UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission File Number 001-34735
RYERSON HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE |
26-1251524 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
227 W. Monroe St., 27th Floor
Chicago, Illinois 60606
(Address of principal executive offices)
(312) 292-5000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading symbol(s) |
Name of each exchange on which registered |
Common Stock, $0.01 par value, 100,000,000 shares authorized |
RYI |
New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☒ |
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Accelerated filer |
☐ |
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Emerging growth company |
☐ |
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Non-accelerated filer |
☐ |
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Smaller reporting company |
☐ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of July 26, 2024, there were 33,201,651 shares of Common Stock, par value $0.01 per share, outstanding.
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
INDEX
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PAGE NO. |
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Item 1. |
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3 |
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Condensed Consolidated Statements of Cash Flows (Unaudited)—Six Months Ended June 30, 2024 and 2023 |
4 |
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Condensed Consolidated Balance Sheets—June 30, 2024 (Unaudited) and December 31, 2023 |
5 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
6 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
20 |
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Item 3. |
30 |
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Item 4. |
31 |
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Item 1. |
32 |
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Item 1A. |
32 |
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Item 2. |
32 |
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Item 3. |
32 |
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Item 4. |
32 |
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Item 5. |
32 |
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Item 6. |
33 |
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34 |
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(In millions, except per share data)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net sales |
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$ |
1,225.5 |
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$ |
1,343.5 |
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$ |
2,464.7 |
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$ |
2,749.6 |
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Cost of materials sold |
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1,002.0 |
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1,082.6 |
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2,023.6 |
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2,224.5 |
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Gross profit |
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223.5 |
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260.9 |
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441.1 |
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525.1 |
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Warehousing, delivery, selling, general, and administrative |
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199.0 |
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202.6 |
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415.8 |
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396.8 |
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Restructuring and other charges |
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1.7 |
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— |
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1.7 |
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— |
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Operating profit |
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22.8 |
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58.3 |
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23.6 |
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128.3 |
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Other income and (expense), net |
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1.8 |
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(0.3 |
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1.6 |
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(0.4 |
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Interest and other expense on debt |
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(11.3 |
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(8.3 |
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(21.4 |
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(15.9 |
) |
Income before income taxes |
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13.3 |
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49.7 |
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3.8 |
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112.0 |
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Provision for income taxes |
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3.0 |
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12.1 |
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0.9 |
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26.9 |
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Net income |
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10.3 |
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37.6 |
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2.9 |
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85.1 |
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Less: Net income attributable to noncontrolling interest |
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0.4 |
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— |
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0.6 |
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0.2 |
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Net income attributable to Ryerson Holding Corporation |
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$ |
9.9 |
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$ |
37.6 |
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$ |
2.3 |
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$ |
84.9 |
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Comprehensive income (loss) |
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$ |
6.2 |
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$ |
39.0 |
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$ |
(3.5 |
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$ |
87.2 |
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Less: Comprehensive income attributable to noncontrolling interest |
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0.4 |
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0.1 |
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0.5 |
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0.2 |
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Comprehensive income (loss) attributable to Ryerson Holding Corporation |
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$ |
5.8 |
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$ |
38.9 |
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$ |
(4.0 |
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$ |
87.0 |
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Basic earnings per share |
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$ |
0.29 |
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$ |
1.07 |
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$ |
0.07 |
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$ |
2.38 |
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Diluted earnings per share |
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$ |
0.29 |
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$ |
1.06 |
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$ |
0.07 |
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$ |
2.33 |
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Dividends declared per share |
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$ |
0.1875 |
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$ |
0.1800 |
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$ |
0.3750 |
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$ |
0.3500 |
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See Notes to Condensed Consolidated Financial Statements.
3
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions)
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Six Months Ended |
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June 30, |
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2024 |
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2023 |
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Operating activities: |
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Net income |
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$ |
2.9 |
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$ |
85.1 |
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Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
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35.4 |
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28.8 |
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Stock-based compensation |
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7.4 |
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6.2 |
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Deferred income taxes |
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0.4 |
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10.1 |
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Provision for allowances, claims, and doubtful accounts |
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3.7 |
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2.5 |
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Restructuring and other charges |
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1.7 |
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— |
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Pension and other postretirement benefits curtailment gain |
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(0.3 |
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— |
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Pension settlement charge |
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1.1 |
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— |
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Non-cash gain from derivatives |
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(5.0 |
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(6.7 |
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Other items |
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0.2 |
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(0.3 |
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Change in operating assets and liabilities: |
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Receivables |
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(65.4 |
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(59.9 |
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Inventories |
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36.5 |
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48.0 |
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Other assets and liabilities |
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0.1 |
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(1.2 |
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Accounts payable |
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(16.6 |
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103.2 |
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Accrued liabilities |
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(15.4 |
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(23.5 |
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Accrued taxes payable/receivable |
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(4.6 |
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11.9 |
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Deferred employee benefit costs |
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(4.0 |
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(8.5 |
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Net adjustments |
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(24.8 |
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110.6 |
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Net cash provided by (used in) operating activities |
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(21.9 |
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195.7 |
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Investing activities: |
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Acquisitions, net of cash acquired |
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— |
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(50.2 |
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Capital expenditures |
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(44.5 |
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(74.1 |
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Proceeds from sale of property, plant, and equipment |
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1.5 |
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0.1 |
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Other items |
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(0.4 |
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— |
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Net cash used in investing activities |
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(43.4 |
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(124.2 |
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Financing activities: |
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Repayment of debt |
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(2.2 |
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(0.9 |
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Net proceeds of short-term borrowings |
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90.4 |
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29.3 |
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Net increase (decrease) in book overdrafts |
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(8.2 |
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14.1 |
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Principal payments on finance lease obligations |
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(3.6 |
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(3.4 |
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Dividends paid to shareholders |
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(12.8 |
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(12.2 |
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Share repurchases |
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(15.0 |
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(103.6 |
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Proceeds from exercise common stock options |
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0.1 |
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— |
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Contingent payment related to acquisitions |
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(5.3 |
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— |
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Tax withholdings on stock-based compensation awards |
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(3.7 |
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(3.2 |
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Net cash provided by (used in) financing activities |
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39.7 |
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(79.9 |
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Net decrease in cash, cash equivalents, and restricted cash |
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(25.6 |
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(8.4 |
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Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
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(0.6 |
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(1.0 |
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Net change in cash, cash equivalents, and restricted cash |
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(26.2 |
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(9.4 |
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Cash, cash equivalents, and restricted cash—beginning of period |
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55.4 |
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40.5 |
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Cash, cash equivalents, and restricted cash—end of period |
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$ |
29.2 |
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$ |
31.1 |
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Supplemental disclosures: |
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Cash paid during the period for: |
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Interest paid to third parties, net |
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$ |
20.1 |
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$ |
12.9 |
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Income taxes, net |
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7.5 |
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5.3 |
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Noncash investing activities: |
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Asset additions under operating leases |
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20.8 |
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104.6 |
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Asset additions under finance leases |
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2.6 |
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2.4 |
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See Notes to Condensed Consolidated Financial Statements.
4
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
Condensed Consolidated Balance Sheets
(In millions, except shares and per share data)
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June 30, |
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December 31, |
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2024 |
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2023 |
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(unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
28.0 |
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$ |
54.3 |
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Restricted cash |
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1.2 |
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1.1 |
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Receivables less provisions of $3.2 at June 30, 2024 and $1.7 at December 31, 2023 |
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529.0 |
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467.7 |
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Inventories |
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744.1 |
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782.5 |
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Prepaid expenses and other current assets |
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86.8 |
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77.8 |
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Total current assets |
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1,389.1 |
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1,383.4 |
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Property, plant, and equipment, at cost |
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1,098.8 |
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1,071.5 |
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Less: Accumulated depreciation |
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495.4 |
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481.9 |
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Property, plant, and equipment, net |
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603.4 |
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589.6 |
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Operating lease assets |
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351.9 |
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349.4 |
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Other intangible assets |
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68.7 |
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73.7 |
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Goodwill |
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161.0 |
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157.8 |
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Deferred charges and other assets |
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17.1 |
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15.7 |
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Total assets |
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$ |
2,591.2 |
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$ |
2,569.6 |
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Liabilities |
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Current liabilities: |
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Accounts payable |
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$ |
439.3 |
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$ |
463.4 |
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Salaries, wages, and commissions |
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38.8 |
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51.9 |
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Other accrued liabilities |
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69.3 |
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75.9 |
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Short-term debt |
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1.4 |
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8.2 |
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Current portion of operating lease liabilities |
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30.2 |
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30.5 |
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Current portion of deferred employee benefits |
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4.0 |
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4.0 |
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Total current liabilities |
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583.0 |
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633.9 |
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Long-term debt |
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524.0 |
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428.3 |
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Deferred employee benefits |
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102.8 |
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106.7 |
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Noncurrent operating lease liabilities |
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341.8 |
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336.8 |
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Deferred income taxes |
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139.3 |
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135.5 |
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Other noncurrent liabilities |
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13.9 |
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13.9 |
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Total liabilities |
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1,704.8 |
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1,655.1 |
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Commitments and contingencies |
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Equity |
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Ryerson Holding Corporation stockholders’ equity: |
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Preferred stock, $0.01 par value; 7,000,000 shares authorized; no shares issued and outstanding at June 30, 2024 and December 31, 2023 |
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— |
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— |
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Common stock, $0.01 par value; 100,000,000 shares authorized; 39,894,144 and 39,450,659 shares issued at June 30, 2024 and December 31, 2023, respectively |
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0.4 |
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0.4 |
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Capital in excess of par value |
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419.3 |
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411.6 |
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Retained earnings |
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802.6 |
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813.2 |
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Treasury stock at cost – Common stock of 6,201,965 and 5,413,434 shares at June 30, 2024 and December 31, 2023, respectively |
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(198.1 |
) |
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(179.3 |
) |
Accumulated other comprehensive loss |
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(146.3 |
) |
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(140.0 |
) |
Total Ryerson Holding Corporation stockholders’ equity |
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877.9 |
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905.9 |
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Noncontrolling interest |
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8.5 |
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8.6 |
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Total equity |
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886.4 |
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|
914.5 |
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Total liabilities and equity |
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$ |
2,591.2 |
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$ |
2,569.6 |
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See Notes to Condensed Consolidated Financial Statements.
5
RYERSON HOLDING CORPORATION AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
NOTE 1: FINANCIAL STATEMENTS
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 3,924,478 shares of our common stock, which is approximately 11.7% of our outstanding common stock.
We are a leading value-added processor and distributor of industrial metals with operations in the U.S. through JT Ryerson and other U.S. subsidiaries, in Canada through our indirect wholly-owned subsidiary Ryerson Canada, Inc., a Canadian corporation (“Ryerson Canada”), and in Mexico through our indirect wholly-owned subsidiary Ryerson Metals de Mexico, S. de R.L. de C.V., a Mexican corporation (“Ryerson Mexico”). In addition to our North American operations, we conduct materials processing and distribution operations in China through an indirect wholly-owned subsidiary, Ryerson China Limited (“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.”
Results of operations for any interim period are not necessarily indicative of results of any future periods or for the year. The condensed consolidated financial statements as of June 30, 2024 and for the three-month and six-month periods ended June 30, 2024 and 2023 are unaudited, but in the opinion of management, include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of results for such periods. The year-end condensed consolidated balance sheet data contained in this report was derived from audited financial statements, but does not include all disclosures required by U.S. generally accepted accounting principles (“GAAP”). These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS
Impact of Recently Issued Accounting Standards—Adopted
No accounting pronouncements have been issued that impact our financial statements.
Impact of Recently Issued Accounting Standards—Not Yet Adopted
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update (“ASU”) 2023-07, “Segment Reporting (Topic 280)”. The amendments in this update require public entities to enhance segment disclosures on both an interim and annual basis. These disclosures include, among others, significant segment expenses regularly reviewed by the chief operating decision maker (CODM), an amount for other segment items, the title and position of the CODM, and how the CODM uses this information in assessing performance. Full segment disclosures will be required of entities that have a single operating segment. The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods of fiscal years beginning after December 15, 2024 and should be adopted retrospectively to all prior periods presented in the financial statements. We do not expect this guidance to materially impact the consolidated financial statements.
In December 2023, FASB issued ASU 2023-09, “Income Taxes (Topic 740)”. The amendments in this update require public businesses to disclose specific categories in the rate reconciliation and further information for reconciling items that meet a quantitative threshold. This update also requires further disclosures of income taxes paid disaggregated by federal, state, and foreign jurisdictions as well as by the individual jurisdiction in which income taxes are paid if the amount paid is equal to or greater than five percent of total income taxes paid. Further, this update requires a disclosure of income or loss from continuing operations before income tax expense disaggregated between domestic and foreign and income tax expense or benefit disaggregated by federal, state, and foreign. This update is effective for annual periods beginning after December 15, 2024 and early adoption is permitted. We will adopt this ASU as of January 1, 2025. We do not expect this guidance to materially impact the consolidated financial statements.
6
NOTE 3: CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the beginning and ending cash balances shown in the Condensed Consolidated Statements of Cash Flows:
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June 30, |
|
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December 31, |
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2024 |
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2023 |
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(In millions) |
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|||||
Cash and cash equivalents |
|
$ |
28.0 |
|
|
$ |
54.3 |
|
Restricted cash |
|
|
1.2 |
|
|
|
1.1 |
|
Total cash, cash equivalents, and restricted cash |
|
$ |
29.2 |
|
|
$ |
55.4 |
|
We had cash restricted for the purpose of covering letters of credit that can be presented for potential insurance claims.
NOTE 4: INVENTORIES
The Company primarily uses the last-in, first-out (LIFO) method of valuing inventory. Interim LIFO calculations are based on projections of expected year-end inventory levels and costs. The year-end projection is then allocated to the interim quarters on a pro-rata basis. Year-end LIFO calculations are based on actual inventory levels and costs.
Inventories, at stated LIFO value, were classified at June 30, 2024 and December 31, 2023 as follows:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
(In millions) |
|
|||||
In process and finished products |
|
$ |
744.1 |
|
|
$ |
782.5 |
|
If current cost had been used to value inventories, such inventories would have been $139 million and $148 million higher than reported at June 30, 2024 and December 31, 2023, respectively. Approximately 88% of inventories are accounted for under the LIFO method at June 30, 2024 and December 31, 2023. Non-LIFO inventories consist primarily of inventory at our foreign facilities using the moving average cost and the specific cost methods. Substantially all of our inventories consist of finished products.
The Company has consignment inventory at certain customer locations, which totaled $6.3 million and $7.1 million at June 30, 2024 and December 31, 2023, respectively.
NOTE 5: GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill, which represents the excess of cost over the fair value of net assets acquired, amounted to $161.0 million and $157.8 million at June 30, 2024 and December 31, 2023, respectively. We recognized $3.2 million of additional goodwill during the first six months of 2024 related to purchase accounting adjustments for acquisitions completed in 2023, see Note 6: Acquisitions for further information.
Pursuant to FASB ASC 350, “Intangibles – Goodwill and Other,” we review the recoverability of goodwill annually as of October 1 or whenever significant events or changes occur which might impair the recovery of recorded amounts. The most recently completed impairment test of goodwill was performed as of October 1, 2023, and it was determined that no impairment existed.
Other intangible assets with finite useful lives continue to be amortized over their useful lives. We did not record any additional intangible assets during the first six months of 2024. We review the recoverability of our long-lived assets whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.
7
NOTE 6: ACQUISITIONS
2023 Acquisitions
On March 1, 2023, JT Ryerson acquired BLP Holdings, LLC ("BLP"). Based out of Houston, Texas, BLP is comprised of three divisions: Absolute Metal Products, Metal Cutting Specialists, and Houston Water Jet, serving various industries such as oil & gas, aerospace, telecommunications, and structural fabrication. BLP provides complex fabrication services in addition to toll processing, including saw cutting, machining, and water jet cutting.
On October 2, 2023, JT Ryerson acquired Norlen Incorporated ("Norlen"). Based out of Schofield, Wisconsin, Norlen is a full-service metal fabricator, providing stamping, machining, painting, and additional value-added fabrication services to industries including agriculture, HVAC, and defense.
On November 1, 2023, JT Ryerson acquired TSA Processing ("TSA"). Headquartered in Houston, Texas, with five other locations across the Midwest and Southern United States, TSA is a stainless steel and aluminum coil and sheet processor.
On December 1, 2023, JT Ryerson acquired Hudson Tool Steel Corporation ("Hudson"). Hudson is headquartered in Cerritos, California, with two facilities located in the Midwest and Northeast. Hudson is a supplier of tool steels and high-speed, carbon, and alloy steels.
The 2023 acquisitions will strengthen and expand JT Ryerson's valued-add services within our industry-leading stainless and aluminum franchises as well as our tool steel capabilities which will allow us to increase our offerings to better serve our diverse customer base across our entire network. In 2023, we paid a total of $127.5 million, net of cash acquired for the 2023 acquisitions. As of June 30, 2024, there is $1.3 million of unpaid purchase consideration related to the 2023 acquisitions accrued on the Condensed Consolidated Balance Sheet relating to holdback payments expected to be paid within 18 months of the acquisition date and working capital true ups.
We deemed the 2023 acquisitions individually immaterial, yet significant in the aggregate to the Condensed Consolidated Balance Sheets.
Included in the financial results for the three-month periods ended June 30, 2024 and June 30, 2023 was $27.5 million and $10.0 million of revenue, respectively, and a net loss of $0.2 million and net income of $0.2 million, respectively, from 2023 Acquisitions. For the six-month periods ended June 30, 2024 and June 30, 2023 there was $55.8 million and $13.0 million of revenue, respectively, and a net loss of $0.1 million and income of $0.6 million, respectively, from the 2023 Acquisitions included in the financial results. The 2023 acquisitions are insignificant to the Company's Condensed Consolidated Statements of Comprehensive Income for the six-months ended June 30, 2024 and the year-ended December 31, 2023.
The allocations of the total purchase price from our combined 2023 acquisitions to the fair values of the assets acquired and liabilities assumed were as follows:
|
|
(In millions) |
|
|
Cash and cash equivalents |
|
$ |
5.8 |
|
Receivables, less provisions |
|
|
20.4 |
|
Inventories |
|
|
11.6 |
|
Prepaid expenses and other current assets |
|
|
2.1 |
|
Property, plant, and equipment |
|
|
47.8 |
|
Operating lease assets |
|
|
35.0 |
|
Other intangible assets |
|
|
31.3 |
|
Goodwill |
|
|
29.5 |
|
Other noncurrent assets |
|
|
1.2 |
|
Total identifiable assets acquired |
|
|
184.7 |
|
Accounts payable |
|
|
(7.2 |
) |
Salaries, wages, and commissions |
|
|
(2.0 |
) |
Other accrued liabilities |
|
|
(0.7 |
) |
Operating lease liabilities |
|
|
(32.4 |
) |
Deferred income taxes |
|
|
(6.9 |
) |
Total liabilities assumed |
|
|
(49.2 |
) |
Net identifiable assets acquired |
|
$ |
135.5 |
|
8
The 2023 acquisitions discussed above were all accounted for under the acquisition method of accounting and, accordingly, the purchase price for each transaction has been allocated to the assets acquired and liabilities assumed based on the estimated fair values at the date of each acquisition. As needed, for each transaction the Company used a third-party valuation firm to estimate the fair values of property, plant, and equipment, leases, earn-outs, and intangible assets. Inventory was valued by the Company using acquisition date fair values of the metals. The Condensed Consolidated Balance Sheets reflect the allocations of each acquisition's purchase price as of June 30, 2024 and December 31, 2023. The measurement period for purchase price allocations will end 12 months after each acquisition date. The purchase price allocations for BLP and TSA are complete. The purchase price allocations for Hudson and Norlen are pending the completion of purchase price adjustments.
Included in the total purchase price is $0.9 million of contingent consideration at fair value. The contingent consideration is based on the attainment of certain financial metrics over the course of 4 years following the acquisition date with a maximum payout of $5.1 million. The fair value of the contingent consideration as of acquisition date was determined using a Monte Carlo simulation. As of June 30, 2024, the fair value of the contingent consideration was determined to be zero based on actual financial performance through June 30, 2024 and updated projections through the end of the earnout period, and as a result $0.9 million of income was recognized as of June 30, 2024 in other income and (expense) in the Condensed Consolidated Statements of Comprehensive Income.
As part of the purchase price allocations for the 2023 acquisitions, we allocated $7.6 million to trade names and $23.7 million to customer relationships with weighted average lives of 14.3 years and 14.0 years, respectively. The goodwill arising from the 2023 acquisitions consists largely of expected strategic benefits, including enhanced operational scale, as well as expansion of acquired product and processing capabilities across our Company. Goodwill increased $3.2 million in the first quarter of 2024, primarily related to accounting for deferred income taxes recorded for Hudson. There was no change in goodwill during the second quarter of 2024.
2023 Asset Acquisition
During the first six months of 2023, JT Ryerson completed the purchase of certain assets from ExOne Operating, LLC. The total amount paid by JT Ryerson for the acquired assets was $9.7 million. The transaction qualified for asset acquisition accounting and is not material to our consolidated financial statements.
2022 Acquisition Activity
On August 31, 2022, JT Ryerson acquired Howard Precision Metals, Inc. ("Howard"). In the first three months of 2024, JT Ryerson paid $1.9 million in holdback payments which are included within financing activities in the Condensed Consolidated Statements of Cash Flows.
On November 1, 2022, JT Ryerson acquired Excelsior, Inc. ("Excelsior"). In the six months ended June 30, 2024, JT Ryerson paid $3.4 million in holdback payments which are included in financing activities in the Condensed Consolidated Statements of Cash Flows.
NOTE 7: LONG-TERM DEBT
Long-term debt consisted of the following at June 30, 2024 and December 31, 2023:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
|
(In millions) |
|
|||||
Ryerson Credit Facility |
|
$ |
528.0 |
|
|
$ |
433.0 |
|
Foreign debt |
|
|
1.4 |
|
|
|
6.0 |
|
Other debt |
|
|
— |
|
|
|
2.2 |
|
Unamortized debt issuance costs and discounts |
|
|
(4.0 |
) |
|
|
(4.7 |
) |
Total debt |
|
|
525.4 |
|
|
|
436.5 |
|
Less: Short-term foreign debt |
|
|
1.4 |
|
|
|
6.0 |
|
Less: Other short-term debt |
|
|
— |
|
|
|
2.2 |
|
Total long-term debt |
|
$ |
524.0 |
|
|
$ |
428.3 |
|
Ryerson Credit Facility
On June 29, 2022, Ryerson entered into a fifth amendment of its revolving credit facility to among other things, increase the facility size from $1.0 billion to $1.3 billion and to extend the maturity date from November 5, 2025 to June 29, 2027. On June 10, 2024, Ryerson entered into a sixth amendment of its revolving credit facility to make conforming changes to effectuate the transition of the reference rate for revolving loans borrowed in Canadian Dollars from the Canadian Dollar Offered Rate to the forward-looking term rate based on the Canadian Overnight Repo Rate Average ("CORRA") (as amended, the “Ryerson Credit Facility” or “Credit Facility”).
9
At June 30, 2024, Ryerson had $528.0 million of outstanding borrowings, $2 million of letters of credit issued, and $511 million available under the Ryerson Credit Facility compared to $433.0 million of outstanding borrowings, $10 million of letters of credit issued, and $560 million available at December 31, 2023. Total credit availability is limited by the amount of eligible accounts receivable, inventory, and qualified cash pledged as collateral under the agreement insofar as Ryerson is subject to a borrowing base comprised of the aggregate of these three amounts, less applicable reserves. Eligible accounts receivable, at any date of determination, is comprised of the aggregate value of all accounts directly created by a borrower in the ordinary course of business arising out of the sale of goods or the rendering of services, each of which has been invoiced, with such receivables adjusted to exclude various ineligible accounts, including, among other things, those to which a borrower (or guarantor, as applicable) does not have sole and absolute title and accounts arising out of a sale to an employee, officer, director, or affiliate of a borrower (or guarantor, as applicable). Eligible inventory, at any date of determination, is comprised of the net orderly liquidation value of all inventory owned by a borrower. Qualified cash consists of cash in an eligible deposit account that is subject to customary restrictions and liens in favor of the lenders.
Amounts outstanding under the Ryerson Credit Facility bear interest at (i) a rate determined by reference to (A) the base rate (the highest of the Federal Funds Rate plus 0.50%, Bank of America’s prime rate, and the Term Secured Overnight Financing Rate (“SOFR”) plus 1.00%) or (B) a Term SOFR rate or (ii) for Ryerson Holding’s Canadian subsidiary that is a borrower, (A) the prime rate or base rate (the highest of the Federal Funds Rate plus 0.50%, Bank of America-Canada Branch’s commercial loan rate, and the Term SOFR rate plus 1.00%), (B) a Term SOFR rate (for loans denominated in US Dollars), or (C) the CORRA rate (for loans denominated in Canadian Dollars).
The spread over the base rate is between 0.25% and 0.50% and the spread over the SOFR rate is between 1.25% and 1.50%, depending on the amount available to be borrowed under the Ryerson Credit Facility; provided that such spreads shall be reduced by 0.125% if the leverage ratio set forth in the most recently delivered compliance certificate is less than or equal to 3.50 to 1.00. The spread over the CORRA rate is 0.30% for a one-month interest period or 0.32% for a three-month interest period. Ryerson also pays commitment fees on amounts not borrowed at a rate of 0.20%. Overdue amounts and all amounts owed during the existence of a default bear interest at 2.00% above the rate otherwise applicable thereto. The weighted average interest rate on outstanding borrowings under the Ryerson Credit Facility was 6.6% at June 30, 2024 and December 31, 2023.
Borrowings under the Ryerson Credit Facility are secured by first-priority liens on all of the inventory, accounts receivables, lockbox accounts, and related assets of the borrowers and the guarantors.
The Ryerson Credit Facility also contains covenants that, among other things, restrict Ryerson Holding and its restricted subsidiaries with respect to the incurrence of debt, the creation of liens, transactions with affiliates, mergers and consolidations, sales of assets, and acquisitions. The Ryerson Credit Facility also requires that, if availability under the Ryerson Credit Facility declines to a certain level, Ryerson maintain a minimum fixed charge coverage ratio as of the end of each fiscal quarter.
The Ryerson Credit Facility contains events of default with respect to, among other things, default in the payment of principal when due or the payment of interest, fees, and other amounts due thereunder after a specified grace period, material misrepresentations, failure to perform certain specified covenants, certain bankruptcy events, the invalidity of certain security agreements or guarantees, material judgments, the occurrence of a change of control of Ryerson, and a cross-default to other financing arrangements. If such an event of default occurs, the lenders under the Ryerson Credit Facility will be entitled to various remedies, including acceleration of amounts outstanding under the Ryerson Credit Facility and all other actions permitted to be taken by secured creditors.
The lenders under the Ryerson Credit Facility could reject a borrowing request if any event, circumstance, or development has occurred that has had or could reasonably be expected to have a material adverse effect on the Company. If Ryerson Holding, JT Ryerson, any of the other borrowers, or any restricted subsidiaries of JT Ryerson becomes insolvent or commences bankruptcy proceedings, all amounts borrowed under the Ryerson Credit Facility will become immediately due and payable.
Net proceeds of short-term borrowings that are reflected in the Condensed Consolidated Statements of Cash Flows represent borrowings under the Ryerson Credit Facility with original maturities of three months or less.
Foreign Debt
At June 30, 2024, Ryerson China's foreign borrowings were $1.1 million, which were owed to banks in Asia at a weighted average interest rate of 3.3% per annum and secured by inventory and property, plant, and equipment. Ryerson China had an additional $0.3 million debt related to letter of credit drawdowns that incur service charges (an initiation fee of 0.25% and a redemption fee of 0.13% per month), rather than interest. These balances are not secured with any of Ryerson China's assets. At December 31, 2023, Ryerson China’s foreign borrowings were $5.4 million, which were owed to banks in Asia at a weighted average interest rate of 3.4% per annum and secured by inventory and property, plant, and equipment. Ryerson China had additional $0.6 million debt related to letter of credit drawdowns that incur service charges (an initial fee ranging between 0.15% and 0.30% and a redemption fee ranging from zero and 0.13% per month), rather than interest. These balances are not secured with any of Ryerson China's assets.
10
Availability under the foreign credit lines was $46 million and $42 million at June 30, 2024 and December 31, 2023, respectively. Letters of credit issued by our foreign subsidiaries were $1 million at June 30, 2024 and December 31, 2023.
NOTE 8: EMPLOYEE BENEFITS
The following tables summarize the components of net periodic benefit cost (credit) for the Ryerson pension plans and postretirement benefit plans other than pension:
|
|
Three Months Ended June 30, |
|
|||||||||||||
|
|
Pension Benefits |
|
|
Other Benefits |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Components of net periodic benefit cost (credit) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service cost |
|
$ |
0.4 |
|
|
$ |
0.5 |
|
|
$ |
— |
|
|
$ |
0.1 |
|
Interest cost |
|
|
3.8 |
|
|
|
4.0 |
|
|
|
0.4 |
|
|
|
0.4 |
|
Expected return on assets |
|
|
(3.8 |
) |
|
|
(4.1 |
) |
|
|
— |
|
|
|
— |
|
Settlement gain |
|
|
(0.6 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Recognized actuarial (gain) loss |
|
|
1.0 |
|
|
|
1.0 |
|
|
|
(1.8 |
) |
|
|
(2.0 |
) |
Net periodic benefit cost (credit) |
|
$ |
0.8 |
|
|
$ |
1.4 |
|
|
$ |
(1.4 |
) |
|
$ |
(1.5 |
) |
|
|
Six Months Ended June 30, |
|
|||||||||||||
|
|
Pension Benefits |
|
|
Other Benefits |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(In millions) |
|
|||||||||||||
Components of net periodic benefit cost (credit) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service cost |
|
$ |
0.8 |
|
|
$ |
0.9 |
|
|
|
0.1 |
|
|
$ |
0.1 |
|
Interest cost |
|
|
7.5 |
|
|
|
8.1 |
|
|
|
0.8 |
|
|
|
0.9 |
|
Expected return on assets |
|
|
(7.6 |
) |
|
|
(8.2 |
) |
|
|
— |
|
|
|
— |
|
Settlement expense |
|
|
1.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Curtailment gain |
|
|
(0.2 |
) |
|
|
— |
|
|
|
(0.1 |
) |
|
|
— |
|
Recognized actuarial (gain) loss |
|
|
2.0 |
|
|
|
2.1 |
|
|
|
(3.6 |
) |
|
|
(4.1 |
) |
Net periodic benefit cost (credit) |
|
$ |
3.6 |
|
|
$ |
2.9 |
|
|
$ |
(2.8 |
) |
|
$ |
(3.1 |
) |
Components of net periodic benefit cost (credit), excluding service cost, are included in Other income and (expense), net in our Condensed Consolidated Statement of Comprehensive Income.
Due to the closure of Central Steel & Wire's ("CSW") headquarters in Chicago, IL and move to University Park, IL, a significant reduction in the service years of employees occurred between the fourth quarter of 2023 and first quarter of 2024, triggering curtailment accounting. The CSW Pension and Postretirement Benefits plans were remeasured as of February 29, 2024, resulting in a curtailment gain. As the curtailment was a net gain, the gain is required to be reflected in the periods in which the terminations occur, resulting in a curtailment gain of $0.3 million recognized in the first quarter of 2024 and $0.5 million recognized in the fourth quarter of 2023 for those terminations occurring during the respective periods. Additionally, the CSW Pension Plan is expecting lump sum payments for 2024 to be in excess of service cost and interest cost therefore, a settlement gain of $1.1 million was recorded in the first six months of 2024. The discount rate for measuring obligations increased from 5.24% at December 31, 2023 to 5.57% as of February 29, 2024. The expected long-term rate of return on pension assets has remained unchanged from December 31, 2023 at 3.85%.
In the first quarter of 2024, the Ryerson Canada Bargaining Unit Pension Plan made $1.2 million of lump sum payments to plan participants and purchased $5.0 million of annuities on behalf of plan participants. The lump sum payments and annuity purchases consisted of all of the existing liabilities of the Ryerson Canada Bargaining Unit Pension Plan, resulting in the termination of the plan. The Ryerson Canada Bargaining Unit Pension Plan was fully funded as of the termination date, and as such, all lump sum payments and annuity purchases were funded with pension plan assets. As a result, the Company recorded a $2.2 million settlement loss in the first quarter of 2024.
The net pension settlement loss and the curtailment gain were recorded within Other income and (expense), net within the Condensed Consolidated Statement of Comprehensive Income for the six months ended June 30, 2024.
The Company contributed $3.1 million to the pension plan funds through the six months ended June 30, 2024, and anticipates that it will have a minimum required pension contribution funding of approximately $8.0 million for the remaining six months of 2024.
11
NOTE 9: COMMITMENTS AND CONTINGENCIES
There have been no material changes to the contingencies and legal matters from those disclosed in Part I, Item 1: Business - Environment, Health, and Safety Matters and in Note 12 of the Notes to the Consolidated Financial Statements, in Part II, Item 8: Financial Statements in the Company's 2023 Form 10-K.
NOTE 10: DERIVATIVES AND FAIR VALUE MEASUREMENTS
Derivatives
The Company may use derivatives to partially offset its business exposure to commodity price, foreign currency, and interest rate fluctuations and their related impact on expected future cash flows and certain existing assets and liabilities. However, the Company may choose not to hedge certain exposures for a variety of reasons including, but not limited to, Company policy, accounting considerations, or the prohibitive economic cost of hedging particular exposures. There can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in commodity pricing, foreign currency exchange, or interest rates. Interest rate swaps may be entered into to manage interest rate risk associated with the Company’s floating-rate borrowings. We use foreign currency exchange contracts to hedge variability in cash flows in our Canada, Mexico, and China operations when a payment currency is different from our functional currency. From time to time, we may enter into fixed price sales contracts with our customers for certain of our inventory components. We may enter into metal commodity futures and options contracts to reduce volatility in the price of these metals. We may also enter into fixed price natural gas contracts to manage the price risk of forecasted purchases of natural gas.
The Company currently does not account for its commodity contracts and foreign exchange derivative contracts as hedges but rather marks them to market with a corresponding offset to current earnings.
The Company regularly reviews the creditworthiness of its derivative counterparties and does not expect to incur a significant loss from the failure of any counterparties to perform under any agreements.
The following table summarizes the location and fair value amount of our derivative instruments reported in our Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023. As of June 30, 2024 and December 31, 2023, all derivative instruments held by the Company were subject to master netting arrangements with various financial institutions. The Company’s accounting policy is to not offset these positions in its Condensed Consolidated Balance Sheets. The gross derivative assets and liabilities presented in the Condensed Consolidated Balance Sheets offset to a net asset of $12.8 million and $7.9 million as of June 30, 2024 and December 31, 2023, respectively, when incorporating the effects of master netting arrangements.
|
|
Asset Derivatives |
|
|
Liability Derivatives |
|
||||||||||||||
|
|
Balance Sheet Location |
|
June 30, 2024 |
|
|
December 31, 2023 |
|
|
Balance Sheet Location |
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||||
Derivatives not designated as hedging instruments under ASC 815 |
|
(In millions) |
|
|||||||||||||||||
Metal commodity contracts |
|
Prepaid expenses and |
|
$ |
15.7 |
|
|
$ |
12.7 |
|
|
Other accrued |
|
$ |
2.9 |
|
|
$ |
4.8 |
|
The following table presents the volume of the Company’s activity in derivative instruments as of June 30, 2024 and December 31, 2023:
|
|
Notional Amount |
|
|
|
|||||
Derivative Instruments |
|
June 30, 2024 |
|
|
December 31, 2023 |
|
|
Unit of Measurement |
||
Hot roll coil swap contracts |
|
|
61,549 |
|
|
|
64,819 |
|
|
Tons |
Aluminum swap contracts |
|
|
15,487 |
|
|
|
20,319 |
|
|
Tons |
Nickel swap contracts |
|
|
1,672 |
|
|
|
1,375 |
|
|
Tons |
Foreign currency exchange contracts |
|
2.7 million |
|
|
1.6 million |
|
|
U.S. dollars |
12
The following table summarizes the location and amount of gains and losses on derivatives not designated as hedging instruments reported in our Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2024 and 2023:
Derivatives not designated as hedging |
|
Location of Gain/(Loss) |
|
Amount of Gain/(Loss) Recognized in Income on Derivatives |
|
|||||||||||||
instruments under ASC 815 |
|
Recognized in Income |
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
on Derivatives |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Metal commodity contracts |
|
Cost of materials sold |
|
$ |
5.3 |
|
|
$ |
(0.5 |
) |
|
$ |
4.4 |
|
|
$ |
7.1 |
|
Foreign exchange contracts |
|
Other income and (expense), net |
|
|
— |
|
|
|
(0.1 |
) |
|
|
0.1 |
|
|
|
(0.1 |
) |
Total |
|
|
|
$ |
5.3 |
|
|
$ |
(0.6 |
) |
|
$ |
4.5 |
|
|
$ |
7.0 |
|
Fair Value Measurements
The Company has various commodity derivatives to lock in hot roll coil, nickel, and aluminum prices for varying time periods. The fair value of hot roll coil, nickel, and aluminum derivatives is determined based on the spot price each individual contract was purchased at and compared with the one-month daily average actual spot price on the Chicago Mercantile Exchange (hot roll coil) and the London Metals Exchange (nickel and aluminum), respectively, for the commodity on the valuation date. In addition, the Company has numerous foreign exchange contracts to hedge variability in cash flows when a payment currency is different from our functional currency. The Company defines the fair value of foreign exchange contracts as the amount of the difference between the contracted and current market value at the end of the period. The Company estimates the current market value of foreign exchange contracts by obtaining month-end market quotes of foreign exchange rates and forward rates for contracts with similar terms. The Company uses the exchange rates provided by Reuters. Each commodity and foreign exchange contract term varies in the number of months, but in general, contracts are between 1 to 12 months in length. As the fair value of each commodity and foreign exchange contract is determined using inputs other than quoted prices that are directly observable (Level 2 inputs) and the market approach valuation technique, as described in ASC 820, “Fair Value Measurement", these derivatives balances are classified as Level 2 within the fair value hierarchy.
The estimated fair value of the Company’s cash and cash equivalents, restricted cash, receivables less provisions, and accounts payable approximate their carrying amounts due to the short-term nature of these financial instruments. The estimated fair value of the Company's long-term debt and the current portions thereof equal the carrying amounts due to the short-term nature of the underlying borrowings on the Ryerson Credit Facility which are typically three months or less. See the Condensed Consolidated Balance Sheets for the June 30, 2024 and December 31, 2023 values of these assets and liabilities.
13
NOTE 11: STOCKHOLDERS’ EQUITY, ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), AND NONCONTROLLING INTEREST
On February 28, 2023, Platinum closed on an underwritten secondary offering of 2,486,580 shares of its common stock. Concurrently, Ryerson Holding completed a share repurchase from Platinum of 1,513,420 shares of common stock for $53.0 million. On May 8, 2023, Platinum closed on another underwritten secondary offering of 2,630,700 shares of its common stock. Concurrently, Ryerson Holding completed a share repurchase from Platinum of 1,369,300 shares of common stock for $50.0 million. In both transactions, Ryerson did not offer any shares of its common stock in the transaction and did not receive any of the proceeds from the sale of the shares by Platinum. The Company funded the share repurchases with cash on hand.
The following table details changes in Ryerson Holding Corporation Stockholders’ Equity accounts for the three-month and six-month periods ended June 30, 2024:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other |
|
|
|
|
|
|||||||||||||||
|
|
Common |
|
|
Treasury |
|
|
Capital in |
|
|
Retained Earnings |
|
|
Foreign |
|
|
Benefit Plan |
|
|
Non-controlling |
|
|
Total |
|
||||||||||||||||
|
|
Shares |
|
|
Dollars |
|
|
Shares |
|
|
Dollars |
|
|
Dollars |
|
|
Dollars |
|
|
Dollars |
|
|
Dollars |
|
|
Dollars |
|
|
Dollars |
|
||||||||||
|
|
(In millions, except shares in thousands) |
|
|||||||||||||||||||||||||||||||||||||
Balance at January 1, 2024 |
|
|
39,451 |
|
|
$ |
0.4 |
|
|
|
(5,413 |
) |
|
$ |
(179.3 |
) |
|
$ |
411.6 |
|
|
$ |
813.2 |
|
|
$ |
(52.2 |
) |
|
$ |
(87.8 |
) |
|
$ |
8.6 |
|
|
$ |
914.5 |
|
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7.6 |
) |
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
(7.4 |
) |
Foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3.3 |
) |
|
|
— |
|
|
|
(0.1 |
) |
|
|
(3.4 |
) |
Changes in defined benefit pension and other post-retirement benefit plans, net of tax of $0.7 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.1 |
|
|
|
— |
|
|
|
1.1 |
|
Share repurchases, net of tax of zero |
|
|
— |
|
|
|
— |
|
|
|
(31 |
) |
|
|
(1.0 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.0 |
) |
Stock-based compensation expense, net |
|
|
436 |
|
|
|
— |
|
|
|
(111 |
) |
|
|
(3.7 |
) |
|
|
3.3 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.4 |
) |
Cash dividends and dividend equivalents |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
(6.4 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6.2 |
) |
Balance at March 31, 2024 |
|
|
39,887 |
|
|
$ |
0.4 |
|
|
|
(5,555 |
) |
|
$ |
(184.0 |
) |
|
$ |
415.1 |
|
|
$ |
799.2 |
|
|
$ |
(55.5 |
) |
|
$ |
(86.7 |
) |
|
$ |
8.7 |
|
|
$ |
897.2 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9.9 |
|
|
|
— |
|
|
|
— |
|
|
|
0.4 |
|
|
|
10.3 |
|
Foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3.1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(3.1 |
) |
Changes in defined benefit pension and other post-retirement benefit plans, net of tax of $0.4 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.0 |
) |
|
|
— |
|
|
|
(1.0 |
) |
Share repurchases, net of tax $0.1 |
|
|
— |
|
|
|
— |
|
|
|
(647 |
) |
|
|
(14.1 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(14.1 |
) |
Stock-based compensation expense, net |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4.1 |
|
Issuance of common stock |
|
|
6 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
Dividends declared to non-controlling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.6 |
) |
|
|
(0.6 |
) |
||||||||
Cash dividends and dividend equivalents |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6.5 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6.5 |
) |
Balance at June 30, 2024 |
|
|
39,894 |
|
|
$ |
0.4 |
|
|
|
(6,202 |
) |
|
$ |
(198.1 |
) |
|
$ |
419.3 |
|
|
$ |
802.6 |
|
|
$ |
(58.6 |
) |
|
$ |
(87.7 |
) |
|
$ |
8.5 |
|
|
$ |
886.4 |
|
14
The following table details changes in Ryerson Holding Corporation Stockholders’ Equity accounts for the three-month and six-month periods ended June 30, 2023:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other |
|
|
|
|
|
|||||||||||||||
|
|
Common |
|
|
Treasury |
|
|
Capital in |
|
|
Retained Earnings |
|
|
Foreign |
|
|
Benefit Plan |
|
|
Non-controlling |
|
|
Total |
|
||||||||||||||||
|
|
Shares |
|
|
Dollars |
|
|
Shares |
|
|
Dollars |
|
|
Dollars |
|
|
Dollars |
|
|
Dollars |
|
|
Dollars |
|
|
Dollars |
|
|
Dollars |
|
||||||||||
|
|
(In millions, except shares in thousands) |
|
|||||||||||||||||||||||||||||||||||||
Balance at January 1, 2023 |
|
|
39,059 |
|
|
$ |
0.4 |
|
|
|
(2,071 |
) |
|
$ |
(61.1 |
) |
|
$ |
397.7 |
|
|
$ |
692.5 |
|
|
$ |
(56.9 |
) |
|
$ |
(87.5 |
) |
|
$ |
7.9 |
|
|
$ |
893.0 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
47.3 |
|
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
47.5 |
|
Foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1.5 |
|
|
|
— |
|
|
|
(0.1 |
) |
|
|
1.4 |
|
Changes in defined benefit pension and other post-retirement benefit plans, net of tax of $0.3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.7 |
) |
|
|
— |
|
|
|
(0.7 |
) |
Share repurchases, net of tax of $0.4 |
|
|
|
|
|
— |
|
|
|
(1,518 |
) |
|
|
(53.6 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(53.6 |
) |
|
Stock-based compensation expense, net |
|
|
390 |
|
|
|
— |
|
|
|
(90 |
) |
|
|
(3.2 |
) |
|
|
2.5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.7 |
) |
Cash dividends and dividend equivalents |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
|
|
(6.0 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5.9 |
) |
Balance at March 31, 2023 |
|
|
39,449 |
|
|
$ |
0.4 |
|
|
|
(3,679 |
) |
|
$ |
(117.9 |
) |
|
$ |
400.3 |
|
|
$ |
733.8 |
|
|
$ |
(55.4 |
) |
|
$ |
(88.2 |
) |
|
$ |
8.0 |
|
|
$ |
881.0 |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
37.6 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
37.6 |
|
Foreign currency translation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.0 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
2.1 |
|
Changes in defined benefit pension and other post-retirement benefit plans, net of tax of $0.3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.7 |
) |
|
|
— |
|
|
|
(0.7 |
) |
Share repurchases, net of tax $0.5 |
|
|
— |
|
|
|
— |
|
|
|
(1,382 |
) |
|
|
(51.0 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(51.0 |
) |
Stock-based compensation expense, net |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3.7 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3.7 |
|
Issuance of common stock |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash dividends and dividend equivalents |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6.3 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6.3 |
) |
|
Balance at June 30, 2023 |
|
|
39,450 |
|
|
$ |
0.4 |
|
|
|
(5,061 |
) |
|
$ |
(168.9 |
) |
|
$ |
404.0 |
|
|
$ |
765.1 |
|
|
$ |
(53.4 |
) |
|
$ |
(88.9 |
) |
|
$ |
8.1 |
|
|
$ |
866.4 |
|
The following table details changes in accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2024:
|
|
Changes in Accumulated Other Comprehensive |
|||||||
|
|
Foreign |
|
|
Benefit |
|
|
||
|
|
(In millions) |
|||||||
Balance at January 1, 2024 |
|
$ |
(52.2 |
) |
|
$ |
(87.8 |
) |
|
Other comprehensive income (loss) before reclassifications |
|
|
(6.4 |
) |
|
|
0.8 |
|
|
Amounts reclassified from accumulated other comprehensive income into net income |
|
|
— |
|
|
|
(0.7 |
) |
|
Net current-period other comprehensive income (loss) |
|
|
(6.4 |
) |
|
|
0.1 |
|
|
Balance at June 30, 2024 |
|
$ |
(58.6 |
) |
|
$ |
(87.7 |
) |
|
15
The following table details the reclassifications out of accumulated other comprehensive income (loss) for the three-month and six-month periods ended June 30, 2024:
|
|
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) |
|||||||
|
|
Amount reclassified from Accumulated Other Comprehensive Income (Loss) |
|
|
|||||
|
|
|
|
|
|||||
|
|
Three Months Ended |
|
|
Six Months Ended |
|
Affected line item in the Condensed Consolidated Statements of Comprehensive Income (Loss) |
||
Details about Accumulated Other |
|
June 30, 2024 |
|
|
|||||
Comprehensive Income (Loss) Components |
|
(In millions) |
|
|
|||||
Amortization of defined benefit pension and other post-retirement benefit plan items |
|
|
|
|
|
|
|
||
Actuarial gain |
|
$ |
(0.7 |
) |
|
$ |
(1.5 |
) |
Other income and (expense), net |
Pension settlement loss (gain) |
|
|
(0.6 |
) |
|
|
1.1 |
|
Other income and (expense), net |
Curtailment gain |
|
|
— |
|
|
|
(0.3 |
) |
Other income and (expense), net |
Total before tax |
|
|
(1.3 |
) |
|
|
(0.7 |
) |
|
Tax expense |
|
|
0.3 |
|
|
|
— |
|
|
Net of tax |
|
$ |
(1.0 |
) |
|
$ |
(0.7 |
) |
|
|
|
|
|
|
|
|
|
||
|
|
Reclassifications Out of Accumulated Other Comprehensive Income (Loss) |
|||||||
|
|
Amount reclassified from Accumulated Other Comprehensive Income (Loss) |
|
|
|||||
|
|
|
|
|
|||||
|
|
Three Months Ended |
|
|
Six Months Ended |
|
Affected line item in the Condensed Consolidated Statements of Comprehensive Income |
||
Details about Accumulated Other |
|
June 30, 2023 |
|
|
|||||
Comprehensive Income (Loss) Components |
|
(In millions) |
|
|
|||||
Amortization of defined benefit pension and other post-retirement benefit plan items |
|
|
|
|
|
|
|
||
Actuarial gain |
|
$ |
(1.0 |
) |
|
$ |
(2.0 |
) |
Other income and (expense), net |
Total before tax |
|
|
(1.0 |
) |
|
|
(2.0 |
) |
|
Tax expense |
|
|
0.3 |
|
|
|
0.6 |
|
|
Net of tax |
|
$ |
(0.7 |
) |
|
$ |
(1.4 |
) |
|
NOTE 12: REVENUE RECOGNITION
Net sales include product revenue and shipping and handling charges, net of estimated sales returns and any related sales incentives. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products.
We have one operating and reportable segment, metals service centers.
The Company derives substantially all of its revenue from the distribution of metals. The following table shows the Company’s percentage of sales disaggregated by major product line:
|
|
Three Months Ended |
|
Six Months Ended |
|
||||||||||
|
|
June 30, |
|
June 30, |
|
||||||||||
Product Line |
|
2024 |
|
|
2023 |
|
2024 |
|
|
2023 |
|
||||
Carbon Steel Flat |
|
|
30 |
% |
|
|
26 |
% |
|
29 |
% |
|
|
26 |
% |
Carbon Steel Plate |
|
|
10 |
|
|
|
10 |
|
|
11 |
|
|
|
10 |
|
Carbon Steel Long |
|
|
13 |
|
|
|
14 |
|
|
13 |
|
|
|
14 |
|
Stainless Steel Flat |
|
|
14 |
|
|
|
15 |
|
|
14 |
|
|
|
16 |
|
Stainless Steel Plate |
|
|
5 |
|
|
|
5 |
|
|
5 |
|
|
|
5 |
|
Stainless Steel Long |
|
|
4 |
|
|
|
5 |
|
|
4 |
|
|
|
5 |
|
Aluminum Flat |
|
|
16 |
|
|
|
15 |
|
|
16 |
|
|
|
15 |
|
Aluminum Plate |
|
|
2 |
|
|
|
3 |
|
|
2 |
|
|
|
2 |
|
Aluminum Long |
|
|
4 |
|
|
|
5 |
|
|
4 |
|
|
|
5 |
|
Other |
|
|
2 |
|
|
|
2 |
|
|
2 |
|
|
|
2 |
|
Total |
|
|
100 |
% |
|
|
100 |
% |
|
100 |
% |
|
|
100 |
% |
16
A significant majority of the Company’s sales are attributable to its U.S. operations. The only sales attributed to foreign countries relate to the Company’s subsidiaries in Canada, China, and Mexico. The following table summarizes consolidated financial information of our operations by geographic location based on where sales originated:
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net Sales |
(In millions) |
|
|
(In millions) |
|
||||||||||
United States |
$ |
1,107.3 |
|
|
$ |
1,223.8 |
|
|
$ |
2,232.6 |
|
|
$ |
2,512.1 |
|
Foreign countries |
|
118.2 |
|
|
|
119.7 |
|
|
|
232.1 |
|
|
|
237.5 |
|
Total |
$ |
1,225.5 |
|
|
$ |
1,343.5 |
|
|
$ |
2,464.7 |
|
|
$ |
2,749.6 |
|
Revenue is recognized either at a point in time or over time based on if the contract has an enforceable right to payment and the type of product that is being sold to the customer, with products that are determined to have no alternative use being recognized over time. The following table summarizes revenues by the type of item sold:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
Timing of Revenue Recognition |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue on products with an alternative use |
|
|
86 |
% |
|
|
87 |
% |
|
|
86 |
% |
|
|
87 |
% |
Revenue on products with no alternative use |
|
|
14 |
|
|
|
13 |
|
|
|
14 |
|
|
|
13 |
|
Total |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
Contract Balances
A receivable is recognized in the period in which an invoice is issued, which is generally when the product is delivered to the customer. Payment terms on invoiced amounts are typically 30 days from the invoice date. We do not have any contracts with significant financing components.
Receivables, which are included in accounts receivables within the Condensed Consolidated Balance Sheet, from contracts with customers were $532.2 million and $469.4 million as of June 30, 2024 and December 31, 2023, respectively.
Contract assets, which consist primarily of revenues recognized over time that have not yet been invoiced and the value of inventory, as estimated, that will be received in conjunction with product returns, are reported in prepaid expenses and other current assets within the Condensed Consolidated Balance Sheets. Contract liabilities, which consist primarily of accruals associated with amounts that will be paid to customers for volume rebates, cash discounts, sales returns and allowances, estimates of shipping and handling costs associated with performance obligations recorded over time, customer prepayments, and bill and hold transactions are reported in other accrued liabilities within the Condensed Consolidated Balance Sheets. Contract assets amounted to $20.2 million and $18.8 million at June 30, 2024 and December 31, 2023, respectively. Contract liabilities amounted to $17.4 million and $16.1 million at June 30, 2024 and December 31, 2023, respectively. Contract liabilities satisfied during the six-month period ended June 30, 2024 amounted to $3.7 million.
The Company’s performance obligations are typically short-term in nature. As a result, the Company has elected the practical expedient that provides an exemption of the disclosure requirements regarding information about remaining performance obligations on contracts that have original expected durations of one year or less.
NOTE 13: PROVISION FOR CREDIT LOSSES
Provisions for allowances and claims on accounts receivables and contract assets are based upon historical rates, expected trends, and estimates of potential returns, allowances, customer discounts, and incentives. The Company considers all available information when assessing the adequacy of the provision for allowances, claims, and doubtful accounts.
The Company performs ongoing credit evaluations of customers and sets credit limits based upon review of the customers’ current credit information, payment history, and the current economic and industry environments. The Company’s credit loss reserve consists of two parts: a) a provision for estimated credit losses based on historical experience and b) a reserve for specific customer collection issues that the Company has identified. Estimation of credit losses requires adjusting historical loss experience for current economic conditions and judgments about the probable effects of economic conditions on certain customers.
17
The following table provides a reconciliation of the provision for credit losses reported within the Condensed Consolidated Balance Sheets as of June 30, 2024:
|
Changes in Provision for Expected Credit Losses |
|
|
|
(In millions) |
|
|
Balance at January 1, 2024 |
$ |
1.7 |
|
Current period provision |
|
2.4 |
|
Write-offs charged against allowance |
|
(1.1 |
) |
Translation |
|
0.2 |
|
Balance at June 30, 2024 |
$ |
3.2 |
|
NOTE 14: INCOME TAXES
For the three months ended June 30, 2024, the Company recorded income tax expense of $3.0 million compared to income tax expense of $12.1 million in the prior year. The income tax expense for the three months ended June 30, 2024 and 2023 primarily represents taxes at federal and local statutory rates where the Company operates, adjusted for certain one-time items. For the six months ended June 30, 2024, the Company recorded income tax expense of $0.9 million compared to income tax expense of $26.9 million in the prior year. The income tax expense for the six months ended June 30, 2024 and 2023 primarily represents taxes at federal and local statutory rates where the Company operates, adjusted for certain one-time items. The decrease in income tax in the first six months of 2024 compared to the first six months of 2023 is primarily a result of the decrease in actual and forecasted earnings between the two periods.
As required by ASC 740, 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. The Company maintains a valuation allowance on certain foreign and U.S. federal 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. The valuation allowance is reviewed quarterly and will be maintained until sufficient positive evidence exists to support the reversal of some or all of the valuation allowance. The valuation allowance was $4.0 million at both June 30, 2024 and December 31, 2023.
The Company accounts for uncertain income tax positions in accordance with ASC 740. We anticipate that certain statutes of limitation will close within the next twelve months resulting in the immaterial reduction of the reserve for uncertain tax benefits related to various intercompany transactions. The reserve for uncertain tax benefits increased from $2.7 million as of December 31, 2023 to $2.9 million as of June 30, 2024 due to accrued interest related to uncertain tax positions.
18
NOTE 15: EARNINGS PER SHARE
Basic earnings per share attributable to Ryerson Holding’s common stock is determined based on earnings for the period divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share attributable to Ryerson Holding’s common stock considers the effect of potential common shares, unless inclusion of the potential common shares would have an antidilutive effect. The weighted average number of shares excluded, as they would have had an antidilutive effect, were 206,844 and zero for the six months ended June 30, 2024 and 2023, respectively. Antidilutive shares were related to outstanding restricted stock units.
The following table sets forth the calculation of basic and diluted earnings per share:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
Basic and diluted earnings per share |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
|
|
(In millions, except number of shares which are reflected in thousands and per share data) |
|
|||||||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Ryerson Holding Corporation |
|
$ |
9.9 |
|
|
$ |
37.6 |
|
|
$ |
2.3 |
|
|
$ |
84.9 |
|
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding |
|
|
34,159 |
|
|
|
34,951 |
|
|
|
34,091 |
|
|
|
35,698 |
|
Dilutive effect of stock-based awards |
|
|
259 |
|
|
|
502 |
|
|
|
480 |
|
|
|
647 |
|
Weighted average shares outstanding adjusted for dilutive securities |
|
|
34,418 |
|
|
|
35,453 |
|
|
|
34,571 |
|
|
|
36,345 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
0.29 |
|
|
$ |
1.07 |
|
|
$ |
0.07 |
|
|
$ |
2.38 |
|
Diluted |
|
$ |
0.29 |
|
|
$ |
1.06 |
|
|
$ |
0.07 |
|
|
$ |
2.33 |
|
NOTE 16: SUBSEQUENT EVENTS
Share Repurchase Authorization. As of June 30, 2024, $24.3 million of the $100.0 million remained under the existing share repurchase authorization expiring in April 2025. On July 30, 2024, the Board of Directors authorized increasing and extending the Company's share repurchase program by an additional $50.0 million expiring in April 2026. Under the share repurchase authorization, management has discretion in determining the conditions under which shares may be purchased from time to time.
Dividends. On July 30, 2024, the Board of Directors declared a quarterly cash dividend in the amount of $0.1875 per share of common stock, payable on September 19, 2024, to stockholders of record as of September 5, 2024. Future quarterly dividends, if any, will be subject to Board approval.
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Quarterly Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements can be identified by the use of forward-looking terminology such as “objectives,” “goals,” “preliminary,” “range,” “believes,” “expects,” “may,” “estimates,” “will,” “should,” “plans,” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those anticipated or implied in the forward-looking statements as a result of various factors. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should, therefore, be considered in light of various factors, including those set forth under “Special Note Regarding Forward-Looking Statements” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed on February 21, 2024 and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Industry and Operating Trends” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we caution you not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events.
The contents herein are provided for general information purposes only and do not constitute an offer to sell or buy, or a solicitation of an offer to buy, any security (“Security”) of Ryerson Holding or its affiliates in any jurisdiction. Ryerson does not intend to solicit and is not soliciting, any action with respect to any Security or any other contractual relationship with Ryerson. Nothing in this Form 10-Q, individually or taken in the aggregate, constitutes an offer of securities for sale or buy, or a solicitation of an offer to buy, any Security in the United States, or to US persons, or in any other jurisdiction in which such an offer or solicitation is unlawful.
The following Management’s Discussion and Analysis ("MD&A") of Financial Condition and Results of Operations is intended to help the reader understand the Company’s results of operations and financial condition as it is viewed by our management. The MD&A should be read in conjunction with our Condensed Consolidated Financial Statements and related Notes thereto in Item 1, “Financial Statements” in this Quarterly Report on Form 10-Q and our Consolidated Financial Statements and related Notes thereto for the year ended December 31, 2023, in our Annual Report on Form 10-K filed on February 21, 2024.
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 nearly 80% of the metals products we sell are processed by us by bending, beveling, blanking, blasting, burning, cutting-to-length, drilling, embossing, flattening, forming, grinding, laser cutting, machining, notching, painting, perforating, polishing, punching, rolling, sawing, scribing, shearing, slitting, stamping, tapping, threading, welding, or other techniques to process materials to a specified thickness, length, width, shape, and surface quality pursuant to specific customer orders.
Similar to other metals service centers, we maintain substantial inventories of metals to accommodate the short lead times and just-in-time delivery requirements of our customers. Accordingly, we purchase metals to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon customer forecasts, historic buying practices, supply agreements with customers, mill lead times, and market conditions. Our commitments to purchase metals are generally at prevailing market prices in effect at the time we place our orders. We may enter into swaps in order to mitigate our customers’ risk of volatility in the price of metals, as well as metal 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. Changes in average selling prices are primarily driven by commodity metals prices, which impact Ryerson’s selling prices over the subsequent three to six-month period.
The metals service center industry is cyclical, volatile in demand and pricing, and difficult to predict. In the second quarter of 2024, Ryerson experienced lower average selling prices of 3.2% and an increase in shipments of 2.2%, compared to the first quarter of 2024, as the period was characterized by sequential restocking demand, offset by a lower pricing environment. In the first six months of 2024, Ryerson experienced lower average selling prices of 9.5% and a decrease in shipments of 1.0% compared to the first six months of 2023, due to the effects of contracting industrial manufacturing demand, which influenced both lower volumes as well as lower pricing.
20
Key steel industry economic indicators continued to report a contraction in industrial activity during the second quarter of 2024. This is evidenced by the Institute for Supply Management’s Purchasing Managers’ Index (“PMI”), which reported readings below the growth threshold of 50, with a reading of 48.5 in June and readings of 48.7 and 49.2 in May and April, respectively, after indicating growth in March of 2024 with a reading of 50.3. The March 2024 growth reading was preceded by sixteen consecutive months of contractionary factory activity. U.S. Industrial Production, which measures industrial sector business output, reported contractionary year-over-year output for most of the second quarter, with a May reading of 0.4% as the first increase in five months.
According to the Metal Service Center Institute, North American service center volumes decreased by 3.3% in the first six months of 2024 compared to the first six months of 2023. Ryerson's North American volumes decreased 2.5% over the same period. Compared to the first six months of 2023, Ryerson's overall consolidated end market demand, as measured by sales volumes, has decreased by 1.0% for the first six months of 2024, with decreased volumes in Consumer Durables, Industrial Machinery & Equipment, Commercial Ground Transportation, and Construction Equipment sectors. Decreases in these end-markets were partially offset by increased volumes in Food Processing & Agriculture, HVAC, and the Metal Fabrication & Machine Shops sectors. On a quarterly sequential basis, the industry volume decreased 0.2% compared to an increase in Ryerson's North American volume of 1.7%. On a quarterly sequential basis, Ryerson's overall consolidated volumes have increased by 2.2%, with the largest increases in HVAC, Construction Equipment, Consumer Durable, and the Oil & Gas sectors.
First Six Months 2024 vs. First Six Months 2023 Performance
$2.5B |
|
|
|
17.9% |
|
|
|
$2.3M |
|
|
Total Revenues |
|
|
Gross Margin |
|
Net Income Attributable to Ryerson |
|
||||
|
10% decrease |
|
|
120bps decrease |
|
|
$83M decrease |
|||
$0.07 |
|
|
|
$0.14 |
|
|
|
$(21.9)M |
|
|
Diluted Income Per Share |
|
|
Adj. Diluted Income Per Share* |
|
Cash used in Operating Activities |
|||||
|
$2.26 decrease |
|
|
$2.19 decrease |
|
|
$218M decrease |
*A reconciliation of the non-GAAP financial measure to the comparable GAAP measure is included in the subsequent table.
To provide greater insight into the Company’s operating trends apart from the period’s one-time transactions, Ryerson provides adjusted net income and adjusted diluted earnings per share figures, which are not U.S. generally accepted accounting principles (“GAAP”) financial measures, to compliment the reported GAAP net income and diluted earnings per share figures. Management uses these metrics to assess year-over-year performance excluding non-recurring transactions. Adjusted net income and adjusted diluted earnings per share do not represent, and should not be used as a substitute for, net income or diluted earnings per share determined in accordance with GAAP. As illustrated in the below table, the net income attributable to Ryerson Holding Corporation of $2.3 million includes a restructuring charge of $1.7 million, as well as a pension settlement loss of $2.2 million and a $0.3 million curtailment gain related to various retirement benefit plans. After adjusting for these non-core business transactions and the related income taxes, the adjusted net income attributable to Ryerson Holding Corporation for the first six months 2024 is $5.0 million, a decrease of $79.9 million compared to net income attributable to Ryerson Holding Corporation of $84.9 million in the first six months of 2023 which had no adjustments.
(Dollars and shares in millions, except per share data) |
|
First Six Months 2024 |
|
|
First Six Months 2023 |
|
||
Net income attributable to Ryerson Holding Corporation |
|
$ |
2.3 |
|
|
$ |
84.9 |
|
Restructuring and other costs |
|
|
1.7 |
|
|
|
— |
|
Pension settlement loss |
|
|
2.2 |
|
|
|
— |
|
Benefit plan curtailment gain |
|
|
(0.3 |
) |
|
|
— |
|
Benefit for income taxes on above items |
|
|
(0.9 |
) |
|
|
— |
|
Adjusted net income attributable to Ryerson Holding Corporation |
|
$ |
5.0 |
|
|
$ |
84.9 |
|
Diluted earnings per share |
|
$ |
0.07 |
|
|
$ |
2.33 |
|
Adjusted diluted earnings per share |
|
$ |
0.14 |
|
|
$ |
2.33 |
|
Shares outstanding – diluted |
|
|
34.6 |
|
|
|
36.3 |
|
21
Recent Developments
On July 11, 2024, the US government announced that it will impose a “melt and pour” requirement for imports of steel products from Mexico and will impose section 232 tariffs of 25% for steel products that are melted and poured in a country other than Mexico, Canada, or the US. The move is expected to help close a loophole in section 232 of the Trade Expansion Act ("Section 232") that has allowed steel produced outside of North America to avoid the tariffs by shipping via Mexico for further processing before being exported to the US. Additionally, the US will impose a “smelt and cast” requirement for aluminum imports from Mexico. Specifically, any product from Mexico whose “primary country of smelt, secondary country of smelt, or country of most recent cast” is China, Russia, Belarus, or Iran will be subject to 10% 232 duties upon entering the US. We believe the impact of these regulatory measures are supportive of US domestic supply and may be beneficial to Ryerson’s volumes and average selling prices.
On May 14, 2024, the U.S. government announced trade actions that increased tariffs across strategic sectors such as steel and aluminum, semiconductors, electric vehicles, batteries, critical minerals, solar cells, ship-to-shore cranes, and medical products. The tariff rate on certain steel and aluminum products under Section 301 of the Trade Act of 1974 ("Section 301") will increase from between zero to 7.5% to 25% in 2024. We anticipate that these actions will provide limited support for metal commodity prices, given China steel and aluminum imports represent a small portion of overall U.S. imports at 2.2% and 3.6%, respectively, in 2023.
On April 12, 2024, the U.S. and United Kingdom governments prohibited metal-trading exchanges from accepting new aluminum, copper, and nickel produced by Russia and barred the import of the metals into the U.S. and Britain. We anticipate these actions will provide support for metal commodity prices, but ultimately the impact on the Company's operations is unclear.
On February 24, 2023, the US government announced trade actions targeting goods and entities from Russia, which included a proclamation to impose 200% ad valorem tariffs on Russian-origin aluminum products and derivative products and other articles made from Russian primary aluminum or Russian aluminum castings. The duties will be imposed under Section 232 and cited by the White House due to (1) challenges faced by US aluminum producers in the face of high levels of aluminum imports and high energy prices; (2) recent increases in imports of aluminum from Russia, whose market is especially export-oriented, by 53 percent between March and July 2022; and (3) the fact that the Russian aluminum industry is a key part of Russia's defense industrial base. Ryerson has communicated to all vendors that we will not accept any Russian originating metal. The trade actions announced by the US government should support prices for Ryerson's product sales mix as the underlying domestic and North American supply-demand balance is protected from oversupply.
Components of Results of Operations
We generate substantially all of our revenue from sales of our metals products. The majority of revenue is recognized upon delivery of product to customers. The timing of shipment is substantially the same as the timing of delivery to customers given the proximity of our distribution sites to our customers. Revenues associated with products which we believe have no alternative use, and where the Company has an enforceable right to payment, are recognized on an over-time basis. Over-time revenues are recorded in proportion with the progress made toward completing the performance obligation.
Sales, cost of materials sold, gross profit, and operating expense control are the principal factors that impact our profitability.
Net sales. Our sales volume and pricing are driven by market demand, which is largely determined by overall industrial production and conditions in the specific industries in which our customers operate. Sales prices are also primarily driven by market factors such as overall demand and availability of product. Our net sales include revenue from product sales, net of returns, allowances, customer discounts, and incentives.
Cost of materials sold. Cost of materials sold includes metal purchase and in-bound freight costs, third-party processing costs, and direct and indirect internal processing costs. The cost of materials sold fluctuates with our sales volume and our ability to purchase metals at competitive prices. Increases in sales volume generally enable us to improve purchasing leverage with suppliers, as we buy larger quantities of metals inventories.
Gross profit. Gross profit is the difference between net sales and the cost of materials sold. Our sales prices to our customers are subject to market competition. Achieving acceptable levels of gross profit is dependent on our acquiring metals at competitive prices, our ability to manage the impact of changing prices, and efficiently managing our internal and external processing costs.
Operating expenses. Optimizing business processes and asset utilization to lower fixed expenses such as employee, facility, and truck fleet costs, which cannot be rapidly reduced in times of declining volume, and maintaining a 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.
22
Results of Operations
The following table sets forth our condensed consolidated statements of income data for the three-month and six-month periods ended June 30, 2024 and 2023 (certain percentages may not calculate due to rounding):
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||||||||||||||||||
|
|
$ |
|
|
% of Net |
|
|
$ |
|
|
% of Net |
|
|
$ |
|
|
% of Net |
|
|
$ |
|
|
% of Net |
|
||||||||
|
|
($ in millions) |
|
|
($ in millions) |
|
||||||||||||||||||||||||||
Net sales |
|
$ |
1,225.5 |
|
|
|
100.0 |
% |
|
$ |
1,343.5 |
|
|
|
100.0 |
% |
|
$ |
2,464.7 |
|
|
|
100.0 |
% |
|
$ |
2,749.6 |
|
|
|
100.0 |
% |
Cost of materials sold |
|
|
1,002.0 |
|
|
|
81.8 |
|
|
|
1,082.6 |
|
|
|
80.6 |
|
|
|
2,023.6 |
|
|
|
82.1 |
|
|
|
2,224.5 |
|
|
|
80.9 |
|
Gross profit |
|
|
223.5 |
|
|
|
18.2 |
|
|
|
260.9 |
|
|
|
19.4 |
|
|
|
441.1 |
|
|
|
17.9 |
|
|
|
525.1 |
|
|
|
19.1 |
|
Warehousing, delivery, selling, general, and administrative expenses |
|
|
199.0 |
|
|
|
16.2 |
|
|
|
202.6 |
|
|
|
15.1 |
|
|
|
415.8 |
|
|
|
16.9 |
|
|
|
396.8 |
|
|
|
14.4 |
|
Restructuring and other costs |
|
|
1.7 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
1.7 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
Operating profit |
|
|
22.8 |
|
|
|
1.9 |
|
|
|
58.3 |
|
|
|
4.3 |
|
|
|
23.6 |
|
|
|
1.0 |
|
|
|
128.3 |
|
|
|
4.7 |
|
Other (expenses) and income |
|
|
(9.5 |
) |
|
|
(0.8 |
) |
|
|
(8.6 |
) |
|
|
(0.6 |
) |
|
|
(19.8 |
) |
|
|
(0.8 |
) |
|
|
(16.3 |
) |
|
|
(0.6 |
) |
Income before income taxes |
|
|
13.3 |
|
|
|
1.1 |
|
|
|
49.7 |
|
|
|
3.7 |
|
|
|
3.8 |
|
|
|
0.2 |
|
|
|
112.0 |
|
|
|
4.1 |
|
Provision for income taxes |
|
|
3.0 |
|
|
|
0.2 |
|
|
|
12.1 |
|
|
|
0.9 |
|
|
|
0.9 |
|
|
|
— |
|
|
|
26.9 |
|
|
|
1.0 |
|
Net income |
|
|
10.3 |
|
|
|
0.8 |
|
|
|
37.6 |
|
|
|
2.8 |
|
|
|
2.9 |
|
|
|
0.1 |
|
|
|
85.1 |
|
|
|
3.1 |
|
Less: Net income attributable to noncontrolling interest |
|
|
0.4 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.6 |
|
|
|
— |
|
|
|
0.2 |
|
|
|
— |
|
Net income attributable to Ryerson Holding Corporation |
|
$ |
9.9 |
|
|
|
0.8 |
% |
|
$ |
37.6 |
|
|
|
2.8 |
% |
|
$ |
2.3 |
|
|
|
0.1 |
% |
|
$ |
84.9 |
|
|
|
3.1 |
% |
Basic earnings per share |
|
$ |
0.29 |
|
|
|
|
|
$ |
1.07 |
|
|
|
|
|
$ |
0.07 |
|
|
|
|
|
$ |
2.38 |
|
|
|
|
||||
Diluted earnings per share |
|
$ |
0.29 |
|
|
|
|
|
$ |
1.06 |
|
|
|
|
|
$ |
0.07 |
|
|
|
|
|
$ |
2.33 |
|
|
|
|
23
Net sales
The following charts show the Company’s percentage of sales by major product lines for the six months ended June 30, 2024 and 2023:
|
|
June 30, |
|
|
Dollar |
|
|
Percentage |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
change |
|
|
change |
|
||||
|
|
($ in millions) |
|
|
|
|
|
|
|
|||||||
Net sales (three months ended) |
|
$ |
1,225.5 |
|
|
$ |
1,343.5 |
|
|
$ |
(118.0 |
) |
|
|
(8.8 |
)% |
Net sales (six months ended) |
|
$ |
2,464.7 |
|
|
$ |
2,749.6 |
|
|
$ |
(284.9 |
) |
|
|
(10.4 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
June 30, |
|
|
Tons |
|
|
Percentage |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
change |
|
|
change |
|
||||
|
|
(in thousands) |
|
|
|
|
|
|
|
|||||||
Tons sold (three months ended ) |
|
|
508 |
|
|
|
496 |
|
|
|
12 |
|
|
|
2.4 |
% |
Tons sold (six months ended) |
|
|
1,005 |
|
|
|
1,015 |
|
|
|
(10 |
) |
|
|
(1.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
June 30, |
|
|
Price |
|
|
Percentage |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
change |
|
|
change |
|
||||
Average selling price per ton sold (three months ended) |
|
$ |
2,412 |
|
|
$ |
2,709 |
|
|
$ |
(297 |
) |
|
|
(11.0 |
)% |
Average selling price per ton sold (six months ended) |
|
$ |
2,452 |
|
|
$ |
2,709 |
|
|
$ |
(257 |
) |
|
|
(9.5 |
)% |
Revenue for the three-month and six-month periods ended June 30, 2024 decreased from the same periods a year ago due to lower average selling prices caused by lower commodity prices in 2024. Compared to the year ago periods, average selling prices decreased for all of our product lines in the three-month and six-month periods ended June 30, 2024 with the largest decreases in our stainless flat, stainless plate, stainless long, and carbon plate products. Tons sold decreased slightly in the six-month period while increasing in the three-month period ended June 30, 2024, compared to the year ago periods. The product lines with the largest decreases in tons sold in 2024 are our carbon long and aluminum long product lines partially offset by an increase in carbon flat tons sold in the three-month and six-month periods ended June 30, 2024 and in carbon plate tons sold in the second quarter of 2024.
24
Cost of materials sold
|
|
June 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
||||||||||||
|
|
$ |
|
|
% of Net |
|
|
$ |
|
|
% of Net |
|
|
Dollar change |
|
|
Percentage change |
|
||||||
|
|
($ in millions) |
|
|
|
|
|
|
|
|||||||||||||||
Cost of materials sold (three months ended) |
|
$ |
1,002.0 |
|
|
|
81.8 |
% |
|
$ |
1,082.6 |
|
|
|
80.6 |
% |
|
$ |
(80.6 |
) |
|
|
(7.4 |
)% |
Cost of materials sold (six months ended) |
|
$ |
2,023.6 |
|
|
|
82.1 |
% |
|
$ |
2,224.5 |
|
|
|
80.9 |
% |
|
$ |
(200.9 |
) |
|
|
(9.0 |
)% |
|
|
June 30, |
|
|
Cost |
|
|
Percentage |
|
|||||||
|
|
2024 |
|
|
2023 |
|
|
change |
|
|
change |
|
||||
Average cost of materials sold per ton sold (three months ended) |
|
$ |
1,972 |
|
|
$ |
2,183 |
|
|
$ |
(211 |
) |
|
|
(9.7 |
)% |
Average cost of materials sold per ton sold (six months ended) |
|
$ |
2,013 |
|
|
$ |
2,192 |
|
|
$ |
(179 |
) |
|
|
(8.2 |
)% |
The decrease in cost of materials sold in the three-month and six-month periods ended June 30, 2024 compared to the year ago periods is primarily due to a decrease in average cost of materials sold per ton. Compared to the year ago periods the average cost of materials sold decreased across all product lines with the largest decreases in our stainless flat, stainless plate, stainless long, and carbon plate product lines. During the second quarter of 2024, LIFO income was $10.0 million compared to LIFO income of $9.0 million in the second quarter of 2023. During the first six months of 2024, LIFO income was $9.0 million compared to LIFO income of $5.0 million in the first six months of 2023.
Gross profit
|
|
June 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
||||||||||||
|
|
$ |
|
|
% of Net |
|
|
$ |
|
|
% of Net |
|
|
Dollar change |
|
|
Percentage |
|
||||||
|
|
($ in millions) |
|
|
|
|
|
|
|
|||||||||||||||
Gross profit (three months ended) |
|
$ |
223.5 |
|
|
|
18.2 |
% |
|
$ |
260.9 |
|
|
|
19.4 |
% |
|
$ |
(37.4 |
) |
|
|
(14.3 |
)% |
Gross profit (six months ended) |
|
$ |
441.1 |
|
|
|
17.9 |
% |
|
$ |
525.1 |
|
|
|
19.1 |
% |
|
$ |
(84.0 |
) |
|
|
(16.0 |
)% |
Gross profit decreased in the three-month and six-month periods ended June 30, 2024 compared to the year ago period as average selling price decreased faster than the decrease in the average cost of materials sold, resulting in a decrease in gross margin. The decrease in averaged selling prices reflected the impact of lower metals commodity prices in the first six months of 2024.
25
Operating expenses
|
|
June 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
||||||||||||
|
|
$ |
|
|
% of Net |
|
|
$ |
|
|
% of Net |
|
|
Dollar change |
|
|
Percentage change |
|
||||||
|
|
($ in millions) |
|
|
|
|
|
|
|
|||||||||||||||
Warehousing, delivery, selling, general, and administrative expenses (three months ended) |
|
$ |
199.0 |
|
|
|
16.2 |
% |
|
$ |
202.6 |
|
|
|
15.1 |
% |
|
$ |
(3.6 |
) |
|
|
(1.8 |
)% |
Warehousing, delivery, selling, general, and administrative expenses (six months ended) |
|
$ |
415.8 |
|
|
|
16.9 |
% |
|
$ |
396.8 |
|
|
|
14.4 |
% |
|
$ |
19.0 |
|
|
|
4.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Restructuring and other charges (three months ended) |
|
$ |
1.7 |
|
|
|
0.1 |
% |
|
$ |
— |
|
|
|
— |
|
|
$ |
1.7 |
|
|
|
— |
|
Restructuring and other assets (six months ended) |
|
$ |
1.7 |
|
|
|
0.1 |
% |
|
$ |
— |
|
|
|
— |
|
|
$ |
1.7 |
|
|
|
— |
|
Warehousing, delivery, selling, general, and administrative expenses declined $3.6 million in the second quarter of 2024 compared to the second quarter of 2023 while expenses increased $19.0 million in the six-month period ended June 30, 2024 compared to the year ago period . Expenses in the second quarter of 2024 included $7.2 million of expenses from companies acquired during 2023, while the first six months of 2024 included expenses of $15.1 million from companies acquired in 2023. Excluding the impact of acquisitions, expenses decreased $10.8 million in the second quarter of 2024 compared to the second quarter of 2023 and expenses increased $3.9 in the six-month period ended June 30, 2024 compared to the year ago period. On a same-store basis, expenses in the three-month and six-month periods changed in the following categories from the prior year periods:
The three month and six month periods ended June 30, 2024 include a restructuring charge of $1.7 million related to severance costs for headcount reductions as we work on optimizing our operating model and improving productivity.
Operating profit
|
|
June 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
||||||||||||
|
|
$ |
|
|
% of Net |
|
|
$ |
|
|
% of Net |
|
|
Dollar change |
|
|
Percentage change |
|
||||||
|
|
($ in millions) |
|
|
|
|
|
|
|
|||||||||||||||
Operating profit (three months ended) |
|
$ |
22.8 |
|
|
|
1.9 |
% |
|
$ |
58.3 |
|
|
|
4.3 |
% |
|
$ |
(35.5 |
) |
|
|
(60.9 |
)% |
Operating profit (six months ended) |
|
$ |
23.6 |
|
|
|
1.0 |
% |
|
$ |
128.3 |
|
|
|
4.7 |
% |
|
$ |
(104.7 |
) |
|
|
(81.6 |
)% |
Our operating profit decreased in the three-month and six month periods ended June 30, 2024 compared to the three-month and six-month periods ended June 30, 2023, primarily due to the decrease in average selling prices and gross profit discussed above.
26
Other expenses
|
|
June 30, |
|
|
|
|
|
|
|
|||||||||||||||
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
||||||||||||
|
|
$ |
|
|
% of Net |
|
|
$ |
|
|
% of Net |
|
|
Dollar change |
|
|
Percentage change |
|
||||||
|
|
($ in millions) |
|
|
|
|
|
|
|
|||||||||||||||
Interest and other expense on debt (three months ended) |
|
$ |
(11.3 |
) |
|
|
(0.9 |
)% |
|
$ |
(8.3 |
) |
|
|
(0.6 |
)% |
|
$ |
3.0 |
|
|
|
36.1 |
% |
Interest and other expense on debt (six months ended) |
|
$ |
(21.4 |
) |
|
|
(0.9 |
)% |
|
$ |
(15.9 |
) |
|
|
(0.6 |
)% |
|
$ |
5.5 |
|
|
|
34.6 |
% |
Other income and (expense), net (three months ended) |
|
$ |
1.8 |
|
|
|
0.1 |
% |
|
$ |
(0.3 |
) |
|
|
— |
|
|
$ |
2.1 |
|
|
|
700.0 |
% |
Other income and (expense), net (six months ended) |
|
$ |
1.6 |
|
|
|
0.1 |
% |
|
$ |
(0.4 |
) |
|
|
— |
|
|
$ |
2.0 |
|
|
|
500.0 |
% |
Interest and other expense on debt increased in the three-month and six-month period ended June 30, 2024 compared to the year ago period primarily due to a higher level of borrowings outstanding under our $1.3 billion revolving credit facility (“the Ryerson Credit Facility”) and higher interest rates on the Ryerson Credit Facility borrowings in the first six months of 2024.
The other expense in the first six months of 2024 includes a $2.2 million settlement loss resulting from the termination of the Ryerson Canada Bargaining Unit Pension Plan. Partially offsetting the $2.2 million settlement loss was a $1.1 million settlement gain and a $0.3 million curtailment gain related to lump-sum buyouts and a reduction in future years of service for the Central Steel & Wire ("CSW") pension and other post-employment benefit plans resulting from workforce reductions at CSW related to the move of the CSW headquarters and main operations to a new facility in University Park, IL. Other income and (expense), net in the first six months of 2024 also includes foreign currency translation gains of $1.6 million. Other income and (expense), net in the first six months of 2023 is primarily related to foreign currency translation losses.
Provision for income taxes. Our effective income tax rate was 22.6% in the second quarter of 2024 and 23.7% in the first six months of 2024 compared to 24.4% in the second quarter of 2023 and 24.0% in the first six months of 2023. The differences between our effective income tax rates and the U.S. federal statutory rate of 21.0% were mainly due to state and foreign income taxes partially offset by the effects of certain discrete items recorded during the periods.
Earnings (loss) per share. Basic income per share was $0.29 in the second quarter of 2024 and $0.07 in the first six months of 2024 compared to basic earnings per share of $1.07 in the second quarter of 2023 and $2.38 in the first six months of 2023. Diluted income per share was $0.29 in the second quarter of 2024 and $0.07 in the first six months of 2024 compared to diluted earnings per share of $1.06 in the second quarter of 2023 and $2.33 in the first six months of 2023. The changes in earnings per share are due to the results of operations discussed above as well as having fewer shares outstanding in the second quarter of 2024 and the first six months of 2024 after the repurchase of 1,068,566 shares of common stock since July 1, 2023.
Liquidity and Cash Flows
Our primary sources of liquidity are cash and cash equivalents, cash flows from operations, and borrowing availability under the Ryerson Credit Facility. 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, and capital expenditures.
We had cash and cash equivalents of $28.0 million at June 30, 2024, compared to $54.3 million at December 31, 2023. Our total debt outstanding at June 30, 2024 increased to $525.4 million compared to $436.5 million at December 31, 2023. We had a debt-to-capitalization ratio of 37% and 32% at June 30, 2024 and December 31, 2023, respectively. We had total liquidity (defined as cash and cash equivalents and availability under the Ryerson Credit Facility and foreign debt facilities) of $585 million at June 30, 2024 versus $656 million at December 31, 2023. Our net debt (defined as total debt less cash and cash equivalents) was $497 million and $382 million at June 30, 2024 and December 31, 2023, respectively. Total liquidity and net debt are not U.S. generally accepted accounting principles (“GAAP”) financial measures. We believe that total liquidity provides additional information for measuring our ability to fund our operations. Total liquidity does not represent, and should not be used as a substitute for, net income or cash flows from operations as determined in accordance with GAAP and total liquidity is not necessarily an indication of whether cash flow will be sufficient to fund our cash requirements. We believe that net debt provides a clearer perspective of the Company’s overall debt profile. Net debt should not be used as a substitute for total debt outstanding as determined in accordance with GAAP.
Below is a reconciliation of cash and cash equivalents to total liquidity:
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||
|
|
(In millions) |
|
|||||
Cash and cash equivalents |
|
$ |
28 |
|
|
$ |
54 |
|
Availability under Ryerson Credit Facility and foreign debt facilities |
|
|
557 |
|
|
|
602 |
|
Total liquidity |
|
$ |
585 |
|
|
$ |
656 |
|
27
Below is a reconciliation of total debt to net debt:
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||
|
|
(In millions) |
|
|||||
Total debt |
|
$ |
525 |
|
|
$ |
436 |
|
Less: cash and cash equivalents |
|
|
(28 |
) |
|
|
(54 |
) |
Net debt |
|
$ |
497 |
|
|
$ |
382 |
|
Of the total cash and cash equivalents as of June 30, 2024, $7.6 million was held in subsidiaries outside the U.S. which is deemed to be permanently reinvested. Ryerson does not currently foresee a need to repatriate earnings from its non-U.S. subsidiaries. Although Ryerson has historically satisfied needs for more capital in the U.S. through debt or equity issuances, Ryerson could elect to repatriate earnings held in foreign jurisdictions, which could result in higher effective tax rates. We have not recorded a deferred tax liability for the effect of a possible repatriation of these earnings as management intends to permanently reinvest these earnings outside of the U.S. Specific plans for reinvestment include funding for future international acquisitions and funding of existing international operations.
The following table summarizes the Company’s cash flows:
|
|
Six Months Ended June 30, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
|
|
(In millions) |
|
|||||
Net income |
|
$ |
2.9 |
|
|
$ |
85.1 |
|
Depreciation and amortization |
|
|
35.4 |
|
|
|
28.8 |
|
Deferred income taxes |
|
|
0.4 |
|
|
|
10.1 |
|
Change in operating assets and liabilities: |
|
|
|
|
|
|
||
Receivables |
|
|
(65.4 |
) |
|
|
(59.9 |
) |
Inventories |
|
|
36.5 |
|
|
|
48.0 |
|
Accounts payable |
|
|
(16.6 |
) |
|
|
103.2 |
|
Accrued liabilities |
|
|
(15.4 |
) |
|
|
(23.5 |
) |
Accrued taxes payable/receivable |
|
|
(4.6 |
) |
|
|
11.9 |
|
All other operating cash flows |
|
|
4.9 |
|
|
|
(8.0 |
) |
Net cash provided by (used in) operating activities |
|
|
(21.9 |
) |
|
|
195.7 |
|
Acquisitions, net of cash acquired |
|
|
— |
|
|
|
(50.2 |
) |
Capital expenditures |
|
|
(44.5 |
) |
|
|
(74.1 |
) |
All other investing cash flows |
|
|
1.1 |
|
|
|
0.1 |
|
Net cash used in investing activities |
|
|
(43.4 |
) |
|
|
(124.2 |
) |
Net proceeds of short-term borrowings |
|
|
90.4 |
|
|
|
29.3 |
|
Net increase (decrease) in book overdrafts |
|
|
(8.2 |
) |
|
|
14.1 |
|
Dividends paid to shareholders |
|
|
(12.8 |
) |
|
|
(12.2 |
) |
Share repurchases |
|
|
(15.0 |
) |
|
|
(103.6 |
) |
Contingent payment related to acquisitions |
|
|
(5.3 |
) |
|
|
— |
|
All other financing cash flows |
|
|
(9.4 |
) |
|
|
(7.5 |
) |
Net cash provided by (used in) financing activities |
|
|
39.7 |
|
|
|
(79.9 |
) |
Effect of exchange rates on cash and cash equivalents |
|
|
(0.6 |
) |
|
|
(1.0 |
) |
Net change in cash and cash equivalents |
|
$ |
(26.2 |
) |
|
$ |
(9.4 |
) |
Operating activities. Working capital fluctuates throughout the year based on business needs. Working capital needs tend to be counter-cyclical, meaning that in periods of expansion the Company will use cash to fund working capital requirements, but in periods of contraction the Company will generate cash from reduced working capital requirements. In the first six months of 2024, working capital requirements increased due to an increase in accounts receivable from higher sales levels compared to the fourth quarter of 2023. Partially offsetting the increase in accounts receivable was a decrease in inventory, as market prices for metals decreased in the first six months of 2024, which also decreased accounts payable balances. In the first six months of 2023, working capital requirements decreased as inventory costs declined as market prices for metals decreased in the first six months of 2023. Revenue increased in the second quarter of 2023 compared to the fourth quarter of 2022 causing an increase in accounts receivable while material purchases were higher at the end of the second quarter of 2023 compared to the end of the fourth quarter of 2022 resulting in an increase in accounts payable.
Investing activities. The Company's main investing activities are capital expenditures and acquisitions. Capital expenditures have decreased year-over-year to $44.5 million for the first six months of 2024 compared to $74.1 million in the first six months of 2023 as the Company is nearing completion of its investment in a new facility in University Park, Illinois, a project which began in 2022. In the first six months of 2023, the Company paid $39.9 million to acquire BLP Holdings, LLC and $9.7 million to purchase certain assets from ExOne Operating, LLC. See Note 6: Acquisitions within Part I, Item I of this report, for further discussion of the 2023 acquisitions.
28
Financing activities. The Company's main source of liquidity to fund working capital requirements is borrowings on the Ryerson Credit Facility. In the first six months of 2024, we increased credit facility borrowings to fund our increase in working capital requirements and capital expenditures. In the first six months of 2023, we increased credit facility borrowings to fund the acquisition of BLP Holdings, LLC and the asset purchase from ExOne Operating, LLC. Book overdrafts fluctuate based on the timing of payments. Cash dividends paid in the first six months of 2024 were $12.8 million compared to $12.2 million paid to shareholders in the first six months of 2023. We repurchased $15.0 million of common stock during the first six months of 2024 compared to $103.6 million of common stock repurchased in the first six months of 2023. In the first six months of 2024, the Company paid $1.9 million and $3.4 million in holdback payments for the 2022 acquisitions of Howard Precision Metals, Inc. and Excelsior, Inc., respectively.
Off-Balance Sheet Arrangements. In the normal course of business with customers, vendors, and others, we have entered into off-balance sheet arrangements, such as letters of credit and surety bonds which totaled $3 million and $12 million, respectively as of June 30, 2024. We do not have any other material off-balance sheet financing arrangements. Our off-balance sheet arrangements are not likely to have a material effect on our current or future financial condition, results of operations, liquidity, or capital resources.
Capital Resources
We believe that cash flow from operations and proceeds from the Ryerson Credit Facility will provide sufficient funds to meet our contractual obligations and operating requirements in the normal course of business.
Total debt in the Condensed Consolidated Balance Sheet increased to $525.4 million at June 30, 2024 from $436.5 million at December 31, 2023, mainly due to cash utilized in operating activities in the first six months of 2024 related to higher working capital as well as cash utilized in investing activities related to capital expenditures.
Total debt outstanding as of June 30, 2024 consisted of the following amounts: $528.0 million of borrowings under the Ryerson Credit Facility, $1.4 million of foreign debt, less $4.0 million of unamortized debt issuance costs. For further information, see Note 7: Long Term Debt in Part I, Item I - Notes to Condensed Consolidated Financial Statements.
Pension Funding
At December 31, 2023, pension liabilities exceeded plan assets by $63.9 million. Through the six months ended June 30, 2024, we have made $3.1 million in pension contributions and we anticipate an additional minimum required pension contribution of approximately $8.0 million in the remaining six months of 2024 under the Employee Retirement Income Security Act of 1974 (“ERISA”) and Pension Protection Act in the U.S. and Ontario Pension Benefits Act in Canada. Future contribution requirements depend on the investment returns on plan assets, the impact of discount rates on pension liabilities, and changes in regulatory requirements. We are unable to determine the amount or timing of any such contributions required by ERISA or whether any such contributions would have a material adverse effect on our financial position or cash flows.
Due to the closure of the CSW headquarters in Chicago, IL and move to University Park, IL, a significant reduction in the service years of employees occurred between the fourth quarter of 2023 and first quarter of 2024, triggering curtailment accounting. The CSW Pension and Postretirement Benefits plans were remeasured as of February 29, 2024, resulting in a curtailment gain. As the curtailment was a net gain, the gain is required to be reflected in the periods in which the terminations occur, resulting in a curtailment gain of $0.3 million recognized in the first quarter of 2024 and $0.5 million recognized in the fourth quarter of 2023 for those terminations occurring during the respective periods. Additionally, the CSW Pension Plan is expecting lump sum payments for 2024 to be in excess of service cost and interest cost and therefore, a settlement gain of $1.1 million was recorded in the first six months of 2024. The discount rate for measuring obligations of the CSW pension plan increased from 5.24% at December 31, 2023 to 5.57% as of February 29, 2024. The expected long-term rate of return on pension assets has remained unchanged from December 31, 2023 at 3.85%.
In the first quarter of 2024, the Ryerson Canada Bargaining Unit Pension Plan made $1.2 million of lump sum payments to plan participants and purchased $5.0 million of annuities on behalf of plan participants. The lump sum payments and annuity purchases consisted of all of the existing liabilities of the Ryerson Canada Bargaining Unit Pension Plan, resulting in the termination of the plan. The Ryerson Canada Bargaining Unit Pension Plan was fully funded as of the termination date, and as such, all lump sum payments and annuity purchases were funded with pension plan assets. As a result, the Company recorded a $2.2 million settlement loss in February of 2024.
The net settlement loss and the curtailment gain were recorded within Other income and (expense), net in the Condensed Consolidated Statement of Comprehensive Income as of June 30, 2024.
29
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.
Material Cash Requirements
The Company expects to make approximately $529 million in principal payments to satisfy its debt obligations, consisting of $1 million of foreign debt coming due within a year, and $528 million for the Ryerson Credit Facility coming due in 2027. Please refer to Part I, Item I - Notes to the Condensed Consolidated Financial Statements, Note 7: Long-term Debt for further information.
The Company expects to pay approximately $35 million of interest on the Ryerson Credit Facility and foreign debt over the next 12 months and $70 million thereafter. Interest payments related to the variable rate debt were estimated using the weighted average interest rate for the respective debt instrument.
The Company leases various assets including real estate, trucks, trailers, mobile equipment, processing equipment, and IT equipment. We have noncancelable operating leases expiring at various times through 2043 and finance leases expiring at various times through 2030. The total amount of future lease payments is estimated to be $486 million, with $47 million due over the next 12 months. We did not have material leases signed but not yet commenced as of June 30, 2024.
Purchase obligations with suppliers are entered into when we receive firm sales commitments with certain of our customers. As of June 30, 2024, we had outstanding purchase obligations of approximately $32 million expiring within a year.
Income Taxes
We maintain a valuation allowance on certain foreign and U.S. federal deferred tax assets until such time as in management’s judgment, considering all available positive and negative evidence, and consistent with its past determinations, we determine that these deferred tax assets are more likely than not realizable.
Item 3. 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 variable-rate long-term debt. As of June 30, 2024 and December 31, 2023, we have no publicly traded debt. The carrying value of our debt was $525.4 million and $436.5 million at June 30, 2024 and December 31, 2023, respectively. The carrying value approximates our fair value due to the short-term nature of the underlying borrowings on the Ryerson Credit Facility.
From time to time, we may use interest rate swaps to manage our exposure to interest rate changes. As of June 30, 2024, we have no outstanding interest rate swaps.
As of June 30, 2024 all of our debt is at variable interest rates. A hypothetical 1% increase in interest rates on variable debt would have increased interest expense for the first six months of 2024 by approximately $2.9 million.
Foreign exchange rate risk
We are subject to foreign currency risks primarily through our operations in Canada, Mexico, and China and we use foreign currency exchange contracts to reduce our exposure to currency price fluctuations. Foreign currency contracts are principally used to purchase U.S. dollars. We had foreign currency contracts with a U.S. dollar notional amount of $2.7 million outstanding at June 30, 2024 and a fair value of zero. We do not currently account for these contracts as hedges but rather mark these contracts to market with a corresponding offset to current earnings. For the six months ended June 30, 2024, the Company recognized a $0.1 million gain associated with its foreign currency contracts. A hypothetical strengthening or weakening of 10% in the foreign exchange rates underlying the foreign currency contracts from the market rate as of June 30, 2024 would increase or decrease the fair value of the foreign currency contracts by $0.2 million or $0.3 million, respectively.
The currency effects of translating the financial statements of our foreign subsidiaries are included in accumulated other comprehensive loss and will not be recognized in the Condensed Consolidated Statements of Comprehensive Income until there is a liquidation or sale of those foreign subsidiaries.
30
Commodity price risk
In general, we purchase metals in an effort to maintain our inventory at levels that we believe to be appropriate to satisfy the anticipated needs of our customers based upon historic buying practices, customer contracts, and market conditions. Our commitments to purchase metals are generally at prevailing market prices in effect at the time we place our orders.
Metal prices can fluctuate significantly due to several factors including changes in foreign and domestic production capacity, raw material availability, metals consumption, and foreign currency rates. Derivative financial instruments are used to manage a limited portion of our exposure to fluctuations in the cost of certain commodities. No derivatives are held for trading purposes.
As of June 30, 2024, we had 61,549 tons of hot roll coil swap contracts with a net asset value of $2.6 million, 15,487 tons of aluminum swap contracts with a net asset value of $1.5 million, and 1,672 tons of nickel swap contracts with a net asset value of $8.7 million. We do not currently account for these swaps as hedges, but rather mark these contracts to market with a corresponding offset to current earnings. For the six months ended June 30, 2024, the Company recognized a gain of $4.4 million associated with its commodity derivatives.
A hypothetical strengthening or weakening of 10% in the commodity prices underlying the commodity derivative contracts from the market rate as of June 30, 2024 would increase or decrease the fair value of commodity derivative contracts by $1.3 million.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by SEC Rule 15d-15(b), we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2024.
Changes in Internal Controls Over Financial Reporting
There have been no changes in the Company’s internal controls over financial reporting that have materially affected or are reasonably likely to materially affect the Company’s controls over financial reporting during the quarter ended June 30, 2024.
31
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For information concerning legal proceedings as of June 30, 2024, please refer to Note 9: Commitments and Contingencies in the notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Report on Form 10-Q, which is incorporated into this item by reference.
Item 1A. Risk Factors
There have been no material changes relating to this Item from those set forth in Item 1A on the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) Issuer Purchases of Equity Securities
We repurchase shares of our common stock from time to time pursuant to our publicly announced share repurchase program. Our share repurchases during the second quarter of 2024 were made in the open market under a Rule 10b5-1 plan under the Securities Exchange Act of 1934. We purchased the following equity securities registered by us pursuant to Section 12 of the Exchange Act.
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program |
|
|
Maximum Dollar Value of Shares that May Yet be Purchased under the Program (1) |
|
||||
|
|
(In millions, except shares and per share data) |
|
|||||||||||||
April 1, 2024 - April 30, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
38.4 |
|
May 1, 2024 - May 31, 2024 |
|
|
241,297 |
|
|
|
23.03 |
|
|
|
241,297 |
|
|
|
32.8 |
|
June 1, 2024 - June 30, 2024 |
|
|
406,033 |
|
|
|
20.93 |
|
|
|
406,033 |
|
|
|
24.3 |
|
|
|
|
647,330 |
|
|
|
|
|
|
647,330 |
|
|
|
|
(1) On May 1, 2023, the Board of Directors authorized an increase in the existing share repurchase program to $100.0 million expiring in April 2025. On July 30, 2024, the Board of Directors authorized an increase of $50.0 million to the existing share repurchase program and extended the program to April 2026. We repurchase shares through open market purchases, privately negotiated transactions, and transactions structured through investment banking institutions under plans relying on Rule 10b5-1 or Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended. Repurchased shares are reverted to the status of Treasury Stock.
Items 3 and 4 are not applicable and have been omitted.
Item 5. Other Information
(c) Other Information
During the quarter ended June 30, 2024, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted, terminated, or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408(a) of Regulation S-K).
32
Item 6. Exhibits
Exhibit |
|
|
|
Incorporated by Reference |
|
Filed |
|||||
Number |
|
Exhibit Description |
|
Form |
|
File No. |
|
Filing Date |
|
Herewith |
|
10.1 |
|
|
|
|
|
|
|
|
X |
||
|
|
|
|
|
|
|
|
|
|
|
|
31.1 |
|
|
|
|
|
|
|
|
X
|
||
|
|
|
|
|
|
|
|
|
|
|
|
31.2 |
|
|
|
|
|
|
|
|
X |
||
|
|
|
|
|
|
|
|
|
|
|
|
32.1* |
|
|
|
|
|
|
|
|
X |
||
|
|
|
|
|
|
|
|
|
|
|
|
32.2* |
|
|
|
|
|
|
|
|
X |
||
|
|
|
|
|
|
|
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents. |
|
|
|
|
|
|
|
X |
|
|
|
|
|
|
|
|
|
|
|
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
|
|
|
|
|
|
|
* In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished herewith and not filed.
33
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
RYERSON HOLDING CORPORATION |
|
|
|
|
|
|
|
By: |
/s/ James J. Claussen |
|
|
|
James J. Claussen |
|
|
|
Executive Vice President and Chief Financial Officer (duly authorized signatory and principal financial officer of the registrant) |
Date: July 30, 2024
34
Exhibit 10.1
Execution Version
AMENDMENT NO. 6, dated as of June 10, 2024 (this “Amendment”), to the Credit Agreement dated as of July 24, 2015, among RYERSON HOLDING CORPORATION, as Holdings, JOSEPH T. RYERSON & SON, INC., a Delaware corporation, as the Lead Borrower (the “Lead Borrower”), RYERSON CANADA, INC., a Canadian corporation, as the Canadian Borrower, and each of the other Borrowers and Guarantors party thereto, the Lenders party thereto from time to time and BANK OF AMERICA, N.A., as the Administrative Agent (in such capacity the “Administrative Agent”) and Collateral Agent (as amended by Amendment No. 1, dated as of November 16, 2016, Amendment No. 2, dated as of June 28, 2018, Amendment No. 3, dated as of September 23, 2019, Amendment No. 4, dated as of November 5, 2020, Amendment No. 5, dated as of June 29, 2022, and as further amended, restated, amended and restated, modified and supplemented from time to time, the “Credit Agreement”; and the Credit Agreement as amended by this Amendment, the “Amended Credit Agreement”); capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement.
WHEREAS, pursuant to the Credit Agreement, the Lenders agreed, subject to the terms and conditions set forth therein, to make to the Canadian Revolving Loans to the Canadian Borrower in Canadian Dollars that bear interest by reference to the Canadian B/A Rate;
WHEREAS, the applicable administrator for the Canadian B/A Rate has made a public statement identifying a specific date after which all tenors of the Canadian B/A Rate shall no longer be made available, or used, for determining the interest rate of loans denominated in Canadian Dollars, and there is no successor administrator that is satisfactory to the Administrative Agent that will continue to provide such representative tenor(s) of the Canadian B/A Rate;
WHEREAS, (1) pursuant to Section 3.05(c) of the Credit Agreement, the Lead Borrower and the Administrative Agent have agreed to amend the Credit Agreement to replace the Canadian B/A Rate with the Term CORRA Rate (as defined in the Amended Credit Agreement) and (2) in accordance with Section 3.05(c) of the Credit Agreement, such amendments shall become effective at 5:00 p.m. (New York City time) on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Lead Borrower (such time, the “Objection Deadline”), unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment (it being understood that this Amendment was posted for the Lenders and the Lead Borrower on June 3, 2024); and
WHEREAS, the Lead Borrower and the Administrative Agent agree, pursuant to and in accordance with Section 3.05(c) of the Credit Agreement, to the amendments to the Credit Agreement as set forth in Section 1 of this Amendment;
Accordingly, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
-2-
[Signature Pages Follow]
-3-
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.
JOSEPH T. RYERSON & SON, INC.
By: /s/ Tricia Kelly
Name: Tricia Kelly
Title: Treasurer
[Ryerson - Signature Page to Amendment No. 6]
BANK OF AMERICA, N.A., as Administrative Agent CREDIT AGREEMENT among RYERSON HOLDING CORPORATION, as Holdings JOSEPH T. RYERSON & SON, INC., as Lead Borrower and a U.S. Borrower
By: /s/ Brian Scawinski
Name: Brian Scawinski
Title: Senior Vice President
[Ryerson - Signature Page to Amendment No. 6]
EXHIBIT A TO AMENDMENT NO. 6
EXHIBIT A
[Credit Agreement, as amended]
RYERSON CANADA, INC.,
as Canadian Borrower
the other BORROWERS
from time to time party hereto
VARIOUS LENDERS
BANK OF AMERICA, N.A.,
as the Administrative Agent and Collateral Agent
_______________________________________
Dated as of July 24, 2015,
as amended by Amendment No. 1 on November 16, 2016, Amendment No. 2 on June 28, 2018,
Amendment No. 3 on September 23, 2019, Amendment No. 4 on November 5, 2020, Amendment No. 5 on June 29, 2022 and Amendment No. 6 on June 10, 2024
BOFA SECURITIES, INC.,
JPMORGAN CHASE BANK, N.A. and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Co-Syndication Agents
BANK OF MONTREAL,
PNC BANK, NATIONAL ASSOCIATION and BOFA SECURITIES, INC., JPMORGAN CHASE BANK, N.A. and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Joint Lead Arrangers and Joint Bookrunners
KEYBANK NATIONAL ASSOCIATION
EXHIBIT A TO AMENDMENT NO. 6
as Co-Documentation Agents
Page
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS. 1
1.01. Defined Terms 1
1.02. Terms Generally 54
1.03. Uniform Commercial Code and PPSA 55
1.04. Exchange Rates; Currency Equivalent 55
1.05. Interpretation (Quebec) 56
1.06. Currency Fluctuations 56
1.07. Interest Rates 56
1.08. Limited Condition Transactions 57
SECTION 2. AMOUNT AND TERMS OF CREDIT. 58
2.01. Commitments 58
2.02. Loans 58
2.03. Borrowing Procedure 60
2.04. Evidence of Debt; Repayment of Loans 61
2.05. Fees. 61
2.06. Interest on Loans 62
2.07. Termination and Reduction of Commitments 63
2.08. Interest Elections 64
2.09. Optional and Mandatory Prepayments of Loans 65
2.10. Payments Generally; Pro Rata Treatment; Sharing of Set‑offs 68
2.11. Defaulting Lenders 69
2.12. Swingline Loans. 70
2.13. Letters of Credit 71
2.14. Settlement Amongst Lenders 76
2.15. Revolving Commitment Increase 77
2.16. Lead Borrower 79
2.17. Overadvances 79
2.18. Protective Advances 80
2.19. Extended Loans 80
2.20. FILO Exchange. 82
2.21. Non-FILO Exchange. 83
SECTION 3. YIELD PROTECTION, ILLEGALITY AND REPLACEMENT OF LENDERS. 84
3.01. Increased Costs, Illegality, etc. 84
3.02. Compensation 85
3.03. Change of Lending Office 86
3.04. Replacement of Lenders 86
3.05. Inability to Determine Rates 87
SECTION 4. [RESERVED]. 89
SECTION 5. TAXES. 89
5.01. Net Payments 89
-i-
Page
SECTION 6. CONDITIONS PRECEDENT TO CREDIT EVENTS ON THE CLOSING DATE92
6.01. Closing Date; Credit Documents 92
6.02. Officer’s Certificate 92
6.03. Opinions of Counsel 92
6.04. Corporate Documents; Proceedings, etc 92
6.05. Insurance 92
6.06. Repayment of Existing Credit Agreement 92
6.07. Material Adverse Effect 92
6.08. Deposit Account Control Agreements 93
6.09. Security Agreements 93
6.10. [Reserved] 93
6.11. [Reserved] 93
6.12. Solvency Certificate 93
6.13. Fees, etc 93
6.14. Representation and Warranties 93
6.15. Patriot Act, etc 93
6.16. Borrowing Notice 94
6.17. Borrowing Base Certificate 94
SECTION 7. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS AFTER THE CLOSING DATE94
7.01. Notice of Borrowing 94
7.02. Availability 94
7.03. No Default 94
7.04. Representations and Warranties 94
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. 94
8.01. Organizational Status 94
8.02. Power and Authority 95
8.03. No Violation 95
8.04. Approvals 95
8.05. Financial Statements; Financial Condition 95
8.06. Litigation 96
8.07. True and Complete Disclosure 96
8.08. Use of Proceeds; Margin Regulations 96
8.09. Tax Returns and Payments 96
8.10. ERISA. 97
8.11. The Security Documents 97
8.12. Properties 98
8.13. EEA Financial Institutions. No Credit Party is an EEA Financial Institution. 98
8.14. Subsidiaries 98
8.15. Compliance with Statutes, OFAC Rules and Regulations; Patriot Act; FCPA. 98
8.16. Investment Company Act. 99
8.17. Insurance 99
8.18. Environmental Matters 99
-ii-
Page
8.19. Labor Relations 100
8.20. Intellectual Property 100
8.21. Legal Names; Type of Organization (and Whether a Registered Organization); Jurisdiction of Organization; etc 100
8.22. Borrowing Base Certificate 100
8.23. Senior Debt 101
8.24. Canadian Pension Plans and Canadian Benefit Plans 101
8.25. No Default 101
8.26. Bank Accounts 101
8.27. ERISA 101
8.28. Beneficial Ownership Certification 101
SECTION 9. AFFIRMATIVE COVENANTS101
9.01. Information Covenants 101
9.02. Books, Records and Inspections. 104
9.03. Maintenance of Property; Insurance 105
9.04. Existence; Franchises 106
9.05. Compliance with Statutes, etc 106
9.06. Compliance with Environmental Laws 106
9.07. ERISA; Canadian Pension Plans 107
9.08. End of Fiscal Years; Fiscal Quarters 107
9.09. Performance of Obligations 108
9.10. Payment of Taxes 108
9.11. Use of Proceeds 108
9.12. Additional Security; Further Assurances; etc 108
9.13. Post-Closing Actions. . 109
9.14. Permitted Acquisitions. 109
9.15. [Reserved] 109
9.16. Designation of Subsidiaries 109
9.17. Collateral Monitoring and Reporting 110
9.18. Landlord and Storage Agreements 113
SECTION 10. NEGATIVE COVENANTS. 113
10.01. Liens 113
10.02. Consolidation, Merger, or Sale of Assets, etc 118
10.03. Dividends 121
10.04. Indebtedness 124
10.05. Advances, Investments and Loans 127
10.06. Transactions with Affiliates 130
10.07. Limitations on Payments of Indebtedness; Modifications of Senior Notes Documents, Certificate of Incorporation, By-Laws and Certain Other Agreements, etc 131
10.08. Limitation on Certain Restrictions on Subsidiaries 132
10.09. Business 133
10.10. Negative Pledges 133
10.11. Financial Covenant 134
10.12. Canadian Defined Benefit Plans 135
10.13. Sanctions 135
SECTION 11. EVENTS OF DEFAULT. 135
-iii-
Page
11.01. Payments 135
11.02. Representations, etc 135
11.03. Covenants 135
11.04. Default Under Other Agreements 135
11.05. Bankruptcy, etc 136
11.06. ERISA; Canadian Pension Plans 136
11.07. Credit Documents 137
11.08. Guarantees 137
11.09. Judgments 137
11.10. Change of Control 137
11.11. Application of Funds 137
SECTION 12. THE ADMINISTRATIVE AGENT. 139
12.01. Appointment and Authorization 139
12.02. Delegation of Duties 140
12.03. Liability of Agents 140
12.04. Reliance by the Agents 141
12.05. Notice of Default 141
12.06. Credit Decision; Disclosure of Information by the Agents 141
12.07. Indemnification of the Agents 142
12.08. Administrative Agent in Its Individual Capacity 142
12.09. Successor Administrative Agent 142
12.10. Administrative Agent May File Proofs of Claim 143
12.11. Collateral and Guaranty Matters 144
12.12. Bank Product Providers 144
12.13. Administrative Agent and the Collateral Agent 145
12.14. Withholding Taxes 145
12.15. Quebec Liens (Hypothecs) 145
12.16. Reports 146
12.17. Certain ERISA Matters. 146
SECTION 13. MISCELLANEOUS. 147
13.01. Payment of Expenses; Indemnification; Limitation of Liability 147
13.02. Right of Setoff 148
13.03. Notices 149
13.04. Benefit of Agreement; Assignments; Participations, etc 149
13.05. No Waiver; Remedies Cumulative 151
13.06. [Reserved] 151
13.07. Calculations; Computations 151
13.08. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL 152
13.09. Counterparts 153
13.10. [Reserved] 153
13.11. Headings Descriptive 153
13.12. Amendment or Waiver; etc 153
13.13. Survival 155
13.14. [Reserved] 155
13.15. Register 155
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13.16. Confidentiality 155
13.17. USA Patriot Act Notice 156
13.18. [Reserved]. 156
13.19. Waiver of Sovereign Immunity 156
13.20. Canadian Anti-Money Laundering Legislation 157
13.21. INTERCREDITOR AGREEMENT 157
13.22. Absence of Fiduciary Relationship 157
13.23. Electronic Signatures 158
13.24. Judgment Currency 158
SECTION 14. CREDIT PARTY GUARANTY. 158
14.01. The Guaranty 158
14.02. Bankruptcy 159
14.03. Nature of Liability 159
14.04. Independent Obligation 159
14.05. Authorization 160
14.06. Reliance 160
14.07. Subordination 160
14.08. Waiver. 161
14.09. Maximum Liability 161
14.10. Payments 161
14.11. Keepwell 161
14.12. Information 162
14.13. Severability 162
14.14. Acknowledgment and Consent to Bail-In of Affected Financial Institutions 162
14.15. Acknowledgment Regarding Any Supported QFCs 162
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SCHEDULE 1.01A Unrestricted Subsidiaries
SCHEDULE 1.01B Swap Contracts
SCHEDULE 1.01D Qualified Account Debtors
SCHEDULE 1.01E Qualified Receivables Counterparties
SCHEDULE 1.01G Joint Ventures Constituting Permitted Affiliates
SCHEDULE 2.01 Commitments
SCHEDULE 8.06 Litigation
SCHEDULE 8.14 Subsidiaries
SCHEDULE 8.17 Insurance
SCHEDULE 8.18 Environmental Matters
SCHEDULE 8.21 Legal Names; Types of Organization (and Whether Registered Organization); Jurisdiction of Organization, etc.
SCHEDULE 8.24Canadian Pension Plans
SCHEDULE 8.26 Bank Accounts
SCHEDULE 9.03 Business Locations
SCHEDULE 9.13 Post-Closing Actions
SCHEDULE 9.17(k) Insurance
SCHEDULE 10.01(iii) Existing Liens
SCHEDULE 10.04(vii) Existing Indebtedness
SCHEDULE 10.04(xiii) Certain Letters of Credit
SCHEDULE 10.05(iii) Existing Investments
SCHEDULE 10.06 Affiliate Transactions
EXHIBIT A‑1 Form of Notice of Borrowing
EXHIBIT A‑2 Form of Notice of Conversion/Continuation
EXHIBIT B‑1 Form of Revolving Note
EXHIBIT B‑2 Form of Swingline Note
EXHIBIT C Form of U.S. Tax Compliance Certificate
EXHIBIT D [Reserved]
EXHIBIT F Form of Solvency Certificate
EXHIBIT G Form of Compliance Certificate
EXHIBIT H Form of Assignment and Assumption Agreement THIS CREDIT AGREEMENT, dated as of July 24, 2015 (as amended by Amendment No.
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1 on November 16, 2016, by Amendment No. 2 on June 28, 2018, by Amendment No. 3 on September 23, 2019, by Amendment No. 4 on November 5, 2020, by Amendment No. 5 on June 29, 2022 and by Amendment No. 6 on June 10, 2024), among RYERSON HOLDING CORPORATION (“Holdings”), JOSEPH T. RYERSON & SON, INC., a Delaware corporation, as the Lead Borrower (the “Lead Borrower”), RYERSON CANADA, INC., a Canadian corporation (the “Canadian Borrower”), and each of the other Borrowers (as hereinafter defined) and Guarantors (as hereinafter defined) party hereto, the Lenders party hereto from time to time, BANK OF AMERICA, N.A., as the Administrative Agent (in such capacity the “Administrative Agent”) and Collateral Agent (in such capacity, the “Collateral Agent”). All capitalized terms used herein and defined in Section 1 are used herein as therein defined.
W I T N E S S E T H:
WHEREAS, (a) the Borrowers have requested that the Lenders extend credit in the form of Revolving Loans in an aggregate principal amount at any time outstanding not to exceed $1,300,000,000, (b) the Borrowers have requested that the Issuing Banks issue Letters of Credit in an aggregate stated amount at any time outstanding not to exceed $50,000,000, (c) the Borrowers have requested that the Swingline Lender extend credit in the form of Swingline Loans in an aggregate principal amount at any time outstanding not to exceed $115,000,000.
NOW, THEREFORE, the Lenders are willing to extend such credit to the applicable Borrowers, the Swingline Lenders are willing to make Swingline Loans to the applicable Borrowers and the Issuing Banks are willing to issue Letters of Credit for the account of the applicable Borrowers on the terms and subject to the conditions set forth herein.
“2016 Intercreditor Agreement” shall mean that certain Intercreditor Agreement, dated as of May 24, 2016, by and among the Collateral Agent and Wells Fargo Bank, National Association, as collateral agent under the Senior Notes Indenture, and acknowledged by the Credit Parties, as amended, restated, amended and restated, supplemented or otherwise modified from time to time; provided that, for purposes of the other Credit Documents, the “2015 Intercreditor Agreement” shall mean the 2016 Intercreditor Agreement.
“Account Debtor” shall mean any Person who may become obligated to another Person under, with respect to, or on account of, an Account.
“Accounts” shall mean all “accounts,” as such term is defined in the UCC (or, as applicable, the PPSA) in which any Person now or hereafter has rights, including all rights to payment for goods sold or leased or for services rendered.
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“Acquired Accounts Eligibility Requirement” shall mean, with respect to any Accounts of an Acquired Entity or Business, the requirement that (i) a collateral review of the acquired Accounts shall have been performed by the Administrative Agent or its representatives (the fees and expenses associated with such review to be paid by the Borrowers in accordance with Section 9.02(c)) and (ii) the Administrative Agent shall have notified the Lead Borrower that it is satisfied in its Permitted Discretion with the scope and results of such collateral review; it being understood that each of the Lead Borrower and the Administrative Agent will use reasonable efforts to satisfy the Acquired Accounts Eligibility Requirement as promptly as reasonably practicable following consummation of the relevant business acquisition.
“Acquired Entity or Business” shall mean either (x) the assets constituting a business, division, product line, manufacturing facility or distribution facility of any Person not already a Subsidiary of the Lead Borrower, which assets shall, as a result of the respective acquisition, become assets of the Lead Borrower or a Restricted Subsidiary of the Lead Borrower (or assets of a Person who shall be merged or amalgamated with and into the Lead Borrower or a Restricted Subsidiary of the Lead Borrower) or (y) a majority of the Equity Interests of any Person, which Person shall, as a result of the respective acquisition, become a Restricted Subsidiary of the Lead Borrower (or shall be merged or amalgamated with and into the Lead Borrower or a Restricted Subsidiary of the Lead Borrower).
“Acquired Inventory Eligibility Requirement” shall mean, with respect to any Inventory of an Acquired Entity or Business, the requirement that (i) a collateral review of such acquired Inventory shall have been performed by the Administrative Agent or its representatives (the fees and expenses associated with such review to be paid by the Borrowers in accordance with Section 9.02(c)), (ii) the Administrative Agent shall have received an appraisal prepared by an independent third party of such acquired Inventory (the fees and expenses associated with such appraisal to be paid by the Borrowers in accordance with Section 9.02(c)), and (iii) the Administrative Agent shall have notified the Lead Borrower that it is satisfied in its Permitted Discretion with the scope and results of such collateral review and such appraisal; it being understood that each of the Lead Borrower and the Administrative Agent will use reasonable efforts to satisfy the Acquired Inventory Eligibility Requirement as promptly as reasonably practicable following consummation of the relevant business acquisition.
“Additional Intercreditor Agreement” shall mean (i) an intercreditor agreement among the Administrative Agent, the Collateral Agent and one or more Junior Representatives for holders of Permitted Junior Debt or (ii) an intercreditor agreement (other than the Intercreditor Agreement) contemplated by Section 10.01(iv)(y) providing, in each case, that, inter alia, the Liens on the Collateral (as defined in the Security Documents) in favor of the Collateral Agent (for the benefit of the Secured Creditors) shall be senior to such Liens in favor of the Junior Representatives (for the benefit of the holders of Permitted Junior Debt) or the Liens in favor of the representative of the Indebtedness contemplated by Section 10.04(i)(y), as applicable, as such intercreditor agreement may be amended, amended and restated, modified or supplemented from time to time in accordance with the terms hereof and thereof. Any Additional Intercreditor Agreement shall be in a form customary for transactions of the type contemplated thereby and otherwise reasonably satisfactory to the Administrative Agent, the Collateral Agent and the Lead Borrower.
“Additional Security Documents” shall have the meaning provided in Section 9.12(a).
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“Adjustment Date” shall mean the first day of January, April, July and October of each fiscal year.
“Administrative Agent” shall mean Bank of America, N.A., in its capacity as the Administrative Agent for the Lenders hereunder, and shall include any successor to the Administrative Agent appointed pursuant to Section 12.09.
“Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise; provided, however, that neither the Administrative Agent nor any Lender (nor any Affiliate thereof) shall be considered an Affiliate of the Lead Borrower or any Subsidiary thereof as a result of this Agreement, the extensions of credit hereunder or its actions in connection therewith.
“Affiliate Loan” shall mean a loan or other extension of credit from a Borrower to a Permitted Affiliate (including the guarantee of any Indebtedness of such Permitted Affiliate) at any time the Affiliate Loan Conditions are satisfied and that is for the sole purpose of working capital, capital expenditures or other general corporate purposes (other than acquisitions or Investments by such Permitted Affiliate) consistent with past practice of such Permitted Affiliate but not for the purpose of a loan, Investment or distribution by such Permitted Affiliate to another Person.
“Affiliate Loan Conditions” shall mean the following conditions, the satisfaction of each of which is a condition to the authority of a Borrower to make an Affiliate Loan: (i) no Event of Default shall exist or result therefrom and (ii) after giving effect to the Affiliate Loan and all other Affiliate Loans made during the most recently ended twelve-month period pursuant to Section 10.05(xxv), the aggregate principal amount of such Affiliate Loans made during such twelve-month period would not exceed $50,000,000.
“Agent-Related Persons” shall mean the Administrative Agent, the Collateral Agent, the Co-Syndication Agents, Co-Documentation Agents, their respective affiliates and branches and the officers, directors, employees, agents and attorneys-in-fact of the Administrative Agent, the Collateral Agent, the Co-Syndication Agents, the Co-Documentation Agents and their respective affiliates and branches.
“Agents” shall mean the Administrative Agent, the Collateral Agent, the Co-Syndication Agents, the Co-Documentation Agents and any other agent with respect to the Credit Documents, including, without limitation, the Joint Lead Arrangers.
“Aggregate Commitments” shall mean, at any time, the aggregate amount of the Revolving Commitments of all Lenders.
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“Aggregate Exposures” shall mean, at any time, the sum of (a) the aggregate Outstanding Amount of all Loans plus (b) the LC Exposure, each determined at such time.
“Aggregate Non-FILO Borrowing Base” shall mean, at any time, the sum of (a) the U.S. Borrowing Base and (b) the Canadian Borrowing Base.
“Agreement” shall mean this Credit Agreement, as modified, supplemented, amended, restated (including any amendment and restatement hereof), extended or renewed from time to time.
“Amendment No. 5” shall mean Amendment No. 5 to this Agreement, dated as of June 29, 2022.
“Amendment No. 5 Effective Date” shall have the meaning provided in Amendment No. 5.
“Amendment No. 6” shall mean Amendment No. 6 to this Agreement, dated as of June 10, 2024.
“Amendment No. 6 Effective Date” shall have the meaning provided in Amendment No. 6.
“AML Legislation” shall have the meaning provided in Section 13.20.
“Anti-Terrorism Laws” shall mean any laws relating to terrorism or money laundering, including the Patriot Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada).
“Applicable Law” shall mean all laws, treaties having the effect of law, rules and regulations applicable to the Person, conduct, transaction, covenant, Credit Document in question, including all applicable common law and equitable principles; all provisions of all applicable state, provincial, local, territorial, federal and foreign constitutions, statutes, rules, regulations, ordinances and orders of Governmental Authorities; and all orders, judgments and decrees of all courts and arbitrators.
“Applicable Margin” shall mean with respect to any Type of Revolving Loan, the per annum margin set forth below, as determined by the Average Availability as of the most recent Adjustment Date for the prior three months; provided that for the period from the Amendment No. 5 Effective Date through the end of the first full fiscal quarter after the Amendment No. 5 Effective Date, the Applicable Margin shall be determined as if Level I, as reduced pursuant to the further proviso immediately following the table below, were in effect (i.e. the Applicable Margin for such period shall be (x) 0.125% with respect to U.S. Base Rate Loans, Canadian Base Rate Loans and Canadian Prime Loans and (y) 1.125% with respect to Term SOFR Loans and Term CORRA Loans):
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Level |
Average Availability (percentage of Line Cap) |
U.S. Base Rate Loans, Canadian Base Rate Loans and Canadian Prime Loans |
Term SOFR Loans and B/A EquivalentTerm CORRA Loans |
I |
> 25% |
0.25% |
1.25% |
II |
≤ 25% |
0.50% |
1.50% |
; provided, further, that, from and after the first full fiscal quarter after the Amendment No. 5 Effective Date, the Applicable Margins shall equal the following if the Leverage Ratio set forth in the most recent Compliance Certificate delivered pursuant to Section 9.01(f) is less than or equal to 3.50 to 1.00:
Level |
Average Availability (percentage of Line Cap) |
U.S. Base Rate Loans, Canadian Base Rate Loans and Canadian Prime Loans |
Term SOFR Loans and B/A EquivalentTerm CORRA Loans |
I |
> 25% |
0.125% |
1.125% |
II |
≤ 25% |
0.375% |
1.375% |
The Applicable Margin shall be subject to an increase or decrease on (x) the first Business Day of each fiscal quarter based on Average Availability, as determined by the Administrative Agent’s system of record, and (y) the first Business Day immediately following the date that the Administrative Agent receives such Compliance Certificate delivered pursuant to Section 9.01(f) setting forth the Leverage Ratio as of the last day of the immediately preceding fiscal quarter or (in the case of Compliance Certificates relating to the period ending on December 31 of an applicable year, setting forth the Leverage Ratio as of the last day of the immediately preceding fiscal year). If the Lead Borrower fails to deliver a Compliance Certificate pursuant to Section 9.01(f) setting forth the Leverage Ratio as of the last day of the prior fiscal quarter or fiscal year, as applicable, when due, the Applicable Margin shall be set based solely on Average Availability (for the avoidance of doubt, without any reduction based upon the Leverage Ratio) as of the first Business Day on which such certificate of a Responsible Officer was required to be delivered and was not delivered until the date on which the Compliance Certificate is delivered in accordance with Section 9.01(f). If the Lead Borrower fails to deliver any Borrowing Base Certificate on or before the date required for delivery thereof, then, at the option of the Required Lenders, the Applicable Margin shall be determined as if Level II of the first table set forth in this definition were applicable, from the first day of the calendar month following the date such Borrowing Base Certificate was required to be delivered until the date of delivery of such Borrowing Base Certificate.
The Applicable Margin with respect to FILO Loans, if any, shall be set forth in the amendment(s) to this Agreement described in Section 2.20(c).
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“Assignment and Assumption Agreement” shall mean an Assignment and Assumption Agreement substantially in the form of Exhibit H (appropriately completed) or such other form as shall be acceptable to the Administrative Agent.
“Availability” shall mean, as of any applicable date, the amount by which the Line Cap at such time exceeds the Aggregate Exposures on such date.
“Average Availability” shall mean, (i) at any Adjustment Date, for purposes of determining the Applicable Margin, the average daily Availability for the fiscal quarter immediately preceding such Adjustment Date and (ii) at any other relevant date, the average daily Availability for such period of days prior to such relevant date as the context may require.
B/A Equivalent Loan
“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” shall mean, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
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“Bank of America-Canada Branch” shall mean Bank of America, N.A. (acting through its Canada branch).
“Bank of Canada Overnight Rate” shall mean the Bank of Canada overnight rate, which is the rate of interest charged by the Bank of Canada on one-day loans to financial institutions, for such day.
“Bank Product” shall mean any of the following products, services or facilities extended to any Borrower or any of the Lead Borrower’s Subsidiaries by Bank of America, N.A., any Agent, any Lender or any other Person who at the date of entering into such products, services or facilities was an Affiliate (including Merrill Lynch Commodities, Inc.) or branch of Bank of America, N.A., any Agent or a Lender, as applicable: (a) Cash Management Services; (b) products under Swap Contracts; provided that the Swap Contracts on Schedule 1.01B hereto shall be deemed to be “Bank Products” for purposes of this Agreement and the Security Documents with respect to U.S. Collateral; (c) commercial credit card and merchant card services; (d) other banking products or services (including purchase cards and stored value cards) as may be requested by any Borrower or another Credit Party, other than Letters of Credit; and (e) supply chain financing, trade receivables financing and trade receivables purchase agreements.
“Bank Product Debt” shall mean Indebtedness and other obligations of a Borrower or any of the Lead Borrower’s Subsidiaries relating to Bank Products.
“Bankruptcy Code” shall have the meaning provided in Section 11.05.
“Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership required by the Beneficial Ownership Regulation, which certification shall be substantially similar in form and substance to the form of Certification Regarding Beneficial Owners of Legal Entity Customers published jointly, in May 2018, by the Loan Syndications and Trading Association and Securities Industry and Financial Markets Association.
“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230
“Benefit Plan” shall mean any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“BIA” shall mean the Bankruptcy and Insolvency Act (Canada).
“Borrowers” shall mean the U.S. Borrowers and the Canadian Borrower.
“Borrowing” shall mean the borrowing of the same Type and Class of Loan by the Borrowers from all the applicable Lenders having applicable Commitments on a given date (or resulting from a conversion or conversions on such date), having in the case of Term SOFR Loans or Term CORRA Loans, the same Interest Period; provided that U.S. Base Rate Loans, Canadian Base Rate Loans and Canadian Prime Loans incurred pursuant to Section 3.01 shall be considered part of the related Borrowing of Term SOFR Loans or Term CORRA Loans, as applicable.
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“Borrowing Base” shall mean (a) the U.S. Borrowing Base, (b) the Canadian Borrowing Base, (c) from and after the date of any FILO Exchange Offer if any FILO Facility exists at such time, the FILO Borrowing Base and/or (d) the sum of the U.S. Borrowing Base, the Canadian Borrowing Base and, from and after the date of any FILO Exchange Offer if any FILO Facility exists at such time, the FILO Borrowing Base, as the context may require. The Borrowing Base or any component thereof at any time shall be determined by reference to the most recent Borrowing Base Certificate delivered to the Administrative Agent pursuant to Section 9.17(a).
The Administrative Agent shall (i) promptly notify the Lead Borrower in writing (including via e-mail) whenever it determines that the Borrowing Base set forth on a Borrowing Base Certificate differs from the Borrowing Base, (ii) discuss the basis for any such deviation and any changes proposed by the Lead Borrower, including the reasons for any impositions of or changes in Reserves or any change in advance rates with respect to Eligible Accounts (in the Administrative Agent’s Permitted Discretion and subject to the definition thereof) or eligibility criteria, with the Lead Borrower, (iii) consider, in the exercise of its Permitted Discretion, any additional factual information provided by the Lead Borrower relating to the determination of the Borrowing Base and (iv) promptly notify the Lead Borrower of its decision with respect to any changes proposed by the Lead Borrower. Pending a decision by the Administrative Agent to make any requested change, the initial determination of the Borrowing Base by the Administrative Agent shall continue to constitute the Borrowing Base.
“Borrowing Base Certificate” shall mean a certificate of a Responsible Officer of the Lead Borrower in form and substance satisfactory to the Administrative Agent.
“Business Day” shall mean any day except Saturday, Sunday and any day which shall be in New York City or Toronto, Ontario, Canada a legal holiday or a day on which banking institutions are authorized or required by law or other government action to close.
“Calculation Requirement” shall mean, on the applicable date, if Availability is less than the FCCR Test Amount.
Canadian B/A RateCDORCDOR Rateprovidedfurther
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“Canadian Base Rate” shall mean, for any day, the greater of (a) the per annum rate of interest designated by Bank of America-Canada Branch from time to time as its base rate for commercial loans made by it in Dollars, which rate is based on various factors, including its costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such rate; (b) the Federal Funds Rate for such day, plus 0.50% per annum; or (c) Term SOFR plus 1.00%; provided, that in no event shall the Canadian Base Rate be less than 1.00%. Any change in such rate shall take effect at the opening of business on the applicable Business Day.
“Canadian Base Rate Loan” shall mean a Canadian Revolving Loan that bears interest based on the Canadian Base Rate.
“Canadian Benefit Plans” shall mean all employee benefit plans, programs or arrangements of any nature or kind whatsoever that are not Canadian Pension Plans and are maintained or contributed to by, or to which there is or may be an obligation to contribute by, any Canadian Credit Party in respect of its Canadian employees or former employees.
“Canadian Borrower” shall have the meaning in the preamble hereto.
“Canadian Borrowing Base” shall mean at any time of calculation, solely in respect of the Canadian Credit Parties, an amount equal to the Dollar Equivalent sum of, without duplication:
(a) the Net Amount of Eligible Accounts of the Canadian Credit Parties multiplied by the advance rate of 90%, plus
(b) 85% of the NOLV Percentage of the Value of the Inventory of Canadian Credit Parties (and, to the extent that the NOLV Percentage accounts for the slow moving nature or aged status of Inventory of the Canadian Credit Parties, such slow moving nature or aged status as in existence on the date of the most recent Qualified Appraisal shall not be used as a basis to exclude Inventory from eligibility nor used as a basis for the institution of an Inventory Reserve), plus
(c) 100% of Qualified Cash of the Canadian Credit Parties, minus
(d) any Reserves established from time to time by the Administrative Agent in accordance herewith.
“Canadian Collateral” shall mean all the “Collateral” (or equivalent term, including “Hypothecated Property”) as defined in each Canadian Security Agreement and all other property (whether real, personal or otherwise) with respect to which any security interests have been granted (or purported to be granted) by the Canadian Credit Parties pursuant to any Security Document (including any Additional Security Documents) or will be granted in accordance with the requirements set forth in Section 9.13.
“Canadian Credit Party” shall mean the Canadian Borrower and each Canadian Subsidiary Guarantor.
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“Canadian Defined Benefit Plan” shall mean a Canadian Pension Plan which is a “registered pension plan,” as defined in subsection 248(1) of the Income Tax Act (Canada) and which contains a “defined benefit provision,” as defined in subsection 147.1(1) of the Income Tax Act (Canada).
“Canadian Dollars” and “C$” shall mean the lawful currency of Canada.
“Canadian Dominion Account” shall mean a special concentration account established by the Canadian Borrower at Bank of America-Canada Branch or another bank reasonably acceptable to the Administrative Agent, over which the Collateral Agent has a first priority perfected Lien (subject only to Permitted Liens) and exclusive control for withdrawal purposes pursuant to the terms and provisions of this Agreement and the other Credit Documents.
“Canadian Employee Benefits Legislation” shall mean the Pension Benefits Act (Ontario), and any Canadian federal, provincial or territorial counterparts or equivalents.
“Canadian Line Cap” shall mean an amount that is equal to the lesser of (a) the Canadian Revolving Sublimit and (b) the Aggregate Non-FILO Borrowing Base.
“Canadian Payment Account” shall mean the Canadian Dollar account and the U.S. Dollar account maintained by the Administrative Agent to which all monies from time to time deposited to a Canadian Dominion Account constituting proceeds of Canadian Collateral considered in calculating the Canadian Borrowing Base are forwarded.
“Canadian Pension Plan” shall mean each plan, program or arrangement which is required to be registered as a pension plan under any applicable pension benefits standards or tax statute or regulation in Canada (or any province or territory thereof) maintained or contributed to by, or to which there is or may be an obligation to contribute by, any Canadian Credit Party which is in respect of its Canadian employees or former employees.
“Canadian Plan Termination Event” shall mean (a) the withdrawal of a Canadian Credit Party or any other Canadian Subsidiary from a Canadian Defined Benefit Plan, which is a “multi-employer pension plan”, as defined under applicable pension standards legislation, during a plan year; or (b) the filing of a notice of intent to terminate in whole or in part a Canadian Defined Benefit Plan or the filing of an amendment with the applicable Governmental Authority which terminates a Canadian Defined Benefit Plan, in whole or in part; or (c) the institution of proceedings by any Governmental Authority to terminate a Canadian Defined Benefit Plan in whole or in part or have a replacement administrator appointed to administer a Canadian Defined Benefit Plan; or (d) any other event or condition or declaration or application which results in the termination or winding up of a Canadian Defined Benefit Plan, in whole or in part, or the appointment by any Governmental Authority of a replacement administrator to administer a Canadian Defined Benefit Plan.
“Canadian Prime Loan” shall mean a Loan to the Canadian Borrower denominated in Canadian Dollars which bears interest at a rate based upon the Canadian Prime Rate.
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“Canadian Prime Rate” shall mean for any day, the greater of (a) the per annum rate of interest designated by Bank of America-Canada Branch from time to time as its prime rate for commercial loans made by it in Canada in Canadian Dollars, which rate is based on various factors, including its costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above or below such rate; or (b) the Term CORRA for a one (1) month term that is two (2) Business Days prior to such date plus the Term CORRA Adjustment plus 1.00% per annum; provided, that in no event shall the Canadian Prime Rate be less than 1.00%. Any change in such rate shall take effect at the opening of business on the applicable Business Day.
“Canadian Priority Payables” shall mean, at any time, with respect to the Canadian Credit Parties:
(a) the amount past due and owing by the Canadian Credit Parties, or the accrued amount for which each of the Canadian Credit Parties has an obligation to remit to a Governmental Authority or other Person pursuant to any Applicable Law in respect of (i) pension fund obligations; (ii) unemployment insurance; (iii) goods and services taxes, sales taxes, harmonized sales taxes, employee income taxes and other taxes payable or to be remitted or withheld; (iv) workers’ compensation; (v) wages, vacation pay, severance pay or amounts payable under the Wage Earner Protection Program Act (Canada); and (vi) other like charges and demands; in each case, in respect of which any Governmental Authority or other Person may claim a security interest, hypothec, prior claim, lien, trust or other claim ranking or capable of ranking in priority to or pari passu with one or more of the Liens granted in the Security Documents; and
(b) the aggregate amount of any other liabilities of the Canadian Credit Parties (i) in respect of which a trust (statutory or deemed) has been or may be imposed on any Canadian Collateral to provide for payment or (ii) which are secured by a security interest, hypothec, prior claim, pledge, lien, charge, right or claim on any Canadian Collateral, in each case, pursuant to any Applicable Law and which trust, security interest, hypothec, prior claim, pledge, lien, charge, right or claim ranks or is capable of ranking in priority to or pari passu with one or more of the Liens granted in the Security Documents.
“Canadian Priority Payables Reserve” shall mean, on any date of determination for any Canadian Credit Party, a reserve established from time to time by the Administrative Agent in its Permitted Discretion in such amount as the Administrative Agent may determine reflects the unpaid or unremitted Canadian Priority Payables by any Canadian Credit Party, which would give rise to a Lien with priority under Applicable Law over the Lien of the Collateral Agent for the benefit of the Secured Creditors.
“Canadian Protective Advances” shall have the meaning assigned to such term in Section 2.18.
“Canadian Revolving Borrowing” shall mean a Borrowing comprised of Canadian Revolving Loans.
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“Canadian Revolving Exposure” shall mean, with respect to any Lender at any time, the aggregate principal amount at such time of all outstanding Canadian Revolving Loans of such Lender, plus the aggregate amount of such Lender’s Swingline Exposure in respect of Swingline Loans made to the Canadian Borrower.
“Canadian Revolving Loans” shall mean advances made to or at the instructions of the Canadian Borrower pursuant to Section 2 hereof to the Canadian Borrower and may constitute Canadian Revolving Loans and Swingline Loans made to the Canadian Borrower but shall not include FILO Loans.
“Canadian Revolving Sublimit” shall mean $100,000,000.
“Canadian Security Agreement” shall mean the Canadian Security Agreement dated as of the Closing Date, by and between the Collateral Agent and each of the Canadian Credit Parties, as amended, amended and restated, supplemented or otherwise modified from time to time, and to the extent that a Canadian Credit Party has a place of business, registered office (domicile), chief executive office or tangible property in the province of Quebec, such term shall include each deed of hypothec and all related documents as may be applicable.
“Canadian Subsidiary” shall mean any Restricted Subsidiary of the Lead Borrower organized now or hereinafter under the laws of Canada or a province or territory thereof.
“Canadian Subsidiary Guarantor” shall mean each Canadian Subsidiary Guarantor party hereto on the Amendment No. 5 Effective Date and each Canadian Subsidiary established, created or acquired after the Amendment No. 5 Effective Date which becomes a party to this Agreement in accordance with the requirements of this Agreement.
“Capital Expenditures” shall mean, with respect to any Person, all expenditures by such Person which should be capitalized in accordance with U.S. GAAP and, without duplication, the amount of Capital Expenditures incurred by such Person; provided that Capital Expenditures shall not include (i) the purchase price paid in connection with a Permitted Acquisition, (ii) the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for such existing equipment being traded in at such time, (iii) expenditures made in leasehold improvements, to the extent reimbursed by the landlord, (iv) expenditures to the extent that they are actually paid for by a third party (excluding any Credit Party or any of its Restricted Subsidiaries) and for which no Credit Party or any of its Restricted Subsidiaries has provided or is required to provide or incur, directly or indirectly, any consideration or monetary obligation to such third party or any other Person (whether before, during or after such period) and (v) property, plant and equipment taken in settlement of accounts.
“Cash Collateralize” shall mean (a) to pledge and deposit with or deliver to the Administrative Agent for deposit into the LC Collateral Account, for the benefit of the Administrative Agent, the Issuing Banks or the Swingline Lenders (as applicable) and the Lenders, cash as collateral for or (b) to provide other credit support (including in the form of backstop letters of credit), in form and containing terms (including, to the extent not specifically set forth in this Agreement, the amount thereof) reasonably satisfactory to the Administrative Agent or the Issuing Banks, as applicable, for, in either case, the LC Exposure, Obligations in respect of Swingline Loans, or obligations of Lenders to fund participations in respect of either thereof (as the context may require), in accordance with Section 2.13(j).
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“Cash Collateral” shall have a meaning correlative to the foregoing and shall include the proceeds of such cash collateral and other credit support.
“Cash Equivalents” shall mean:
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“Cash Management Services” shall mean any services provided from time to time to any Borrower or any of the Lead Borrower’s Subsidiaries in connection with operating, collections, payroll, trust, or other depository or disbursement accounts, including automated clearinghouse, e-payable, electronic funds transfer, wire transfer, controlled disbursement, overdraft, depository, information reporting, lockbox and stop payment services.
“CERCLA” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as the same has been amended and may hereafter be amended from time to time, 42 U.S.C. § 9601 et seq.
“CFC” shall mean a “controlled foreign corporation” within the meaning of Section 957 of the Code; provided that no Canadian Subsidiary shall be deemed to be a CFC hereunder.
“Change in Law” shall mean the occurrence, after the Amendment No. 5 Effective Date, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith or in the implementation thereof and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted, issued or implemented.
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“Change of Control” shall mean, at any time and for any reason whatsoever, (a) Holdings shall fail to directly or indirectly own 100% on a fully diluted basis of the Lead Borrower’s Equity Interests, (b) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act), other than one or more Permitted Holders, shall be the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act) of Equity Interests having more, directly or indirectly, than 35% of the total voting power of all outstanding Equity Interests of Holdings in the election of directors, unless at such time the Permitted Holders are direct or indirect “beneficial owners” (as so defined) of Equity Interests of Holdings having a greater percentage of the total voting power of all outstanding Equity Interests of Holdings in the election of directors than that owned by such other “person” or “group” described above or (c) a “change of control” or similar event shall occur as provided in (I) the Senior Notes Indenture or any refinancing of the Senior Notes Indenture or (II) any Permitted Junior Debt or any other debt instrument of a Credit Party, in each case of this clause (II), with an aggregate principal amount in excess of the Threshold Amount.
“China Facility” shall mean the letter agreement dated as of January 15, 2019 (as amended, amended and restated, supplemented or otherwise modified from time to time) among Ryerson Global Trading Co., Ltd., Dongguan Van Shung Chong Steel Products Co., Ltd., Guangzhou Shenchang Metal Products Company Limited, Tianjin Van Shung Chong Metal Products Co., Ltd. and VSC Advanced Material (Kunshan) Company Limited and Bank of America, N.A. Shanghai Branch.
“China Intercreditor Agreement” shall mean the First Lien Intercreditor Agreement, dated as of the Closing Date, by and among the Administrative Agent and Bank of America, N.A. Shanghai Branch and Bank of America, N.A. as lenders under the China Facility.
“Class” (a) when used with respect to Lenders, shall refer to whether such Lender has a Loan, Protective Advances or Commitment with respect to the Non-FILO Facility or the FILO Facility, (b) when used with respect to Commitments, refers to whether such Commitments are Non-FILO Revolving Commitments or FILO Commitments, and (c) when used with respect to Loans or a Borrowing, refers to whether such Loans, or the Loans comprising such Borrowing, are Loans under the Non-FILO Facility, Loans under the FILO Facility or Protective Advances under the Non-FILO Facility or the FILO Facility.
“Closing Date” shall mean July 24, 2015.
“CME” shall mean CME Group Benchmark Administration Limited.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
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“Co-Documentation Agents” shall mean Bank of Montreal, PNC Bank, National Association and KeyBank National Association.
“Co-Syndication Agents” shall mean BofA Securities, Inc., JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association.
“Collateral” shall mean, collectively, the Canadian Collateral, the U.S. Collateral and all other property (whether real, personal or otherwise) with respect to which any security interests have been granted or will be granted (or purported to be granted) pursuant to any Security Document.
“Collateral Agent” shall have the meaning assigned to such term in the preamble hereto.
“Commercial Tort Claim” shall have the meaning assigned to such term in the applicable Security Agreement.
“Commitment” shall mean, with respect to any Lender, such Lender’s Revolving Commitment, LC Commitment or Swingline Commitment, or any Extended Revolving Loan Commitment.
“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“Compliance Certificate” shall mean a certificate of the Responsible Officer of the Lead Borrower substantially in the form of Exhibit G hereto, and in any case, in form and substance reasonably satisfactory to the Administrative Agent.
“Conforming Changes” shall mean, with respect to the use, administration of or any conventions associated with SOFR, Term SOFR, Term CORRA or any proposed Successor Rate, as applicable, any conforming changes to the definitions of “U.S. Base Rate”, “Canadian Base Rate”, “Canadian Prime Rate”, “SOFR”, “Term SOFR”, “Term CORRA” and “Interest Period” (and, in each case, the definitions of any component thereof), timing and frequency of determining rates and making payments of interest and other technical, administrative or operational matters (including, for the avoidance of doubt, the definitions of “Business Day” and “U.S. Government Securities Business Day”, timing of borrowing requests or prepayment, conversion or continuation notices and length of lookback periods) as may be appropriate, in the discretion of the Administrative Agent (in consultation with the Lead Borrower), to reflect the adoption and implementation of such applicable rate(s) and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice for such currency (or, if the Administrative Agent determines that adoption of any portion of such market practice is not administratively feasible or that no market practice for the administration of such rate for such currency exists, in such other manner of administration as the Administrative Agent determines is reasonably necessary in connection with the administration of this Agreement and any other Credit Document).
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“Consolidated” shall mean the consolidation in accordance with U.S. GAAP of the accounts or other items as to which such term applies.
“Consolidated Adjusted Net Earnings” shall mean with respect to any fiscal period, the net income (or loss) for such fiscal period attributable to the Borrowers and their Restricted Subsidiaries, all as reflected on the Section 9.01 Financials, but excluding (without duplication and to the extent otherwise included in such net income (or loss)): (i) any gain or loss arising from the sale of fixed assets; (ii) any gain arising from any write-up (or loss arising from any write-down) of fixed assets, Investments or general intangibles during such period; (iii) net earnings of a Joint Venture or any other entity in which a Borrower or a Restricted Subsidiary has an ownership interest except to the extent actually distributed to the Borrowers or their Subsidiaries in cash; (iv) any portion of the net earnings of any Subsidiary which for any reason is unavailable for payment of Distributions in cash to a Borrower or its Restricted Subsidiary; (v) the earnings of any Person to which any assets of a Borrower or its Restricted Subsidiary shall have been sold, transferred or disposed of, or into which a Borrower or its Restricted Subsidiary shall have merged, or been a party to any consolidation or other form of reorganization, prior to the date of such transaction; (vi) any gain arising from the acquisition of any securities of a Borrower or its Restricted Subsidiary; (vii) any non-cash gain or non-cash loss arising from extraordinary or non-recurring items net of any Taxes (without duplication); and (viii) public company costs, merger and proxy related expenses, workers compensation reserve adjustments, legal settlements and other historical costs associated with closed facilities.
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“Consolidated EBITDA” shall mean for any fiscal period of the Borrowers and their Restricted Subsidiaries, on a Consolidated basis (without duplication), an amount equal to the sum for such fiscal period of (i) Consolidated Adjusted Net Earnings, plus (ii) provision for taxes based on or determined by reference to income, plus (iii) Consolidated Interest Expense, plus (iv) depreciation, amortization and other non-cash charges (other than any such other non-cash charges that represent an accrual or reserve for potential cash items in any future period), plus (v) cash distributions received by Borrowers or their Restricted Subsidiaries from a Joint Venture or any other entity in which a Borrower has an ownership interest in excess of the net income of such entity otherwise included in Consolidated Adjusted Net Earnings, plus (vi) [reserved], plus (vii) [reserved], plus or minus (viii) LIFO expense or income; in the case of each of clauses (ii) through (vii) and the following clauses (ix) through (xiii) to the extent deducted (and not added back) in calculating Consolidated Adjusted Net Earnings and in the case of clause (viii) to the extent any such expense is deducted (and not added back) or income is included, in each case in Consolidated Adjusted Net Earnings, plus (ix) any up-front fees, transaction costs, commissions, expenses, premiums or charges related to any equity offering, permitted investment, acquisition, disposal or incurrence, repayment, amendment or modification of Indebtedness permitted by this Agreement (whether or not successful) and any nonrecurring merger, amalgamation or business acquisition transaction costs incurred during such period (in each case whether or not successful), plus (x) cash restructuring charges or reserves and business optimization expenses, including any restructuring costs and integration costs incurred in connection with Permitted Acquisitions after the Closing Date, costs related to the opening and closure and/or consolidation of facilities, retention charges, contract termination costs, retention, recruiting, relocation, severance and signing bonuses and expenses, transaction fees and expenses, future lease commitments, systems establishment costs, conversion costs and excess pension charges, consulting fees and any one-time expense relating to enhanced accounting function, or any other costs incurred in connection with any of the foregoing; provided that the aggregate amount of add backs made pursuant to this clause (x) for any period of four consecutive fiscal quarters, when added to the aggregate amount of add backs made pursuant to clause (xi) below for such period of four consecutive fiscal quarters, shall not exceed an amount equal to 15% of Consolidated EBITDA for such period of four consecutive fiscal quarters (without giving effect to any adjustments pursuant to this clause (x) or clause (xi) below), plus (xi) the amount of net cost savings, operating expense reductions, other operating improvements and acquisition synergies projected by the Lead Borrower in good faith to be realized during such period (calculated on a pro forma basis as though such items had been realized on the first day of such period) as a result of actions taken or to be taken in connection with any acquisition or disposition or operational change by the Lead Borrower or any Restricted Subsidiary, net of the amount of actual benefits realized during such period that are otherwise included in the calculation of Consolidated EBITDA from such actions, provided that (A) a duly completed certificate signed by a Responsible Officer of the Lead Borrower shall be delivered to the Administrative Agent with the Compliance Certificate required to be delivered pursuant to Section 9.01(e), certifying that (x) such cost savings, operating expense reductions, other operating improvements and synergies are reasonably expected and factually supportable in the good faith judgment of the Lead Borrower, and (y) such actions are to be taken within 18 months after the consummation of the acquisition, disposition, restructuring or the implementation of an initiative, which is expected to result in such cost savings, expense reductions, other operating improvements or synergies, (B) no cost savings, operating expense reductions, other operating improvements and synergies shall be added pursuant to this clause (ix) to the extent duplicative of any expenses or charges otherwise added to Consolidated EBITDA, whether through a pro forma adjustment or otherwise, for such period, (C) to the extent that any cost savings, operating expense reductions, other operating improvements and synergies are not associated with any other specified transaction, all steps shall have been taken for realizing such savings, (D) projected amounts (and not yet realized) may no longer be added in calculating Consolidated EBITDA pursuant to this clause (xi) to the extent occurring more than four full fiscal quarters after the specified action taken in order to realize such projected cost savings, operating expense reductions and synergies and (E) the aggregate amount of add-backs made pursuant to this clause (ix) for any period of four consecutive fiscal quarters, when added to the aggregate amount of add backs made pursuant to clause (x) above for such period of four consecutive fiscal quarters, shall not exceed an amount equal to 15% of Consolidated EBITDA for such period of four consecutive fiscal quarters (without giving effect to any adjustments pursuant to this clause (ix) or clause (vii) above), plus (xii) to the extent covered by insurance and actually reimbursed or otherwise paid, or, so long as the Lead Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed or otherwise paid by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed or otherwise paid within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed or otherwise paid within such 365 days), expenses with respect to liability or casualty events and expenses or losses relating to business interruption plus (xiii) expenses to the extent covered by contractual indemnification or refunding provisions in favor of the Lead Borrower or a Restricted Subsidiary and actually paid or refunded, or, so long as the Lead Borrower has made a determination that there exists reasonable evidence that such amount will in fact be paid or refunded by the indemnifying party or other obligor and only to the extent that such amount is (A) not denied by the applicable indemnifying party or obligor in writing within 90 days and (B) in fact reimbursed within 180 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within such 180 days).
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“Consolidated Fixed Charge Coverage Ratio” shall mean for any period of the Borrowers and their Restricted Subsidiaries, on a Consolidated basis, the ratio of (i) Consolidated EBITDA for such period minus Unfinanced Capital Expenditures paid in cash during such period to (ii) (without duplication of any items subtracted from Consolidated EBITDA in clause (i) of this definition) Consolidated Fixed Charges for such period.
“Consolidated Fixed Charges” shall mean, for any fiscal period of the Borrowers and their Restricted Subsidiaries, on a Consolidated basis, the sum of the Borrowers’ and their Restricted Subsidiaries’ (i) cash interest expense in respect of their Funded Debt, plus (ii) scheduled payments of principal on their Funded Debt paid during such period (excluding the Loans), plus (iii) cash income taxes paid plus (iv) (a) solely for purposes of calculating the Fixed Charge Coverage Ratio for purposes of determining compliance with the financial covenant set forth in Section 10.11, Distributions made in reliance on Section 10.03(xv) (and no other Distributions) and (b) for all other purposes under this Agreement, Distributions made in reliance on either Section 10.03(xiii) or Section 10.03(xv).
“Consolidated Indebtedness” shall mean, at any time, the sum of (without duplication) (i) all Indebtedness of the Borrowers and their Restricted Subsidiaries (on a consolidated basis) as would be required to be reflected as debt on the liability side of a consolidated balance sheet of the Borrowers and their Restricted Subsidiaries in accordance with U.S. GAAP, (ii) all Indebtedness of the Borrowers and their Restricted Subsidiaries of the type described in clause (i)(A) of the definition of “Indebtedness” and (iii) all Contingent Obligations of the Borrowers and their Restricted Subsidiaries in respect of Indebtedness of any third Person of the type referred to in the preceding clauses (i) and (ii); provided that Consolidated Indebtedness shall not include (x) Indebtedness in respect of any Senior Notes or refinancing of any Senior Notes that have been defeased or satisfied and discharged in accordance with the Senior Notes Indentures or any refinancing of the Senior Notes Indentures and (y) Indebtedness in respect of any Permitted Junior Notes that have been defeased or satisfied and discharged in accordance with the applicable indenture or with respect to which the required deposit has been made in connection with a call for repurchase or redemption to occur within the time period set forth in the applicable indenture, in each case to the extent such transactions are permitted by Section 10.07.
“Consolidated Interest Expense” shall mean for any period, the total interest expense of the Borrowers and their Restricted Subsidiaries during such period, determined on a Consolidated basis in accordance with U.S. GAAP.
“Consolidated Total Assets” shall mean, as of any date of determination, the amount that would, in conformity with U.S. GAAP, be set forth opposite the caption “total assets” (or any like caption) on a consolidated balance sheet of the Lead Borrower and the Restricted Subsidiaries at such date.
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“Contingent Obligation” shall mean, as to any Person, any obligation of such Person as a result of such Person being a general partner of any other Person, unless the underlying obligation is expressly made non-recourse as to such general partner, and any obligation of such Person guaranteeing or intended to guarantee any Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any such obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase Property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.
Contract PeriodSection 2.03Section 2.08provided
“CORRA” shall mean the Canadian Overnight Repo Rate Average administered and published by the Bank of Canada (or any successor administrator).
“Credit Documents” shall mean this Agreement and, after the execution and delivery thereof pursuant to the terms of this Agreement, each Note, each Security Document, the Intercreditor Agreement, the China Intercreditor Agreement, any Additional Intercreditor Agreement, each Incremental Revolving Commitment Agreement and each Extension Amendment.
“Credit Event” shall mean the making of any Loan.
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“Credit Extension” shall mean, as the context may require, (i) a Credit Event or (ii) an LC Credit Extension; provided that “Credit Extensions” shall not include conversions and continuations of outstanding Loans.
“Credit Parties” shall mean the U.S. Credit Parties, the Canadian Credit Parties and each other Subsidiary which becomes a Subsidiary Guarantor pursuant to the proviso to the definition of “Excluded Subsidiary”.
“Credit Party Guaranty” shall mean the guaranty of each Credit Party pursuant to Section 14.
“CWA” shall mean the Clean Water Act (33 U.S.C. §§ 1251 et seq.).
“Daily Simple SOFR” with respect to any applicable determination date means the SOFR published on such date on the Federal Reserve Bank of New York’s website (or any successor source).
“Default” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.
“Default Rate” shall have the meaning assigned to such term in Section 2.06(f).
“Defaulting Lender” shall mean any Lender that (a) has failed to perform any funding obligations hereunder, or that has failed to pay to the Administrative Agent, any Issuing Bank, any Swingline Lender or any other Lender any other amount required to be paid by it hereunder (including in respect of its participation in Letters of Credit or Swingline Loans) and, in each case, such failure is not cured within three Business Days unless such Lender notifies the Administrative Agent and Lead Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (which conditions precedent, together with the applicable default, if any, shall be specifically identified in such writing) has not been satisfied; (b) has notified the Administrative Agent or the Lead Borrower that such Lender does not intend to comply with its funding obligations hereunder or has made a public statement to the effect that it does not intend to comply with its funding obligations hereunder or under any other credit facility unless such Lender notifies the Administrative Agent and the Lead Borrower in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (which conditions precedent, together with the applicable default, if any, shall be specifically identified in such writing) has not been satisfied; (c) has failed, within three Business Days following request by the Administrative Agent, to confirm in a manner satisfactory to the Administrative Agent that such Lender will comply with its funding obligations hereunder; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Lead Borrower; or (d) has, or has a direct or indirect parent company that has, become the subject of an insolvency proceeding or taken any action in furtherance thereof or become the subject of a Bail-In Action; provided, however, that a Lender shall not be a Defaulting Lender solely by virtue of a Governmental Authority’s ownership of any equity interest in such Lender or parent company.
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“Deposit Account Control Agreement” shall mean a Deposit Account control agreement to be executed by each institution maintaining a Deposit Account (other than an Excluded Deposit Account) for a Borrower or any other Canadian Credit Party, in each case as required by and in accordance with the terms of Section 9.17 and in form and substance reasonably satisfactory to the Collateral Agent.
“Designated Jurisdiction” shall mean any country or territory to the extent that such country or territory itself is the subject of any Sanction.
“Designated Non-Cash Consideration” shall mean the fair market value of non-cash consideration received by the Lead Borrower or one of the Restricted Subsidiaries in connection with a sale of assets that is so designated as Designated Non-Cash Consideration pursuant to an officers’ certificate, setting forth the basis of such valuation, less the amount of cash and Cash Equivalents received in connection with a subsequent sale of such Designated Non-Cash Consideration.
“Dilution Percentage” shall mean, at any time:
(a) with respect to any U.S. Credit Party, an amount (expressed as a percentage) equal to (i) the sum (without duplication) of all deductions, credit memos, returns, adjustments, allowances, bad-debt write-offs and other non-cash credits which are recorded (or should be recorded in the reasonable determination of the Administrative Agent) by all U.S. Credit Parties to reduce their accounts receivable, divided by (ii) the sum of aggregate gross billings of all U.S. Credit Parties, in each case for the 12 fiscal months of the Lead Borrower then most recently ended as shown in the monthly Borrowing Base Certificate most recently delivered pursuant to Section 9.17; and
(b) with respect to the Canadian Borrower, an amount (expressed as a percentage) equal to (i) the sum (without duplication) of all deductions, credit memos, returns, adjustments, allowances, bad-debt write-offs and other non-cash credits which are recorded (or should be recorded in the reasonable determination of the Administrative Agent) by any Canadian Credit Party to reduce its accounts receivable, divided by (ii) the aggregate gross billings of any Canadian Credit Party, in each case for the 12 fiscal months of the Lead Borrower then most recently ended as shown in the monthly Borrowing Base Certificate most recently delivered pursuant to Section 9.17.
“Dilution Reserve” of any U.S. Credit Parties together, or any Canadian Credit Parties together, at any time shall mean an amount equal to the product of (a) the positive result, if any, of the Dilution Percentage for any U.S. Credit Parties together, or any Canadian Credit Parties together, as applicable, at such time minus 2.5% multiplied by (b) the Eligible Accounts of any U.S. Credit Parties together, or any Canadian Credit Parties together, as applicable, at such time.
“Distribution” shall mean, in respect of any entity, (i) any direct or indirect payment of any Dividends on Equity Interests of the entity (except distributions in such Equity Interests); (ii) any purchase, redemption or other acquisition or retirement for value of any Equity Interests of the entity or any Affiliate of the entity unless made contemporaneously from the net proceeds of the sale of Equity Interests; and (iii) any other direct or indirect distribution, advance or repayment of Indebtedness to a holder of Equity Interests.
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“Distribution Conditions” shall mean as to any relevant action contemplated in this Agreement, (i) no Event of Default has then occurred and is continuing or would result from any action and (ii) either (a) Availability on a Pro Forma Basis immediately after giving effect to such action would be at least the greater of (x) 20.0% of the Line Cap and (y) $100,000,000 and over the 30 consecutive days prior to consummation of such action, Average Availability was no less than the greater of (x) 20.0% of the Line Cap and (y) $100,000,000, also on a Pro Forma Basis for such action or (b)(1) Availability on a Pro Forma Basis immediately after giving effect to such action would be at least the greater of (x) 15% of the Line Cap and (y) $75,000,000 and over the 30 consecutive days prior to consummation of such action, Average Availability was no less than the greater of (x) 15% of the Line Cap and (y) $75,000,000, also on a Pro Forma Basis for such action and (2) the Consolidated Fixed Charge Coverage Ratio would be at least 1.0 to 1.0 on a Pro Forma Basis for such action.
“Dividend” shall mean, with respect to any Person, that such Person has declared or paid a dividend, distribution or returned any equity capital to its stockholders, partners or members or authorized or made any other distribution, payment or delivery of property (other than common equity of such Person) or cash to its stockholders, partners or members as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for a consideration any shares of any class of its capital stock or any partnership or membership interests outstanding on or after the Closing Date (or any options or warrants issued by such Person with respect to its Equity Interests), or set aside any funds for any of the foregoing purposes.
“Dividing Person” shall have the meaning assigned to it in the definition of “Division.”
“Division” shall mean the division of the assets, liabilities and/or obligations of a Person (the “Dividing Person”) among two or more Persons (whether pursuant to a “plan of division” or similar arrangement), which may or may not include the Dividing Person and pursuant to which the Dividing Person may or may not survive.
“Division Successor” shall mean any Person that, upon the consummation of a Division of a Dividing Person, holds all or any portion of the assets, liabilities and/or obligations previously held by such Dividing Person immediately prior to the consummation of such Division. A Dividing Person which retains any of its assets, liabilities and/or obligations after a Division shall be deemed a Division Successor upon the occurrence of such Division.
“Dollar Equivalent” shall mean, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in Canadian Dollars, the equivalent amount thereof in Dollars as determined by the Administrative Agent or the applicable Issuing Bank, as the case may be, at such time on the basis of the Spot Rate (determined in respect of the most recent Revaluation Date) for the purchase of Dollars with Canadian Dollars.
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“Domestic In-Transit Inventory” shall mean Inventory that has been purchased by a Credit Party and that is in-transit to or from (a) in the case of a U.S. Credit Party, (i) a Vendor from a location within the continental United States to a U.S. Credit Party or a location designated by a U.S. Credit Party that is in the continental United States or (ii) between two facilities operated by any U.S. Credit Party in the continental United States and (b) in the case of a Canadian Credit Party, (i) a Vendor from a location within Canada to any Canadian Credit Party or a location designated by any Canadian Credit Party that is in Canada or (ii) between two facilities operated by any Canadian Credit Party in Canada.
“Domestic Subsidiary” shall mean any Subsidiary organized under the laws of the United States, any state thereof or the District of Columbia.
“Dominion Account” shall mean, collectively, the U.S. Dominion Account and the Canadian Dominion Account.
“EEA Financial Institution” shall mean (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” shall mean any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Effective Yield” shall mean, as to any Revolving Loans, the effective yield on such Revolving Loans as determined by the Administrative Agent and the Lead Borrower in good faith, taking into account the applicable interest rate margins, any interest rate floors or similar devices and all fees, including upfront or similar fees or original issue discount (amortized over the shorter of (x) the Weighted Average Life to Maturity of such Loans and (y) the four years following the date of incurrence thereof) payable generally to Lenders making such Loans, but excluding any ticking, arrangement, underwriting, structuring, commitment or similar fees (regardless of whether paid in whole or in part to any lenders) and other fees payable in connection therewith that are not generally shared with the relevant Lenders and customary consent fees paid generally to consenting Lenders. Each mutual determination of the “Effective Yield” by the Administrative Agent and the Lead Borrower shall be conclusive and binding on all Lenders absent manifest error.
“Eligible Account” shall mean at any date of determination thereof (a) with respect to any U.S. Credit Party, the aggregate value (determined on a basis consistent with U.S. GAAP and the Lead Borrower’s current and historical accounting practices) of all Qualified Accounts of such U.S. Credit Party at such date; and (b) with respect to any Canadian Credit Party, the aggregate value (determined on a basis consistent with U.S.
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GAAP and the Lead Borrower’s current and historical accounting practices) of all Qualified Accounts of such Canadian Credit Party at such date, in each case adjusted on any date of determination to exclude, without duplication, the amount of Ineligible Accounts of such U.S. Credit Party or such Canadian Credit Party (as applicable) (calculated in accordance with the definition of “Ineligible Accounts” herein or in the revised definition of “Ineligible Accounts” then most recently furnished to the Lead Borrower by the Administrative Agent in writing).
“Eligible In-Transit Inventory” shall mean, on any date, In-Transit Inventory that meets the requirements of clause (a)(i) (solely to the extent that a Credit Party has right of title to such Inventory), (a)(ii), (b)(i) (solely to the extent that a Credit Party has right of title to such Inventory) or (b)(ii) of the definition of “Domestic In-Transit Inventory.”
“Eligible Inventory” shall mean, at any date of determination thereof, an amount equal to:
(a) with respect to any U.S. Credit Party, the aggregate Value (as reflected on the perpetual inventory system of the applicable U.S. Credit Party) at such date of all Qualified Inventory owned by such U.S. Credit Party and located in any jurisdiction in the United States in which the Lien on such Qualified Inventory granted to the Administrative Agent would be perfected by appropriate UCC financing statements that have been filed (or delivered to the Administrative Agent for filing pursuant to Section 6.09 or 9.12) naming such U.S. Credit Party as “debtor” and the Collateral Agent, for the benefit of the Secured Creditors as “secured party”; and
(b) with respect to the Canadian Credit Parties, the aggregate Value (as reflected on the perpetual inventory system of the Canadian Borrower and, if applicable, the Canadian Subsidiary Guarantors) at such date of all Qualified Inventory owned by the Canadian Credit Parties and located in any jurisdiction in Canada as to which Qualified Inventory appropriate personal property security filings or registrations have been made (or delivered to the Administrative Agent for filing pursuant to Section 6.09 or 9.12), in favor of the Collateral Agent, for the benefit of the Secured Creditors;
in each case, adjusted on any date of determination to exclude, without duplication, the amount of Ineligible Inventory of the U.S. Credit Parties or the Canadian Credit Parties (as applicable) (calculated in accordance with the definition of “Ineligible Inventory” herein or in the revised definition of “Ineligible Inventory” then most recently furnished to the Lead Borrower by the Administrative Agent in writing).
“Eligible Transferee” shall mean and include a commercial bank, an insurance company, a finance company, a financial institution, any fund that invests in loans or any other “accredited investor” (as defined in Regulation D of the Securities Act) (other than a natural person) but in any event excluding Holdings, each Borrower and their respective Subsidiaries and Affiliates.
“Environment” shall mean ambient air, indoor air, surface water, groundwater, drinking water, land surface and sub-surface strata and natural resources such as wetlands, flora and fauna.
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“Environmental Claim” shall mean any claim, notice, demand, order, action, suit or proceeding alleging actual or potential liability for investigation, Response or corrective action, damages to natural resources, personal injury, property damage, fines, penalties or other costs resulting from or arising out of (i) the presence, Release or threatened Release of Hazardous Material at any Property or (ii) any violation of Environmental Law, and shall include any claim seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from or arising out of the presence, Release or threatened Release of Hazardous Material or alleged injury or threat of injury to health (to the extent related to Hazardous Material) or the Environment.
“Environmental Laws” shall mean the common law and all federal, state, provincial, territorial, local and foreign laws, rules, regulations, codes, ordinances, orders, judgments and consent decrees, now or hereafter in effect, that relate to the protection or pollution of the Environment or human health (to the extent related to exposure to Hazardous Materials), including those relating to the use, recycling, manufacture, distribution, handling, storage, treatment, transport, Release or threat of Release of Hazardous Materials, whether now or hereafter in effect, including the CERCLA, the RCRA and the CWA.
“Equipment” shall mean all “equipment,” as such term is defined in the UCC (or, as applicable, the PPSA), wherever located, in which any Person now or hereafter has rights.
“Equity Interests” of any Person shall mean any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, any limited or general partnership interest and any limited liability company or unlimited liability company membership interest.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and, unless the context indicates otherwise, the regulations promulgated and rulings issued thereunder. Section references to ERISA are to ERISA as in effect at the Closing Date and any successor Section thereof.
“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA) which together with the Lead Borrower or a Restricted Subsidiary would be deemed to be a “single employer” within the meaning of Section 414(b) or (c) of the Code and, solely with respect to Section 412 of the Code, Sections 414(b), (c), (m) or (o) of the Code.
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“ERISA Event” shall mean (a) a Reportable Event with respect to a Pension Plan, (b) a complete or partial withdrawal by any Borrower, or by any Person for which any Borrower may have any direct or indirect liability from a Plan, or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA, (c) a complete or partial withdrawal by any Borrower, or by any Person for which any Borrower may have any direct or indirect liability from a Multiemployer Plan, the receipt by any Borrower, or by any Person for which any Borrower may have any direct or indirect liability of any notice concerning the imposition of withdrawal liability (as defined in Part 1 of Subtitle E of Title N of ERISA) or notification that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization or endangered or critical status, (d) the filing of a notice of intent to terminate a Pension Plan, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan (provided that, with respect to any such Multiemployer Plan, the Borrower, or any Person for which any Borrower may have any direct or indirect liability has received written notice of such action or proceeding), (e) the occurrence of an event or condition which could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan, (f) with respect to a Pension Plan, the failure to satisfy the minimum funding standard of Section 412 of the Code and Section 302 of ERISA, whether or not waived, (g) the failure to make by its due date a required contribution under Section 412(m) of the Code (or Section 430(j) of the Code, as amended by the Pension Protection Act of 2006) with respect to any Pension Plan or the failure to make any required contribution to a Multiemployer Plan, (h) the filing pursuant to Section 412 of the Code of an application for a waiver of the minimum funding standard with respect to any Pension Plan, (i) a determination that any Plan is in “at risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code), (j) the occurrence of a nonexempt prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could result in liability to the Borrowers or any Subsidiary or (k) the incurrence of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower or any Person for which any Borrower may have a direct or indirect obligation to pay such liability, or any other extraordinary event or condition with respect to a Plan or Multiemployer Plan which could reasonably be expected to result in a Lien or acceleration of any statutory requirement to fund all or a substantial portion of the unfunded accrued benefit liabilities of any such plan.
“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.
“Event of Default” shall have the meaning provided in Section 11.
“Excluded Collateral” shall mean, with respect to (i) a U.S. Credit Party, the meaning provided in the U.S. Security Agreement and (ii) a Canadian Credit Party, all assets specifically described in a Canadian Security Agreement as being excluded from the grant of security.
“Excluded Deposit Account” shall mean a Deposit Account (i) which is used for the sole purpose of making payroll and withholding tax payments related thereto and other employee wage and benefit payments and accrued and unpaid employee compensation (including salaries, wages, benefits and expense reimbursements), (ii) which is used for the sole purpose of paying or remitting taxes, including sales taxes, (iii) which is used solely as an escrow account or as a fiduciary or trust account for the exclusive benefit of third parties, (iv) is a zero balance Deposit Account, (v) which, individually or together with any other Deposit Accounts that are Excluded Deposit Accounts pursuant to this clause (v), has an average daily balance for any fiscal month of less than $1,000,000 (or the Dollar Equivalent), (vi) which is used solely to hold segregated deposits in respect of Permitted Liens pursuant to clauses (xii), (xiv), (xv), (xvi), (xxii), (xxviii), (xxxi), (xxxiv), (xxxvi), (xxxviii), (xxxix) and (xl) of Section 10.01 hereof or (vii) located outside of the United States or Canada.
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“Excluded Subsidiary” shall mean any Subsidiary of the Lead Borrower that is (a) a Foreign Subsidiary (other than a Canadian Subsidiary), (b) an Unrestricted Subsidiary, (c) (x) a FSHCO or (y) a Domestic Subsidiary of a Foreign Subsidiary that is a CFC, (d) not a Wholly-Owned Subsidiary of the Lead Borrower or one or more of its Wholly-Owned Restricted Subsidiaries, (e) an Immaterial Subsidiary, (f) established or created pursuant to Section 10.05(xi) and meeting the requirements of the proviso thereto; provided that such Subsidiary shall only be an Excluded Subsidiary for the period immediately prior to such acquisition, (g) prohibited by applicable law, rule or regulation from guaranteeing the Obligations, or which would require governmental (including regulatory) consent, approval, license or authorization to provide a guarantee, in each case, unless, such consent, approval, license or authorization has been received, (but without obligation to seek the same), (h) prohibited from guaranteeing the Obligations by any contractual obligation in existence (x) on the Closing Date or (y) at the time of the acquisition of such Subsidiary after the Closing Date (to the extent such prohibition was not entered into in contemplation of such acquisition), (i) a not-for-profit Subsidiary, a captive insurance company or special purpose entity (j) RdM Holdings LLC and (g) any other Subsidiary (other than the Canadian Subsidiaries) with respect to which the Lead Borrower and the Administrative Agent reasonably agree in writing that the cost or other consequences of guaranteeing the Obligations (including any adverse tax consequences) shall be excessive in view of the benefits to be obtained by the Lenders therefrom; provided that, notwithstanding the above, (x) the Lead Borrower may designate any Wholly-Owned Restricted Subsidiary that would otherwise constitute an “Excluded Subsidiary” hereunder as a “Subsidiary Guarantor” and cause such Subsidiary to execute a joinder agreement to this Agreement as a “Subsidiary Guarantor” (and from and after the execution of this Agreement, such Subsidiary shall no longer constitute an “Excluded Subsidiary” unless released from its obligations under the Credit Agreement as a “Subsidiary Guarantor” in accordance with the terms hereof and thereof; provided that such Restricted Subsidiary shall not be released solely on the basis that it was not required to become a Guarantor) so long as the Administrative Agent has consented to such designation; provided that such Subsidiary shall take all actions necessary or advisable in the opinion of the Administrative Agent or the Collateral Agent to grant a perfected first priority lien on substantially all of its assets to the Collateral Agent for the benefit of the Secured Creditors regardless of whether such Subsidiary is organized in a jurisdiction other than the United States (notwithstanding anything to the contrary in this Agreement or in the other Credit Documents), pursuant to arrangements reasonably agreed between the Administrative Agent and the Lead Borrower and subject to customary limitations in such jurisdiction to be reasonably agreed to between the Administrative Agent and the Lead Borrower and in the case of any Foreign Subsidiary, the jurisdiction of such Subsidiary shall be reasonably acceptable to the Administrative Agent, taking into account the availability and enforceability of guarantees and collateral pledges in such jurisdictions and (y) if a Subsidiary serves as an issuer or guarantor under (I) the Senior Notes or any Indebtedness refinancing of the Senior Notes or (II) Permitted Junior Debt or any other Indebtedness incurred by any Borrower or any Subsidiary Guarantor, in each case of this clause (II), with a principal amount in excess of the Threshold Amount, then it shall not constitute an “Excluded Subsidiary.”
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“Excluded Swap Obligation” shall mean, with respect to any Subsidiary Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (determined after giving effect to Section 14.10 hereof and any other “keepwell, support or other agreement” for the benefit of such Guarantor and any and all guarantees of such Guarantor’s Swap Obligations by other Credit Parties) at the time the Guaranty of such Guarantor, or a grant by such Guarantor of a security interest, becomes effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guaranty or security interest is or becomes excluded in accordance with the first sentence of this definition.
“Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, or any other recipient of any payment to be made by or on account of any obligation of any Credit Party under any Credit Document, (a) any Taxes imposed on (or measured by) such recipient’s net income, and franchise Taxes imposed on it in lieu of income Taxes imposed by a jurisdiction as a result of such recipient being organized or having its principal office or applicable lending office in such jurisdiction or as a result of any other present or former connection between such recipient and such jurisdiction (other than a connection arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to and/or enforced any Credit Document, or sold or assigned an interest in any Loan or Credit Document), (b) any branch profits Taxes under Section 884(a) of the Code, or any similar Tax, imposed by any jurisdiction described in clause (a) above, (c) solely with respect to a Loan made to a U.S. Borrower, in the case of a Lender (other than an assignee pursuant to a request by the Lead Borrower under Section 3.04), any U.S. federal withholding Taxes imposed on amounts payable to such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect at the time such Lender (1) acquires such interest in the applicable Commitment or, (2) to the extent a Lender acquires an interest in a Loan not funded pursuant to a prior Commitment, acquires such interest in such Loan (or designates a new lending office), except to the extent that such Lender (or its assignor, if any) was entitled, immediately prior to the time of designation of a new lending office (or assignment), to receive additional amounts from a Credit Party with respect to such U.S. federal withholding tax pursuant to Section 5.01, (d) any withholding Tax that is attributable to a Lender’s failure to comply with Section 5.01(b) or Section 5.01(c), (e) any withholding Taxes imposed under FATCA, (f) any U.S. federal backup withholding Taxes imposed pursuant to Section 3406 of the Code, and (g) solely with respect to a Loan made to the Canadian Borrower, (i) any Canadian Taxes as a result of such Lender not dealing at arm’s length (within the meaning of the Income Tax Act (Canada)) with a Canadian Credit Party, and (ii) solely with respect to a Loan made to the Canadian Borrower, any Canadian Taxes as a result of such Lender being a “specified shareholder” (within the meaning of subsection 18(5) of the Income Tax Act (Canada)) of a Canadian Credit Party or not dealing at arm’s length with such specified shareholder of a Canadian Credit Party, other than, in the case of subclauses (i) or (ii) above, where the non-arm’s length relationship arises, or where the Lender is a specified shareholder of a Canadian Credit Party or not dealing at arm’s length with such a specified shareholder by virtue of it having become a party to, received or perfected a security interest under or enforced any rights under, any Credit Document.
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“Existing Credit Agreement” shall mean the Amended and Restated Credit Agreement, dated as of April 3, 2013 (as further amended, amended and restated, supplemented or otherwise modified from time to time), among the Lead Borrower, certain subsidiaries and affiliates of the Lead Borrower, as borrowers, certain lenders party thereto, Bank of America, N.A., as the Administrative Agent (as amended, restated or otherwise modified from time to time prior to the Closing Date) and the other parties thereto.
“Existing Indebtedness” shall have the meaning provided in Section 10.04(vii).
“Existing Revolving Loans” shall have the meaning assigned to such term in Section 2.19.
“Extended Revolving Loans” shall have the meaning assigned to such term in Section 2.19.
“Extended Revolving Loan Commitments” shall mean one or more commitments hereunder to convert Existing Revolving Loans to Extended Revolving Loans of a given Extension Series pursuant to an Extension Amendment.
“Extending Lender” shall have the meaning provided in Section 2.19.
“Extension Amendment” shall have the meaning provided in Section 2.19.
“Extension Election” shall have the meaning provided in Section 2.19.
“Extension Request” shall have the meaning provided in Section 2.19.
“Extension Series” shall have the meaning provided in Section 2.19.
“FATCA” shall mean Sections 1471 through 1474 of the Code as of the Closing Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations thereunder or official interpretations thereof, any agreements entered into pursuant to current Section 1471(b)(1) of the Code (or any amended or successor version described above), and any intergovernmental agreements implementing the foregoing.
“FCCR Test Amount” shall have the meaning provided in Section 10.11(a).
“FCPA” shall have the meaning provided in Section 8.15(c).
“Federal Funds Rate” shall mean, for any day, the rate per annum calculated by the Federal Reserve Bank of New York based on such day’s federal funds transactions by depository institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its public website from time to time) and published on the next succeeding Business Day by the Federal Reserve Bank of New York as the federal funds effective rate; provided that if the Federal Funds Rate as so determined would be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
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“Fees” shall mean all amounts payable pursuant to or referred to in Section 2.05.
“FILO Amendment” shall have the meaning given in Section 2.20(c).
“FILO Borrowing” shall mean a Borrowing comprised of FILO Loans.
“FILO Borrowing Base” shall mean at any time of calculation an amount equal to the sum of, without duplication:
(a) the Net Amount of Eligible Accounts of the Borrowers multiplied by the advance rate of up to 5.00%, plus
(b) up to 10.00% of the NOLV Percentage Value of the Inventory of the Borrowers (and, to the extent that the NOLV Percentage accounts for the slow moving nature or aged status of Inventory of a Borrower, such slow moving nature or aged status as in existence on the date of the most recent Qualified Appraisal shall not be used as a basis to exclude Inventory from eligibility nor used as a basis for the institution of an Inventory Reserve), minus
(c) any Reserves established from time to time by the Administrative Agent in accordance herewith.
“FILO Commitment” shall mean the commitment, if any, of the FILO Lenders to make FILO Loans hereunder up to the FILO Line Cap.
“FILO Exchange Offer” shall have the meaning given in Section 2.20(a).
“FILO Exposure” shall mean, with respect to any FILO Lender at any time, the aggregate principal amount at such time of all outstanding FILO Loans of such Lender.
“FILO Facility” shall mean the FILO Commitment and the FILO Loans thereunder.
“FILO Lender” shall mean any Lender that accepts a FILO Exchange Offer pursuant to Section 2.20 and has a resulting FILO Commitment.
“FILO Line Cap” shall mean an amount equal to the lesser of (a) the aggregate FILO Commitments and (b) the FILO Borrowing Base.
“FILO Loans” shall mean advances made to or at the instructions of the Lead Borrower pursuant to Section 2 hereof under the FILO Facility.
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“Financed Capital Expenditures” shall mean Capital Expenditures that are (i) funded with the proceeds of Indebtedness permitted by Section 10.04(iii), (ii) any additions to property and equipment and other capital expenditures made with the proceeds of any equity securities issued or capital contributions received by any Credit Party, (iii) expenditures made in connection with the replacement, substitution, restoration or repair of assets to the extent financed with (A) insurance proceeds paid on account of the loss of or damage to the assets being replaced, substituted, restored or repaired, or (B) awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced or substituted, (iv) the purchase price of equipment that is purchased simultaneously with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for the equipment being traded in at such time, (v) the purchase or improvement of property, plant or equipment to the extent paid for with the proceeds of dispositions permitted by Section 10.02 that are not required to be applied to prepay the Obligations or the Senior Notes (or any refinancing in respect thereof), (vi) expenditures that are accounted for as capital expenditures by Holdings or any Subsidiary and that actually are paid for by a Person other than Holdings or any Subsidiary to the extent neither Holdings nor any Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such Person or any other Person (whether before, during or after such period), (vii) any expenditures which are contractually required to be, and are, advanced or reimbursed to the Credit Parties in cash by a third party (including landlords) during such period of calculation, (viii) the book value of any asset owned by Holdings or any Subsidiary prior to or during such period to the extent that such book value is included as a Capital Expenditure during such period as a result of such Person reusing or beginning to reuse such asset during such period without a corresponding expenditure actually having been made in such period; provided that (A) any expenditure necessary in order to permit such asset to be reused shall be included as a Capital Expenditure during the period in which such expenditure actually is made and (B) such book value shall have been included in Capital Expenditures when such asset was originally acquired, (ix) expenditures that constitute Investments constituting a business acquisition otherwise permitted hereunder or (x) that portion of interest on Indebtedness incurred for Capital Expenditures which is paid in cash and capitalized in accordance with U.S. GAAP.
“Finance Lease Obligations” shall mean, at the time any determination thereof is to be made, the amount of the liability in respect of a finance lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the notes thereto) in accordance with Accounting Standards Codification 842, Leases, (ASC 842) under GAAP; provided that no obligation will be deemed a “Finance Lease Obligation” for any purpose under this Agreement if such obligation is classified as an Operating Lease as defined under ASC 842.
“Foreign In-Transit Inventory” shall mean Inventory of a Credit Party that is in-transit from a Vendor of such Credit Party from a location outside the continental United States (in the case of a U.S. Credit Party) or Canada (in the case of a Canadian Credit Party) to such Credit Party or a location designated by such Credit Party that is in the continental United States (in the case of a U.S. Credit Party) or Canada (in the case of a Canadian Credit Party).
“Foreign Pension Plan” shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established or maintained outside the United States or Canada by the Lead Borrower or any one or more of the Restricted Subsidiaries primarily for the benefit of employees of the Lead Borrower or such Restricted Subsidiaries residing outside the United States or Canada, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA, the Code, or any Canadian Employee Benefits Legislation.
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“Foreign Subsidiaries” shall mean each Subsidiary of the Lead Borrower that is not a Domestic Subsidiary.
“Fronting Exposure” shall mean a Defaulting Lender’s Pro Rata Share of LC Exposure or Swingline Loans, as applicable, except to the extent allocated to other Lenders under Section 2.11.
“Fronting Fee” shall have the meaning provided in Section 2.05(c).
“FSHCO” shall mean any Domestic Subsidiary with no material assets other than the capital stock (including, for the avoidance of doubt, any instrument treated as stock for U.S. federal income tax purposes) of one or more Foreign Subsidiaries that are CFCs.
“Funded Debt” shall mean collectively but without duplication (a) the aggregate principal amount of Indebtedness (including Subordinated Debt) which would, in accordance with U.S. GAAP, be classified as long-term debt, together with the current maturities thereof and the face amount of all outstanding letters of credit; (b) all Indebtedness outstanding under any revolving credit, line of credit or renewals thereof, notwithstanding that any such Indebtedness is created within one (1) year of the expiration of such agreement; and (c) all Finance Lease Obligations.
“Governmental Authority” shall mean any federal, state, provincial, territorial, municipal, national, foreign or other governmental department, commission, board, bureau, legislative, administrative or regulatory body, court, agency or instrumentality or political subdivision thereof, in each case whether associated with the United States, Canada, any other nation or, in each case, any state, province, district or territory or other political subdivision thereof.
“Guaranteed Creditors” shall mean and include (x) each of the Administrative Agent, the Collateral Agent and the Lenders and (y) the Administrative Agent, any Lender and any Affiliate or branch of the Administrative Agent or any Lender (even if the Administrative Agent or such Lender subsequently ceases to be the Administrative Agent or a Lender under this Agreement for any reason) so long as the Administrative Agent, such Lender or such Affiliate served such purposes at the time of entry into a particular Secured Bank Product Obligation and their subsequent assigns, if any, whether now in existence or hereafter arising.
“Guarantor” shall mean Holdings, each Borrower (other than with respect to its own Obligations) and each Subsidiary Guarantor.
“Guaranty” shall mean and include each of the Credit Party Guaranty and any additional guaranty entered into pursuant to Section 9.12.
“Hazardous Materials” shall mean (a) any petroleum or petroleum products, by-products or breakdown products, radioactive materials, asbestos or asbestos-containing materials, mold, polychlorinated biphenyls, polyfluoroalkyl and perfluoroalkyl substances and radon gas and (b) any other chemicals, materials, substances, wastes, pollutants, contaminants, compounds or constituents in any form regulated, or which can give rise to liability, under any Environmental Law.
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“Holdings” shall have the meaning provided in the preamble.
“Identified Contingent Liabilities” shall mean the maximum estimated amount of liabilities reasonably likely to result from pending litigation, asserted claims and assessments, guarantees, uninsured risks and other contingent liabilities of Holdings and its Subsidiaries taken as a whole after giving effect to the Transaction (including all fees and expenses related thereto but exclusive of such contingent liabilities to the extent reflected in Stated Liabilities).
“Immaterial Subsidiary” shall mean any Restricted Subsidiary of Lead Borrower that (i) has Consolidated Total Assets together with all other Immaterial Subsidiaries (as determined in accordance with U.S. GAAP) of less than 5.0% of Consolidated Total Assets measured at the end of the most recent fiscal period for which internal financial statements are available and on a pro forma basis giving effect to any acquisitions or dispositions of companies, division or lines of business since such balance sheet date and on or prior to the date of acquisition of such Subsidiary or (ii) has revenues together with all other Immaterial Subsidiaries (as determined in accordance with U.S. GAAP) for the period of four consecutive fiscal quarters ending on such date of less than 5.0% of the combined revenues of Lead Borrower and its Restricted Subsidiaries for such period (measured for the four quarters ended most recently for which internal financial statements are available and on a pro forma basis giving effect to any acquisitions or dispositions of companies, division or lines of business since the start of such four quarter reference period).
“Incremental Revolving Commitment Agreement” shall have the meaning provided in Section 2.15(d).
“Indebtedness” shall mean, as to any Person, without duplication, (i) all indebtedness (including principal, interest, fees and charges) of such Person (A) for borrowed money or (B) for the deferred purchase price of property or services, (ii) the maximum amount available to be drawn under all letters of credit, bankers’ acceptances and similar obligations issued for the account of such Person and all unpaid drawings in respect of such letters of credit, bankers’ acceptances and similar obligations, (iii) all Indebtedness of the types described in clause (i), (ii), (iv), (v), (vi) or (vii) of this definition secured by any Lien on any property owned by such Person, whether or not such Indebtedness has been assumed by such Person (provided that, if the Person has not assumed or otherwise become liable in respect of such Indebtedness, such Indebtedness shall be deemed to be in an amount equal to the lesser of (x) the aggregate unpaid amount of Indebtedness secured by such Lien and (y) the fair market value of the property to which such Lien relates as determined in good faith by such Person), (iv) the aggregate amount of all Finance Lease Obligations of such Person, (v) all Contingent Obligations of such Person, (vi) all obligations under any Swap Contracts and any Bank Product Debt or under any similar type of agreement and (vii) all Off-Balance Sheet Liabilities of such Person.
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Notwithstanding the foregoing, Indebtedness shall not include (a) trade payables and accrued expenses incurred by any Person in accordance with customary practices and in the ordinary course of business of such Person, (b) obligations, to the extent such obligations would otherwise constitute Indebtedness, under any agreement that has been defeased or satisfied and discharged pursuant to the terms of such agreement, or (c) earn-outs and contingent payments in respect of acquisitions except to the extent that the liability on account of any such earn-outs or contingent payment has become fixed, due and payable for more than 10 Business Days without being paid and is required by U.S. GAAP to be reflected as a liability on the consolidated balance sheet of Holdings, the Lead Borrower and any Restricted Subsidiary.
“Indemnified Liabilities” shall have the meaning provided in Section 13.01(a).
“Indemnified Person” shall have the meaning provided in Section 13.01(a).
“Indemnified Taxes” shall mean all Taxes other than (i) Excluded Taxes and (ii) Other Taxes.
“Ineligible Accounts” shall mean, with respect to the U.S. Credit Parties or the Canadian Credit Parties, as applicable, at any date of determination, an amount equal to the aggregate value of all Qualified Accounts of the U.S. Credit Parties or the Canadian Credit Parties, as applicable, described in one or more of the following clauses, without duplication:
(a) Qualified Accounts to which the U.S. Credit Parties or the Canadian Credit Parties, as applicable, do not have sole and absolute title (excluding Qualified Accounts that are subject (and solely after becoming subject) to a Permitted Receivables Transaction); or
(b) Qualified Accounts that arise out of a sale made by the U.S. Credit Parties or the Canadian Credit Parties, as applicable, to an employee, officer, director or Affiliate of the U.S. Credit Parties or the Canadian Credit Parties, as applicable; or
(c) Qualified Accounts in respect of which the Account Debtor (i) is a creditor of the U.S. Credit Parties or the Canadian Credit Parties, as applicable, (ii) has or has asserted a right of setoff against the U.S. Credit Parties or the Canadian Credit Parties, as applicable, including co-op advertising (unless such Account Debtor has entered into a written agreement reasonably acceptable to the Administrative Agent to waive such setoff rights) or (iii) has disputed its liability (whether by chargeback or otherwise) or made any claim with respect to such Qualified Accounts or any other Qualified Accounts which has not been resolved, in each case to the extent of the amount owed by the U.S. Credit Parties or the Canadian Credit Parties, as applicable, to the Account Debtor, the amount of such actual or asserted right of setoff, or the amount of such dispute or claim, as the case may be; or
(d) Qualified Accounts from Account Debtors whose credit standing is not satisfactory to the Administrative Agent in its Permitted Discretion, including, without limitation, bankrupt or insolvent Account Debtors or against whom the U.S. Credit Parties or the Canadian Credit Parties, as applicable, are not able to bring suit or otherwise enforce its remedies through judicial process; or
(e) (i) in the case of Qualified Accounts of the U.S. Credit Parties, Qualified Accounts that are not payable in U.S.
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Dollars, or Qualified Accounts in respect of which the Account Debtor either (x) is not incorporated or organized under the laws of the United States, any state thereof or the District of Columbia or the laws of Canada or any province or territory thereof, (y) is located outside the United States and Canada or (z) has its principal place of business or substantially all of its assets outside the United States and Canada, other than Qualified Accounts covered (1) under a letter of credit or bankers’ acceptance on terms acceptable to the Administrative Agent or (2) by credit insurance in form, substance, and amount, and by an insurer satisfactory to the Administrative Agent in its Permitted Discretion, up to, in the case of this clause (2), $2,500,000 (it being understood that no representation or certification by a Borrower as to the matters described in the foregoing clauses (y) or (z) shall be deemed to be false or misleading in any material respect so long as the relevant Borrower has exercised its customary care in making any determination as to the matters described in such clauses); or (ii) in the case of Qualified Accounts of the Canadian Credit Parties, such Qualified Account is not payable in Canadian Dollars or U.S. Dollars or the Account Debtor either (x) is not incorporated under the laws of Canada, or any province or territory thereof, or the laws of the United States, any state thereof or the District of Columbia or (y) is located outside Canada and the United States or (z) has its principal place of business (or domicile for the purposes of the Quebec Civil Code) or substantially all of its assets outside Canada and the United States, other than Qualified Accounts covered under a letter of credit or bankers’ acceptance on terms acceptable to the Administrative Agent (it being understood that no representation or certification by the Canadian Credit Parties as to the matters described in the foregoing clause (y) or (z) shall be deemed to be false or misleading in any material respect so long as the relevant Borrower has exercised its customary care in making any determination as to the matters described in such clauses); or
(f) (i) Qualified Accounts resulting from sales that are guaranteed sales, sale-and-returns, ship-and-returns or sales on approval or (ii) Qualified Accounts that are sold on terms in excess of 90 days; or
(g) Qualified Accounts in respect of goods that have not been shipped or title to which has not passed to the applicable Account Debtors (including sales on consignment), or Qualified Accounts that represent Progress-Billings or otherwise do not represent completed sales. For purposes hereof, an Account represents a “Progress-Billing” if, and to the extent that, the Account Debtor’s obligation to pay the invoice giving rise to such Account is conditioned upon such Borrower’s completion of any further performance under the contract or agreement; or
(h) Qualified Accounts that do not comply in all material respects with the requirements of all Applicable Laws including without limitation the Federal Consumer Credit Protection Act and the Federal Truth in Lending Act; or
(i) Qualified Accounts that are unpaid more than (i) 60 days from the original due date or (ii) 90 days from the original date of invoice; provided that (x) up to $20,000,000 of Qualified Accounts owing from Investment Grade Account Debtors that are unpaid no more than 120 days from the original date of invoice may be included as Eligible Accounts notwithstanding this clause (i)(ii) and (y) up to $20,000,000 of Qualified Accounts owing from Account Debtors that are not Investment Grade Account Debtors that are unpaid no more than 120 days from the original date of invoice may be included as Eligible Accounts notwithstanding this clause (i)(ii); or
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(j) Qualified Accounts that are not paid in full and for which the U.S. Credit Parties or the Canadian Credit Parties, as applicable, create new receivables for the unpaid portion of such Accounts, including without limitation chargebacks, debit memos and other adjustments for unauthorized deductions; or
(k) all Qualified Accounts with respect to a single Account Debtor if 50% or greater in aggregate value of the Qualified Accounts of such Account Debtor are ineligible other than as a result of this clause (k) (it being understood that in determining the aggregate amount of Qualified Accounts from a single Account Debtor that are unpaid more than 60 days from the due date or more than 90 days from the original date of invoice under clause (i) above, there shall be excluded the amount of any net credit balances relating to the Qualified Accounts of such Account Debtor which are more than 60 days from the due date or 90 days from the original date of invoice); or
(l) Qualified Accounts that (i) are not subject to a valid and perfected first priority Lien in favor of the Collateral Agent, subject to no other Liens other than Permitted Liens described in Sections 10.01(i), (iv)(x), (x), (xi) and (xiv) or (ii) do not otherwise conform to the representations and warranties contained in the Credit Documents relating to Accounts; or
(m) Qualified Accounts for which a check, promissory note, draft, trade acceptance or other instrument for the payment of money has been received as payment for all or any part of such Qualified Accounts, presented for payment and returned uncollected for any reason; or
(n) Qualified Accounts that have been written off the books of the U.S. Credit Parties or the Canadian Credit Parties, as applicable, or have otherwise been designated as uncollectible; or
(o) (i) Qualified Accounts that are non-trade Accounts or notes receivable, (ii) Qualified Accounts that are subject to any adverse security deposit, retainage or other similar advance made by or for the benefit of the applicable Account Debtors, (iii) Qualified Accounts that represent or relate to payments of interest, or (iv) Qualified Accounts that are subject to off-set from customer overpayments, in each case to the extent thereof; or
(p) Qualified Accounts in respect of which the Account Debtor is the United States or Canada or any department, agency or instrumentality thereof, unless (i) in the case of the U.S. Credit Parties or the Canadian Credit Parties, as applicable, holding a Qualified Account in respect of which the Account Debtor is the United States or any department, agency or instrumentality thereof, the U.S.
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Credit Parties or the Canadian Credit Parties, as applicable, duly assign the rights to payment of such Qualified Accounts to the applicable Agent pursuant to the Assignment of Claims Act of 1940, as amended, which assignment and related documents and filings shall be in form and substance reasonably satisfactory to the Administrative Agent or (ii) in the case of the U.S. Credit Parties or the Canadian Credit Parties, as applicable, holding a Qualified Account in respect of which the Account Debtor is Canada or any department, agency or instrumentality thereof, the provisions of the Financial Administration Act (Canada) or similar provincial or territorial legislation or municipal ordinance of similar purpose have been complied with and any other steps necessary to perfect the Lien of the Collateral Agent on such Account have been complied with to the Collateral Agent’s satisfaction; or
(q) Qualified Accounts that are subject to a cash rebate, to the extent of the amount of such cash rebate that is accrued and unpaid; or
(r) Qualified Accounts due from any Account Debtor if the aggregate value of Qualified Accounts due from such Account Debtor, plus the aggregate value of Qualified Accounts of such Account Debtor’s Affiliates (in each case, which Qualified Accounts would otherwise be Eligible Accounts), exceeds 20% of the total amount of Eligible Accounts at the time of any determination, to the extent of such excess over such limit; or
(s) such other Qualified Accounts as may be deemed ineligible by the Administrative Agent from time to time in the reasonable exercise of its Permitted Discretion;
(t) such Qualified Account is of an Account Debtor that is located in a jurisdiction requiring the filing of a notice of business activities report or similar report in order to permit such U.S. Credit Party or Canadian Credit Party, as applicable, to seek judicial enforcement in such jurisdiction of payment of such Account, unless the U.S. Credit Parties or the Canadian Credit Parties, as applicable, have qualified to do business in such jurisdiction or have filed a notice of business activities report or equivalent report for then-current year or if such failure to file and inability to seek judicial enforcement is capable of being remedied without any material delay or material cost.
“Ineligible Inventory” shall mean, with respect to the U.S. Credit Parties or the Canadian Credit Parties, as applicable, at any date of determination, an amount equal to the sum of the following, without duplication:
(a) 100% of the Value of Qualified Inventory that is not subject to a perfected first priority Lien in favor of the Collateral Agent; or
(b) 100% of the Value of Qualified Inventory that consists of maintenance spare parts, stores supplies, cleaning mixtures and lubricants, as determined in accordance with the accounting policies of the Lead Borrower to be classified as supplies; or
(c) with respect to the U.S.
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Credit Parties or the Canadian Credit Parties, as applicable, 50% of the Value of Slow Moving Inventory; or (d) 100% of the Value of (i) Qualified Inventory that is not located at property that is owned or leased by such Credit Party and is not Eligible In-Transit Inventory and (ii) Qualified Inventory that is located at or in transit to or from any Third-Party Location to property that is either owned or leased by the U.S. Credit Parties or the Canadian Credit Parties, as applicable; provided that the Value of Qualified Inventory located at or in transit to or from a Third-Party Location shall not be included in calculating “Ineligible Inventory” pursuant to this clause (d) on any date of determination if such Credit Party or the Lead Borrower shall have delivered to the Administrative Agent a Landlord Lien Waiver and Access Agreement with respect to such Third-Party Location or an Inventory Reserve has been established in respect thereof; or
(e) 100% of the Value of Qualified Inventory that (i) in the case of a U.S. Credit Party, is not located in the United States or (ii) in the case of the Canadian Credit Parties, is not located in Canada; or
(f) 100% of the Value of Qualified Inventory considered non-conforming, which shall mean, on any date, all inventory classified as “non-prime,” “scrap” or other “off-spec” such as non-conforming (“NCR”), seconds or thirds, damaged, defective, discontinued, rejects, obsolete, unmerchantable, not in good condition, marked “return to vendor” or otherwise unsaleable in the ordinary course of business; or
(g) 100% of the Value of Qualified Inventory that does not otherwise conform to the representations and warranties contained in the Credit Documents; or
(h) 100% of the Value of Qualified Inventory located on the premises of joint ventures, unless (i) a joint venture agreement reasonably acceptable to the Administrative Agent has been executed and (ii) such Qualified Inventory is reasonably acceptable to the Administrative Agent; or
(i) 100% of the Value of Qualified Inventory that is subject to a negotiable document of title (as defined in the UCC or as defined or used in the PPSA, as applicable) unless such negotiable document of title has been delivered to the applicable Agent; or
(j) the Value of Qualified Inventory to the extent such Value includes tolling costs or processing costs incurred by the U.S. Credit Parties or the Canadian Credit Parties, as applicable, for processing customer-owned Inventory; or
(k) the Value of Qualified Inventory to the extent such Value includes prepaid Inventory or relates to advance payments made to vendors for merchandise not yet received; or
(1) without duplication of any calculation pursuant to clause (d) of the definition of “Inventory Valuation Reserves,” the Value of Qualified Inventory that is subject to vendor credits representing price allowances, rebates and credits that have been allocated by the U.S. Credit Parties or the Canadian Credit Parties, as applicable, to reduce Inventory costs, to the extent of such credits; or (m) 50% of the Value of Shorts Inventory; or
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(n) the Value of such other Qualified Inventory as may be deemed ineligible by the Administrative Agent from time to time in the exercise of its Permitted Discretion; or
(o) the Value of In-Transit Inventory except Eligible In-Transit Inventory.
“Instrument” shall have the meaning ascribed to the term “instrument” in Article 9 of the UCC (or, as applicable, the PPSA).
“Intellectual Property” shall have the meaning provided in Section 8.20.
“Intellectual Property Claim” shall mean the assertion by any Person of a claim (whether asserted in writing, by action, suit or proceeding or otherwise) that any Borrower’s or other Canadian Credit Party’s ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property or other Property is violative of any ownership or right to use any Intellectual Property of such Person.
“Intercreditor Agreement” shall mean (i) prior to the execution of the 2016 Intercreditor Agreement, that certain Intercreditor Agreement, dated as of October 10, 2012, by and among the Collateral Agent and Wells Fargo Bank, National Association, as collateral agent under the Indenture, dated as of October 10, 2012, between Ryerson Inc. and Joseph T. Ryerson & Son, Inc., as co-issuers, and Wells Fargo Bank, National Association, as trustee (as same may be amended or modified from time to time in accordance with the terms thereof) or (ii) the 2016 Intercreditor Agreement.
“Interest Determination Date” shall mean, the second Business Day (or in the case of Term SOFR Loans, the second U.S. Government Securities Business Day) prior to the commencement of any Interest Period relating to such Loan, unless market practice differs in the relevant Interbank Market for a currency, in which case the Interest Determination Date for that currency will be determined by the Administrative Agent in accordance with market practice in the relevant Interbank Market.
“Interest Period” shall mean, as to any Borrowing of a Term SOFR Loan or Term CORRA Loan, the period commencing on the date of such Borrowing or on the last day of the immediately preceding Interest Period applicable to such Borrowing, as applicable, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is one, three, six (solely with respect to Term SOFR Loans) or, with respect to Term SOFR Loans, if agreed to by all Lenders, twelve months or less than one month thereafter, as the Lead Borrower may elect, or the date any Borrowing of a Term SOFR Loan or Term CORRA Loan is converted to a Borrowing of a U.S. Base Rate Loan or Canadian Base Rate Loan, as applicable, in accordance with Section 2.08 or repaid or prepaid in accordance with Section 2.07 or Section 2.09 (in the case of each requested Interest Period, subject to availability); provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, (ii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period and (iii) no Interest Period shall extend beyond the Maturity Date.
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Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period.
“Interim Period” shall have the meaning assigned to such term in Section 10.11(b).
“In-Transit Inventory” shall mean Inventory of a Credit Party that is either Domestic In-Transit Inventory or Foreign In-Transit Inventory.
“Inventory” shall mean all “inventory,” as such term is defined in the UCC (or with respect to any Canadian Credit Party, the PPSA), wherever located, in which any Person now or hereafter has rights.
“Inventory Reserves” shall mean, with respect to any Credit Party, an amount equal to the sum of (i) “landlord reserves,” calculated (x) in the case of a U.S. Credit Party, as three months’ rent expense for each U.S. Credit Party’s leased facilities at which Eligible Inventory is located for which a Landlord Lien Waiver and Access Agreement has not been obtained and (y) in the case of the Canadian Borrower, as three months’ rent expense for each of the Canadian Credit Parties’ leased facilities at which Eligible Inventory is located for which a Landlord Lien Waiver and Access Agreement has not been obtained, (ii) “third party liability reserves,” calculated as any liability owed to any Outside Processor, customer, vendor or Third-Party Warehouseman holding Eligible Inventory from whom a Landlord Lien Waiver and Access Agreement has not been obtained, not to exceed, for any location, the lesser of (x) the amount owing to such Outside Processor, customer, vendor or Third-Party Warehouseman or (y) the Value of the Eligible Inventory balance at such location, (iii) in the case of the Canadian Credit Parties, any reserve which the Administrative Agent may require in its Permitted Discretion on account of the right of an unpaid supplier to repossess goods under Section 81.1 of the BIA (generally known as the “30 day goods” rule) or any other similar Applicable Law of any other applicable jurisdiction, (iv) such other reserves as may be deemed appropriate by the Administrative Agent from time to time in the exercise of its Permitted Discretion, and (v) Inventory Valuation Reserves.
“Inventory Valuation Reserves” shall mean an amount equal to the sum of the following:
(a) a purchase price variance reserve, calculated as the aggregate of the most current four months’ purchase price variance, as recorded on the Lead Borrower’s income statements’ variance reports; provided that such aggregate amount represents a favorable purchase price variance (i.e., where the Value exceeds the actual cost of such Inventory); (b) a conversion cost reserve calculated as the amount by which (i) the sum of the most current four months’ reclass variance exceeds (ii) 5% of Value at such date of determination;
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(c) a vendor discount reserve, equal to the product of (i) vendor discounts earned, expressed as a percentage of cost of sales during the most current two year period, multiplied by (ii) Value at such date of determination;
(d) a lower of cost or market reserve for Inventory that is sold, or valued by the relevant Borrower or Canadian Credit Party or as deemed appropriate by the Administrative Agent in its Permitted Discretion, for less than the actual cost to produce or acquire; provided that such a reserve shall only be imposed when the price of relevant metals (including aluminum, stainless steel and carbon) on the London Metal Exchange has dropped at least 5% since the delivery of the immediately prior Borrowing Base Certificate and shall be extinguished upon delivery of the next Borrowing Base Certificate;
(e) a reserve for estimated scrap losses related to custom plates in an amount determined in a manner consistent with the relevant Credit Party’s past accounting practices;
(f) a reserve in the amount of general ledger adjustments reflecting changes in Value of Qualified Inventory based on the results of a physical inventory to the extent such adjustments have not also been made to the applicable Credit Party’s perpetual inventory system; and
(g) such other reserves as may reasonably be deemed appropriate by the Administrative Agent in its Permitted Discretion.
“Investment Grade Account Debtor” shall mean an Account Debtor with corporate ratings of at least BBB- from S&P or Baa3 from Moody’s (or an equivalent rating from Fitch).
“Investments” shall have the meaning provided in Section 10.05.
“ISDA Definitions” shall mean the 2006 ISDA Definitions published by the International Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
“Issuing Bank” shall mean, as the context may require, (a) Bank of America, N.A. or any affiliate or branch of Bank of America, N.A. with respect to Letters of Credit issued by it; (b) any other Lender that may become an Issuing Bank pursuant to Sections 2.13(i) and 2.13(k), with respect to Letters of Credit issued by such Lender; or (c) collectively, all of the foregoing.
“Joint Lead Arrangers” shall mean BofA Securities, Inc., JPMorgan Chase Bank, N.A. and Wells Fargo Bank, National Association.
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“Joint Venture” shall mean any Person other than an individual or a Subsidiary of the Lead Borrower (i) in which the Lead Borrower or any Restricted Subsidiary holds or acquires an ownership interest (by way of ownership of Equity Interests or other evidence of ownership) and (ii) which is engaged in a business permitted by Section 10.09.
“Junior Representative” shall mean, with respect to any series of Permitted Junior Debt, the trustee, administrative agent, collateral agent, security agent or similar agent under the indenture or agreement pursuant to which such Permitted Junior Debt is issued, incurred or otherwise obtained and each of their successors in such capacities.
“Landlord Lien Waiver and Access Agreement” shall mean an agreement duly executed in favor of the Collateral Agent in form and content reasonably acceptable to the Collateral Agent.
“Latest Maturity Date” shall mean, at any date of determination, the latest maturity date applicable to any Loan or Commitment hereunder as of such date of determination.
“LC Collateral Account” shall mean a collateral account in the form of a deposit account established and maintained by the Administrative Agent for the benefit of the Secured Creditors, in accordance with the provisions of Section 2.13.
“LC Commitment” shall mean the commitment of the Issuing Bank to issue Letters of Credit pursuant to Section 2.13; provided that the individual commitment of each Issuing Bank to issue Letters of Credit shall be set forth on Schedule 2.01.
“LC Credit Extension” shall mean, with respect to any Letter of Credit, the issuance, amendment or renewal thereof or extension of the expiry date thereof, or the increase of the amount thereof.
“LC Disbursement” shall mean a payment or disbursement made by the Issuing Bank pursuant to a Letter of Credit.
“LC Documents” shall mean all documents, instruments and agreements delivered by the Borrowers or any other Person to the Issuing Bank or the Administrative Agent in connection with any Letter of Credit.
“LC Exposure” shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate principal amount of all LC Disbursements that have not yet been reimbursed at such time. The LC Exposure of any Non-FILO Lender at any time shall mean its Pro Rata Percentage of the aggregate LC Exposure at such time.
“LC Obligations” shall mean the sum (without duplication) of (a) all amounts owing by the Borrowers for any drawings under Letters of Credit (including any bankers’ acceptances or other payment obligations arising therefrom); and (b) the stated amount of all outstanding Letters of Credit.
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“LC Participation Fee” shall have the meaning assigned to such term in Section 2.05(c)(i).
“LC Request” shall mean a request by the Lead Borrower or the Canadian Borrower, as applicable, in accordance with the terms of Section 2.13(b) in form and substance satisfactory to the applicable Issuing Bank.
“LCT Election” shall have the meaning provided in Section 1.08.
“LCT Test Date” shall have the meaning provided in Section 1.08.
“Lead Borrower” shall have the meaning provided in the preamble hereto.
“Lender” shall mean each financial institution listed on Schedule 2.01, as well as any Person that becomes a “Lender” hereunder pursuant to Section 2.15, 3.04 or 13.04(b).
“Lender-Related Person” shall have the meaning provided in Section 13.01(b).
“Letter of Credit Expiration Date” shall mean the date which is five (5) Business Days prior to the Maturity Date.
“Letter of Credit” shall mean any letters of credit issued or to be issued by the Issuing Bank for the account of the Borrowers pursuant to Section 2.13.
“Leverage Ratio” shall mean, with respect to any Person, at any date the ratio of (a) Consolidated Indebtedness at such time to (b) Consolidated EBITDA of such person for the four full fiscal quarters for which internal financial statements are available immediately preceding such date on which such additional Indebtedness is incurred. In the event that the Lead Borrower or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, defeases, redeems or otherwise discharges any Indebtedness subsequent to the commencement of the period for which the Leverage Ratio is being calculated but prior to the event for which the calculation of the Leverage Ratio is made, then the Leverage Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness as if the same had occurred at the beginning of the applicable four-quarter period.
“Lien” shall mean any mortgage, pledge, hypothecation, collateral assignment, security deposit arrangement, encumbrance, deemed trust, constructive trust, statutory trust, security conveyance, lien (statutory or other) or arrangement to provide any preference or priority or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, and any financing lease having substantially the same effect as any of the foregoing).
“Limited Condition Transaction” shall mean any transaction in connection with any acquisition (including by way of merger or amalgamation) or similar Investment (including the assumption or incurrence of Indebtedness), the making of any Dividend and/or the making of any voluntary or optional payment or prepayment on or redemption or acquisition for value of any Indebtedness subject to Section 10.07(a).
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“Line Cap” shall mean an amount that is equal to the lesser of (a) the Aggregate Commitments and (b) the then applicable aggregate amount of the Borrowing Base.
“Liquidity Event” shall mean the occurrence of a date when Availability is less than the greater of (x) 10% of the Line Cap and (y) $60,000,000, in each case for 5 consecutive Business Days, until such date as Availability has been greater than $80,000,000 on each day during the immediately preceding 30 consecutive days.
“Liquidity Period” shall mean any period throughout which (a) a Liquidity Event has occurred and is continuing or (b) a Specified Event of Default has occurred and is continuing.
“Loans” shall mean advances made to or at the instructions of a Borrower pursuant to Section 2 hereof and may constitute Revolving Loans or Swingline Loans.
“Location” of any Person shall mean such Person’s “location” as determined pursuant to Section 9-307 of the UCC or, if applicable Section 7 (or similar provision) of the PPSA.
“Margin Stock” shall have the meaning provided in Regulation U.
“Material Adverse Effect” shall mean the effect of any event, condition or circumstance, which, when taken together with other events, conditions or circumstances occurring or existing concurrently therewith, (i) has a material adverse effect upon the business, assets, results of operations or financial condition of the Lead Borrower and its Restricted Subsidiaries, taken as a whole; (ii) has a material and adverse effect on the rights and remedies of the Administrative Agent and Collateral Agent, on behalf of the Lenders, taken as a whole, under the Credit Documents; or (iii) has a material and adverse effect on the ability of the Credit Parties, taken as a whole, to perform their payment obligations under the Credit Documents.
“Maturity Date” shall mean June 29, 2027.
“Moody’s” shall mean Moody’s Investors Service, Inc.
“Multiemployer Plan” shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding six (6) years contributed to or required to be contributed to by any Borrower, or any Person for which any Borrower may have any direct or indirect liability or with respect to which any Borrower or Subsidiary could incur liability. For greater certainty, “Multiemployer Plan” does not include any Canadian Pension Plan.
“Net Amount of Eligible Accounts” shall mean the value of such Eligible Accounts on any date less, without duplication, (x) at all times any and all returns, rebates, discounts (which may, at the Administrative Agent’s option, be calculated on shortest terms), credits, allowances or Taxes (including sales, excise or other Taxes but excluding franchise and other Taxes imposed on, or measured by reference to, income) at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with, or any interest accrued on the amount of, such Accounts at such date (calculated without duplication of (1)
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deductions taken pursuant to the exclusion of “Ineligible Accounts” as described in the definition of “Eligible Accounts” or (2) items included within the Dilution Reserve) and (y) at the Administrative Agent’s discretion solely after the occurrence and during the continuation of a Liquidity Period, the aggregate amount of all cash received in respect of such Accounts (excluding, to the extent it can be traced as such, cash received and identifiable with respect to Ineligible Accounts) but not yet applied to reduce the amount of such Accounts.
“New Financing” shall mean the Indebtedness incurred or to be incurred by Holdings and its Subsidiaries under the Credit Documents (assuming the full utilization of the Revolving Commitments) and all other financings contemplated by the Credit Documents, in each case after giving effect to the Transaction and the incurrence of all financings in connection therewith.
“NOLV Percentage” shall mean the net orderly liquidation value of Inventory, expressed as a percentage of the Value of Inventory, expected to be realized at an orderly, negotiated sale held within a reasonable period of time, net of all liquidation expenses, as determined from the most recent Qualified Appraisal of such Inventory performed by a Qualified Appraiser.
“Non-Defaulting Lender” shall mean and include each Lender other than a Defaulting Lender.
“Non-FILO Exchange” shall have the meaning given in Section 2.21(a).
“Non-FILO Exchange Offer” shall have the meaning given in Section 2.21(a).
“Non-FILO Exposure” shall mean the Canadian Revolving Exposure and the U.S. Revolving Exposure.
“Non-FILO Facility” shall mean the Non-FILO Revolving Commitments and the Revolving Loans thereunder.
“Non-FILO Lender” shall mean each Lender with a Non-FILO Revolving Commitment.
“Non-FILO Line Cap” shall mean an amount that is equal to the lesser of (a) the Non-FILO Revolving Commitments and (b) the Aggregate Non-FILO Borrowing Base.
“Non-FILO Loans” shall mean advances made to or at the instructions of a Borrower pursuant to Section 2 hereof under the Non-FILO Facility.
“Non-FILO Revolving Commitment” shall mean, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans hereunder up to the amount set forth and opposite such Lender’s name on Schedule 2.01, or in the Assignment and Assumption Agreement pursuant to which such Lender assumed its Revolving Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.07, (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 13.04 and (c)
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reallocated from time to time pursuant to Section 2.20. The aggregate amount of the Lenders’ Non-FILO Revolving Commitments on the Amendment No. 5 Effective Date is $1,300,000,000.
“Note” shall mean each Revolving Note or Swingline Note, as applicable.
“Notes Collateral Agent” shall mean Wells Fargo Bank, National Association, in its capacity as collateral agent under the Senior Notes Documents and together with its successors in such capacity.
“Notice of Borrowing” shall mean a notice substantially in the form of Exhibit A‑1 hereto.
“Notice of Conversion/Continuation” shall mean a notice substantially in the form of Exhibit A‑2 hereto.
“Notice Office” shall mean 110 N Wacker Drive, IL4-110-08-03, Telecopier: (312) 904-7190, Attention: Thomas H. Herron; or such other offices or persons as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.
“Noticed Hedge” shall mean any Secured Bank Product Obligations arising under a Swap Contract with respect to which the Lead Borrower and the Secured Bank Product Provider thereof have notified the Administrative Agent of the intent to include such Secured Bank Product Obligations as a Noticed Hedge hereunder and with respect to which a Reserve has subsequently been established in the maximum amount thereof.
“Obligations” shall mean (x) all now existing or hereafter arising debts, obligations, covenants, and duties of payment or performance of every kind, matured or unmatured, direct or contingent, owing, arising, due, or payable to any Lender, Agent or Indemnified Person by any Credit Party arising out of this Agreement or any other Credit Document (other than the Intercreditor Agreement, the China Intercreditor Agreement or any Additional Intercreditor Agreement), including, without limitation, all obligations to repay principal or interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or similar case or proceeding, regardless of whether allowed or allowable in such case or proceeding) on the Loans, and to pay interest, fees, costs, charges, expenses, professional fees, and all sums chargeable to the Borrowers or any other Credit Party or for which any Borrower or any other Credit Party is liable as indemnitor under the Credit Documents, whether or not evidenced by any note or other instrument (including fees and expenses accruing during the pendency of any bankruptcy, insolvency, receivership or similar case or proceeding, regardless of whether allowed or allowable in such case or proceeding) and (y) all Secured Bank Product Obligations; provided, however, that for purposes of the Credit Party Guaranty and each other guarantee agreement or other instrument or document executed and delivered pursuant to this Agreement, the term “Obligations” shall not, as to any Guarantor, include any Excluded Swap Obligations. Notwithstanding anything to the contrary contained above, (x) obligations of any Credit Party under any Secured Bank Product Obligations shall be secured and guaranteed pursuant to the Credit Documents only to the extent that, and for so long as, the other Obligations are so secured and guaranteed and (y) any release of Collateral or Guarantors effected in the manner permitted by this Agreement shall not require the consent of holders of obligations under Secured Bank Product Obligations.
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“OFAC” shall have the meaning provided in Section 8.15(b).
“Off-Balance Sheet Liabilities” of any Person shall mean (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any obligation under a Synthetic Lease or (iii) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person.
“Other Taxes” shall mean any and all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes arising from any payment made under, from the execution, delivery, registration, performance or enforcement of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Credit Document except any such Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 3.04) that are imposed as a result of any present or former connection between the assignee or assignor and the jurisdiction imposing such Tax (other than a connection arising from such Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to and/or enforced any Credit Document, or sold or assigned an interest in any Loan).
“Outside Processor” shall mean any Person that provides processing services with respect to Qualified Inventory owned by a Credit Party and on whose premises Qualified Inventory is located, which premises are neither owned nor leased by a Credit Party.
“Outstanding Amount” shall mean with respect to Loans on any date, the Dollar Equivalent amount of the aggregate outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments of Loans occurring on such date.
“Overadvance” shall have the meaning assigned to such term in Section 2.17.
“Overadvance Loan” shall mean a U.S. Base Rate Loan, Canadian Prime Loan or Canadian Base Rate Loan when an Overadvance exists or is caused by the funding thereof.
“Participant Register” shall have the meaning provided in Section 13.04(a).
“Patriot Act” shall have the meaning provided in Section 13.17.
“Payment Conditions” shall mean as to any relevant action contemplated in this Agreement, (i) no Event of Default has then occurred and is continuing or would result from any action and (ii) either (a) Availability on a Pro Forma Basis immediately after giving effect to such action would be at least the greater of (x) 17.5% of the Line Cap and (y) $90,000,000 and over the 30 consecutive days prior to consummation of such action, Average Availability was no less than the greater of (x) 17.5% of the Line Cap and (y) $90,000,000, also on a Pro Forma Basis for such action or (b) (1) Availability on a Pro Forma Basis immediately after giving effect to such action would be at least the greater of (x) 12.5% of the Line Cap and (y) $65,000,000 and over the 30 consecutive days prior to the consummation of such action, Average Availability was no less than the greater of (x) 12.5% of the Line Cap and (y) $65,000,000, also on a Pro Forma Basis for such action and (2) the Consolidated Fixed Charge Coverage Ratio would be at least 1.0 to 1.0 on a Pro Forma Basis for such action.
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“Payment Item” shall mean all checks, drafts, or other items of payment payable to a Borrower or Canadian Credit Party, including proceeds of any of the Collateral.
“Payment Office” shall mean the office of the Administrative Agent located at 901 Main Street, 14th Floor Dallas, Texas 75202, Attention: Operations Manager, Telephone No.: (214) 209-4743, Telecopier No.: (972) 773-3765 or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto.
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
“Pension Plan” shall mean a pension plan other than a Multiemployer Plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA or subject to the minimum funding standards of Section 412 of the Code or Section 302 of ERISA which is or was at any time during the current year or the immediately preceding six (6) years maintained, sponsored, contributed to or required to be contributed to by a Borrower or any Person for which any Borrower may have any direct or indirect liability for contributions, or with respect to which a Borrower or Subsidiary could incur liability. For greater certainty, “Pension Plan” does not include any Canadian Pension Plan.
“Perfection Certificate” shall mean the Perfection Certificate in the form approved by the Collateral Agent, as the same may be supplemented from time to time pursuant to Section 9.01(f) or otherwise.
“Permitted Acquisition” shall mean the acquisition by the Lead Borrower or any Restricted Subsidiary of an Acquired Entity or Business; provided that (in each case) (A) the Acquired Entity or Business acquired is in a business permitted by Section 10.09 and (B) all applicable requirements of Section 9.14 are satisfied.
“Permitted Affiliates” shall mean the Joint Ventures existing on the Amendment No. 5 Effective Date and listed on Schedule 1.01G hereto attached hereto and any Joint Ventures created or acquired after the Amendment No. 5 Effective Date and permitted pursuant to the terms of the Credit Documents.
“Permitted Discretion” shall mean reasonable credit judgment exercised in good faith in accordance with customary business practices for comparable asset-based lending transactions, and as it relates to the establishment of reserves or the imposition of exclusionary criteria shall require that (x) such establishment, adjustment or imposition after the Closing Date be based on the analysis of facts or events first occurring or first discovered by the Administrative Agent after the Closing Date or are materially different from the facts or events occurring or known to the Administrative Agent on the Closing Date, unless the Lead Borrower and the Administrative Agent otherwise agree in writing and the proposed action to be taken by the Administrative Agent to mitigate the effects of such changed fact or event bears a reasonable relationship to such fact or event that is the basis therefor, (y) the contributing factors to the imposition of any reserves shall not duplicate (i) the exclusionary criteria set forth in the definitions of “Eligible Accounts” or “Eligible Inventory” as applicable (and vice versa) or (ii) any reserves deducted in computing book value and (z) the amount of any such reserve so established or the effect of any adjustment or imposition of exclusionary criteria be a reasonable quantification of the incremental dilution of the Borrowing Base attributable to such contributing factors.
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“Permitted Holders” shall mean (i) Platinum and Platinum Affiliates, (ii) any Permitted Transferee of any of the foregoing Persons, or (iii) any “group” (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act or any successor provision) of which any of the foregoing are members; provided that in the case of such “group” and without giving effect to the existence of such “group” or any other “group,” such Persons specified in clauses (i), (ii) or (iii) above, collectively, have beneficial ownership, directly or indirectly, of more than 50% of the total voting power of the voting Equity Interests of Holdings or any of its direct or indirect parent entities held by such “group,”.
“Permitted Junior Debt” shall mean and include (i) any Permitted Junior Notes and (ii) any Permitted Junior Loans.
“Permitted Junior Debt Documents” shall mean and include the Permitted Junior Notes Documents and the Permitted Junior Loan Documents.
“Permitted Junior Loan Documents” shall mean, after the execution and delivery thereof, each agreement, document or instrument relating to the incurrence of Permitted Junior Loans, in each case as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.
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“Permitted Junior Loans” shall mean any Indebtedness of the Lead Borrower or any Restricted Subsidiary in the form of unsecured or secured loans; provided that in any event, unless the Required Lenders otherwise expressly consent in writing prior to the issuance thereof, (i) no such Indebtedness, to the extent incurred by any Credit Party, shall be guaranteed by any Person other than the Borrowers or Guarantors, (ii) no such Indebtedness shall be subject to scheduled amortization or have a final maturity (excluding for this purpose, interim loan financings that provide for automatic rollover, subject to customary conditions, to Indebtedness otherwise meeting the maturity requirements of this clause), in either case prior to the date occurring ninety-one (91) days following the Latest Maturity Date as of the date such Indebtedness was incurred or shall have a Weighted Average Life to Maturity of less than the Weighted Average Life to Maturity as then in effect for any other Revolving Loans then outstanding, (iii) in the case of any such Indebtedness incurred by a Credit Party (a) in the case of secured Indebtedness, that is secured by some or all of the assets comprising Collateral (as defined in the applicable Security Documents) such Indebtedness must be secured on a junior-lien basis relative to the Liens on such Collateral securing the Obligations of the Credit Parties, (b) the security agreements relating to such Indebtedness are substantially the same (as to Collateral) as the applicable Security Documents (with such differences as are reasonably satisfactory to the Administrative Agent) and (c) a Junior Representative acting on behalf of the holders of such Indebtedness shall have become party to the Intercreditor Agreement as “Additional Cash Flow Obligations” thereunder or, if the Intercreditor Agreement is no longer in effect, the Additional Intercreditor Agreement; provided that if such Indebtedness is the initial incurrence of Permitted Junior Debt by the Lead Borrower that is secured by assets of the Lead Borrower or any of other Credit Party on a basis junior to the Obligations and the obligations under the Senior Notes or any refinancing of the Senior Notes, then the Credit Parties, the Administrative Agent, the Collateral Agent and the Junior Representative for such Indebtedness shall have executed and delivered the Additional Intercreditor Agreement and (iv) in respect of any such Indebtedness of a Credit Party, the covenants and events of default, taken as a whole, contained in the agreement governing such Indebtedness shall not be materially more favorable to the lenders of the Permitted Junior Loans than those with respect to this Agreement; provided that (x) any such covenants and events of default may be materially more favorable to the extent they take effect after the Latest Maturity Date as of the date such Indebtedness was incurred and (y) in the event that any agreement evidencing such Indebtedness contains financial maintenance covenants that are effective prior to the Latest Maturity Date as of the date such Indebtedness was incurred, the Borrowers shall have offered in good faith to enter into an amendment to this Agreement to add any such financial covenants as are not then contained in this Agreement (provided that a certificate of a Responsible Officer of Lead Borrower delivered to the Administrative Agent at least five Business Days prior to the incurrence of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that Lead Borrower has determined in good faith that such terms and conditions satisfy the requirement set out in the foregoing clause (iv), shall be conclusive evidence that such terms and conditions satisfy such requirement unless the Administrative Agent provides notice to Lead Borrower of an objection during such five Business Day period (including a reasonable description of the basis upon which it objects)).
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“Permitted Junior Notes Documents” shall mean, after the execution and delivery thereof, each Permitted Junior Notes Indenture, and the Permitted Junior Notes, in each case as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.
“Permitted Junior Notes Indenture” shall mean any indenture or similar agreement entered into in connection with the issuance of Permitted Junior Notes, as the same may be amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.
“Permitted Liens” shall have the meaning provided in Section 10.01.
“Permitted Receivables Transaction” shall mean a transaction entered in the ordinary course of business or consistent with past practice by any Borrower or any U.S. or Canadian Subsidiary under a Qualified Receivables Program and pursuant to which such Borrower or such U.S. or Canadian Subsidiary agrees to assign to a Qualified Receivables Counterparty its right, title and interest in and to all or a portion of such Borrower’s or such U.S. or Canadian Subsidiary’s Accounts owing from an Account Debtor; provided that, in connection therewith, all of the following conditions are satisfied as reasonably determined by the Administrative Agent: (i) the applicable Borrower or the applicable U.S. or Canadian Subsidiary provides written notice to the Administrative Agent of its intent to enter into such factoring transaction not less than ten (10) Business Days prior to (or such later date as agreed to by the Administrative Agent) execution of the definitive documentation relating thereto and, promptly after the execution thereof, provides to the Administrative Agent copies of all Receivables Documents executed or delivered in connection therewith; (ii) pursuant to the applicable Receivables Documents, to the extent applicable, such Borrower or such U.S. or Canadian Subsidiary does not grant (and the Qualified Receivables Counterparty does not otherwise obtain) any Liens on any Collateral other than Receivables Transaction Assets arising from such Borrower’s or such U.S. or Canadian Subsidiary’s sale of Inventory or provision of services to the applicable Account Debtor; (iii) [reserved]; (iv) no Event of Default has occurred and is continuing at the time of the applicable Borrower’s or the applicable U.S. or Canadian Subsidiary’s execution of the applicable Receivables Documents and no Event of Default would occur as a result thereof; (v) any Borrowing Base Certificate delivered to the Administrative Agent after such Borrower or such U.S. or Canadian Subsidiary has executed the applicable Receivables Documents shall, in the case of a Qualified Receivables Program of the type described in clause (i) of the definition thereof, to the extent sold by such Borrower or such U.S.
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or Canadian Subsidiary, reflect all Accounts owing by the Qualified Account Debtor as Ineligible Accounts or in the case of other Qualified Receivables Programs, reflect all transferred Accounts as Ineligible Accounts, and in each case the applicable Borrower shall deliver a pro forma Borrowing Base Certificate for the latest available reporting period under Section 9.17(a) to the Administrative Agent upon entering into any such program and (vi) the Lead Borrower shall provide the Administrative Agent upon delivery of each scheduled Borrowing Base with a schedule (and periodic updates thereto) listing the Receivables Transaction Assets.
“Permitted Restricted Cash” shall mean any cash and Cash Equivalents of Lead Borrower and its Restricted Subsidiaries restricted solely in favor of or pursuant to (x) any Credit Document or any Senior Notes Document and (y) any Permitted Junior Debt Document, in the case of this clause (y), to the extent such cash and Cash Equivalents also secure the Indebtedness hereunder on a senior priority basis.
“Permitted Transferees” shall mean (i) any Platinum Affiliate, (ii) any managing director, general partner, limited partner, director, officer or employee of Platinum or any Platinum Affiliate (collectively, the “Platinum Associates”), (iii) the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any Platinum Associate and (iv) any trust, the beneficiaries of which, or a corporation or partnership, the stockholders or partners of which, include only a Platinum Associate, his or her spouse, parents, siblings, members of his or her immediate family (including adopted children and stepchildren) and/or direct lineal descendants.
“Plan” shall mean an employee benefit plan (as defined in Section 3(3) of ERISA) that is maintained or contributed to by a Borrower or any Subsidiary (or with respect to an employee benefit plan subject to Title IV of ERISA, a Borrower, or any Person for which any Borrower may have any direct or indirect liability) or with respect to which a Borrower or a Subsidiary could incur liability, other than a Canadian Benefit Plan. For greater certainty, “Plan” does not include any Canadian Benefit Plan or Canadian Pension Plan.
“Platinum” shall mean Platinum Equity Advisors, LLC.
“Platinum Affiliate” shall mean the collective reference to any entities (other than a portfolio company) controlled directly or indirectly by Platinum.
“PPSA” shall mean the Personal Property Security Act (Ontario) and the regulations thereunder; provided, however, if validity, perfection and effect of perfection and non-perfection of the Collateral Agent’s Lien on any applicable Collateral are governed by the personal property security laws of any Canadian jurisdiction other than Ontario, PPSA shall mean those personal property security laws (including the Civil Code of Quebec) in such other jurisdiction for the purposes of the provisions hereof relating to such validity, perfection and effect of perfection and non-perfection and for the definitions related to such provisions, as from time to time in effect.
“Pro Forma Basis” shall mean, in connection with any calculation of compliance with any financial term, the calculation thereof after giving effect on a pro forma basis to (w) the incurrence of any Indebtedness (other than revolving Indebtedness, except to the extent the same is incurred to refinance other outstanding Indebtedness or to finance a Permitted Acquisition)
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after the first day of the relevant Test Period as if such Indebtedness had been incurred (and the proceeds thereof applied) on the first day of the relevant Test Period, (x) the permanent repayment of any Indebtedness (other than revolving Indebtedness except to the extent accompanied by a corresponding permanent commitment reduction) after the first day of the relevant Test Period as if such Indebtedness had been retired or redeemed on the first day of the relevant Test Period, (y) any disposition of assets constituting a business, division, product line, manufacturing facility or distribution facility of the Lead Borrower or any of its Restricted Subsidiaries or of the Equity Interests of any Subsidiary of the Lead Borrower and/or (z) the Permitted Acquisition, if any, then being consummated as well as any other Permitted Acquisition consummated after the first day of the Test Period most recently ended prior to the date of any such Permitted Acquisition for which Section 9.01 Financials are available and on or prior to the date of the Permitted Acquisition then being effected, as the case may be, with the following rules to apply in connection therewith:
(i) all Indebtedness (x) (other than revolving Indebtedness, except to the extent the same is incurred to refinance other outstanding Indebtedness or to finance a Permitted Acquisition) incurred or issued after the first day of the relevant Test Period (whether incurred to finance a Permitted Acquisition, to refinance Indebtedness or otherwise) shall be deemed to have been incurred or issued (and the proceeds thereof applied) on the first day of the respective Test Period and remain outstanding through the date of determination and (y) (other than revolving Indebtedness except to the extent accompanied by a corresponding permanent commitment reduction) permanently retired or redeemed after the first day of the relevant Test Period shall be deemed to have been retired or redeemed on the first day of the respective Test Period and remain retired through the date of determination;
(ii) all Indebtedness assumed to be outstanding pursuant to the preceding clause (i) shall be deemed to have borne interest at (x) the rate applicable thereto, in the case of fixed rate indebtedness, or (y) at the rate which would have been applicable thereto on the last day of the respective Test Period, in the case of floating rate Indebtedness (although interest expense with respect to any Indebtedness for periods while the same was actually outstanding during the respective period shall be calculated using the actual rates applicable thereto while the same was actually outstanding);
(iii) in making any determination of Consolidated EBITDA, pro forma effect shall be given to any disposition of assets constituting a business, division, product line, manufacturing facility or distribution facility of the Lead Borrower or any other Restricted Subsidiary of the Lead Borrower or of the Equity Interests of any Subsidiary of the Lead Borrower consummated during the periods described above, with such Consolidated EBITDA to be determined as if such disposition (or the relevant portion thereof) was consummated on the first day of the relevant Test Period. Pro forma calculations for any fiscal period ending on or prior to the first anniversary of a disposition of assets constituting a business, division, product line, manufacturing facility or distribution facility of the Lead Borrower or any other Restricted Subsidiary of the Lead Borrower or of the Equity Interests of any Subsidiary of the Lead Borrower may offset operating expense reductions or other operating improvements or synergies reasonably expected to result from a disposition (less the amount of costs reasonably expected to be incurred by the Lead Borrower and any Restricted Subsidiaries to achieve such cost savings) against reductions in Consolidated EBITDA attributable to such a disposition, to the extent that the Lead Borrower delivers to the Administrative Agent (i) a certificate of the chief financial officer of the Lead Borrower setting forth such operating expense reductions and the costs to achieve such reductions and (ii) information and calculations supporting in reasonable detail such estimated operating expense reductions and the costs to achieve such reductions; provided that any increase in Consolidated EBITDA as a result of cost savings, operating expense reductions, other operating improvements and synergies shall be subject to the limitations set forth in the definition of Consolidated EBITDA;
(iv) in making any determination of Consolidated EBITDA, pro forma effect shall be given to any Permitted Acquisition consummated during the periods described above (excluding that portion of the assets or business acquired pursuant to any Permitted Acquisition which has been sold or disposed of thereafter and prior to the date of the respective determination), with such Consolidated EBITDA to be determined as if such Permitted Acquisition (or the relevant portion thereof) was consummated on the first day of the relevant Test Period.
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Pro forma calculations for any fiscal period ending on or prior to the first anniversary of a Permitted Acquisition may include adjustments to reflect operating expense reductions or other operating improvements or synergies reasonably expected to result from such Permitted Acquisition, less the amount of costs reasonably expected to be incurred by the Lead Borrower and any Restricted Subsidiaries to achieve such cost savings, to the extent that the Lead Borrower delivers to the Administrative Agent (i) a certificate of the Responsible Officer of the Lead Borrower setting forth such operating expense reductions and the costs to achieve such reductions and (ii) information and calculations supporting in reasonable detail such estimated operating expense reductions and the costs to achieve such reductions; provided that any increase in Consolidated EBITDA as a result of cost savings, operating expense reductions, other operating improvements and synergies shall be subject to the limitations set forth in the definition of Consolidated EBITDA; and
(v) in making any determination of the Consolidated Fixed Charge Coverage Ratio, in the event that the Lead Borrower or any Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than in the case of revolving credit borrowings, in which case interest expense will be computed based upon the average daily balance of such Indebtedness during the Test Period), subsequent to the commencement of the period for which the Consolidated Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Consolidated Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Consolidated Fixed Charge Coverage Ratio will be calculated on a Pro Forma Basis as if such incurrence, assumption, guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, and the use of the proceeds therefrom, had occurred at the beginning of the Test Period.
For purposes of this definition, if any Indebtedness bears a floating rate of interest and is being calculated on a Pro Forma Basis, the interest on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period (taking into account any hedging obligations applicable to such Indebtedness if such hedging obligations have a remaining term in excess of 12 months as of the Calculation Date). For purposes of this definition, interest on a Finance Lease Obligation will be deemed to accrue at an interest rate reasonably determined by a Responsible Officer of the Lead Borrower to be the rate of interest implicit in such Finance Lease Obligation in accordance with U.S. GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis will be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, will be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Lead Borrower may designate.
“Properly Contested” shall mean in the case of any obligation of a Borrower or Canadian Credit Party for Taxes or other governmental assessments or claims that could result in a Lien, which is not paid as and when due or payable by reason of such Borrower’s or Canadian Credit Party’s bona fide dispute concerning its liability to pay same or concerning the amount thereof, (i) such obligation is being properly contested in good faith by appropriate proceedings promptly instituted and diligently conducted; (ii) such Borrower or Canadian Credit Party has established appropriate reserves as shall be required in conformity with U.S.
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GAAP; (iii) the non-payment of such obligation, individually or in the aggregate with other non-payment of obligations due and payable, will not have a Material Adverse Effect and will not result in a forfeiture of any assets of such Borrower or Canadian Credit Party; (iv) no Lien is imposed upon any of such Borrower’s or Canadian Credit Party’s assets with respect to such obligation unless such Lien is at all times junior and subordinate in priority to the Liens in favor of the Agents (except only with respect to property taxes and other payables that have priority as a matter of Applicable Law and with respect to Liens securing obligations that do not exceed in the aggregate with respect to all such obligations $2,000,000 per fiscal year, unless otherwise consented to by the Administrative Agent in its sole discretion) or enforcement of such Lien is stayed (or if such obligation is fully bonded, no enforcement action has been commenced against any of the Collateral) during the period prior to the final resolution or disposition of such dispute; (v) if the obligation results from, or is determined by the entry, rendition or issuance against a Borrower or Canadian Credit Party or any of its assets of, a judgment, writ, order or decree, enforcement of such judgment, writ, order or decree is stayed pending a timely appeal or other judicial review or if such obligation is fully bonded, no enforcement action has been commenced against any of the Collateral; and (vi) if such contest is abandoned, settled or determined adversely (in whole or in part) to such Borrower or Canadian Credit Party, such Borrower or Canadian Credit Party forthwith pays such obligation and all penalties, interest and other amounts due in connection therewith.
“Property” shall mean any interest in any kind of property or asset, whether real, personal or mixed and whether tangible or intangible.
“Pro Rata Percentage” of any Lender at any time shall mean either (i) the percentage of the total Non-FILO Revolving Commitments represented by such Lender’s Non-FILO Revolving Commitment, or (ii) the percentage of the total FILO Commitments represented by such Lender’s FILO Commitment, as applicable.
“Pro Rata Share” shall mean, with respect to each Lender at any time, (i) a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Aggregate Exposure of such Lender at such time and the denominator of which is the aggregate amount of all Aggregate Exposures at such time, (ii) a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the U.S. Revolving Exposure of such Lender at such time and the denominator of which is the aggregate amount of all U.S. Revolving Exposures at such time, (iii) a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the Canadian Revolving Exposure of such Lender at such time and the denominator of which is the aggregate amount of all Canadian Revolving Exposures at such time or (iv) a fraction (expressed as a percentage, carried out to the ninth decimal place), the numerator of which is the amount of the FILO Exposure of such Lender at such time and the denominator of which is the aggregate amount of all FILO Exposures at such time, as applicable. The initial Pro Rata Shares of each Lender are set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and Assumption Agreement pursuant to which such Lender becomes a party hereto, as applicable.
“Protective Advance” shall have the meaning assigned to such term in Section 2.18.
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“PTE” shall mean a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.
“Qualified Account Debtor” shall mean an Account Debtor specified on Schedule 1.01D or otherwise reasonably acceptable to the Administrative Agent.
“Qualified Accounts” shall mean, with respect to any Borrower or Canadian Credit Party, all Accounts that are directly created by such Borrower or Canadian Credit Party in the ordinary course of business arising out of the sale of goods or rendition of services by such Borrower or Canadian Credit Party and for which an invoice has been sent to the applicable Account Debtor; provided that, except during a period of 90 days after a business acquisition with respect to Accounts acquired in such business acquisition that, taken together with Qualified Inventory acquired in such business acquisition, do not exceed 15% of the applicable Borrowing Base immediately prior to such business acquisition, no Accounts acquired in connection with a business acquisition shall be considered for inclusion as Qualified Accounts until the Acquired Accounts Eligibility Requirement with respect to such Accounts shall have been satisfied.
“Qualified Appraisal” shall mean for the purpose of determining the net orderly liquidation value of Eligible Inventory on any date, a written appraisal that is prepared by a Qualified Appraiser, that sets forth the Qualified Appraiser’s estimate of the net orderly liquidation value (net of, among other things, liquidation expenses) of the Eligible Inventory that is the subject of the appraisal and that provides an evaluation opinion as of the date that is no earlier than ninety (90) days prior to the date on which such appraisal is delivered; provided that the Lead Borrower may request (but no more than once per calendar year), subject to the Administrative Agent’s consent not to be unreasonably withheld, that the Administrative Agent obtain an additional written appraisal that meets the criteria of a Qualified Appraisal prepared by a Qualified Appraiser at the sole cost and expense of the Lead Borrower and the net orderly liquidation value of Eligible Inventory shall be determined in accordance with such additional Qualified Appraisal.
“Qualified Appraiser” shall mean a Person (other than an officer, agent, director, employee or Affiliate of a Borrower) who has sufficient qualifications, experience and credentials to give an evaluation opinion with respect to Collateral and who is otherwise satisfactory to the Collateral Agent in its Permitted Discretion in consultation with the Lead Borrower.
“Qualified Cash” shall mean cash on any date of determination held by any Credit Party and maintained in a Deposit Account of a Lender located in the United States or Canada, subject to a Deposit Account Control Agreement and subject to the Collateral Agent’s first priority perfected Lien (subject only to Permitted Liens) less, at the Administrative Agent’s discretion solely after the occurrence and during the continuation of a Liquidity Period, the aggregate amount of all cash received in respect of Accounts (excluding, to the extent it can be traced as such, cash received and identifiable with respect to Ineligible Accounts) but not yet applied to reduce the amount of Accounts.
“Qualified ECP Guarantor” shall mean, at any time, each Credit Party with total assets exceeding $10,000,000 or that qualifies at such time as an “eligible contract participant”
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under the Commodity Exchange Act and can cause another person to qualify as an “eligible contract participant” at such time under § 1a(18)(A)(v)(II) of the Commodity Exchange Act.
“Qualified Inventory” shall mean, with respect to any Borrower or Canadian Credit Party, all Inventory that is owned solely by such Borrower or Canadian Credit Party and as to which such Borrower or Canadian Credit Party has good, valid and marketable and (subject to the immediately succeeding sentence) unencumbered title; provided that, except during a period of 90 days after a business acquisition with respect to Inventory acquired in such business acquisition that, taken together with Qualified Accounts acquired in such business acquisition, does not exceed 15% of the applicable Borrowing Base immediately prior to such business acquisition, no Inventory acquired in connection with a business acquisition shall be considered for inclusion as Qualified Inventory until the Acquired Inventory Eligibility Requirement with respect to such Inventory shall have been satisfied. For the avoidance of doubt, “Qualified Inventory” (a) excludes Inventory in which any Person other than the owner Borrower or Canadian Credit Party has any direct or indirect ownership interest or title and (b) excludes Inventory that is subject to any Lien other than Liens permitted pursuant to Sections 10.01(i), (iv)(x), (x), (xi), (xx) and (xxvii)(x)-(y).
“Qualified Preferred Stock” shall mean any preferred capital stock of the Lead Borrower so long as the terms of any such preferred capital stock (x) do not contain any mandatory put, redemption, repayment, sinking fund or other similar provision prior to the 91st day after the Latest Maturity Date then in effect other than (i) provisions requiring payment solely in the form of common Equity Interests of the Lead Borrower or Holdings or Qualified Preferred Stock, (ii) provisions requiring payment solely as a result of a change of control or asset sale, so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale are subject to the payment in full of all Obligations in cash (other than unasserted contingent indemnification obligations) or such payment is otherwise permitted by this Agreement (including as a result of a waiver or amendment hereunder) and (iii) with respect to preferred capital stock issued to any plan for the benefit of employees of the Lead Borrower or any Subsidiaries or by any such plan to such employees, provisions requiring the repurchase thereof in order to satisfy applicable statutory or regulatory obligations and (y) do not require the cash payment of dividends or distributions at any time that such cash payment is not permitted under this Agreement or would result in an Event of Default hereunder.
“Qualified Receivables Counterparty” shall mean each bank or other financial institution set forth in Schedule 1.01E, or any other bank or financial institution reasonably satisfactory to the Administrative Agent.
“Qualified Receivables Program” shall mean (i) a financing program sponsored by a Qualified Account Debtor in partnership with one or more Qualified Receivables Counterparties under which each participating supplier of such Qualified Account Debtor or (ii) an accounts receivable factoring program with one or more Qualified Receivables Counterparties under which one or more Credit Parties, in either case may in its sole discretion sell, convey, transfer or assign from time to time, all or a portion of its Receivables Transaction Assets to such Qualified Receivables Counterparty(ies) on mutually-agreed terms and conditions; provided that such transaction shall be non-recourse to the applicable Credit Party other than in connection with customary repurchase obligations other than as a result of the uncreditworthiness of the applicable Account Debtor.
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“RCRA” shall mean the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901-6992k) and all rules and regulations promulgated pursuant thereto.
“Real Property” of any Person shall mean, collectively, the right, title and interest of such Person (including any leasehold, mineral or other estate) in and to any and all land, improvements and fixtures owned, leased or operated by such Person, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof.
“Receivables Documents” shall mean collectively, any financing agreement or accounts receivable purchase agreement, service agreement and all other related documents and instruments entered into among, or executed by, the Borrowers or any U.S. or Canadian Subsidiary, a Qualified Account Debtor and/or a Qualified Receivables Counterparty in connection with the relevant Qualified Receivables Program, on terms and conditions generally consistent with similar arrangements, established by such Qualified Account Debtor for its other suppliers in the same or similar business as such Borrower or such U.S. or Canadian Subsidiary under such Qualified Receivables Program or otherwise reasonably satisfactory to the Administrative Agent, in each case of the foregoing, as amended, supplemented or otherwise modified from time to time in a manner not materially adverse in the interests of the Lenders.
“Receivables Transaction Assets” shall mean in connection with any Permitted Receivables Transaction, Accounts owing by the applicable Account Debtor, together with all proceeds thereof (including “proceeds” as defined in the UCC or the PPSA, as applicable) and all rights of the seller of such Accounts to enforce such rights to reimbursement constituting such Accounts.
“Recovery Event” shall mean the receipt by the Lead Borrower or any Restricted Subsidiaries of any cash insurance proceeds or condemnation or expropriation awards payable (i) by reason of theft, loss, physical destruction, damage, taking or any other similar event with respect to any property or assets of the Lead Borrower or any Restricted Subsidiaries (but not by reason of any loss of revenues or interruption of business or operations caused thereby) and (ii) under any policy of insurance required to be maintained under Section 9.03, in each case to the extent such proceeds or awards do not constitute reimbursement or compensation for amounts previously paid by the Lead Borrower or any Restricted Subsidiaries in respect of any such event.
“Register” shall have the meaning provided in Section 13.15.
“Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof establishing reserve requirements.
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“Regulation T” shall mean Regulation T of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
“Regulation U” shall mean Regulation U of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
“Regulation X” shall mean Regulation X of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.
“Release” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing or migrating of any Hazardous Material in, into, onto or through the Environment.
“Relevant Guaranteed Obligations” shall mean (x) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of the unpaid principal and interest on each Note issued by, and all Loans made to each Borrower under this Agreement, together with all the other obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code (or any similar provision of any other applicable bankruptcy law), would become due), indebtedness and liabilities (including, without limitation, indemnities, fees, expenses, and interest (including any interest, fees, and expenses accruing after the commencement of any bankruptcy, insolvency, receivership or similar case or proceeding at the rate provided for herein, whether or not such interest, fees, and expenses is an allowed or allowable claim in any such case or proceeding) thereon) of each Borrower to the Lenders, the Administrative Agent and the Collateral Agent now existing or hereafter incurred under, arising out of or in connection with this Agreement and each other Credit Document (other than the Intercreditor Agreement) to which each Borrower is a party and the due performance and compliance by the Borrowers with all the terms, conditions and agreements contained in this Agreement and in each such other Credit Document (other than the Intercreditor Agreement) and (y) the full and prompt payment when due (whether at the stated maturity, by acceleration or otherwise) of all obligations (including obligations which, but for the automatic stay under Section 362(a) of the Bankruptcy Code (or any similar provision of any other applicable bankruptcy law), would become due), liabilities and indebtedness (including any interest, fees, and expenses accruing after the commencement of any bankruptcy, insolvency, receivership or similar case or proceeding at the rate provided for herein, whether or not such interest, fees, and expenses is an allowed or allowable claim in any such case or proceeding) of such Borrower or any Restricted Subsidiaries owing under any Secured Bank Product Obligation and the due performance and compliance with all terms, conditions and agreements contained therein; provided, however, that for purposes of the Credit Party Guaranty and each other guarantee agreement or other instrument or document executed and delivered pursuant to this Agreement, the term “Obligations” shall not, as to any Guarantor, include any Excluded Swap Obligations.
“Relevant Guaranteed Party” shall mean with respect to any Credit Party, any other Credit Party.
“Replaced Lender” shall have the meaning provided in Section 3.04.
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“Replacement Lender” shall have the meaning provided in Section 3.04.
“Reportable Event” shall mean any of the events set forth in Section 4043(b) of ERISA (other than an event for which the 30 day notice period is waived by regulation).
“Required Lenders” shall mean Non-Defaulting Lenders holding more than 50% of the sum of the (i) total Outstanding Amount (with the aggregate amount of each Lender’s risk participation and funded participation in LC Obligations and Swingline Loans being deemed “held” by such Lender for purposes of this definition) and (ii) aggregate unused Commitments, held by Non-Defaulting Lenders at such time as of any date of determination.
“Requirement of Law” shall mean, with respect to any Person, (i) the charter, articles or certificate of organization or incorporation and bylaws or other organizational or governing documents of such Person and (ii) any statute, law, treaty, rule, regulation, order, decree, writ, official administrative pronouncement, injunction or determination of any arbitrator or court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.
“Reserves” shall mean, on any date of determination thereof and with respect to the U.S. Borrowing Base, FILO Borrowing Base or Canadian Borrowing Base, as the case may be, an amount equal to the sum of the following (without duplication): (i) the Inventory Reserves; (ii) all amounts of past due rent, fees or other charges owing at such time by any U.S. Credit Party or any Canadian Credit Party, as applicable, (a) to any landlord of any premises where any of the Collateral is located or (b) to any repairman, mechanic or other Person (other than a landlord, Outside Processor or Third-Party Warehouseman) who is in possession of any Collateral or has asserted any Lien or claim thereto; (iii) any amounts which any U.S. Credit Party or any Canadian Credit Party, as applicable, are obligated to pay pursuant to the provisions of any of the Credit Documents that the Administrative Agent or any Lender elects to pay for the account of any U.S. Credit Party or any Canadian Credit Party, as applicable, in accordance with authority contained in any of the Credit Documents; (iv) the aggregate amount of reserves established by the Collateral Agent in its Permitted Discretion in respect of Bank Product Debt (other than Cash Management Services); (v) the aggregate amount of all liabilities and obligations that are secured by Liens upon any of the Collateral that are senior in priority to the applicable, Agent’s Liens if such Liens are not Permitted Liens (provided that the imposition of a reserve hereunder on account of such Liens shall not be deemed a waiver of the Event of Default that arises from the existence of such Liens); (vi) the Dilution Reserve; (vii) the Canadian Priority Payables Reserve; and (viii) notwithstanding anything in this “Reserves” definition to the contrary, such other or additional reserves, in such amounts and with respect to such matters, as the Collateral Agent in its Permitted Discretion may elect to impose from time to time.
Notwithstanding anything to the contrary in this Agreement, (i) such Reserves shall not be established or changed except upon not less than three (3) Business Days’ prior written notice to the Lead Borrower, which notice shall include a reasonably detailed description of such Reserve being established (during which period (a) the Administrative Agent shall, if requested, discuss any such Reserve or change with the Lead Borrower and (b) the Lead Borrower may take such action as may be required so that the event, condition or matter that is the basis for such Reserve or change thereto no longer exists or exists in a manner that would result in the establishment of a lower Reserve or result in a lesser change thereto, in a manner and to the extent reasonably satisfactory to the Administrative Agent), and (ii) the amount of any Reserve established by the Agents, and any change in the amount of any Reserve, shall have a reasonable relationship to the event, condition or other matter that is the basis for such Reserve or such change.
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Notwithstanding clause (i) of the preceding sentence, changes to the Reserves solely for purposes of correcting mathematical or clerical errors shall not be subject to such notice period, it being understood that no Default or Event of Default shall be deemed to result therefrom, if applicable, for a period of three (3) Business Days.
“Resolution Authority” shall mean an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Response” shall mean (a) ”response” as such term is defined in CERCLA, 42 U.S.C. § 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily undertaken to (i) investigate, clean up, remove, treat, abate, monitor or in any other way address any Hazardous Material in the Environment; (ii) prevent the Release or threat of Release, or minimize the further Release, of any Hazardous Material; or (iii) perform studies and investigations in connection with, or as a precondition to, clause (i) or (ii) above.
“Responsible Officer” shall mean, with respect to any Person, its chief executive officer, president, chief financial officer or any vice president, managing director, director, treasurer or assistant treasurer, controller, secretary or assistant secretary or other officer of such Person having substantially the same authority and responsibility and, solely for purposes of notices given pursuant to Article 2, any other officer or employee of the applicable Credit Party so designated by any of the foregoing officers in a notice to the Administrative Agent or any other officer or employee of the applicable Credit Party designated in or pursuant to an agreement between the applicable Credit Party and the Administrative Agent; provided that, with respect to compliance with financial covenants, “Responsible Officer” shall mean the chief executive officer, chief financial officer, treasurer or controller of the Lead Borrower, or any other officer of the Lead Borrower having substantially the same authority and responsibility.
“Restricted Subsidiary” shall mean each Subsidiary of the Lead Borrower other than any Unrestricted Subsidiary. The Subsidiary Borrowers, U.S. Subsidiary Guarantors and the Canadian Credit Parties shall at all times constitute Restricted Subsidiaries.
“Restructuring Memo” shall mean that certain restructuring steps memo provided by Ernst & Young LLP, dated as of May 15, 2015 and delivered to the Administrative Agent on or prior to the Closing Date.
“Returns” shall have the meaning provided in Section 8.09.
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“Revaluation Date” shall mean (a) with respect to any Loan, each of the following: (i) each date of a Borrowing of a Term SOFR Loan denominated in Dollars or a Term CORRA Loan denominated in Canadian Dollars, (ii) each date of a continuation of a Term SOFR Loan denominated in Dollars or a Term CORRA Loan denominated in Canadian Dollars pursuant to Section 2.02, and (iii) such additional dates as the Administrative Agent shall determine or the Required Lenders shall require; and (b) with respect to any Letter of Credit, each of the following: (i) each date of issuance of a Letter of Credit denominated in Canadian Dollars, (ii) each date of an amendment of any such Letter of Credit having the effect of increasing the amount thereof, (iii) each date of any payment by the applicable Issuing Bank under any Letter of Credit denominated in Canadian Dollars and (iv) such additional dates as the Administrative Agent or the Issuing Banks shall determine or the Required Lenders shall require.
“Revolving Availability Period” shall mean the period from and including the Closing Date to but excluding the earlier of the Maturity Date and the date of termination of the Revolving Commitments.
“Revolving Borrowing” shall mean a Canadian Revolving Borrowing, a U.S. Revolving Borrowing and/or a FILO Borrowing.
“Revolving Commitment” shall mean the Non-FILO Revolving Commitment and/or the FILO Commitment, if any.
“Revolving Commitment Increase” shall have the meaning provided in Section 2.15(a).
“Revolving Exposure” shall mean the Canadian Revolving Exposure, the U.S. Revolving Exposure and/or the FILO Exposure, as the context requires.
“Revolving Loans” shall mean Canadian Revolving Loans, U.S. Revolving Loans, FILO Loans, Protective Advances and/or Overadvance Loans.
“Revolving Note” shall mean each revolving note substantially in the form of Exhibit B-1 hereto.
“Ryerson 2014 Omnibus Plan” shall mean the Ryerson Holding Corporation 2014 Omnibus Incentive Plan filed as Exhibit 10.12 to Ryerson Holding Corporation’s registration statement on Form S-1 filed on August 7, 2014.
“S&P” shall mean Standard & Poor’s Ratings Services, a division of the McGraw Hill Company, Inc., and any successor owner of such division.
“Schedule of Accounts” shall have the meaning provided in Section 9.17(b).
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“SEC” shall have the meaning provided in Section 9.01(h).
“Section 9.01 Financials” shall mean the quarterly and annual financial statements required to be delivered pursuant to Sections 9.01(a) and (b).
“Secured Bank Product Obligations” shall mean Bank Product Debt owing to a Secured Bank Product Provider, up to the maximum amount (in the case of any Secured Bank Product Provider other than Bank of America, N.A. and its Affiliates or branches) specified by such provider in writing to the Administrative Agent, which amount may be established or increased (by further written notice by either the Lead Borrower or the applicable Secured Bank Product Provider to the Administrative Agent from time to time) as long as no Default or Event of Default then exists and no Overadvance would result from establishment of a Reserve for such amount and all other Secured Bank Product Obligations.
“Secured Bank Product Provider” shall mean, at the time of entry into a Bank Product (or, if such Bank Product exists on the Closing Date, as of the Closing Date) the Administrative Agent, any Lender or any of their respective Affiliates or branches that is providing a Bank Product; provided such provider delivers written notice to the Administrative Agent, in form and substance satisfactory to the Administrative Agent, by the later of the Closing Date or ten (10) days following creation of the Bank Product (or such later date as agreed to by the Administrative Agent in its sole discretion), (i) describing the Bank Product and setting forth the maximum amount to be secured by the Collateral and the methodology to be used in calculating such amount, and (ii) agreeing to be bound by Section 12.12.
“Secured Creditors” shall mean, collectively, the Administrative Agent, the Collateral Agent, each other Agent, the Lenders, the Issuing Banks and each Secured Bank Product Provider.
“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Securities Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Security Agreement” shall mean the Canadian Security Agreement and/or the U.S. Security Agreement, as the context may require.
“Security Document” shall mean and include each of the Security Agreements, the Deposit Account Control Agreements and, after the execution and delivery thereof, each Additional Security Document and each other security agreement or other instrument or document executed and delivered by any Credit Party to the Collateral Agent pursuant to this Agreement or any other Credit Document granting a Lien to secure any of the Obligations.
“Senior Notes” shall mean the $500,000,000 of senior secured notes issued by the Lead Borrower pursuant to the Senior Notes Documents.
“Senior Notes Documents” shall mean the Senior Notes, the Senior Notes Indenture and all other documents executed and delivered with respect to the Senior Notes or Senior Notes Indenture, as in effect on the Amendment No.
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5 Effective Date and as the same may be amended, modified and/or supplemented from time to time in accordance with the terms hereof and thereof.
“Senior Notes Indenture” shall mean the Indenture, dated as of July 22, 2020, between Joseph T. Ryerson & Son, Inc., as issuer, and Wells Fargo Bank, National Association, as trustee and as collateral agent, as the same may be modified, amended or supplemented from time to time in accordance with the terms hereof and thereof.
“Shorts Inventory” shall mean, with respect to any Credit Party, Qualified Inventory classified by such Credit Party as partial Inventory pieces, on the basis that the Inventory has been cut below sales lengths customary for such Credit Party’s Qualified Inventory.
“Similar Business” shall mean any business and any services, activities or businesses incidental, or reasonably related or similar to, or complementary to any line of business engaged in by the Lead Borrower and any Restricted Subsidiary on the Amendment No. 5 Effective Date or any business activity that is a reasonable extension, development or expansion thereof or ancillary thereto.
“Slow Moving Inventory” shall mean with respect to any Credit party, an amount equal to the Value of such Credit Party’s Qualified Inventory classified by such Credit Party as stock inventory (measured on a stock keeping unit by stock keeping unit basis) (A) that (i) has not been sold or processed within a 180 day period and (ii) which is calculated to have more than 365 days of supply based upon the immediately preceding 6 months of consumption, or (B) to the extent days of supply data in (ii) above is not available then an amount equal to the Value of such Credit Party’s Qualified Inventory classified by such Credit Party as stock inventory (measured on a stock keeping unit by stock keeping unit basis) which has not been sold or processed within the prior 365 day period.
“SOFR” shall mean the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (or a successor administrator).
“SOFR Adjustment” shall mean, with respect to Daily Simple SOFR and Term SOFR, 0.10% (10 basis points).
“Solvent” shall mean as to any Person, such Person (i) owns Property whose fair value and present fair saleable value is greater than the amount required to pay all of such Person’s Indebtedness (including contingent Indebtedness), (ii) is able to pay all of its Indebtedness as such Indebtedness matures, (iii) has capital sufficient to carry on its business and transactions and all business and transactions in which it is engaged or is about to engage, and (iv) is not “insolvent” within the meaning of Section 101(32) of the Bankruptcy Code or, with respect to the Canadian Borrower and the Canadian Subsidiary Guarantors, is not an “insolvent person” within the meaning of the BIA.
“Specified Event of Default” shall mean any Event of Default arising under Section 11.01, 11.02 (solely relating to Section 8.22) 11.03(i) (solely relating to a failure to comply with Section 9.17(c)), 11.03(ii) or 11.05.
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“Specified Loan Party” shall mean any Credit Party that is not an “eligible contract participant” under the Commodity Exchange Act (determined prior to giving effect to Section 14.11 hereof).
“Spot Rate” shall mean the exchange rate, as determined by the Administrative Agent, that is applicable to conversion of one currency into another currency, which is (a) the exchange rate reported by Bloomberg (or other commercially available source designated by the Administrative Agent) as of the end of the preceding business day in the financial market for the first currency; or (b) if such report is unavailable for any reason, the spot rate for the purchase of the first currency with the second currency as in effect during the preceding business day in the Administrative Agent’s principal foreign exchange trading office for the first currency.
“Stated Liabilities” shall mean the recorded liabilities (including contingent liabilities that would be recorded in accordance with U.S. GAAP) of Holdings and its Subsidiaries taken as a whole, as of the Closing Date after giving effect to the consummation of the Transaction, determined in accordance with U.S. GAAP consistently applied, together with the principal amount of all New Financing.
“Subordinated Debt” shall mean unsecured Indebtedness incurred by a Credit Party that is expressly subordinated and made junior to the payment and performance in full of the Obligations and contains terms and conditions (including terms relating to interest, fees, repayment and subordination) satisfactory to the Administrative Agent.
“Subsidiary” shall mean, as to any Person, (i) any corporation, more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency), which is at the time owned by such Person and/or one or more Subsidiaries of such Person and (ii) any partnership, limited liability company, unlimited liability company, association, joint venture or other entity in which such Person and/or one or more Subsidiaries of such Person has more than a 50% Equity Interest at the time. Unless the context otherwise requires, all references to a Subsidiary shall mean a Subsidiary of the Lead Borrower.
“Subsidiary Borrower” shall mean each U.S. Subsidiary Borrower and the Canadian Borrower.
“Subsidiary Guarantor” shall mean each U.S. Subsidiary Borrower (other than with respect to its own Obligations), U.S. Subsidiary Guarantor, Canadian Subsidiary Guarantor and each other Subsidiary which becomes a Subsidiary Guarantor pursuant to the proviso to the definition of “Excluded Subsidiary”.
“Supermajority Lenders” shall mean those Non-Defaulting Lenders which would constitute the Required Lenders under, and as defined in, this Agreement if the percentage “50%” contained therein were changed to “66-2/3%.”
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“Swap Contract” shall mean (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement.
“Swap Obligation” shall mean any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.
“Swingline Commitment” shall mean the commitment of the Swingline Lender to make loans pursuant to Section 2.12, as the same may be reduced from time to time pursuant to Section 2.07 or Section 2.12.
“Swingline Exposure” shall mean at any time the aggregate principal amount at such time of all outstanding Swingline Loans. The Swingline Exposure of any Non-FILO Lender at any time shall equal its Pro Rata Percentage of the aggregate Swingline Exposure at such time.
“Swingline Lender” shall mean Bank of America, N.A. (including, as regards Swingline Loans to the Canadian Borrower, Bank of America-Canada Branch).
“Swingline Loan” shall mean any Loan made by the Swingline Lender pursuant to Section 2.12.
“Swingline Note” shall mean each swingline note substantially in the form of Exhibit B‑2 hereto.
“Syndication Date” shall mean such date as has been agreed to in a separate writing among the Joint Lead Arrangers and Holdings.
“Synthetic Lease” shall mean a lease transaction under which the parties intend that (i) the lease will be treated as an “operating lease” by the lessee and (ii) the lessee will be entitled to various tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.
“Taxes” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges, fees, assessments, liabilities or withholdings imposed by any Governmental Authority, including any interest, penalties and additions to tax with respect thereto.
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“Term CORRA” shall mean, for any Interest Period with respect to a Term CORRA Loan, the rate per annum equal to the forward-looking term rate based on CORRA, as published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time) on the day that is two (2) Business Days prior to the first day of such Interest Period (or if such day is not a Business Day, then on the immediately preceding Business Day), with a term equivalent to such Interest Period plus the Term CORRA Adjustment for such Interest Period; provided, that, if Term CORRA shall be less than 0.00%, such rate shall be deemed 0.00% for purposes of this Agreement.
“Term CORRA Adjustment” shall mean (i) 0.29547% (29.547 basis points) for an Interest Period of one-month’s duration and (ii) 0.32138% (32.138 basis points) for an Interest Period of three-months’ duration.
“Term CORRA Borrowing” shall mean, a Borrowing comprised of Term CORRA Loans.
“Term CORRA Loans” shall mean any Canadian Revolving Loan bearing interest at a rate determined by reference to Term CORRA in accordance with the provisions of Section 2.
“Term SOFR” shall mean:
(a) for any Interest Period with respect to a Term SOFR Loan, the rate per annum equal to the Term SOFR Screen Rate two U.S. Government Securities Business Days prior to the commencement of such Interest Period with a term equivalent to such Interest Period; provided that if the rate is not published prior to 11:00 a.m. on such determination date then Term SOFR means the Term SOFR Screen Rate on the first U.S. Government Securities Business Day immediately prior thereto, in each case, plus the SOFR Adjustment for such Interest Period; and
(b) for any interest calculation with respect to a U.S. Base Rate Loan or Canadian Base Rate Loan on any date, the rate per annum equal to the Term SOFR Screen Rate with a term of one month commencing that day;
provided that if the Term SOFR determined in accordance with either of the foregoing provisions (a) or (b) of this definition would otherwise be less than 0.00%, the Term SOFR shall be deemed 0.00% for purposes of this Agreement.
“Term SOFR Loan” shall mean a Loan that bears interest at a rate based on clause (a) of the definition of Term SOFR.
“Term SOFR Replacement Date” shall have the meaning specified in Section 3.05(c).
“Term SOFR Screen Rate” shall mean the forward-looking SOFR term rate administered by CME (or any successor administrator satisfactory to the Administrative Agent) and published on the applicable Reuters screen page (or such other commercially available source providing such quotations as may be designated by the Administrative Agent from time to time).
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“Test Period” shall mean each period of four consecutive fiscal quarters of Holdings (in each case taken as one accounting period).
“Third-Party Location” shall mean any property that is either owned or leased by (w) a Third-Party Warehouseman, (x) an Outside Processor, (y) a customer or (z) a Vendor.
“Third-Party Warehouseman” shall mean any Person on whose premises Qualified Inventory is located, which premises are neither owned nor leased by a Credit Party, any customer of or Vendor to a Credit Party, or an Outside Processor.
“Threshold Amount” shall mean $25,000,000.
“Transaction” shall mean, collectively, (i) the entering into of the Credit Documents and the incurrence of Loans on the Closing Date, (ii) the repayment and termination of the Existing Credit Agreement and release of liens and guarantees thereunder and (iii) the payment of all Transaction Costs.
“Transaction Costs” shall mean the fees, premiums and expenses payable by Holdings and its Subsidiaries in connection with the transactions described in clauses (i) and (ii) of the definition of “Transaction.”
“Type” shall mean the type of Loan determined with regard to the interest option applicable thereto, i.e., whether a U.S. Base Rate Loan, Term SOFR Loan, Canadian Base Rate Loan, Canadian Prime Loan or Term CORRA Loan.
“UCC” shall mean the Uniform Commercial Code in effect in the State of New York from time to time; provided, however, that, at any time, if by reason of mandatory provisions of law, the Uniform Commercial Code as in effect in a jurisdiction in the United States other than the State of New York governs, the term “UCC” shall mean the Uniform Commercial Code as in effect, at such time, in such other jurisdiction for purposes of the provisions relating to such perfection or priority and for purposes of definitions relating to such provisions.
“UK Financial Institutions” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unfinanced Capital Expenditures” shall mean Capital Expenditures that are not Financed Capital Expenditures.
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“Unfunded Pension Liability” of any Plan shall mean the amount, if any, by which the value of the accumulated plan benefits under the Plan determined on a plan termination basis in accordance with actuarial assumptions at such time consistent with those prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds the fair market value of all plan assets of such Plan.
“United States” and “U.S.” shall each mean the United States of America.
“Unrestricted Subsidiary” shall mean (i) each Subsidiary of the Lead Borrower listed on Schedule 1.01A and (ii) any Subsidiary of the Lead Borrower designated by the board of directors of the Lead Borrower as an Unrestricted Subsidiary pursuant to Section 9.16 subsequent to the Amendment No. 5 Effective Date; provided, however, that no Subsidiary Borrower shall be designated as an Unrestricted Subsidiary.
“Unused Line Fee” shall have the meaning assigned to such term in Section 2.05(a).
“Unused Line Fee Rate” shall mean 0.20% per annum on the average daily unused Revolving Commitments, calculated based upon the actual number of days elapsed over a 360-day year payable quarterly in arrears.
“U.S. Base Rate” shall mean for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1% (b) the rate of interest in effect for such day as publicly announced from time to time by the Administrative Agent as its “prime rate”, and (c) the Term SOFR plus 1.00%; provided, that in no event shall the U.S. Base Rate be less than 1.00%. The “prime rate” is a rate set by the Administrative Agent based upon various factors including the Administrative Agent’s costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in such prime rate announced by the Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change. If the U.S. Base Rate is being used as an alternate rate of interest pursuant to Section 3.05 hereof, then the U.S. Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above.
“U.S. Base Rate Loan” shall mean each Revolving Loan which is designated or deemed designated as a U.S. Base Rate Loan by the Lead Borrower at the time of the incurrence thereof or conversion thereto.
“U.S. Borrowers” shall mean (i) the Lead Borrower and (ii) any U.S. Subsidiary Borrower.
“U.S. Borrowing Base” shall mean at any time of calculation, solely in respect of the U.S. Credit Parties, an amount equal to the sum of, without duplication:
(a) the Net Amount of Eligible Accounts of the U.S.
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Credit Parties multiplied by the advance rate of 90%, plus (b) 85% of the NOLV Percentage of the Value of the Inventory of such U.S. Credit Party (and, to the extent that the NOLV Percentage accounts for the slow moving nature or aged status of Inventory of such U.S. Credit Party, such slow moving nature or aged status as in existence on the date of the most recent Qualified Appraisal shall not be used as a basis to exclude Inventory from eligibility nor used as a basis for the institution of an Inventory Reserve); plus
(c) 100% of Qualified Cash of the U.S. Credit Parties, minus
(d) any Reserves established from time to time by the Administrative Agent in accordance herewith.
“U.S. Collateral” shall mean all property (whether real, personal or otherwise) with respect to which any security interests have been granted or will be granted (or purported to be granted) pursuant to any Security Document governed by the laws of the United States (or any state thereof) (including any Additional Security Documents but excluding the Canadian Security Agreement), including, without limitation, all collateral as described in the U.S. Security Agreement.
“U.S. Credit Party” shall mean Holdings, each U.S. Borrower and each U.S. Subsidiary Guarantor.
“U.S. Dollars” or “Dollars” and the sign “$” shall each mean freely transferable lawful money (expressed in dollars) of the United States.
“U.S. Dominion Account” shall mean a special concentration account established by the Lead Borrower at Bank of America, N.A. or another bank reasonably acceptable to the Administrative Agent, over which the Collateral Agent has exclusive control for withdrawal purposes pursuant to the terms and provisions of this Agreement and the other Credit Documents.
“U.S. GAAP” shall mean generally accepted accounting principles in the United States as in effect from time to time; provided that determinations made pursuant to this Agreement in accordance with U.S. GAAP are subject (to the extent provided therein) to Section 13.07(a).
“U.S. Government Securities Business Day” shall mean any Business Day, except any Business Day on which any of the Securities Industry and Financial Markets Association, the New York Stock Exchange or the Federal Reserve Bank of New York is not open for business because such day is a legal holiday under the federal laws of the United States or the laws of the State of New York, as applicable.
“U.S. Line Cap” shall mean an amount that is equal to the lesser of (a) the Non-FILO Revolving Commitments and (b) the Aggregate Non-FILO Borrowing Base.
“U.S. Payment Account” shall mean an account maintained by the Administrative Agent to which all monies from time to time deposited to a U.S. Dominion Account constituting proceeds of Collateral considered in calculating the U.S. Borrowing Base shall be transferred and all other payments shall be sent in immediately available federal funds.
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“U.S. Protective Advances” shall have the meaning assigned to such term in Section 2.18.
“U.S. Revolving Borrowing” shall mean a Borrowing comprised of U.S. Revolving Loans.
“U.S. Revolving Exposure” shall mean, with respect to any Lender at any time, the aggregate principal amount at such time of all outstanding U.S. Revolving Loans of such Lender, plus the aggregate amount at such time of such Lender’s LC Exposure, plus the aggregate amount at such of such Lender’s Swingline Exposure.
“U.S. Revolving Loans” shall mean advances made to or at the instructions of the Lead Borrower pursuant to Section 2 hereof to a U.S. Borrower and may constitute U.S. Revolving Loans and Swingline Loans made to U.S. Borrowers but shall not include FILO Loans.
“U.S. Security Agreement” shall mean the U.S. Security Agreement dated as of the Closing Date, by and between the Collateral Agent and each of the U.S. Credit Parties, as amended, amended and restated, supplemented or otherwise modified from time to time.
“U.S. Subsidiary Borrower” shall mean any Domestic Subsidiaries of the Lead Borrower that execute a counterpart hereto and to any other applicable Credit Document as a Borrower in accordance with the requirements of this Agreement and any other applicable Credit Document.
“U.S. Subsidiary Guarantor” shall mean each Domestic Subsidiary of the Lead Borrower (other than the other U.S. Borrowers) in existence on the Closing Date other than any Excluded Subsidiary, as well as each Domestic Subsidiary of the Lead Borrower established, created or acquired after the Closing Date which becomes a party to this Agreement in accordance with the requirements of this Agreement.
“U.S. Tax Compliance Certificate” shall have the meaning provided in Section 5.01(c).
“Value” shall mean with reference to the value of Inventory, value as shown in the applicable Borrower’s or Subsidiary Guarantor’s perpetual inventory system, consistent with past practice.
“Vendor” shall mean a Person that sells Inventory to a Credit Party.
“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing (i) then outstanding principal amount of such Indebtedness into (ii) the product obtained by multiplying (x) the amount of each then remaining installment or other required scheduled payments of principal, including payment at final maturity, in respect thereof, by (y) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment.
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“Wholly-Owned Domestic Subsidiary” shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Domestic Subsidiary of such Person.
“Wholly-Owned Foreign Subsidiary” shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Foreign Subsidiary of such Person.
“Wholly-Owned Restricted Subsidiary” shall mean, as to any Person, any Wholly-Owned Subsidiary of such Person which is a Restricted Subsidiary of such Person.
“Wholly-Owned Subsidiary” shall mean, as to any Person, (i) any corporation 100% of whose capital stock is at the time owned by such Person and/or one or more Wholly-Owned Subsidiaries of such Person and (ii) any partnership, association, joint venture or other entity in which such Person and/or one or more Wholly-Owned Subsidiaries of such Person owns 100% of the Equity Interests at such time (other than, in the case of a Foreign Subsidiary with respect to preceding clauses (i) or (ii), director’s qualifying shares and/or other nominal amounts of shares required to be held by Persons other than the Lead Borrower and any Restricted Subsidiary under applicable law).
“Will be Able To Pay their Stated Liabilities and Identified Contingent Liabilities as they Mature” shall mean Holdings and its Subsidiaries taken as a whole will have sufficient assets and cash flow to pay their respective Stated Liabilities and Identified Contingent Liabilities as those liabilities mature or (in the case of contingent liabilities) otherwise become payable.
“Write-Down and Conversion Powers” shall mean, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
(a) The definitions in Section 1.01 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall”; and the words “asset” and “property” shall be construed as having the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
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The words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision of this Agreement unless the context shall otherwise require. All references herein to Articles, Sections, paragraphs, clauses, subclauses, Exhibits and Schedules shall be deemed references to Articles, Sections, paragraphs, clauses and subclauses of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Unless otherwise expressly provided herein, (a) all references to documents, instruments and other agreements (including the Credit Documents and organizational documents) shall be deemed to include all subsequent amendments, restatements, amendments and restatements, supplements and other modifications thereto, but only to the extent that such amendments, restatements, amendments and restatements, supplements and other modifications are not prohibited by any Credit Document and (b) references to any law, statute, rule or regulation shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such law. Unless otherwise specified, all references herein to times of day shall be references to Eastern time (daylight or standard, as applicable). Any reference herein or in any other Credit Document to the satisfaction, repayment, or payment in full of the Obligations or the Obligations having been repaid in full, or words of similar import, shall mean (i) the payment or repayment in full of all such Obligations (other than (x) LC Exposure of the type described in clause (a) of the definition thereof, (y) contingent indemnification Obligations for which no claim has been asserted and (z) Secured Bank Product Obligations), (ii) the receipt by the Administrative Agent of Cash Collateral in order to secure LC Exposure of the type described in clause (a) of the definition thereof, and (iii) the termination of all of the Commitments of the Lenders. For purposes of determining compliance at any time with Sections 10.01, 10.02, 10.03, 10.04, 10.05, 10.06 and 10.07(a), it is understood and agreed that any Lien, sale, lease or other disposition of assets, Dividend, Indebtedness, Investment, Affiliate transaction or prepayment of Indebtedness need not be permitted solely by reference to one category of permitted Lien, sale, lease or other disposition of assets, Dividend, Indebtedness, Investment, Affiliate transaction or prepayment of Indebtedness under Sections 10.01, 10.02, 10.03, 10.04, 10.05, 10.06 and 10.07(a), respectively, but may instead be permitted in part under any combination thereof (it being understood that Lead Borrower may utilize amounts under any category that is subject to any financial ratio or test, including the Leverage Ratio, the Consolidated Fixed Charge Coverage Ratio, Payment Conditions or Distribution Conditions, prior to amounts under any other category). For purposes of determining compliance at any time with Sections 10.01, 10.02, 10.03, 10.04, 10.05 and 10.06, in the event that any Lien, sale, lease or other disposition of assets, Dividend, Indebtedness, Investment or transaction with affiliates meets the criteria of more than one of the categories of transactions or items permitted pursuant to any clause of such Sections 10.01, 10.02, 10.03, 10.04, 10.05 and 10.06 (other than, in each case, any clause permitting any transaction subject to the satisfaction of the Payment Conditions or the Distribution Conditions), the Lead Borrower, in its sole discretion, may, from time to time, classify or reclassify such transaction or item (or portion thereof) and will only be required to include the amount and type of such transaction (or portion thereof) in any one category by providing written notice to the Administrative Agent at the Administrative Agent’s reasonable request of the amount of Liens, sales, leases or other dispositions of assets, Dividends, Indebtedness, Investments or transaction with affiliates to be reclassified and certifying that such Liens, sales, leases or other dispositions of assets, Dividends, Indebtedness, Investments or transaction with affiliates, as applicable, could be incurred under such other category on the date of such notice).
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(b) Any reference herein to a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited liability company, or an allocation of assets to a series of a limited liability company (or the unwinding of such a division or allocation), as if it were a merger, transfer, consolidation, amalgamation, consolidation, assignment, sale, disposition or transfer, or similar term, as applicable, to, of or with a separate Person. Any division of a limited liability company shall constitute a separate Person hereunder (and each division of any limited liability company that is a Subsidiary, joint venture or any other like term shall also constitute such a Person or entity).
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in each case, at the option of the Lead Borrower (the Lead Borrower’s election to exercise such option in connection with any Limited Condition Transaction, an “LCT Election”), the date of determination of whether any such action is permitted hereunder shall be made (1) in the case of any acquisition (including by way of merger or amalgamation) or similar Investment (including the assumption or incurrence of Indebtedness in connection therewith), at the time of (or, in the case of any calculation or any financial ratio or test, with respect to, or as of the last day of the most recently ended Test Period at the time of) either (x) the execution of the definitive agreement with respect to such acquisition or Investment, (y) the public announcement of an intention to make an offer in respect of the target of such acquisition or Investment or (z) the consummation of such acquisition or Investment, (2) in the case of any Dividend, at the time of (or, in the case of any calculation or any financial ratio or test, with respect to, or as of the last day of the most recently ended Test Period at the time of) (x) the irrevocable declaration of such Dividend or (y) the making of such Dividend and (3) in the case of any voluntary or optional payment or prepayment on or redemption or acquisition for value of any Indebtedness subject to Section 10.07(a), at the time of (or, in the case of any calculation or any financial ratio or test, with respect to, or as of the last day of the most recently ended Test Period at the time of) (x) delivery of irrevocable (which may be conditional) notice with respect to such payment or prepayment or redemption or acquisition of such Indebtedness or (y) the making of such voluntary or optional payment or prepayment on or redemption or acquisition for value of any Indebtedness (the “LCT Test Date”), and if, for the Limited Condition Transaction (and the other transactions to be entered into in connection therewith), the Lead Borrower or any of its Restricted Subsidiaries would have been permitted to take such action on the relevant LCT Test Date in compliance with such ratio, test or basket, such ratio, test or basket shall be deemed to have been complied with. For the avoidance of doubt, if the Lead Borrower has made an LCT Election and any of the ratios, tests or baskets for which compliance was determined or tested as of the LCT Test Date would have failed to have been complied with as a result of fluctuations in any such ratio, test or basket, including due to fluctuations in Consolidated EBITDA or Consolidated Total Assets of the Lead Borrower or the Person subject to such Limited Condition Transaction, at or prior to the consummation of the relevant transaction or action, such baskets, tests or ratios will not be deemed to have failed to have been complied with as a result of such fluctuations; provided, that, notwithstanding anything to the contrary herein, if financial statements for one or more subsequent Test Periods shall have become available, Lead Borrower may elect, in its sole discretion, to re-determine all such financial ratios or tests, with respect to, or as of the last day of, the most recently ended Test Period on the basis of such financial statements, in which case such date of redetermination shall thereafter be deemed to be the LCT Test Date for purposes of such baskets, ratios and financial metrics. If the Lead Borrower has made an LCT Election for any Limited Condition Transaction, then in connection with any calculation of any ratio, test or basket availability with respect to the incurrence of Indebtedness or Liens, the making of Dividends, the making of any Investment, mergers, amalgamations, the conveyance, lease or other transfer of all or substantially all of the assets of the Lead Borrower, the prepayment, redemption, purchase, defeasance or other satisfaction of Indebtedness, or the designation of an Unrestricted Subsidiary (each, a “Subsequent Transaction”) following the relevant LCT Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement, public announcement or irrevocable notice for such Limited Condition Transaction is terminated, revoked or expires without consummation of such Limited Condition Transaction, for purposes of determining whether such Subsequent Transaction is permitted under this Agreement, any such ratio, test or basket shall be required to be satisfied on a Pro Forma Basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated.
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If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be a Borrowing of U.S. Base Rate Loans for U.S. Borrowers and of Canadian Prime Loans for the Canadian Borrower. If no Interest Period is specified with respect to any requested Borrowing of Term SOFR Loans or Term CORRA Loans, then the Lead Borrower or the Canadian Borrower, as applicable, shall be deemed to have selected an Interest Period of one month’s duration (subject to the proviso in clause (d) above). If no currency is specified, then the requested Borrowing shall be made in Dollars for U.S. Borrowers and Canadian Dollars for the Canadian Borrower. Promptly following receipt of a Notice of Borrowing in accordance with this Section 2.03, the Administrative Agent shall advise each applicable Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.
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If any such Notice of Conversion/Continuation requests a Borrowing of Term SOFR Loans or Term CORRA Loans but does not specify an Interest Period, then the Lead Borrower or the Canadian Borrower, as applicable, shall be deemed to have selected an Interest Period of one month’s duration. No Borrowing may be converted into or continued as a Borrowing denominated in a different currency, but instead must be prepaid in the original currency of such Borrowing and reborrowed in the other currency.
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and the result of any of the foregoing shall be to increase the cost to such Lender, Issuing Bank or the Administrative Agent of making, continuing, converting or maintaining any Loan (or of maintaining its obligation to make any such Loan) or issuing or participating in any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender, Issuing Bank or the Administrative Agent hereunder (whether of principal, interest or otherwise), then the Borrowers will pay to such Lender, Issuing Bank or the Administrative Agent, as the case may be, such additional amount or amounts as will compensate such Lender, Issuing Bank or the Administrative Agent, as the case may be, for such additional costs incurred or reduction.
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If the Term SOFR Successor Rate is Daily Simple SOFR plus the SOFR Adjustment, all interest payments will be payable on a monthly basis.
Notwithstanding anything to the contrary herein, (i) if the Administrative Agent determines that Daily Simple SOFR is not available on or prior to the Term SOFR Replacement Date, or (ii) if the events or circumstances of the type described in Section 3.05(c)(i) or (ii) have occurred with respect to the Term SOFR Successor Rate then in effect, then in each case, the Administrative Agent and the Lead Borrower may amend this Agreement solely for the purpose of replacing Term SOFR or any then current Term SOFR Successor Rate in accordance with this Section 3.05(c) at the end of any Interest Period, relevant interest payment date or payment period for interest calculated, as applicable, with an alternative benchmark rate giving due consideration to any evolving or then existing convention for similar Dollar denominated credit facilities syndicated and agented in the United States for such alternative benchmark and, in each case, including any mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar Dollar denominated credit facilities syndicated and agented in the United States for such benchmark, which adjustment or method for calculating such adjustment shall be published on an information service as selected by the Administrative Agent from time to time in its reasonable discretion and may be periodically updated. For the avoidance of doubt, any such proposed rate and adjustments, shall constitute a “Term SOFR Successor Rate”. Any such amendment shall become effective at 5:00 p.m. (New York City Time) on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Lead Borrower unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment.
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or if the events or circumstances of the type described in Section 3.05(c)(i) or (ii) have occurred with respect to the Successor Rate then in effect, then, the Administrative Agent and the Lead Borrower may amend this Agreement solely for the purpose of replacing Term CORRA or any then current Successor Rate to Term CORRA in accordance with this Section 3.05 with an alternative benchmark rate giving due consideration to any evolving or then existing convention for similar credit facilities syndicated and agented in the U.S. and denominated in Canadian Dollars, and, in each case, including any mathematical or other adjustments to such benchmark giving due consideration to any evolving or then existing convention for similar credit facilities syndicated and agented in the U.S. and denominated in Canadian Dollars, which adjustment or method for calculating such adjustment shall be published on an information service as selected by the Administrative Agent from time to time in its reasonable discretion and may be periodically updated (and any such proposed rate, including for the avoidance of doubt, any adjustment thereto, a “Canadian B/ATerm CORRA Successor Rate”, and collectively with the Term SOFR Successor Rate, each a “Successor Rate”), and any such amendment shall become effective at 5:00 p.m. on the fifth Business Day after the Administrative Agent shall have posted such proposed amendment to all Lenders and the Lead Borrower unless, prior to such time, Lenders comprising the Required Lenders have delivered to the Administrative Agent written notice that such Required Lenders object to such amendment.
Any Successor Rate shall be applied in a manner consistent with market practice; provided that to the extent such market practice is not administratively feasible for the Administrative Agent, such Successor Rate shall be applied in a manner as otherwise reasonably determined by the Administrative Agent.
Notwithstanding anything else herein, if at any time any Successor Rate as so determined would otherwise be less than 0.00%, the Successor Rate will be deemed to be 0.00% for the purposes of this Agreement and the other Credit Documents.
In connection with the implementation of a Successor Rate, the Administrative Agent will have the right to make Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Credit Document, any amendments implementing such Conforming Changes will become effective without any further action or consent of any other party to this Agreement; provided that, with respect to any such amendment effected, the Administrative Agent shall post each such amendment implementing such Conforming Changes to the Lead Borrower and the Lenders reasonably promptly after such amendment becomes effective.
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The acceptance of the benefits of each Credit Event after the Closing Date shall constitute a representation and warranty by each Borrower to the Administrative Agent and each of the Lenders that all the conditions specified in this Section 7 and applicable to such Credit Event are satisfied as of that time (other than such conditions which are subject to the discretion of the Administrative Agent or the Lenders). All of the Notes, certificates, legal opinions and other documents and papers referred to in Section 6 and in this Section 7, unless otherwise specified, shall be delivered to the Administrative Agent at the Notice Office for the account of each of the Lenders.
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In addition, notwithstanding the foregoing, the financial statements, information and other information and documents required to be provided as described in Section 9.01(a), (b) and (e), may be those of Holdings; provided that, if the financial information so furnished relates to Holdings, the same is accompanied by a reasonably detailed description of the quantitative differences between the information relating to Holdings, on the one hand, and the information relating to the Lead Borrower and its Restricted Subsidiaries on a stand-alone basis, on the other hand.
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(1) any pending or threatened Environmental Claim against the Lead Borrower or any Subsidiary of Holdings or any Real Property owned, leased or operated by the Lead Borrower or any Subsidiary of Holdings;
(2) any condition or occurrence on or arising from any Real Property owned, leased or operated by the Lead Borrower or any Subsidiary of Holdings that (a) results in noncompliance by the Lead Borrower or any Subsidiary of Holdings with any applicable Environmental Law or (b) would reasonably be expected to form the basis of an Environmental Claim against the Lead Borrower or any Subsidiary of Holdings or any such Real Property;
(3) any condition or occurrence on any Real Property owned, leased or operated by the Lead Borrower or any Subsidiary of Holdings that could reasonably be expected to cause such Real Property to be subject to any restrictions on the ownership, lease, occupancy, use or transferability by the Lead Borrower or any Subsidiary of Holdings of such Real Property under any Environmental Law; and
(4) the taking of any removal or remedial action in response to the actual or alleged presence of any Hazardous Material on any Real Property owned, leased or operated by the Lead Borrower or any of Holdings’ Subsidiaries as required by any Environmental Law or any governmental or other administrative agency and all notices received by the Lead Borrower or any Subsidiary of Holdings from any government or governmental agency under, or pursuant to, CERCLA which identify the Lead Borrower or any Subsidiary of Holdings as potentially responsible parties for remediation costs or which otherwise notify the Lead Borrower or any Subsidiary of Holdings of potential liability under CERCLA.
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All such notices shall describe in reasonable detail the nature of the claim, investigation, condition, occurrence or removal or remedial action and the Lead Borrower’s or such Subsidiary’s response thereto.
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In connection with the granting of Liens of the type described in this Section 10.01 by the Lead Borrower and any Restricted Subsidiary, the Administrative Agent and the Collateral Agent shall, and shall be authorized to, take any actions deemed appropriate by it in connection therewith (including, without limitation, by executing appropriate lien releases or lien subordination agreements in favor of the holder or holders of such Liens, in either case solely with respect to the item or items of equipment or other assets subject to such Liens).
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To the extent the Required Lenders waive the provisions of this Section 10.02 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 10.02 (other than to any Borrower or Guarantor), such Collateral shall be sold free and clear of the Liens created by the Security Documents, and the Administrative Agent and the Collateral Agent shall, and shall be authorized to, take any actions deemed appropriate in order to effect the foregoing.
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(a) franchise and similar Taxes (and other fees and expenses) required to maintain their corporate existence to the extent such Taxes, fees and expenses are reasonably attributable to the ownership or operations of the Lead Borrower and any Restricted Subsidiary;
(b) for any taxable period for which Lead Borrower and/or any of its Subsidiaries are members of a consolidated, combined or similar income tax group for U.S. federal and/or applicable state, local or foreign income tax purposes of which a direct or indirect parent of the Lead Borrower is the common parent (a “Tax Group”), the portion of any U.S. federal, foreign, state and local income and similar Taxes (including alternative minimum Taxes) of such Tax Group, as applicable, for such taxable period that are attributable to the income of the Lead Borrower and/or its Subsidiaries, as applicable, provided that, in each case (i) the amount of such payments for any taxable period shall not exceed the amount of such Taxes that Lead Borrower and/or such Subsidiaries, as applicable, would have paid had Lead Borrower and/or such Subsidiaries, as applicable, been a stand-alone corporate taxpayer (or a stand-alone corporate group) with respect to all taxable periods (or portions thereof) beginning after the Closing Date, (ii) the amount of such payments for any taxable period in respect of an Unrestricted Subsidiary shall be permitted only to the extent that cash distributions were made by such Unrestricted Subsidiary to the Lead Borrower or any of its Restricted Subsidiaries for such purpose and (iii) with respect to any taxable period ended prior to the Closing Date, payments otherwise permitted pursuant to this clause (b) shall be permitted only to the extent relating to Taxes paid after the Closing Date;
(c) general corporate operating and overhead costs and expenses (including administrative, legal, accounting and similar expenses provided by third parties) of Holdings to the extent such costs and expenses are reasonably attributable to the ownership or operations of the Lead Borrower and any Restricted Subsidiary;
(d) cash payments in lieu of issuing fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of the Lead Borrower or Holdings;
(e) the purchase or other acquisition by any parent of the Lead Borrower of all or substantially all of the property and assets or business of any Person, or of assets constituting a business unit, a line of business or division of such Person, or of all of the Equity Interests in a Person; provided that, if such purchase or other acquisition had been made by the Lead Borrower, it would have constituted a Permitted Acquisition permitted to be made pursuant to Section 9.14; provided further that (A) such dividend, distribution, loan or advance shall be made concurrently with the closing of such purchase or other acquisition and (B) such parent shall, immediately following the closing thereof, cause (1) all property acquired (whether assets or Equity Interests) and any liabilities assumed to be contributed to the Lead Borrower or any Restricted Subsidiary or (2) the merger or amalgamation (to the extent permitted in Section 10.02) into the Lead Borrower or any Restricted Subsidiary of the Person formed or acquired in order to consummate such purchaser or other acquisition; and
(f) any customary fees and expenses related to any unsuccessful equity offering by Holdings directly attributable to the operations of the Lead Borrower and any Restricted Subsidiary;
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In determining compliance with this Section 10.03, amounts loaned or advanced to Holdings pursuant to Section 10.05(vi) shall be deemed to be cash Dividends paid to Holdings to the extent provided in said Section 10.05(vi).
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Upon the occurrence of any of the following specified events (each, an “Event of Default”):
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then and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent, upon the written request of the Required Lenders, shall by written notice to the Lead Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent, any Lender or the holder of any Note to enforce its claims against any Credit Party (provided that, if an Event of Default specified in Section 11.05 shall occur with respect to any Credit Party, the result which would occur upon the giving of written notice by the Administrative Agent as specified in clauses (i) and (ii) below shall occur automatically without the giving of any such notice): (i) declare the Aggregate Commitments terminated, whereupon all Commitments of each Lender shall forthwith terminate immediately; (ii) declare the principal of and any accrued interest in respect of all Loans and the Notes and all Obligations owing hereunder and thereunder to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by each Credit Party; (iii) enforce, as Collateral Agent, all of the Liens and security interests created pursuant to the Security Documents; (iv) enforce each Credit Party Guaranty, (v) terminate, reduce or condition any Revolving Commitment, or make any adjustment to the Borrowing Base and (vi) require the Credit Parties to Cash Collateralize LC Obligations, and, if the Credit Parties fail promptly to deposit such Cash Collateral, the Administrative Agent may (and shall upon the direction of Required Lenders) advance the required Cash Collateral as Revolving Loans (whether or not an Overadvance exists or is created thereby, or the conditions in Section 7.01 are satisfied).
First, to the payment of all reasonable costs and out-of-pocket expenses, fees, commissions and taxes of such sale, collection or other realization including, without limitation, compensation to the Administrative Agent and its agents and counsel, and all expenses, liabilities and advances made or incurred by the Administrative Agent in connection therewith;
Second, to the payment of all other reasonable costs and out-of-pocket expenses of such sale, collection or other realization including, without limitation, costs and expenses and all costs, liabilities and advances made or incurred by the other Secured Creditors in connection therewith (other than in respect of Secured Bank Product Obligations);
Third, to interest then due and payable on any Swingline Loan;
Fourth, to the principal balance of the Swingline Loans outstanding until the same has been prepaid in full;
Fifth, to interest then due and payable on Revolving Loans and other amounts due pursuant to Sections 3.01, 3.02 and 5.01;
Sixth, to Cash Collateralize all LC Exposures (to the extent not otherwise Cash Collateralized pursuant to the terms hereof) plus any accrued and unpaid interest thereon;
Seventh, to the principal balance of Revolving Borrowings then outstanding and all Obligations on account of Noticed Hedges with Secured Creditors, pro rata;
Eighth, to all other Obligations (excluding any Bank Product Debt other than Noticed Hedges with Secured Creditors) pro rata;
Ninth, to all Obligations on account of Bank Product Debt with Secured Creditors other than Noticed Hedges; and Tenth, the balance, if any, as required by the Intercreditor Agreement or any Additional Intercreditor Agreement or, in the absence of any such requirement, to the Person lawfully entitled thereto (including the applicable Credit Party or its successors or assigns).
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Notwithstanding the foregoing, no amounts shall be applied to the FILO Facility at any time when other Obligations remain outstanding.
Amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause Sixth above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above. Amounts distributed with respect to any Secured Bank Product Obligations shall be the lesser of the maximum Secured Bank Product Obligations last reported to the Administrative Agent or the actual Secured Bank Product Obligations as calculated by the methodology reported to the Administrative Agent for determining the amount due. The Administrative Agent shall have no obligation to calculate the amount to be distributed with respect to any Secured Bank Product Obligations, and may request a reasonably detailed calculation of such amount from the applicable Secured Creditor. If a Secured Creditor fails to deliver such calculation within five days following request by the Administrative Agent, the Administrative Agent may assume the amount to be distributed is zero.
In the event that any such proceeds are insufficient to pay in full the items described in clauses First through Ninth of this Section 11.11(a), the Credit Parties shall remain liable for any deficiency. Notwithstanding the foregoing provisions, this Section 11.11 is subject to the provisions of the Intercreditor Agreement and any Additional Intercreditor Agreement.
First, to the payment of all reasonable costs and out-of-pocket expenses, fees, commissions and taxes of such sale, collection or other realization including, without limitation, compensation to the Administrative Agent and its agents and counsel, and all expenses, liabilities and advances made or incurred by the Administrative Agent in connection therewith due from the U.S. Borrowers;
Second, to the payment of all other reasonable costs and out-of-pocket expenses of such sale, collection or other realization including, without limitation, costs and expenses and all costs, liabilities and advances made or incurred by the other Secured Creditors in connection therewith (other than in respect of Secured Bank Product Obligations) due from the Borrowers;
Third, to interest then due and payable on the Swingline Loans;
Fourth, to the principal balance of the Swingline Loans outstanding until the same has been prepaid in full;
Fifth, to interest then due and payable on Revolving Loans (other than FILO Loans) and other amounts due pursuant to Sections 3.01, 3.02 and 5.01;
Sixth, to Cash Collateralize all LC Exposures (to the extent not otherwise Cash Collateralized pursuant to the terms hereof) plus any accrued and unpaid interest thereon;
Seventh, to the principal balance of Revolving Loans (other than FILO Loans) then outstanding and all Obligations on account of Noticed Hedges with Secured Creditors, pro rata;
Eighth, to interest then due and payable on FILO Loans and other amounts due pursuant to Sections 3.01, 3.02 and 5.01; Ninth, to the principal balance of FILO Loans then outstanding;
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Tenth, to any amounts owed under the guarantees of the China Facility made by any U.S. Credit Party;
Eleventh, to all other Obligations pro rata; and
Twelfth, the balance, if any, as required by the Intercreditor Agreement or any Additional Intercreditor Agreement or, in the absence of any such requirement, to the Person lawfully entitled thereto (including the applicable Credit Party or its successors or assigns).
Excluded Swap Obligations with respect to any Guarantor shall not be paid with amounts received from such Guarantor or its assets, but appropriate adjustments shall be made with respect to payments from other Credit Parties to preserve the allocation to Obligations otherwise set forth above in this Section.
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Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to vote with respect to, or accept or adopt on behalf of any Lender or any Issuing Bank any proposed plan of reorganization, arrangement, adjustment or composition, proposal or similar dispositive restructuring plan affecting the Obligations or the rights of any Lender or any Issuing Bank to authorize the Administrative Agent to vote in respect of the claim of any Lender or any Issuing Bank in any such case or proceeding.
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Upon request by the Administrative Agent or the Collateral Agent at any time, the Required Lenders will confirm in writing the Administrative Agent’s or the Collateral Agent’s, as applicable, authority to release or subordinate its interest in particular types or items of property, or to release any Guarantor from its obligations under the Credit Party Guaranty pursuant to this Section 12.11. In each case as specified in this Section 12.11, the Administrative Agent and Collateral Agent will (and each Lender irrevocably authorizes the Administrative Agent and Collateral Agent to), at the Borrowers’ expense, execute and deliver to the applicable Credit Party such documents, including (without limitation) termination or partial release statements, as such Credit Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Security Documents or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty, in each case, without recourse or warranty and in accordance with the terms of the Credit Documents and this Section 12.11.
Without limitation of the operation of the releases described above or in any Security Document, a certificate of a Responsible Officer delivered either at the request of the Administrative Agent or Collateral Agent or at the option of the Lead Borrower, in either case, to the Administrative Agent or Collateral Agent with respect to any release described in this Section 12.11 stating that the Lead Borrower has determined in good faith that such release satisfies the foregoing requirements shall be conclusive evidence that such release satisfies the foregoing requirement and such automatic release has occurred (and the Administrative Agent and the Collateral Agent will rely conclusively on such certificate without further inquiry).
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Notwithstanding the preceding sentence and except as may otherwise be agreed in writing, each Lender agrees that the Administrative Agent has no obligation to ascertain the identity of the Canadian Credit Parties or any authorized signatories of the Canadian Credit Parties on behalf of any Lender, or to confirm the completeness or accuracy of any information it obtains from any Canadian Credit Party or any such authorized signatory in doing so.
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“BHC Act Affiliate” of a party shall mean an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Covered Entity” shall mean any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Default Right” shall have the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
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“QFC” shall have the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
* * *
[Signature Pages Intentionally Omitted]
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EXHIBIT B
[Credit Agreement Exhibit A-1 and Exhibit A-2, as amended]
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Exhibit 31.1
CERTIFICATE OF THE
PRINCIPAL EXECUTIVE OFFICER
I, Edward J. Lehner, President & Chief Executive Officer, certify that:
Date: July 30, 2024
Signature: |
/s/ Edward J. Lehner |
|
Edward J. Lehner |
|
President & Chief Executive Officer |
|
(Principal Executive Officer), Director |
Exhibit 31.2
CERTIFICATE OF THE
CHIEF FINANCIAL OFFICER
I, James J. Claussen, as Chief Financial Officer, certify that:
Date: July 30, 2024
Signature: |
/s/James J. Claussen |
|
James J. Claussen |
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
Written Statement of the Chief Executive Officer
In connection with the Quarterly Report of Ryerson Holding Corporation, (the “Company”) on Form 10-Q for the period ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:
|
/s/ Edward J. Lehner |
Edward J. Lehner President & Chief Executive Officer (Principal Executive Officer), Director |
July 30, 2024
Exhibit 32.2
Written Statement of the Principal Financial Officer
In connection with the Quarterly Report of Ryerson Holding Corporation, (the “Company”) on Form 10-Q for the period ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:
|
/s/ James J. Claussen |
James J. Claussen Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
July 30, 2024