Ryerson's Rocky Road to Recovery in Q1: Is the Bottom in Sight?

Investors in industrial metals distributors are no strangers to volatility, but Ryerson Holding Corporation (RYS) just delivered a report card that’s a mix of hope and caution. Let’s break down the numbers and see if this quarter’s results signal a turning point—or if the headwinds are still too strong.

The first thing that jumps off the page is Ryerson’s $1.1357 billion in Q1 sales, up a robust 12.7% from the prior quarter but down 8.3% year-over-year. The sequential pop is a win, driven by stronger transactional sales volumes and market share gains. Transactional sales—a key metric for this business—rose 12% year-over-year, proving Ryerson’s ability to capitalize on smaller, more agile demand. But the year-over-year decline isn’t great. Why? Blame weaker program accounts, which are larger, multi-month contracts. Big clients are pulling back, and that’s dragging down the top line.

Now, the bad news: Ryerson still can’t turn a profit. The company reported a net loss of $5.6 million, or $0.18 per share, narrower than last year’s $0.22 loss. But here’s the catch: $13.6 million in soaring operating expenses and a $6.8 million LIFO charge (due to rising commodity prices) are eating into margins. The LIFO impact is a recurring thorn in Ryerson’s side, as it forces the company to account for the most recently purchased (and expensive) inventory first. Strip that out, though, and the LIFO-adjusted gross margin improved to 18.6%, a 220-basis-point sequential jump. That’s a sign of operational discipline—maybe they’re finally getting a handle on costs.

Let’s pause here for a visual check on Ryerson’s stock:

If the chart shows a flat or slightly downward trend, it’s no surprise. Investors are still skeptical about Ryerson’s ability to stabilize margins and grow sales in a tough industrial environment.

Now, the silver lining: Ryerson isn’t just surviving—it’s fighting back. The dividend stayed steady at $0.1875 per share, a sign of cash flow stability despite the losses. Management also raised its Q2 outlook, forecasting sales of $1.15–$1.19 billion and adjusted EBITDA of $40–$45 million. That’s a slight improvement over Q1’s $1.135 billion, and the EBITDA guidance implies a path to profitability—if they can control those LIFO charges.

But here’s the rub: Ryerson operates in a brutally cyclical industry. The company’s 114 locations across four countries and 4,600 employees give it scale, but metals demand is tied to construction, manufacturing, and infrastructure spending—all sectors that are sensitive to interest rates and economic cycles. If the U.S. economy slows further, those program accounts (which still matter) could dry up entirely.

So, what’s the verdict? Ryerson is a classic “value trap” candidate: cheap stock, but with risks. The positives?
- Revenue growth is back, even if it’s from smaller deals.
- Cost controls are working (LIFO-adjusted margins are up).
- Dividend is intact, signaling management’s confidence.

The negatives?
- LIFO charges are unpredictable and tied to commodity swings.
- Program accounts are struggling, and there’s no guarantee they rebound.
- Q2 guidance is cautious, with EPS estimates of just $0.07–$0.14.

Looking ahead, Ryerson’s fate hinges on two things: commodity prices and macroeconomic stability. If steel and aluminum prices stabilize, the LIFO drag eases. If the Fed pauses rate hikes and the economy avoids a hard landing, industrial demand could pick up. But with the Federal Reserve’s next move still uncertain, investors are right to be nervous.

The bottom line? Ryerson is showing signs of life, but it’s not out of the woods yet. For bulls, the dividend and margin improvements are reasons to dip a toe in. For bears, the losses and reliance on program accounts are red flags. Buyers should wait for a clearer signal—like a full-quarter profit or a pickup in program sales—before going all in. Until then, Ryerson remains a rollercoaster ride for the bold.

Final Take: Ryerson’s Q1 report is a glass-half-full story. The revenue rebound and margin gains are steps forward, but the company still needs to prove it can survive a downturn. For now, this stock is a hold—not a buy, not a sell. Keep an eye on Q2 results and commodity trends. If Ryerson can turn the corner, it could be a steal. But don’t bet the farm yet.