 'twenty, Ryerson redeemed $15 million of its outstanding senior secured notes due 2020.
This transaction marks the first exercise of the company's optional redemption features superiors and with July 2020, and refinance and was.
As expected the provide approximately $4 $3 billion and annual interest expense savings.
In November we completed the amendment and extension of our credit facility.
Another important advancement and the improvement of our balance sheet and cost of debt capital.
And finally at the end of the fourth quarter. We also offered a lump sum buyout for a portion of our pension participants to continue to reduce pension expenses.
Yes.
Even with the fourth quarter balance sheet actions, Ryerson and retained a strong liquidity position of $373 million as of December 31st 2000 and why.
Compared to $398 million as of September 30 of 2020.
During the fourth quarter, we invested $8 1 million and capital expenditures.
Bringing our 2020 total spend for <unk>.
$26 million in line with our COVID-19 revised budget of $25 million.
Given our positive outlook at the outset of 2021, we anticipate our maintenance and growth Capex budget base case of $40 million for 'twenty and 'twenty one.
In summary of 2020, Ryerson reduced net debt of $244 million and achieved the milestone improvements and its balance sheet, including the notes refinance partial pension amortization as well as the aforementioned amendment and extension of our credit facility first exercise of the notes for.
<unk> features and the lump sum pension buyout.
All of these accomplishments were realized despite unique uncertainties risks and operational challenges and they have created a vastly improved balance sheet with lower fixed cash commitments and.
And the triggers to further accelerate the deleveraging and cash interest cost reductions as we wrap up our financial performance summary.
And to express my thanks to our Ryerson operations sales and supply chain and corporate teams, whose dedication throughout the year made these achievements possible now.
And I'll turn the call back over to Eddie to conclude.
Thank you Jen and 2020.
The new pages to our crisis, and countercyclical playbook, and we managed to come out better than we were going in but happy to recognize the many hardships and we often do it along the way.
While acknowledging that every year presents its own unique challenges we are.
Also the knowledge and 2020 was something very different.
There will be a time of the place to come to understand and fully everything that happened over the past year debt.
And I am extraordinarily proud of our organization and our people for giving our best and the quote so Paul taken of Sad song and making it better.
Embarking on the first chapter of 2021 with the indication indications of strong pricing tailwind pent up demand.
And supply side tables, we are fully engaged and our mission of providing great customer experiences with the.
Speed scale value add and consistency.
Of our network of intelligent and connected industrial metal service centers.
And as we begin our 170 and Nike and business.
And it's hard to be and the prediction business and we continue earning our way and the adaptation business.
Looking back over the last year and decade of weak.
Continue and our self help waves for making the best of any and every environment. We're in the.
The tangibles and intangibles and proof of that.
For you with great enthusiasm for imposed pandemic era of renewal and progress with budding optimism.
Is it really is time to build.
And invest after so many years of puzzling and harmful and the black.
With the past year has made one thing abundantly clear and it's time to build.
With that we look for to your questions operator.
Thank you and as a reminder, and just started one of if you would like to ask a question.
And we will take our first question from Chris Terry with Deutsche Bank.
Right.
Eddie Eddie and team and <unk> had.
Out of couple of questions and wanted to go through just wanted to and talk about whether there's any impact to me and the first quarters as the result of the snowstorm. So I. Appreciate you don't have too much exposure there, but just wondered if you could go through debt.
Yeah, Hi, Chris how are you doing can you hear me okay.
Yeah of doing well thanks for your kidneys.
Okay, Great Yeah, Chris I mean, I think like everybody across the country and there were a lot of a lot of disruptions caused by the storms last week and and you're reading of what we're reading and we're experiencing and certainly on the ground and we think will catch up over time, but certainly there was a there was a disruption the last week and I.
And certainly that's the only have Mike and Kevin give you some more color on that.
I think over time the.
Or you know the bigger story is pent up demand and supply coming to meet that demand. So I don't think the demand has gone anywhere I think interest in for the displaced by the storms and.
And it's going to come back and the absence of some other type of exogenous event. It's there. It's all of it there's going to the package. There. So yeah. I think everybody took a hit last week, everybody still digging out and and getting back on the on plane, but the but all of our optimism is really undiminished and we just recognize that we lost the better.
Part of you know for box shipping days.
Mike and Kevin.
Yeah.
The Richardson I think.
And he summarized it well we had about 15 plants that got disrupted last week and some of our plants only lost a day, but some of them were down for almost the entire week and I agree with and he's assessment it'll work its way through and the next couple of weeks for the most part.
Okay.
Okay. Thanks, Thanks for the color and then just on the guard and just wondering if you could go through the non seems a 21 million of adjustments of just wasn't sure what that related to.
Yeah. So let me give you some color around that I mean.
We really cleaned out the pipes and the company I mean, we all know the kind of year of was it was pretty good put any adjective you want we know how extraordinary difficult 2020 was and and we did the hard things and 2020 as you know we refined the debt and the extent of the ADL, we get of pension lift out and you get a lump sum buyout, we did it really did.
Our ERP conversion of CSW, which which.
And it certainly caused us a cost of some money and Q4 that we could roll over the restructuring. So if you look at the bridge for Q4, you're going to see that delivery expenses went up by about $4 million.
Sequentially, which is consistent with what we've seen and the industry and I think we're managing that we're managing that well and then and then we had a instead of a comp does he did true ups, because we exceeded our targets and then going into the pandemic.
I think we were all thinking that we would be well the tread water and and we did so much better than that that we trigger of incentive comp bogies that we're glad to pay out on so you know between incentive comp being about $10 million and and you have to look at the out through the lens of of really applying that back for the whole year, but taking into the fourth quarter.
<unk>.
Tween incentive comp and between ERP conversion cost of the system and delivery.
We had a transient costs and and I think when we look at the operating leverage that we're painting for one of 2021 and really for 'twenty and 'twenty one.
Were positioned better than we've ever been positioned acknowledging the ongoing risks of the pandemic and acknowledging our supply chain risks and and the things that we've talked about but all of those things aside when I think about our ability to generate the self help and it seems that we're dealing with and the operating model.
We have a really good glide path and line of sight on further deleveraging derisking of the pension and and seen operating model improvements come through in the 'twenty 'twenty, one, which I think you can see and our guidance and I would say that we would not we would not have triggered our first special redemption right sort of pay down 50 million on the.
And original $500 million Notionally would not have triggered that right and Q4, if I. If we didn't have a high degree of confidence and are and how we're going to operate going forward. So I hope that helps.
Yeah. Thanks. Thanks, Thanks for the and then just in terms of the the working capital how do we think about that over the course of 2021.
Sure.
The working capital side and you look at you know we had a 62 day cash conversion cycle and Q4, we've never managed.
Working capital as well as we did really throughout the year and in Q4 I mean, the team just did an exceptional job and I think you know we're gonna have a bill because we're we're certainly experiencing.
Notional inflation and our average selling prices based on.
Underlying commodity drivers around aluminum and nickel and carbon sheet and so.
We're going to have to finance that inflation with unit growth I think again the big story is the industry has been trying to restock for five months and we really haven't been able to do it and that's not for a lack of of putting the orders into our suppliers. So.
The price environment is really strong will build working capital. We've typically been you know we've been and a ratio of between six and $7 of revenue for every dollar of net working capital employed.
Given the robustness of of our Q1 guidance and the EBITDA margins that are associated with that.
We you can you can do the math and see the.
Unlike maybe past cyclical recoveries and most of that working capital build if not all of it is going to be financed.
EBIT of generation. So that's the that's a really good sign of the improvements we've made as an organization. So we worked it and that ratio of six to $7 of revenue for every dollar of net working capital.
The support that revenue recovery from some of the cyclical trough that was brought on by the pandemic.
Okay. Thanks, Eddie and good work all of a live at the thanks.
Basically I appreciate it.
And we will take our next question from Michael and the shock with Keybanc.
Hey, good morning, there was and I wanted to touch on the Opex and for Q.
A meaningful uptick there I'm just wondering if you see that as a sustainable baseline going forward at least in the near term.
He touched on the impact of winter storms, but outside of that just wondering what your expectations are for opex over the next few quarters.
Yes sure.
What are what I would what I would say is that there are certain of opex pressures. There that are in the system as you would imagine.
And as our prices are going up the other suppliers. The prices are going up. She was the result of the supply chain constraints and and other inflationary forces that are there in the system right now, but I'll tell you.
We have a lot of the operating leverage going forward based on non value added cost and he took out during the pandemic other variables Asian actions. We took during the pandemic. So we have we have a really good amount of operating leverage.
And that we've retained as we go into 'twenty.
2021, but a lot of optionality in terms of how we run cost to our company to maximize the utilization of our assets and and and giving a better service proposition to our customers, which early indications and Q1 are we've done a really good job of that and that's important because across of 100 and facility network give or take.
And at times, you'll be bottleneck in one place that we have the ability now because of the way, we're interconnected and you have the ability to roll over that.
Debt processing and that fulfillment over to another sort of center and that really helps you the cost absorption. So that you don't have stranded costs and one place.
And you're not.
You know over absorbed and another so.
We all of our cost profile and the variable the station of that cost profile as we think it's the.
But that's been and sort.
And the time the.
And the kind of idea of with horizon.
Okay, and then you touched on the need for restocking across the industry and.
And Ryerson and inventory thoughts for sequential increase and a while I think in since <unk> of 19.
And to what extent do you think you'll be able to take up your inventory in 'twenty and 'twenty, one and how long do you foresee the restocking cycle to take to get the levels that you're comfortable with.
Sure we noted in the script debt.
And we don't think this is going to unwind quickly I mean, we think that it's at least another two quarters before the mills I get to a point of what I'll call. The first stages of restocking equal there'll be and that's just to get to a point of.
More of the location relative to long term industry averages for months on hand, and me right now of between one seven and one eight months on hand of inventory and the industry typically of run it anywhere between two two to two point for so you've got a you've got a deficit there that has to get GAAP first before you can start to think about how you sort of the secular demand. So.
And as the year unfolds, you don't have any significant imports that are really arriving until Q3 of any consequence and prices are going up all the seeds as we speak if you look at the headlines the came out on Bloomberg last night, you can see the European prices are going up.
Prices in Asia are going up and and conditions are improving so.
We think the prices are going to be higher for longer and it's going to take longer for these supply chain tangles too.
And Boston themselves and.
And we'll go ahead, and and and have the opportunity to build back our inventories and the orders are out there, it's really a function of of suppliers.
Being able to catch up to their order books, and and some capacity coming online and and some imports coming in in the in the second half of the year I would also say, though that basically one of the one of the capabilities. We have that I'm again that we're really proud of is the ability to buy out the ability to go.
Into the into the industrial metals external network not just our internal network for the external network and and fine metal for customers.
There and theyre not able to get quoting satisfaction.
From for maybe the more traditional sources so.
It's a good environment Ah I.
I mean, reflecting for the ongoing pandemic and it's a good environment based on the indicators and you came out.
And then just lastly for me on Capex, how should we think about maintenance levels for the business and.
What do you foresee and in 'twenty and 'twenty one.
Sure sure of say last year when the meeting typically are countercyclical playbook of our recession playbook as well.
And we'll see maintenance capex and with some growth component of somewhere between 20 and $30 million, we pretty much hit our midpoint of 26 of the came in within our expectations of Capex and then.
And at the mid cycles at mid cycle base case, capex for us and $35 million to $45 million maintenance being about $20 million of that and then the growth Capex being 15 to 20 of that and then if we as we move through and.
And up cycle.
And we can certainly entertain and underwrite and support investments and it's $50 million and we can be opportunistic and how we look at really good.
Payback timelines to make those incremental investments to improve the customer experience. So in.
And in a recession, where 25 call it and this and this environment right now of between 35 and 45 and maybe.
And just thinking about next to me and the balance.
And then.
And up cycle, and we get towards that peak, we can be opportunistic and we can take that to the 50.
Great. Thank you.
Sure.
As a reminder of the star Wonder if he would like to ask a question.
And we will take our next question from Peter and work with Bank of America.
Hey, good morning, guys. Thanks for taking my questions.
The P O parts of the shelf registration back in January.
And the intentions of issuing some equity here at these prices and and possibly a pay down some debt.
Yeah.
[laughter] and yeah, I think gas and I think we certainly dropped the hint there that we're going to be opportunistic and looking at those opportunities and you need we were very purposeful and we did the high of refinanced in.
In July of last year, when the very purposeful and negotiating and especially with especially with denture and features that get us really the right to pay down $200 million of the notional within the first two years and $250 million of the notion of within the first three years, leading up to our first call day and as you can see and you're already exercise that's the first $50 million.
The amortization sugar and the fourth quarter. We also have an ex equity claw opportunity as you mentioned and.
We'll be opportunistic about that but yeah, I mean, we're going to create of a fortress balance sheet of Ryerson and we've made tremendous progress around that initiative and we'll continue to make great progress on that initiative. So if we see an opportunity where we think.
It's compelling to exercise that debt equity claw and pay down some debt and also of increase.
You know increase share float and liquidity, we'll certainly evaluate that as of the isn't new for the year.
Okay, great. That's it for me thanks.
Thank you.
As a reminder, and and Starwood and if he would like to ask a question.
And with no additional questions in queue I would like to turn the call back to Eddie Lehner for any additional or closing remarks.
Yeah.
Well, we thank you for your continued support we look forward and continue next quarter and and vaccinated and everybody take care and we'll see you here and a couple of months. Thank you.
Ladies and gentlemen, this concludes today's call and we thank you for your participation you may now disconnect.
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