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- **$120M Synergy Target**: 2-year phased integration to unlock cost savings from: 
  - Commodity mix optimization ($14/ton procurement savings) 
  - Workforce efficiency (5-15% voluntary attrition) 
  - End product manufacturing expansion 
- **Merger Structure**: All-stock deal with 63% Ryerson, 37% Olympic ownership post-close. 
- **Financial Resilience**: $500M debt, 3.7x leverage ratio (target 0.5-2.0x). 
- **Q4 2025 Guidance**: EBITDA $33-37M (flat to +2% ASP growth). 
- **Customer Confidence**: Overwhelmingly positive feedback despite industry consolidation skepticism.

**【CEO Summary Section】**
- **Market Overview**: Third quarter marked continued industry recession with falling shipments (year-over-year and sequential) and margin compression, driven by weak demand and supply-side tariffs. 
- **Revenue Performance**: Q3 2025 revenue of $1.16B (-1% vs. Q4 2025), with 2.6% ASP increase offset by 3.2% tonnage decline. 
- **Merger Highlights**: Announced merger with Olympic Steel to create North America's 2nd-largest metal service center ($6.5B pro forma revenue). 
- **Synergy Vision**: $120M synergies (phased in over 2 years) from: 
  - **Commodity Mix Optimization**: Ryerson's 25% stainless/25% aluminum vs. industry 33% non-ferrous; Olympic's carbon expertise. 
  - **Operational Efficiency**: 5-15% voluntary attrition rate in industry enabling workforce optimization. 
  - **Procurement Scale**: Combined 2.9M tons annual purchasing to achieve $14/ton savings. 
- **Financial Health**: $500M total debt, 3.7x leverage ratio (target 0.5-2.0x). Q4 2025 EBITDA guidance: $33-37M (flat to 2% ASP growth). 

**【CFO Financial Commentary】**
- **Q5 2025 Results**: 
  - Adjusted EBITDA (ex LIFO): $40.3M (vs. $45M prior quarter). 
  - Net loss: $14.8M (-$0.46 EPS) vs. $1.9M ($0.06 EPS) prior quarter. 
  - LIFO expense: $13.2M (consistent vs. prior quarter). 
- **Q4 2025 Outlook**: 
  - Revenue: $1.07-1.11B (flat to +2% ASP). 
  - EBITDA: $33-37M (down 16-24% vs. Q5). 
  - CapEx: $50-55M (aligned with normalized run rate). 
  - Cash conversion cycle: 68 days (stable vs. prior quarter). 

**【Merger Details】**
- **Structure**: All-stock deal with Olympic Steel shareholders receiving 1.7105 Ryerson shares. 
- **Ownership**: Ryerson 63%, Olympic 37% post-close. 
- **Synergy Phasing**: 1/3 realized by end of Q1 2026, full realization by Q4 2027. 
- **Balance Sheet**: Target leverage 3.0x post-close, enhanced credit profile. 

**【Synergy Examples】**
1. **Commodity Mix Optimization**: 
  - Ryerson: 25% stainless, 25% aluminum, 50% carbon. 
  - Industry: 33% non-ferrous, 67% carbon. 
  - Olympic: Strong carbon (plate, tube) and coated carbon capabilities. 
2. **Workforce Efficiency**: 
  - 5-15% annual voluntary attrition rate in industry. 
  - Combined workforce cost savings through attrition-driven headcount reduction. 
3. **Procurement Scale**: 
  - Combined 2.9M tons annual purchasing. 
  - $14/ton savings ($40.6M total) from scale. 

**【Q&A Highlights】**
1. **Cash Flow Outlook**: 
  - Q4 2025 working capital release: $70-80M (typical seasonal trend). 
  - Long-term working capital optimization opportunity: $6-7 revenue per $1 NWC. 
2. **Market Share Growth**: 
  - Cross-selling opportunities via combined 160-location network. 
  - End product manufacturing (e.g., industrial hoppers, HVAC components) as countercyclical margin driver. 
3. **Synergy Costs**: 
  - Up to $40M in one-time integration costs. 
  - No incremental CapEx required beyond normalized $50-55M/yr. 
4. **Customer Reaction**: 
  - Overwhelmingly positive feedback from customers and stakeholders. 
  - No negative pushback despite industry consolidation skepticism.

Olympic Steel Inc (ZEUS) Q3 2025 Earnings Call Transcript

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ZEUS

ZEUS fundamentals

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