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Ryerson Holding (RYI) Q3 Earnings call transcript Oct 30, 2024

Daily EarningsWednesday, Oct 30, 2024 11:43 pm ET

1min read

MSCI -- RYI --

In the third quarter of 2024, Ryerson Holding Corporation faced a challenging environment marked by extended countercyclical conditions, unrelenting gross margin compression, and declining demand. Amidst these adversities, the company is poised to emerge stronger with strategic investments and operational improvements.

Strategic Investments and Resilience Amidst Industry Downturn

Edward Lehner, Ryerson's President and CEO, acknowledged the company's ability to weather a protracted industry downturn, emphasizing the importance of the investments made during this period. Despite the tough operating environment, these investments are deemed necessary for the company's long-term growth and future competitiveness.

Financial Performance in Q3: Mixed Signals

Ryerson reported a revenue of $1.13 billion in Q3, meeting the low end of its guidance expectations. However, sales volume was lower than anticipated, impacted by a slow demand environment and extreme weather events. The average selling price per ton also decreased by 3.7%, reflecting pricing pressure across the product mix. Notably, Ryerson's Bright Metals franchise saw a 1% increase in aluminum and a 2% decrease in stainless steel average sell prices.

Market Conditions and Demand Environment

Industry volumes across North America, as measured by the Metals Service Center Institute (MSCI), decreased by 5.1% compared to the prior 3 months. Ryerson's North American shipments also decreased by 5.5%. Despite these challenges, Ryerson noted market share gains across all 3 product lines, with stainless steel leading the way.

Looking Ahead: Q4 and Beyond

Jim Claussen, Ryerson's CFO, outlined the company's expectations for Q4 2024, anticipating a volume decrease of 8% to 10% sequentially compared to the third quarter. Revenues are forecasted to be between $1 billion to $1.04 billion, with average selling prices remaining stable. The company expects adjusted EBITDA for the quarter to be in the range of $10 million to $12 million, with a loss per share between $0.53 to $0.47 per diluted share. Ryerson aims to maintain its financial discipline and optimize its cost structure to prepare for the next upturn.

Conclusion

Ryerson Holding Corporation's third quarter earnings call underscored the company's resilience amidst challenging market conditions. Despite the downturn, strategic investments and operational improvements position Ryerson for future growth. The company's focus on market share gains and cost optimization bodes well for its long-term prospects, making it an interesting investment opportunity to watch.

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