On July 30, 2024, Ryerson Holding Corp (RYI, Financial) released its 8-K filing for the second quarter ended June 30, 2024. Ryerson Holding Corp, a leading value-added processor and distributor of industrial metals, reported a net income of $9.9 million and adjusted EBITDA, excluding LIFO, of $42.6 million. The company earned diluted EPS of $0.29 on $1.23 billion of revenue from 508,000 tons shipped, with an average selling price of $2,412 per ton.
Company Overview
Ryerson Holding Corp provides a metals service center, and value-added processor and is a distributor of industrial metals with operations in the United States, Canada, and Mexico. In addition to its North American operations, it conducts processing and distribution operations in China. Its customers range from local, independently owned fabricators and machine shops to large, international original equipment manufacturers. It carries a full line of products in stainless steel, aluminum, carbon steel, and alloy steels and a limited line of nickel and red metals in various shapes and forms. The company generates substantially all of its revenue from sales of metal products. Geographically, the majority is from the United States.
Performance and Challenges
Ryerson Holding Corp's performance in Q2 2024 was marked by a net income of $9.9 million, a significant improvement from the net loss of $7.6 million in Q1 2024. However, the company's revenue of $1.23 billion fell short of the analyst estimate of $1.27 billion. The diluted EPS of $0.29 also missed the analyst estimate of $0.39. The company faced a challenging environment with compressed pricing and declining industry demand, particularly in late May through the end of the quarter.
Financial Achievements
Despite the challenges, Ryerson Holding Corp achieved several financial milestones. The company reduced operating expenses by $17.8 million compared to Q1 2024, updated its annualized cost reduction expectations to $60 million from the previously announced $40 million, and reduced inventory by $107.1 million on a FIFO cost basis. Additionally, Ryerson returned $20.4 million to shareholders through share repurchases and dividends.
Income Statement Highlights
| Financial Highlights | Q2 2024 | Q1 2024 | Q2 2023 | QoQ | YoY |
|---|---|---|---|---|---|
| Revenue | $1,225.5 million | $1,239.2 million | $1,343.5 million | (1.1)% | (8.8)% |
| Net Income (Loss) | $9.9 million | $(7.6) million | $37.6 million | 230.3% | (73.7)% |
| Diluted EPS | $0.29 | $(0.22) | $1.06 | $0.51 | $(0.77) |
| Adjusted EBITDA, excl. LIFO | $42.6 million | $40.2 million | $70.1 million | 6.0% | (39.2)% |
Balance Sheet and Cash Flow
Ryerson ended Q2 2024 with total debt of $525 million and net debt of $497 million, compared to $497 million and $455 million, respectively, in Q1 2024. The company generated $25.9 million in operating cash flow during the quarter, a significant turnaround from the $47.8 million used in Q1 2024. However, global liquidity decreased to $585 million from $684 million in the previous quarter.
Management Commentary
"Over the second quarter we managed through a compressed pricing and declining industry demand environment that intensified in late-May through the end of the quarter marked by a continued slowdown in various industrial manufacturing and consumer end-markets as well as notable declines in aluminum, nickel, and carbon steel commodity indexes. Despite these challenges, our overall business performance improved as we saw an increase in tons sold, reduced variable and structural expenses, reduced our inventory levels, and returned to generating operating cash flow and free cash flow." - Eddie Lehner, President, CEO, and Director.
Outlook
For Q3 2024, Ryerson expects customer shipments to decrease by 2% to 4% quarter-over-quarter. The company anticipates net sales to be in the range of $1.12 billion to $1.16 billion, with average selling prices decreasing by 3% to 5%. Adjusted EBITDA, excluding LIFO, is expected to be in the range of $21 million to $25 million, and earnings per diluted share are projected to be between $0.01 and $0.10.
For more detailed information, please refer to the 8-K filing.
Explore the complete 8-K earnings release (here) from Ryerson Holding Corp for further details.
