Ryerson (RYI) Q2 EPS Drops 76%

Core Viewpoint - Ryerson's Q2 2025 financial results showed a decline in earnings and revenue, reflecting ongoing challenges in profit margins and industrial demand, despite some operational achievements in market share [1][5][12] Financial Performance - Diluted EPS (GAAP) was $0.06, missing estimates of $0.19, while revenue was $1.17 billion, slightly below the expected $1.18 billion [1][2] - Year-over-year revenue decreased by 4.6% from $1.23 billion in Q2 2024, and net income attributable to Ryerson fell 80.8% to $1.9 million from $9.9 million [2][9] - Adjusted EBITDA (excluding LIFO) increased by 5.6% year-over-year to $45 million, indicating some operational resilience [2][5] Business Overview and Strategy - Ryerson operates a broad metals service center network, distributing carbon steel, stainless steel, and aluminum products across various sectors, which helps mitigate dependence on any single market [3] - The company's strategy focuses on expanding value-added services and increasing market reach through organic growth and targeted acquisitions [4] Operational Highlights - Tons shipped were 501,000, a slight decrease of 1.4% year-over-year, but better than the 2.1% decline in the broader North American service center industry, indicating modest market share gains [5] - Average selling price per ton (GAAP) was $2,334, down 3.2% year-over-year, but showed improvement from the first quarter [6] Sales Mix and Cost Management - The company has shifted its sales mix towards more transactional business, with growth in transactional sales for five consecutive quarters, helping to offset declines in contractual OEM business [7] - Cost management efforts resulted in a 0.7% increase in warehousing, delivery, and administrative expenses from Q1 to Q2 2025, with expenses declining as a percentage of revenue [8] Future Guidance - For Q3 2025, management projects GAAP revenue between $1.14 billion and $1.18 billion, with shipments expected to fall 2% to 4% quarter-over-quarter [11] - Average selling price per ton is anticipated to rise by 1% to 3%, while adjusted EBITDA excluding LIFO is expected to be in the $40 million to $45 million range [11] - Management expressed cautiousness regarding manufacturing and industrial metal demand, particularly from large OEM customers [12]