Ryerson Holding Corp. Q3 FY2026 earnings call

• Merger Synergies: The merger with Olympic Steel is delivering value ahead of schedule. First-year synergy targets ($40 million) were surpassed early, with an annualized run rate of approximately $13 million realized in Q3 and expectations of $14-$15 million in Q4. Total two-year target remains $120 million.
• Data Center & Power Generation: These sectors are major growth drivers, representing ~9% of revenues (up from 6% in Q2). Data center volumes increased ~65% compared to Q1 2026, driven by demand for power, IT hardware, cooling, and fabrication.
• Network Integration: ~90% of Olympic Steel’s inventory and transaction data is now integrated into Ryerson’s systems, enabling better visibility, inventory sharing, and coordinated fulfillment across the combined network.
• Commercial Strength: Transactional business is driving volume growth. Commercial synergies are outperforming expectations, with Q4 forecast including ~$4 million in realized commercial synergies, approaching the two-year target of $20 million.
• Operational Efficiency: Productivity reached 2.25 tons per employee per day, well above benchmarks. Network optimization projects, such as the Connecticut consolidation (combining Olympic Milford and Ryerson Specialty Alloys), are underway to reduce fixed costs and improve logistics.

Total Net Sales: $2.2 billion (an increase of 8.6% sequentially). Shipments: 814,000 tons (1.2% sequential increase). Same-store revenue was $1.58 billion (9.3% sequential increase). Gross Margin: Contracted by 50 basis points to 17.2% due to higher cost inventory flowing through COGS and a $4 million one-time inventory purchase accounting adjustment. Adjusted EBITDA (excluding LIFO): $115 million, exceeding guidance. Olympic Steel contributed $30.2 million to Adjusted EBITDA.

• Q4 Revenue: Expected range of $1.96 billion to $2.04 billion.
• Q4 Net Income: Excluding residual inventory adjustments, expected range of $16 million to $20 million (30 to 38 cents per diluted share).
• Q4 Adjusted EBITDA (excl. LIFO): Expected range of $100 million to $104 million, with Olympic Steel contributing $28 million to $30 million.
• Q4 LIFO Expense: Expected range of $28 million to $32 million.
• Synergy Run Rate: Expecting $56 million to $60 million on an annualized run rate by end of Q4.
• Full Year CapEx: Maintained at approximately $75 million (~$50M for Legacy Ryerson, $25M for Olympic Steel).
• Leverage Ratio: Anticipated to fall below 3.0 times by year-end due to higher trailing 12-month EBITDA and lower seasonal working capital needs.

• Margin Compression: Gross margins faced pressure from higher cost inventory (particularly carbon products) flowing through COGS before corresponding price adjustments could be made to program customers.
• Inventory Accounting Adjustments: A $4 million one-time purchase accounting adjustment impacted Q3 results; while declining, residual impacts may persist.
• Supply Chain Constraints: Extended mill lead times and exceptionally lean inventories create friction, requiring significant resourcefulness to meet customer demand and maintain service levels.
• Material Cost Volatility: Continued increases in carbon mill pricing and potential tightness in hot rolled steel and aluminum supply through 2027 pose risks to cost management.

Q: Analyst asked about program business margin pressure and signs of inflection. / A: Management noted that program margins have been pressured because COGS rose faster than ASPs, particularly on carbon. However, they see improvement in both volume and margin, especially as carbon prices continue to rise, allowing catch-up in pricing. Transactional business is showing stronger momentum, and negotiations for 2027 contracts are nearing completion, providing better clarity on future terms.