Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ryerson Holding Corp (NYSE:RYI) reported a 12.7% increase in net sales for Q1 2025 compared to Q4 2024, reaching $1.14 billion.
• The company achieved a 14% increase in North American shipments, outperforming the industry average by 3 percentage points.
• Ryerson Holding Corp (NYSE:RYI) saw significant improvements in working capital management and market share gains in the spot transactional market.
• The company maintained its $60 million expense reduction target, achieving a $32 expense per ton reduction year-over-year.
• Ryerson Holding Corp (NYSE:RYI) is progressing with significant CapEx investments aimed at modernizing its service center network, which are expected to improve earnings quality.

Negative Points

• The company experienced a net loss of $5.6 million or $0.18 per diluted share in Q1 2025, compared to a net loss of $4.3 million in the prior quarter.
• Gross margin contracted by 100 basis points to 18% due to rising commodity prices and lagging contract price adjustments.
• The stainless steel market remains a headwind, with depressed conditions affecting Ryerson Holding Corp (NYSE:RYI)'s performance.
• The company's leverage ratio increased to 4.3 times, above the target range of 2 times, due to countercyclical volume and pricing conditions.
• Ryerson Holding Corp (NYSE:RYI) used $41 million of cash in operations during Q1 2025, primarily due to increased accounts receivable from higher customer sales volumes.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with RYI.

Q: Despite the overall debt load increasing, how does Ryerson plan to manage debt levels and reduce interest expenses? A: Eddie Lehner, CEO, explained that as CapEx projects wind down and become operational, cash flow and EBITDA are expected to improve, allowing for debt reduction and lower interest expenses. Jim Clawson, CFO, added that higher cash flows and lower CapEx will help decrease leverage ratios over time.

Q: The second quarter pricing outlook seems lower than expected. Are there specific areas in the portfolio affecting this? A: Eddie Lehner noted that OEM contract business was a significant headwind, with average selling prices bottoming in January. However, transactional growth and CapEx investments are starting to pay off, despite challenges in the OEM contract segment.

Q: Can you update us on the current split between transactional and contractual sales? A: Jim Clawson stated that transactional sales increased to about 47% in the first quarter, up from 43% at the end of the previous year. The target remains to reach approximately 60% transactional sales.

Q: How is Ryerson addressing the challenges in the stainless steel market, and are there plans to diversify away from it? A: Eddie Lehner mentioned that while the stainless steel market has been challenging, Ryerson has gained market share and made investments in this area. The company plans to grow its carbon franchise transactionally, complementing its existing portfolio rather than moving away from stainless steel.

Q: Could you discuss the progress and impact of Ryerson.com 3.0 on transactional sales? A: Eddie Lehner highlighted that transactional customer visits and sales on Ryerson.com have increased, with new customers establishing accounts and utilizing the platform. The company is seeing positive trends as the platform matures.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.