Ryerson Holding Corp. Q3 FY2024 earnings call

• Ryerson has been navigating an extended countercyclical period since mid-2022, but signs of moving off the bottom in 2024-2025 are emerging.
• In Q3, adjusted EBITDA excluding LIFO was within guidance, though investment activities and extreme weather affected results negatively. Service levels, account churn, and on-time delivery improved.
• Spot bill and material transactional business outperformed OEM contract business in Q3.
• The company generated $103 million in free cash flow, returned $42 million to shareholders, and made ongoing cost reductions.
• New investments are coming online, and service center fundamentals are improving, positioning the company for future financial targets.

In the third quarter, Ryerson generated $1.13 billion in revenue, which aligned with the low end of guidance. The average selling price was $2,323 per ton, within guidance. Sales volume stood at 485,000 tons, below the guidance range due to a slow demand environment and the impact of Hurricane Helene. For carbon products, average selling prices decreased by 6% following the trend of baseline carbon steel prices. In the bright metals franchise, aluminum saw a 1% increase and stainless steel had a 2% decrease in average cell prices.

• For Q4 2024, volumes are expected to be down 8%-10% sequentially, with revenues in the range of $1 billion to $1.04 billion and average selling prices within +/-1%.
• Adjusted EBITDA excluding LIFO is forecasted to be between $10 million and $12 million for Q4 2024, with a loss per share range of $0.53 to $0.47 per diluted share.
• Anticipate remaining above 2.0x net leverage as the investment cycle concludes, aiming for the long-term net leverage range of 0.5x to 2x.
• The cost reduction plan targets $60 million in annualized savings, with the heavy lifting of expense reductions already completed.

• Forward-looking statements involve risks as outlined in the company's SEC filings, including those related to securities laws and potential differences between actual results and forward-looking statements.
• Balance sheet considerations, such as net leverage being above the target range at 3.8x in Q3, and potential impacts of the investment cycle on debt and liquidity.

Q: Of the $60 million in cost savings you're targeting, how much of that has already been realized so far?

A: Jim Claussen said the heavy lifting has been done, with expense per ton trending down from the first quarter to the third quarter, and while some optimization continues, the major work on cost reductions is completed.

Q: Any way to frame up what we should think about with reorganization this quarter and next quarter versus the $15 million average we've seen in the last few?

A: Eddie Lehner said it's going to start to trend down, with an estimate of $8 million to $12 million in Q4, noting some insurable expenses related to floods and storms but expecting recovery.

Q: Related to your opening comments, where do you believe the balance is right now between U.S. steel mill supply and demand?

A: Eddie Lehner said operating rates are in the low 70s, indicating plenty of capacity, and that the market is currently a price market, not an availability market, with lead times short currently but expected to change as the cycle improves