Ryerson Holdings ((RYI)) has held its Q1 earnings call. Read on for the main highlights of the call.
Ryerson Holdings’ recent earnings call presented a mixed sentiment, reflecting both optimism and caution. The company reported strong sequential growth in sales volume and improved adjusted EBITDA, driven by significant CapEx investments and increased liquidity. However, the earnings call also highlighted challenges, including an increased net loss, rising debt levels, and persistent difficulties in the stainless steel market and OEM contracts, leading to a mixed performance outlook.
Strong Sequential Volume Growth
Ryerson Holdings reported a robust first quarter with sales volume reaching 500,000 tons, marking a 12% increase quarter-over-quarter. This growth was particularly notable in North American shipments, which rose nearly 14%, outperforming the industry by 3 percentage points. This achievement underscores Ryerson’s effective market strategies and operational efficiencies.
Improved Adjusted EBITDA
The company achieved a significant improvement in adjusted EBITDA, excluding LIFO, reaching $32.8 million in the first quarter of 2025, compared to $10.3 million in the previous quarter. This improvement was attributed to better-than-expected margins and effective operating cost controls, showcasing Ryerson’s ability to enhance profitability despite market challenges.
Significant CapEx Investments
Ryerson invested $8 million in capital expenditures during the first quarter, focusing on advancements at the Shelbyville, Kentucky facility. These investments are expected to boost productivity and enhance service offerings, aligning with the company’s long-term growth strategy.
Increased Global Liquidity
The company’s global liquidity saw an increase, rising to $490 million in the first quarter from $451 million in the fourth quarter. This improvement was driven by higher receivables, providing Ryerson with greater financial flexibility to navigate market uncertainties.
Net Loss Increase
Despite positive developments, Ryerson reported a net loss of $5.6 million or $0.18 loss per diluted share, up from $4.3 million and a diluted loss per share of $0.13 in the previous quarter. This increase in net loss highlights ongoing financial challenges that the company needs to address.
Rising Debt and Leverage Ratio
Ryerson’s total debt rose to $498 million from $468 million in the prior quarter, with the leverage ratio climbing to 4.3 times, exceeding the target range of two times. This was primarily due to lower trailing 12-month adjusted EBITDA, excluding LIFO, indicating a need for improved debt management.
Challenges in Stainless Steel Market
The stainless steel market posed significant challenges, with a price decline of approximately 3%, which negatively impacted Ryerson’s performance across quarters. This sector’s volatility remains a concern for the company’s future profitability.
OEM Contract Business Slowdown
Ryerson’s OEM contracts faced considerable headwinds, reflecting weaknesses in specific markets such as Class A trucks, machinery, equipment, and appliances. This slowdown underscores the broader market challenges impacting Ryerson’s contract business.
Forward-Looking Guidance
Looking ahead, Ryerson Holdings provided guidance for the second quarter of 2025, anticipating a sequential improvement in operating income despite challenging market dynamics. The company forecasted adjusted EBITDA for Q2, 2025 to be between $40 million to $45 million, with earnings per share expected to range from $0.07 to $0.14. Revenues are projected to be between $1.15 billion and $1.19 billion, with an average selling price increase of 3% to 4%. Ryerson also reaffirmed its $50 million annual CapEx target and expects improvement in its leverage ratio throughout 2025.
In conclusion, Ryerson Holdings’ earnings call painted a picture of both progress and challenges. While the company demonstrated strong growth in sales volume and improved financial metrics, it continues to face hurdles in managing rising debt and navigating a volatile stainless steel market. The forward-looking guidance suggests cautious optimism, with expectations of improved operating income and strategic investments driving future growth.