Ryerson Holding Corp. Q2 FY2025 earnings call

• Industry is in a protracted downturn with PMI prints showing contraction in 30 of the past 32 months. - Ryerson is focusing on self-help initiatives like taking out non-value-added costs, precise working capital management. - Deployed over $650 million in capital since 2021 to modernize service centers. - Customer activity cautious in OEM contract business, but transactional field business saw market share gains. - Price trends stabilizing amid slowing demand. - Distributed $6 million in dividends in Q2, with a $0.1875 per share quarterly dividend announced for Q3.

In the second quarter of 2025, Ryerson reported net sales of $1.17 billion, an increase of 3% compared to the first quarter. Average selling prices were up 2.8% and tons shipped were fractionally higher. North American market share growth was seen in carbon longs, plate, and stainless longs. Adjusted EBITDA excluding LIFO in the second quarter was $45 million, which was favorable compared to the prior quarter's $32.8 million. Revenue contribution percentages weren't explicitly stated, but absolute figures include net sales of $1.17 billion and adjusted EBITDA excluding LIFO of $45 million for the quarter.

• Third quarter 2025 volumes expected to soften 2%-4% due to challenged demand environment. - Revenues expected in range of $1.14 billion to $1.18 billion. - Adjusted EBITDA excluding LIFO forecasted in range of $40 million to $45 million. - EPS expected in range of $0.00 to $0.06 per diluted share. - LIFO expense expected between $9 million and $11 million in Q3. - Full year CapEx target remains $50 million, with timing being a function of project milestones.

• Industry downturn with PMI prints showing contraction in 30 of the past 32 months. - Trade policy resets, high interest rates, stagflation fears impeding manufacturing and industrial metals activity. - Global overcapacity management challenges and tariff uncertainty. - Slowing and below-trend demand affecting business.

Q: The presentation calls out North American market share growth in carbon longs and plate and the release noted another quarter of increasing transactional business. Talk more about some of the biggest wins for this demand as more of your CapEx projects have become full contributors.

A: Edward J. Lehner discussed that CapEx investments involve refining the service model, taking out frictional costs in the network, improving lead times, service levels, and consistency. It's a process of connecting various elements in the ERP environment and refining over time to provide a better customer experience.

Q: The second quarter EPS enjoyed a tax benefit of over $0.25 a share. Talk about the mechanics there and if we should expect a similar tailwind during the third quarter in which you expect EPS to be relatively flat sequentially.

A: Jim Claussen explained that reduced earnings led to a lower tax provision, and there were discrete state tax credits in the quarter. Expected basic effective tax rate around 25%-26% going forward.

Q: Can you update us what the split currently is between transactional and contractual sales and how you're thinking about the split moving forward?

A: Edward J. Lehner said on a ship and in book basis, it's about 46% transactional and 54% program. Moving forward, continue to perform well consistently to gain more transactional business by improving network normalization, lead times, quoting, and consistency.

Q: How much of your exposure goes to the data center market?

A: Edward J. Lehner stated it's a subvertical, hard to get an exact fix, but it's a secular build-out and they're getting their share of opportunities.

Q: When looking at your CapEx, you maintained the $50 million for '25. But first half is trending below that. Is that just timing? Or is there opportunity for CapEx to come below that $50 million?

A: Edward J. Lehner said it's a function of timing, with payments tied to commissioning and start-up milestones, and they'll stay with the $50 million target but will have a better picture of year-end in 3 months.

Q: Can you talk about the investments made over the last few years, how far along are you really? Or what inning are you?

A: Edward J. Lehner mentioned projects like Shelbyville is at about 67% of volume ramp-up. Contract tons down year-over-year, transactional tons up. Encouraging transactional progress, but return cycle still early.

Q: Talk about second half cash flow, what you're expecting and where you hope to get the leverage ratio by the end of the year.

A: Edward J. Lehner said it's a function of EBITDA, expects to generate cash through the balance of the year, dependent on prices and demand, but base case is generating cash and working towards leverage ratio target