Ryerson Reports Second Quarter 2024 Results

Quarterly business highlights include ramp-up of operations at University Park, IL service center, expansion and modernization of the Shelbyville, KY service center, and progress on cost savings across the network

CHICAGO, July 30, 2024 /PRNewswire/ -- Ryerson Holding Corporation (NYSE: RYI), a leading value-added processor and distributor of industrial metals, today reported results for the second quarter ended June 30, 2024.

Highlights: 

• Delivered Net Income attributable to Ryerson Holding Corporation of $9.9 million and Adjusted EBITDA¹, excluding LIFO of $42.6 million
• Earned diluted EPS² of $0.29 on $1.23 billion of revenue from 508,000 tons shipped and average selling price of $2,412 per ton
• Reduced operating expenses³ by $17.8 million, compared to the first quarter of 2024, as part of previously announced cost reductions. Annualized cost reduction expectations updated to savings of approximately $60 million from previously announced $40 million
• Reduced inventory by $107.1 million on a FIFO cost basis⁴, compared to the first quarter of 2024
• Returned $20.4 million to shareholders during the quarter, comprised of $14.0 million in share repurchases and $6.4 million in dividends
• Ended the quarter with debt of $525 million and net debt⁵ of $497 million as of June 30, 2024, compared to $497 million and $455 million, respectively, on March 31, 2024
• Increased share repurchase authorization by $50 million and extended maturity of authorization to April 2026
• Announced third quarter 2024 dividend of $0.1875 per share

A reconciliation of non-GAAP financial measures to the comparable GAAP measure is included below in this news release.

Management Commentary
Eddie Lehner, Ryerson's President, Chief Executive Officer, and Director, said, "I want to thank all of my Ryerson teammates for striving to create a better Ryerson that delivers the industry's best customer experience safely, enjoyably, and productively. 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. We did this while transitioning to an optimization phase as we complete a record three-year investment cycle, highlighted this quarter by the start-up of our state-of-the-art 900,000 square foot University Park, IL service center, ongoing assimilation of the ERP-conversion in our southern network of service centers, our launch of Ryerson's redesigned e-commerce platform at www.ryerson.com, as well as nearing the final stage of equipment installation for our Shelbyville, KY processing center modernization and expansion that is slated to start-up in the first quarter of 2025. During the quarter, we grew our book value per share, repurchased 647,330 shares of Ryerson common stock, and paid a quarterly dividend of $0.1875. For the remainder of 2024, we are targeting approximately $60 million in annualized cost savings, updated from our previous $40 million target, primarily through the realization of greater efficiencies within our network. As we navigate through the second half of 2024, Ryerson is planning, preparing, and executing on the strategic growth plan for our business through the optimization of our operating model despite the persistence of what has turned out to be an extended industry counter-cycle. Looking at the bigger picture, it has been just about ten-years since Ryerson closed its Initial Public Offering ("IPO") on August 13, 2014.  I would kindly ask interested stakeholders to view the first page of this quarter's investor presentation deck. When we stack up all the days since our IPO and look at all we have accomplished over the past ten years, it is an important reminder that there is no sustainable progress without some pain and discomfort. As I look at the strength of our company, the significant investments made to our next-gen operating model, the value of our assets, and the culture of our people and organization, I couldn't be more optimistic about the next ten years."

Announcement – Ryerson's Chief Operating Officer, Mike Burbach to retire at year-end of 2024
After more than 40 years of driving excellence, Mike Burbach will retire from his position as Chief Operating Officer ("COO"), effective December 31, 2024. Mike has served as COO since April 2, 2021, and has been pivotal to the company's operational and financial success. Eddie Lehner, Ryerson's President, Chief Executive Officer, and Director, said, "Mike has been a tremendous asset to our organization and will be missed by all those who know him and have had the pleasure to work him throughout his remarkable career – he is truly a pillar of the metals service industry and is well respected not just within Ryerson, but the entire industry. He has always been a steady hand and partner at the till, helping navigate the ebbs, flows, highs, and lows of this dynamic industry." Mr. Lehner continued, "Mike has been a mentor, leader, partner, role model, friend, and Ryerson "All-Time Great." I am delighted that Mike is spending some more time with us in transition, and I wish Mike, Anne, and their 5 grandkids the best of everything in retirement!"

Second Quarter Results
Ryerson generated net sales of $1.23 billion in the second quarter of 2024, a decrease of 1.1%, compared to the first quarter of 2024. Revenue performance during the quarter benefitted from seasonal volume demand which increased 2.2%, but was offset by average selling prices decreasing 3.2%, which was below our guidance expectations.

Gross margin expanded sequentially by 60 basis points to 18.2% in the second quarter of 2024, compared to 17.6% in the first quarter of 2024, primarily driven by $10 million in LIFO income recorded in the second quarter of 2024 compared to LIFO expense of $1 million recorded in the first quarter of 2024. Due to a decline in metals futures prices, in the second quarter of 2024, LIFO income of $10 million was greater than our guidance expectations of a LIFO expense of $1 million. Excluding the impact of LIFO, gross margin contracted 20 basis points to 17.4% in the second quarter of 2024, compared to 17.6% in the first quarter. Gross margins for our product mix experienced compression in the second quarter of 2024 due to average selling prices for our carbon, aluminum, and stainless-steel products declining at a greater rate than our costs of goods sold.

Warehousing, delivery, selling, general and administrative expenses decreased 8.2%, or $17.8 million, to $199.0 million in the second quarter of 2024, compared to $216.8 million in the first quarter of 2024. Decreases in expenses were strongest in personnel-related expenses, operating expenses, and the reduction in start-up costs related to our University Park, IL service center, as well as a reduction in the costs related to our network ERP integration.

Net Income Attributable to Ryerson Holding Corporation for the second quarter of 2024 was $9.9 million, or $0.29 per diluted share, compared to a net loss of $7.6 million, or $0.22 per diluted share in the previous quarter. Ryerson generated Adjusted EBITDA, excluding LIFO, of $42.6 million in the second quarter of 2024, compared to the first quarter of 2024 Adjusted EBITDA, excluding LIFO of $40.2 million.

Liquidity & Debt Management
Ryerson generated $25.9 million of operating cash flow in the second quarter of 2024 due to net income of $10.3 million. The Company ended the second quarter of 2024 with $525 million of debt and $497 million of net debt, sequential increases of $28 million and $42 million, respectively, compared to the first quarter of 2024. Ryerson's net leverage ratio as of the second quarter of 2024 was 3.2x, above the Company's target leverage range of 0.5x – 2.0x, but still well below Ryerson's prior 10-year average. Ryerson's global liquidity, composed of cash and cash equivalents and availability on its revolving credit facilities, decreased to $585 million as of June 30, 2024, compared to $684 million as of March 31, 2024.

Shareholder Return Activity

Dividends. On July 30, 2024, the Board of Directors declared a quarterly cash dividend of $0.1875 per share of common stock, payable on September 19, 2024, to stockholders of record as of September 5, 2024, unchanged from the prior quarter. During the second quarter of 2024, Ryerson paid a quarterly dividend of $0.1875 per share, amounting to a cash return of approximately $6.4 million. 

Share Repurchases and Authorization. Ryerson repurchased 647,330 shares for $14.0 million in the open market during the second quarter of 2024. Ryerson made these repurchases in accordance with its share repurchase authorization, which allows the Company to acquire up to an aggregate amount of $100.0 million of the Company's common stock through April of 2025. As of June 30, 2024, $24.3 million of the $100.0 million remained under the existing authorization. On July 30, 2024, the Board of Directors approved a $50 million increase to the Company's share repurchase authorization and extended the authorization to April 2026.

Outlook Commentary
For the third quarter of 2024, Ryerson expects customer shipments to decrease 2% to 4%, quarter-over-quarter. The Company anticipates third-quarter net sales to be in the range of $1.12 billion to $1.16 billion, with average selling prices decreasing 3% to 5%. LIFO income in the third quarter of 2024 is expected to be $12 million. We expect adjusted EBITDA, excluding LIFO in the range of $21 million to $25 million and earnings per diluted share in the range of $0.01 to $0.10.

Earnings Call Information
Ryerson will host a conference call to discuss second quarter 2024 financial results for the period ended June 30, 2024, on Wednesday, July 31, 2024, at 10 a.m. Eastern Time. The live online broadcast will be available on the Company's investor relations website, ir.ryerson.com. A replay will be available at the same website for 90 days.

About Ryerson
Ryerson is a leading value-added processor and distributor of industrial metals, with operations in the United States, Canada, Mexico, and China. Founded in 1842, Ryerson has around 4,400 employees and over 110 locations. Visit Ryerson at www.ryerson.com. 

Notes:
¹For EBITDA, Adjusted EBITDA and Adjusted EBITDA excluding LIFO please see Schedule 2
²Diluted EPS is Diluted earnings per share
³Operating expenses are Warehousing, delivery, selling, general, and administrative expenses
⁴FIFO cost basis is inventory cost excluding LIFO
⁵Net debt is defined as long term debt plus short term debt less cash and cash equivalents and excludes restricted cash

Legal Disclaimer
The contents herein are provided for general information purposes only and do not constitute an offer to sell or buy, or a solicitation of an offer to buy, any security ("Security") of the Company or its affiliates ("Ryerson") in any jurisdiction. Ryerson does not intend to solicit, and is not soliciting, any action with respect to any Security or any other contractual relationship with Ryerson. Nothing in this release, individually or taken in the aggregate, constitutes an offer of securities for sale or buy, or a solicitation of an offer to buy, any Security in the United States, or to U.S. persons, or in any other jurisdiction in which such an offer or solicitation is unlawful.

Safe Harbor Provision
Certain statements made in this release and other written or oral statements made by or on behalf of the Company constitute "forward-looking statements" within the meaning of the federal securities laws, including statements regarding our future performance, as well as management's expectations, beliefs, intentions, plans, estimates, objectives, or projections relating to the future. Such statements can be identified by the use of forward-looking terminology such as "objectives," "goals," "preliminary," "range," "believes," "expects," "may," "estimates," "will," "should," "plans," or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. The Company cautions that any such forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements as a result of various factors. Among the factors that significantly impact our business are: the cyclicality of our business; the highly competitive, volatile, and fragmented metals industry in which we operate; the impact of geopolitical events; fluctuating metal prices; our indebtedness and the covenants in instruments governing such indebtedness; the integration of acquired operations; regulatory and other operational risks associated with our operations located inside and outside of the United States; the influence of a single investor group over our policies and procedures; work stoppages; obligations under certain employee retirement benefit plans; currency fluctuations; and consolidation in the metals industry. Forward-looking statements should, therefore, be considered in light of various factors, including those set forth above and those set forth under "Risk Factors" in our most recent our annual report on Form 10-K and in our other filings with the Securities and Exchange Commission. Moreover, we caution against placing undue reliance on these statements, which speak only as of the date they were made. The Company does not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events or circumstances, new information or otherwise.

SOURCE Ryerson Holding Corporation