Ryerson Holdings Signals Rebound in Earnings Call

Ryerson Holdings ((RYZ)) has held its Q1 earnings call. Read on for the main highlights of the call.

Ryerson Holdings’ latest earnings call struck a notably upbeat tone as management highlighted a sharp rebound in operations, with shipments and revenues climbing and margins widening after a tough prior year. While leverage and cash usage jumped due to the Olympic Steel merger and working-capital build, executives emphasized that early synergy wins and stronger profitability are already offsetting these near-term balance sheet pressures.

Strong Volume Recovery and Market Share Gains

Ryerson reported a powerful rebound in volumes, with total tons shipped up 42.3% sequentially and 31.2% year over year as the Olympic Steel acquisition kicked in. On a same-store basis, shipments still grew a solid 13.4% sequentially and 4.6% annually, outpacing MSCI industry trends and signaling market share gains driven by transactional strength and carbon product demand.

Revenue Growth

Net sales surged to $1.57 billion in the first quarter of 2026, marking a 37.9% increase from a year earlier as higher volumes and prices flowed through the P&L. Same-store locations generated $1.29 billion in sales, with shipments up 4.6% and average selling prices rising 8.9% year over year, underlining both volume recovery and improved pricing power.

Margin Expansion and Profitability Improvement

Profitability moved meaningfully higher, with same-store gross margin expanding 270 basis points to 18% and gross margin excluding LIFO up to 18.8%, a 150 basis-point gain. The company swung from a loss in the prior-year quarter to net income of $4.5 million, or $0.10 per diluted share, while adjusted net income reached $13.1 million, or $0.30 per share.

Adjusted EBITDA More Than Doubled

Earnings quality improved as adjusted EBITDA excluding LIFO more than doubled year over year to $67.4 million, reflecting better margins and higher throughput. Same-store adjusted EBITDA of $54.9 million exceeded internal expectations, while Olympic Steel added another $12.5 million during its six-week contribution window.

Meaningful Early Synergy Realization

Management stressed that synergy capture is off to a strong start, with procurement actions taken in the quarter already annualizing roughly $15 million in savings. The company expects $4 million to $6 million of synergy realization in the second quarter and reiterated its targets of $40 million in procurement savings over two years and $120 million in total annual run-rate synergies.

Q2 Outlook and Improved Forward Guidance

Forward guidance turned more constructive, with total tons shipped projected to be 18% to 20% above the first quarter as Olympic is fully consolidated. Ryerson is guiding revenue between $1.86 billion and $1.93 billion, same-store selling prices up 2% to 4% sequentially, net income of $20 million to $22 million, and adjusted EBITDA excluding LIFO of $88 million to $92 million.

Operational and Balance Sheet Positives

Despite integration noise, day-to-day metrics showed discipline as inventory days of supply fell by five days to 74, placing the company within its 70 to 75 day target band. The cash conversion cycle improved slightly to 67 days, and total liquidity climbed from $502 million to $618 million quarter over quarter, giving Ryerson flexibility as it navigates the merger.

Shareholder Returns and Capital Allocation Tools

Ryerson continued to return cash to investors, distributing $9.7 million in dividends during the quarter while also launching a fresh $100 million share repurchase authorization over two years. The company bought back approximately 74,000 shares for $1.6 million in the period, and capital spending remained modest at $12 million, with full-year capex still pegged at about $75 million including Olympic.

Integration Execution and Cultural Alignment

The integration narrative was notably upbeat as management highlighted rapid establishment of unified leadership teams and strong cross-company collaboration. Early facility consolidations, including two exits expected to save about $1.5 million annually, and a surge of employee-driven synergy ideas suggested cultural alignment and operational momentum across the combined platform.

Significant Increase in Leverage

The main blemish in the story is leverage, with total debt rising to $908 million and net debt to $883 million, roughly $445 million higher than last quarter. That pushed the leverage ratio up to 5.1 times from 3.1 times, and while management expects this to recede as EBITDA grows, investors must weigh the elevated debt load against the promised synergy benefits.

Large Working Capital and Operating Cash Use

The company consumed $179 million of cash in operating activities during the quarter, primarily to build working capital for the seasonally stronger period and to support the enlarged balance sheet. This heavy draw underscores that the merger and growth push require significant upfront cash, even as they set the stage for higher earnings in subsequent periods.

LIFO Expense Above Expectations

Inventory accounting also added some noise as LIFO expense reached $10 million, above the expected $6 million to $8 million range and reducing reported gross profit. Management signaled that LIFO headwinds will intensify in the near term, guiding to $14 million to $16 million of LIFO expense in the second quarter and flagging ongoing inventory cost pressure.

Higher SG&A and Integration-Related Costs

Operating expenses moved higher with total warehousing, delivery, selling, general and administrative costs climbing to $265.2 million, or $217.6 million on a same-store basis. The increase of $15.5 million year over year reflected higher compensation and benefits, advisory fees tied to the Olympic Steel deal, and rising delivery expenses as diesel prices climbed.

Elevated Debt Service and Merger-Related Cash Outflows

Beyond working capital, the cash flow statement was weighed down by merger-related funding, including repayment of roughly $300 million of Olympic Steel debt. These one-time uses, coupled with integration spending, explain much of the quarter’s spike in total and net debt and will likely remain in focus as investors monitor de-leveraging progress.

Contract Business Lagging Transactional Strength

The demand picture was uneven, with transactional business showing pronounced strength while contract and program work lagged by about 4% to 5%. Management noted that several large OEM end markets have yet to fully recover, suggesting a potential upside lever once these customers normalize but leaving near-term growth more reliant on spot-oriented demand.

Commodity Inflation and Delivery Cost Risks

Rising metal prices, particularly in aluminum and recently nickel, as well as higher diesel and trucking costs, pose a risk to the margin story if not carefully managed. Executives warned of a potential “boomerang effect” where aggressively passing through cost increases could choke off demand, underscoring the delicate balance between pricing power and volume.

One-Time Tax and Non-Deductible Costs

Tax expense came in elevated at $8.2 million, partly due to about $2 million of non-deductible transaction-related items and state tax-rate changes stemming from the merger. Management characterized these as one-time effects and expects the effective tax rate to normalize in the 25% to 26% range going forward, easing a temporary drag on net income.

Forward-Looking Guidance and Strategic Trajectory

Looking ahead to the second quarter, Ryerson is guiding modest same-store shipment growth of 1% to 3% alongside overall volume gains of 18% to 20% with Olympic fully included, and expects overall average selling prices to rise 1% to 3%. The company is targeting net income of $20 million to $22 million and adjusted EBITDA excluding LIFO between $88 million and $92 million, supported by $4 million to $6 million of additional synergies and capex of around $75 million for 2026.

Ryerson’s call framed a company in transition but on the front foot, with stronger shipments, widening margins and accelerating synergies offering a compelling earnings trajectory despite higher leverage and cost noise. Investors will be watching whether management can translate early integration wins and disciplined working-capital management into sustained EBITDA growth and de-leveraging, but for now the operational momentum appears to outweigh the near-term financial strain.