On October 29, 2024, Ryerson Holding Corp (RYI, Financial) released its 8-K filing detailing its third-quarter financial results. The company, a prominent metals service center and distributor, operates across the United States, Canada, Mexico, and China, serving a diverse clientele from local fabricators to international manufacturers. Ryerson's product line includes stainless steel, aluminum, carbon steel, and alloy steels, with the majority of revenue generated from U.S. operations.
Quarterly Financial Highlights
Ryerson reported revenue of $1.13 billion for Q3 2024, closely aligning with analyst estimates of $1.13 billion. However, the company posted a net loss of $6.6 million, translating to a diluted loss per share of $0.20, missing the estimated earnings per share of $0.88. This performance reflects ongoing challenges in the industrial metals market, characterized by cyclical bottoming and price contractions.
Operational and Strategic Developments
During the quarter, Ryerson generated $134.6 million in operating cash flow and $103.4 million in free cash flow. The company also reduced its inventory by $80.8 million on a FIFO cost basis and returned $42.0 million to shareholders through share repurchases and dividends. Notably, Ryerson completed the acquisition of Production Metals, expanding its reach into aerospace, defense, and semiconductor markets.
Income Statement and Key Metrics
Ryerson's gross margin contracted to 17.9% from 18.2% in the previous quarter, with a notable impact from declining selling prices and inventory costs. Adjusted EBITDA, excluding LIFO, was $21.0 million, a significant decrease from $42.6 million in Q2 2024. The company's net debt stood at $487 million, with a net leverage ratio of 3.8x, above its target range but below historical averages.
Management Commentary
Eddie Lehner, Ryerson’s President, Chief Executive Officer, and Director, stated, “Two things can be true at the same time: 1) the industry is experiencing a cyclical bottoming marked by twenty-four months of moving average demand and price contraction; and 2) Ryerson’s record investments in systems, capital expenditures, and acquisitions over this same period are positioning the company well for the next cyclical upturn.”
Financial Tables
| Financial Highlights | Q3 2024 | Q2 2024 | Q3 2023 | QoQ | YoY |
|---|---|---|---|---|---|
| Revenue | $1,126.6M | $1,225.5M | $1,246.7M | (8.1)% | (9.6)% |
| Net Income (Loss) | $(6.6)M | $9.9M | $35.0M | (166.7)% | (118.9)% |
| Adjusted EBITDA, excl. LIFO | $21.0M | $42.6M | $45.0M | (50.7)% | (53.3)% |
Analysis and Outlook
Ryerson's Q3 performance underscores the challenges faced by the industrial metals sector, with declining demand and pricing pressures impacting profitability. Despite these headwinds, the company's strategic investments and cost-reduction initiatives position it for potential recovery in future cycles. Ryerson's focus on expanding its market presence through acquisitions and enhancing operational efficiency could drive long-term growth.
For the fourth quarter, Ryerson anticipates a seasonal and counter-cyclical decrease in shipments, with net sales projected between $1.00 billion and $1.04 billion. The company expects adjusted EBITDA, excluding LIFO, to range from $10 million to $12 million, with a projected loss per diluted share between $0.53 and $0.47.
Explore the complete 8-K earnings release (here) from Ryerson Holding Corp for further details.
