Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ryerson Holding Corp (RYI, Financial) generated $103 million in free cash flow during the third quarter.
- The company returned $42 million to shareholders, including $36 million in share repurchases and $6 million in dividends.
- Ryerson Holding Corp (RYI) is seeing improvements in service levels, positive account turn, and on-time delivery.
- The company is making strategic investments in modernization and automation, such as the Shelbyville, Kentucky facility, to enhance productivity and customer experience.
- Ryerson Holding Corp (RYI) is optimistic about moving off the cyclical bottoming and anticipates improved conditions in 2025.
Negative Points
- Ryerson Holding Corp (RYI) experienced a net loss of $6.6 million and a diluted loss per share of $0.20 in the third quarter.
- Sales volume of 485,000 tons was below guidance due to a slow demand environment and impacts from Hurricane Helene.
- Average selling prices decreased, with carbon products seeing a 6% drop, contributing to margin compression.
- The company ended the quarter with a net leverage of 3.8 times, above its target range of 2 times.
- Ryerson Holding Corp (RYI) anticipates a further 8% to 10% sequential decline in volumes for the fourth quarter.
Q & A Highlights
Q: Of the $60 million in cost savings you're targeting, how much has already been realized so far?
A: James Claussen, CFO, explained that the heavy lifting in expense reductions has been done, with further optimization possible as automation is implemented. The trend in expense per ton has been decreasing from the first to the third quarter.
Q: Is there still any opportunity for further working capital release in the fourth quarter?
A: Edward Lehner, CEO, confirmed there is more opportunity for working capital release. He anticipates 2025 to be a better year, with indicators turning more favorable compared to 2023 and 2024.
Q: How do you feel about your current inventory levels, and how should we think about them given the expectation for relatively stagnant pricing in the fourth quarter?
A: Edward Lehner, CEO, stated that inventory levels can still be reduced relative to mill lead times. He expects improvements in aluminum and carbon, with the ability to maintain high service levels while reducing days of supply.
Q: How much longer do you expect reorganization costs to weigh on earnings?
A: Edward Lehner, CEO, estimated reorganization costs will trend down, projecting between $8 million and $12 million in Q4. He noted that costs associated with major investments like University Park and Shelbyville are nearing completion.
Q: Can you discuss more about the investment efforts at Shelbyville and how they will competitively differentiate offerings in that region?
A: Edward Lehner, CEO, highlighted that Shelbyville is strategically located within a 500-mile radius of major suppliers, allowing for efficient processing and value-added services. The investment positions Ryerson as a leader in stainless value-add in North America.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
