Ryerson Holding Corporation

Good day and welcome to the Ryerson Holding Corporation's board call.

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Good morning.

Thank you for joining Ryerson Holding Corporation's fourth quarter 2025 earnings call. On our call, we have Eddie Lehner, Ryerson's chief executive officer, Jim Klassen, our chief financial officer, and Molly Cannon, our chief accounting officer and corporate controller. A recording of this call will be posted on our investor relations website at ir.ryerson.com. Please read the forward-looking statement disclosures included in our earnings release issued yesterday. and note that it applies to all statements made during this call. In addition, our remarks today refer to several non-GAAP measures. Reconciliations of these adjusted numbers are also included in our earnings release. I will now turn the call over to Eddie.

Thank you, Justine.

Good morning, and thank you all for joining us to discuss our fourth quarter and full year 2025 performance. Before diving in, would like to first extend a warm welcome to rick maravito rich manson and andrew greif who are joining this morning's call as our president and chief operating officer our senior vice president of finance and our executive vice president of ryerson and president of the olympic steel business unit and all of our Olympic Steel faithful following the successful merger of Ryerson and Olympic Steel, which we closed just a week ago today. It is my absolute pleasure to be working alongside you to serve both our collective shareholders and our combined employee base that's more than 6,000 strong in approximately 160 locations. I'm looking forward to the great things we are going to accomplish together as a unified enterprise with significantly greater scale and expanded product and service offerings. We are in the very early days of integration as in seven, but we've been sitting on a spring for several months and now we've sprung and we're off to an excellent start. We have established an experienced integration team focused on realizing the expected 120 million in annual run rate synergies with an emphasis on combining best practices, optimizing asset utilization, and capturing combined targeted cost and revenue merger benefits. We are highly confident in our ability to deliver on the aforementioned synergies over the next two years and are looking forward to sharing our progress with you quarterly. Turning to the business, the underlying commodity price gumbo for our mix of products increased at a faster rate than anticipated during the fourth quarter as supply side price drivers outpaced buyer price absorption and demand was still subdued and contractionary in the quarter. By the end of the quarter, supply side price increases have not yet materialized in our customer end markets due to contract customer pricing lags and transactional customer price stagnation. With Q4 2025 in the rear view and as we progress through the first quarter of 2026, we are seeing encouraging strength in customer quote and order activity relative to the past several years, and we expect to see gross margin expansion year-over-year and sequentially as better pricing propagates through the industrial metals value chain along with improving demand signals. We also expect operating income improvements sequentially and year-over-year given better manufacturing demand, improved operating leverage, and revenue growth. These encouraging trends though still early, when looking at a more desirable duration of synchronized manufacturing growth, certainly represent the best demand start to a year since 2022. It is always better to close a merger with improving industry fundamentals, and it is part and parcel of why the stage is also well set from a timing perspective for our just completed merger with Olympic Steel. Independently, over the past four years and now together, we have both invested significantly in our capabilities with strong balance sheets leading up to the merger, and now together we expect to execute on $120 million of annual run rate synergies at the cusp of what we hope to be at least a multi-quarter cyclical inflection upwards. As we advance in 2026, our clear priorities are to continue integrating the combined organization in a way that preserves and enhances the customer experience as well as our employee culture, to begin realizing merger synergies as communicated to stakeholders, to improve the quality of earnings through disciplined execution of service center fundamentals across our expanded value-added service center network, and to reduce leverage to within our targeted range with updated shareholder capital allocation plans coinciding with synergy attainment. Before we get into the details of our financial results, I want to thank all of my Ryerson Olympic teammates for their hard work over these past six months, particularly given the additional time and effort involved in consummating our merger with Olympic Steel. We also appreciate the continued engagement and support of our customers, suppliers, and shareholders as we enter this next phase together for the desired betterment of all. With that, I'd like to turn the call over to Jim Klassen for a review of market conditions and financial results.

Thanks, Eddie, and good morning, everyone. North American industry volumes, as measured by the MSCI, or Metal Service Center Institute, experienced normal seasonal decline in the fourth quarter relative to the third, decreasing by 5.8% sequentially and 1.5% for the full year of 25 compared to 2024. By comparison, Ryerson's North American shipments decreased by 6.8% sequentially and less than half a percentage point for the full year, indicating market share gains for the full year of 25 despite retracement during the quarter on majorly depressed OEM program demand and shipments. Our total company ton shipped were down just under 5% quarter over quarter, in line with guidance, and approximately 3% higher compared to the fourth quarter of last year. For the full year of 25, our total company ton shipped came in just ahead of last year, up by half a percentage point. Turning to performance at the end market level, I'd first like to note that we recently wrapped up a top to bottom review of our classifications and realigned our reporting to gain a clearer, more accurate understanding of our business performance and better direct strategic decision making. Utilizing these new classifications, we saw the most year over year volume growth in our fabrication and welding sector, followed by growth in the machine shop and machinery and equipment sectors. Partially offsetting that growth was weakness in the commercial transportation sector, and to a lesser degree, by weakness in our climate sector, which includes HVAC, and in our heavy equipment sector, which includes agricultural and construction equipment. Turning to fourth quarter performance, we achieved revenue within our guidance range with volumes in line with seasonal trends. However, as Eddie mentioned, material costs rose faster than anticipated during the quarter, outpacing our average selling price growth, and the quarter expired before we were able to fully price these increases into the market. As a result, we experienced weaker than expected gross margins and recorded a higher than expected LIFO expense for the quarter. our operating expenses came in largely as expected. In all, our net loss of $38 million, or $1.18 per share, and our adjusted EBITDA excluding LIFO generation of $20 million came in below our guidance expectations. Turning to current expectations, we have been seeing very strong activity in the first quarter of 26. and we anticipate finishing the quarter with tons shipped up 13 to 15% compared to the fourth quarter of 25. Same store revenues are expected to be in the range of $1.26 to $1.3 billion, with average selling prices expected to be flat to up 2% quarter over quarter as fourth quarter material price increases start to flow into the market and expand gross margins. We also expect to realize operating leverage as demand conditions improve. In all, we anticipate generating net income for the first quarter in the range of $10 to $12 million before any merger-related fees. We also expect to record LIFO expense of between $6 and $8 million and adjusted EBITDA excluding LIFO of $51 to $54 million in the first quarter of 26. Turning to our expectations for Olympic Steel, in the last six weeks of the quarter, we anticipate that Olympic will experience similar market dynamics and therefore generate accretive revenue in the range of $260 to $280 million and adjusted EBITDA, excluding LIFO, in the range of $12 to $13 million. For our combined companies, we anticipate first quarter revenue in the range of $1.52 to $1.58 billion, and adjusted EBITDA, excluding LIFO attainment, between $63 and $67 million. Turning to our investments in the business, in the fourth quarter, our capital expenditures totaled $21 million, contributing to a full-year investment of $52 million. In 26, we anticipate investing approximately $50 million in capital expenditures on the same store basis, or $75 million including a prorated expectation for Olympic steel. We generated fourth quarter cash from operating activities of $113 million as our seasonal working capital release more than offset the net loss generated. Inventory days of supply increased by three days quarter over quarter to 79 and was well managed considering the typical fourth quarter trend. Our overall cash conversion cycle also remained well managed coming in at 68 days for the fourth quarter, which is consistent with the prior quarter and 11 days leaner than the same period last year. Utilizing our cash flow generation, we decreased our debt by $37 million and net debt by $34 million compared to the prior quarter. As a result of continued incremental improvements in both our net debt and trailing 12-month adjusted EBITDA excluding LIFO, our leverage ratio decreased quarter over quarter from 3.7 to 3.1 times, continuing to approach our target range of 0.5 to 2 times. From a global liquidity perspective, the company's profile remained healthy during the fourth quarter, and we ended the period with $502 million of liquidity compared to $521 million at the end of the third quarter. In conjunction with the closure of our merger with Olympic Steel, we successfully extended the maturity of our revolving credit facility and expanded its capacity from $1.3 billion to $1.8 billion. We expect to utilize the facility to fund our combined general corporate needs as well as support the pursuit of synergistic growth opportunities. Turning to shareholder returns, Ryerson distributed $6.1 million in the form of dividends or 18.75 cents per share during the fourth quarter and has announced a first quarter dividend of the same amount payable to our now combined shareholder base. We did not repurchase any shares in the fourth quarter and ended the period with $38.4 million remaining on our share repurchase authorization. I will now turn the call over to Molly Cannon to discuss our financial performance highlights for the fourth quarter.

Thanks, Jim, and good morning, everyone. For the fourth quarter of 2025, Ryerson reported net sales of $1.1 billion, a decrease of approximately 5% compared to the previous quarter, driven by lower tons shipped with average selling prices flat. Compared to the fourth quarter of 2024, net sales increased by 9.7%, with average selling prices 6.3% higher, as well as increased ton shift of 3.1%. As discussed, commodity prices rose more than anticipated during the quarter and resulted in a LIFO expense of $22.5 million compared to our expected expense of $10 to $14 million and compared to the previous quarter expense of $13.2 million. Gross margin contracted by 190 basis points to 15.3% and gross margin excluding LIFO contracted by 100 basis points to 17.3% during the fourth quarter as we were unable to price these rapid increases into the market before the end of the period. Warehousing delivery selling general and administrative expenses totaled 205.3 million for the fourth quarter, an increase of 4.9 million compared to the third quarter, driven by advisory service fees related to the Olympic steel merger. In all, the gross margin compression and one-time expenses contributed to our fourth quarter net loss attributable to Ryerson of 37.9 million, or $1.18 per diluted share. This compares to net loss of 4.3 million and diluted loss per share of 13 cents for the fourth quarter of 2024. Our adjusted EBITDA, excluding LIFO generation for the fourth quarter, was $20.4 million, which compares to $10.3 million generated in the fourth quarter of 2024. And with this, I'll turn the call back to Eddie.

Thank you, Molly. While fourth quarter results were adversely influenced by ongoing recessed manufacturing conditions, We are seeing the signs of an improving manufacturing economy through the early part of 2026, and the combined potential and prospects of our merger have us aiming much higher in the quarters and years ahead. Regardless, whatever the macro gives or takes away, our determination and conviction are resolute in making good on the $120 million and annual synergies we expect to deliver. And we as a team could not be more confident in the RYZ, RIS or RISE, whatever you prefer, organization that we have assembled to deliver it. As Ronnie Coleman, and you got to Google it, used to say, ain't nothing to it, but to do it.

With that, we look forward to your questions, operator. Thank you. Thank you. Ready for questions. Is anybody out there?

Thank you. If you are dialed in via the telephone and would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. We will take our first question from Katia Janek from BMO Capital Markets. Please go ahead.

Hi, thank you for taking my questions. Maybe starting on more, I guess, near term, the 4Q was negatively impacted by the fast increase in prices and you not being able to push prices higher. Are you right now still seeing any potential pushback from your customers about fully accepting these price increases?

Hi, Katia. It's Eddie. And, you know, we've got Rick and Jim and Rich and Andy and Nick in the room with us, so we could give you a really fulsome answer. I'll tell you that I've been pleasantly surprised by the increase in business activity overall. When we look at quoting rates and we look at conversion rates, IT'S THE BEST WE'VE SEEN IN A REALLY LONG, LONG TIME. SO THAT'S VERY POSITIVE. I THINK GETTING PRICE INCREASES INTO THE MARKET, IT'S FINALLY STARTING TO HAPPEN. BUT I'LL ALSO SAY IF YOU LOOK AT MILL UTILIZATION RATES AND YOU LOOK AT SOME OF THE RECOVERIES IN CERTAIN END MARKETS, IT'S STILL SOMEWHAT UNEVEN. IT REALLY IS SORT OF THE END MARKET BY END MARKET AND CUSTOMER BY CUSTOMER. SO IT'S A GRADUAL PRICING THROUGH ON THAT SIDE AS WE LOOK AT MILL PRICING GETTING THROUGH THE DISTRIBUTION CHANNEL TO CUSTOMERS. FOR THE FIRST 45-PLUS DAYS OF THE QUARTER, IT'S BEEN VERY POSITIVE OVERALL.

RICK? YEAH, THANKS, EDDIE. AGREE. I THINK, AND EVERYBODY KNOWS, WE CLOSED ON THE 13TH, SO THE FIRST HALF OF THE FIRST QUARTER IS NOT INCLUDED IN OUR RESULTS GOING FORWARD. BUT I AGREE WITH EDDIE. WE SAW A, HAVE SEEN A GOOD START TO THE YEAR IN TERMS OF BOTH VOLUMES. and pricing. So we're optimistic, as Eddie said earlier in his comments. It's good to close a transaction and merge and have a little wind in our sails in terms of the market. So we're feeling good about that.

And, Connie, I would say this, too. I mean, you know from our attendance at the BMO conferences, which we're looking forward to seeing you again next week, Last couple of years, I mean, it's been a long trough and it got very tiresome to talk about the same things over and over again. Looking at the investments that we both made individually and collectively and looking at the execution of both companies and having a lot of the CapEx really behind us. I'll give you an example. Shelbyville had a record month and we had done a major expansion in Shelbyville. And we're starting to see the promise of those capital investments really show through in a meaningful, tangible way. And the call doesn't afford us the opportunity to go through every single one, but just suffice to say, we're really pleased with how those investments now are starting to look when we see some operating leverage in the industry and across our assets.

And given that the markets are improving, right, and you have a bigger portfolio now, how are you thinking about capital allocation moving forward? And I understand that you're in the process of fully combining or integrating the two companies, but how should we think about that?

Yeah, so I'll start, and then I'm going to kick it over to Rick. So it's important to keep the main thing the main thing, and that is really getting after the $120 million in annual run rate synergies and deleveraging. We still want to bring the debt down. People ask us about growth, but we just took a major quantum leap forward when it comes to growth through the merger. So we want to de-lever, we want to get the synergies, we want to go ahead and optimize the footprint of the assets, and that's job one. And I think when we get through the year, as we get through the year, and we have the success that we expect, then I think we can start to keep one eye out for what may be on that horizon.

Rick, what do you think? Yeah, I agree. And I think, obviously, Eddie talked about continuing the dividend, which we thought was really important as a piece of the capital allocation. But, yeah, I think really focusing on the cash flow and getting the debt down is job one, but certainly continuing to look to also reward the shareholder through dividends and And then we'll frame in as we move forward some more specifics on that.

Perfect. Thank you. And I'll see you next week.

Thanks, Connie. I look forward to it.

Thank you. If you wish to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We will take our next question from Samuel McKinney from KeyBank Capital Markets.

Hey, good morning, guys. Hi, Sam.

Just going back to Katja's first question, this wasn't a Ryerson-specific headwind this week, but you talked about the challenge in passing through rising mill prices to customers. Were there products and maybe aluminum where that struggle was more pronounced than others?

Yeah, I would say that

Of the three commodities, I would say that aluminum has probably been the slowest to propagate through, but that's picking up now in terms of the ability to start to get those price increases through the value chain. But yeah, if you're asking about aluminum specifically, I would say of the three, that's probably been the toughest when you look at when that price started to go up around April on a regression lineup where it really started to turn up in April and it's continued to move higher. you know, sitting here today, you know, past the middle of February. Carbon, you know that story. I mean, it's like a sticky ride, right? And now finally, we've got some momentum upward on carbon, which has been good to see. And it's been somewhat gradual. It hasn't really spiked the way it has in years past. And that's a good story. And then stainless was really, I mean, stainless and nickel have been beat up for what I'll call structural reasons and also cyclical reasons. But, you know, as Nick Webb has said, you know, we finally maybe caught a bit on stainless where, We've seen that now move higher over the last several months, and so that's starting to get into the price book as well.

Okay.

And then the first quarter same-store volume guidance up in the mid-teens sequentially, and that's safely above your historical seasonality. Are you starting to see some restocking or some more activity from some of your major industrial customers?

Yeah, I mean, the real story of 2025 for us was transactional was up 11 plus percent and OEM was down 8%. And that was really the first time we've seen that type of decoupling when it comes to directional movements, you know, within an industrial metals and manufacturing cycle. You know, so I would say that overall we're seeing on balance as we referenced, we're seeing a stronger market consistent with a stronger PMI print and now industrial production and PMI are moving in the same direction. So we're tracking that really well. I also think it's a function of the improvements that we've made. It's a function of how well Olympic has executed over the last several years and how well they continue to execute. And so I think it's also us getting better and improving and bringing those investments through finally to full operating status. But yeah, Let me kick it over to Rick, and he'll give you some more color.

Yeah, couldn't agree more. I think, and you know, Sam, just from following the Olympic story, much the same in terms of some of the concentrations of investments over the last year or two. So we had a pretty heavy CapEx, I'll call it last 18 to 24 months. A lot of those investments are really just coming through freelancers fruition right now and are phasing in over, I'll call it fourth quarter into second quarter of this year. So again, a little wind in the sails from the market, plus some of the self-investment. We're optimistic about growth. Eddie mentioned the PMI, finally. We don't need to to keep continuing the historical bad news. But, you know, wow, how many months in a row and how many out of two years were we going to have PMIs printing down? So, yeah, feel pretty good about the momentum in the market. Feel really good about the combination of the two companies. And really excited about really showing everybody what we're going to be able to do in terms of those synergies and really bringing the combined strengths of the two companies together. And really, that's what it's all about is being able to service our customers better with more capabilities, additional geography. And, you know, we're on it. I tell you, we got off to a, you know, a I called it – I said we want to get off to a running start. I think we got off to a sprinting start. But just excited about all that. And, again, it's good to have a little wind behind us. So, yeah.

And, Sima, let me give you a little bit more, I would say – a little bit more of the inside baseball. We look at how, how does our company operate? And I think, how does the industry operate? Stability is a big thing. I mean, you're going to take a hit when you make investments. If you, if you shut down a service center, that's been in a place for a long time and you build a new one and you do greenfields, I mean, you know, greenfields will, will shorten your life expectancy. And I think, It's hard to go through them, but once you're on the other side of them, it's really, really good. So I'll give you an example. Central Steel and Wire, where we moved out of Kedzie and we moved to University Park, that was a 900,000 square foot greenfield. And when we bottomed out during the construction, just before the grand opening, volumes went down to about 520 tons a day, as an example. Well, bookings at CS&W, very proud of the team and the leadership there. Bookings at CS&W are now over 780 tons a day, not including me. you know, intercompany work that they do for other Ryerson locations. So, you know, when you think about that incremental 260 tons, it's very meaningful, but I also think it's indicative of what happens when you do major CapEx greenfields and you do heavy investments in facilities, you do ERP conversions, you take a hit, and it's a hard thing to go through. But when you do get to the other side of it, things start to work and operate a lot better. And it then syncs up very well with what we see historically, where if you've got the right balance of investment, to go with, I would say, stable, consistent, well-performing operations, you start to really realize that upside operating leverage in your network and things start to get and look a lot better.

Okay, thanks. I appreciate all the color on that question.

And then last one for me, increasing the revolver by $500 million to $1.8 billion. In the context of trying to get back down to the leverage range, What's the chance you use this to explore more M&A? And if so, could you do this before the achievement of synergies? Are those mutually exclusive? And what do you feel you need to round out the now combined portfolio?

I think we finally have like half of the CFO questions. We'll be able to pop that over to Jim and Rich. But I would just say, Sam, I mean, when it comes to M&A, we just did a huge transaction. And I want to emphasize it's important to keep the main thing the main thing. I don't think you ever look away from what would truly be an exceptional opportunity. But You're just so much more selective because you really don't want to diffract the attention of the organization on what it is we really have to do first and foremost, which is hit our marks, get the synergies, and boost the overall performance that flows through our financials. So that really is the priority. But let me send it over to Jim and Rich.

Yeah, good morning, Sam. I mean, Eddie really, really touched on it. I mean, we did amend and extend the ABL. raising it up in order to really work through this merger and put the company in a good spot to continue to grow forward. But right now, as we sit here week one in, it's full speed ahead on working through the Synergy case, continuing to operate the business, serve our customers, and we'll continue to work through our capital allocation plans.

And Rich Manson is the Synergy czar. So, Rich, what do you think?

yeah no i think rick said it well earlier as soon as the uh the merger was done we jumped in with both feet and started sprinting and so lots of people involved lots of great ideas and uh we look forward to tackling and uh hitting all the numbers that we've set forth we'll do it all right thanks guys good luck and nice to talk to you again hey thanks sam as a reminder to ask a question please press

Star 1 on your telephone keypad. We will now take our next question from Alan Weber from JP Capital.

Good morning. Hey, good morning, Alan. Hey, Alan, are you there?

Yeah, can you hear me?

Yeah.

So a question, you know, given you guys doing the merger, which sounds great, and then you have Kloepner being, you know, announced that they're going to be acquired. Can you talk about how you think about it longer term, more consolidation, impact on Ryerson slash Olympic and like that?

Sure, sure.

You know, Alan, I think, you know, members of the team here have certainly socialized the reality that for a long, long time, M&A activity was lacking in our sector. And it really is just a mathematical fact. If you look at consolidation on the mill side, If you even look at consolidation on the customer side, we in the middle would just continue to really get squeezed, given that there's like 7,500 firms that identify themselves as metal distributors, wholesalers, and processors. So I do think there'll be more. I think there's a realization and recognition that there should be more just to kind of balance things out in our industry when you look at shipment levels since 2006 up to the present time. really a fantastic opportunity and moved by both of our companies to do this. Uh, both when we look at the DNA of both organizations, but really in the larger industry, uh, you know, as a whole. So the answer is yes, I'm really, really thrilled that we did it. I think our prospects are fantastic. And I think that, uh, the Worthington clocker announcement I think is overall, it's a positive, it's healthy for the industry.

Right. I, I think you nailed it. I got, I really have nothing to add to that. Um, consolidation is good for our industry, period.

And Alan, it's, and it also is the customer experience. Like we want to get closer to the customer. We have more touch points. We can get closer. You know, Andy Grice has started out leading the Supply Chain Integration Council, the Commercial Integration Council. And Andy can give you some color too on just how attractive the opportunities look, you know, with the combined companies, Andy.

Well, I think, Eddie, you said it right.

The

the opportunity to take two great storied companies. And as customers today, the industrial OEM is really looking for downstream help. And one of the first things they look at is the balance sheet of the companies that can help support them. I think you take this combination, it really sends a very strong message to our large customers that not only are we there financially to be able to support them, but if you look at the investments that the two companies have made over the last three to five years, really taking everything downstream as the customer today is looking for, you know, not just the rectangle of what was, you know, once upon a time important in our business, but, you know, finished welded product that's going directly into their assembly. And there's not a lot of people that can do that to the scale that our large customers are looking. So I think the consolidation in particular, this one, um, is going to be, um, fantastic for our customers. We've already gotten a number of calls as to what can we do collectively to try to help them grow their business. And we're excited to get in front of the customer. Yeah.

And I mean, I think the better solution we offer, the more repeat business and growth we're going to see. We just have to really make sure that the experience we offer is, you know, to the highest level and meets our aspirations for what we want to deliver post-merger.

Great. Thank you and good luck.

Hey, Alan. Thanks a lot.

As we have no further questions, I would like to turn the conference back to Eddie Maynor for any additional or closing remarks.

No, really, thanks so much for your support. We really look forward to being with you next quarter to report out on how we're doing with our synergies, how the business is operating, and I look forward to the next call. Thank you.

Everybody stay well.

This concludes today's call. Thank you for your participation. You may now disconnect.