Ryerson Holding Corporation Q3 FY2025 earnings call

• Market backdrop: Third quarter continued difficult market conditions with industry contraction, falling shipments year-over-year and sequentially, and notable carbon steel margin compression. Demand remained stubbornly depressed.
• Transactional business: Ryerson's transactional business was growing with shorter lead times, higher service levels, and improved on-time delivery as recent investments operationalized, stabilized, and scaled.
• Financial results: Third quarter net sales were $1.16 billion; net loss was $14.8 million or $0.46 per diluted share; adjusted EBITDA excluding LIFO was $40.3 million, within guidance range.
• Merger with Olympic Steel: Announced all-stock merger, targeted to close in Q1 2026. Combined company to be second largest metal service center in North America with over $6.5 billion revenue, expected $120 million in synergies over 2 years, and enhanced financial profile including stronger balance sheet and greater free cash flow.

In the third quarter of 2025, Ryerson reported net sales of $1.16 billion, a decrease of $7.8 million or less than 1% compared to the second quarter. Average selling prices were up 2.6% and tons shipped were down 3.2%. Gross margin and gross margin excluding LIFO both contracted by 70 basis points to 17.2% and 18.3% respectively. However, no detailed breakdown of product segments into absolute terms and revenue contribution % was provided in the transcript.

• Fourth quarter 2025: Volumes expected to soften 5%-7% due to seasonality and persistent demand challenges. Revenues projected in range of $1.07 billion to $1.11 billion. Gross margins under pressure. Adjusted EBITDA excluding LIFO forecasted in range of $33 million to $37 million. Net loss per share in range of $0.28 to $0.22 per diluted share.
• Cash flow: Expect cash flow generation to move leverage ratio towards target range, with liquidity healthy and working capital cycle at 68 days.

• Industry recessionary conditions continuing with falling shipments and margin compression.
• Demand remaining stubbornly depressed affecting customer buying behavior.
• Supply side tariffs and trade policy impacts on industrial metal commodity prices.
• Voluntary attrition in the industry ranging from 5% to 15% which could impact operations.

Q: Congratulations, guys. Just want to start with one Ryerson-specific question. Fourth quarter, typically a strong cash flow quarter for you guys. Given the earnings guidance and the normal year-end working capital release, fair for us to expect some more solid cash generation again to close the year?

A: Yes, you're correct on the cash generation, and we typically see somewhere between $70 million and $80 million of working capital release in the fourth quarter relative to volumes and natural release. So I expect again in this fourth quarter to get a decent working capital release and cash flow there from operations.

Q: Currently, Ryerson generally reports the whole company, while, Rick, you touched on earlier, you guys provide results for carbon, specialty and pipe and tube. Are you planning for this merger to be a complete roll-up with no segments? Or are you going to provide some segments to the business?

A: We don't know. So we're going to figure out though because we're not... But I'm sure Rick and Rich can give you some good color on that, too.

Q: Can you talk first about are there cash costs to get the synergies? And I just want to make sure that the synergies that you're talking about are under current market conditions, not based upon improved business cycle, et cetera.

A: Yes. Alan, again, I'm going to kick it over to Rick here in just a second. But look, all we've known for the last 3 years of the current conditions, and so we have to really go way back to remember better conditions. So the synergies are really founded and premised on current conditions and how we get them Q: And then last question, can you talk about assuming market conditions are flattish next year or similar to this year, kind of working capital for the combined company for next year, whether that will be a source of cash or...

A: Yes. Alan, I try to give a little bit of insight into that in terms of what we've seen over time where how much net working capital does it take for us to really finance an incremental dollar of revenue. And I think if you look at that in reverse, if conditions were to stay the same, depending on where price goes, but if conditions were to stay the same in a combined company scenario, there's certainly working capital there to be had and there's working capital release and free cash flow there