Ryerson Holding Corp. Q1 FY2025 earnings call

• Eddie Lehner discussed operating model renovations, significant CapEx investments across service centers, and improvements across the business sequentially. He noted excellent working capital management and spot transactional market share gains offset slow OEM contract business and lagging contract price adjustments. The quarter had three moves: January with depressed conditions, February-March with improved quote/order activity, and quarter end deceleration due to uncertainty.
• Jim Claussen reviewed market conditions, financial results, stating first quarter sales volume was 12% higher quarter-over-quarter, exceeded adjusted EBITDA excluding LIFO guidance, maintained $60 million expense reduction target, and discussed 2025 CapEx targets, leverage ratio, cash generation, and shareholder returns.
• Molly Kannan detailed net sales, volume growth across product categories, average selling price changes by product, gross margin with and without LIFO, expense increases, and net loss attributable to Ryerson.

In the first quarter of 2025, Ryerson reported net sales of $1.14 billion, which was 12.7% higher than the fourth quarter of 2024. There was low double-digit sequential volume growth across all three product categories. Average selling price in the fourth quarter was $2,271 per ton, with carbon products roughly flat, aluminum products up 2%, and stainless steel products down approximately 3%. Gross margin contracted 100 basis points to 18% during the quarter, influenced by $7 million in LIFO expense, but excluding LIFO, gross margin expanded sequentially by 220 basis points to 18.6%.

• For Q2 2025, revenues expected in range of $1.15 billion to $1.19 billion, average selling price increasing 3% to 4%, adjusted EBITDA excluding LIFO in range of $40 million to $45 million, earnings per share in range of $0.07 to $0.14 per diluted share, and LIFO expense between $5 million and $7 million.
• Reaffirmed $50 million annual CapEx target for 2025, expect leverage ratio to improve throughout 2025, Q2 earnings to improve, stronger operating cash flows, and net-debt reduction.

• Risks include those set forth in Risk Factors and SEC filings, such as market dynamics, price volatility, demand uncertainty, capital markets, and trade variables that could cause actual results to differ from forward-looking statements.

Q: Despite the overall debt load increasing about $30 million from the end of the year, could you talk about your plans to manage debt levels and further drive that interest expense lower?

A: Eddie Lehner and Jim Claussen discussed that winding down CapEx projects and operationalizing them would lead to better cash flow, EBITDA, and eventually lower debt and interest expense. As CapEx projects are placed in service, cash flow improves, EBITDA increases, and leverage ratio trends down.

Q: The second-quarter pricing outlook was a bit below expectations, are you seeing pockets in a specific part of the portfolio?

A: Eddie Lehner mentioned OEM contracts got off to a rough start, average selling prices bottomed in January and started to come back. Transactional growth was good, but program OEM revenue and volume were off year-over-year, especially in certain markets like Class A truck, machinery, and appliances.

Q: Can you update us on what the current split is between transactional versus contractual sales and the target?

A: Jim Claussen said transactional was about 47% in the first quarter, up from about 43% at the end of 2024. The target is still to reach about 60%, and it's about operationalizing CapEx investments to improve service levels and on-time delivery to grow transactional sales.