Ryerson(US:RYI)2024-07-31 18:15Financial Data and Key Metrics Changes - In Q2 2024, Ryerson reported net sales of $1.23 billion, which was 1.1% lower than Q1 2024, driven by lower average selling prices across the product mix despite higher volumes [22] - The average selling price per ton decreased by 3.2% quarter-over-quarter to $2,412, leading to revenue below expectations [12] - Adjusted EBITDA, excluding LIFO, was $42.6 million, which was below guidance expectations [15][22] - Net income attributable to Ryerson was $9.9 million or $0.29 per diluted share, compared to a net loss of $7.6 million in the prior quarter [23] Business Line Data and Key Metrics Changes - Ryerson's sales volume was 508,000 tons, a 2.2% increase quarter-over-quarter, while North American industry volumes decreased by 0.2% [12][14] - The company noted market share gains across all three product lines, particularly in stainless steel, followed by carbon and aluminum [14] - Average selling prices for aluminum decreased by 4.9%, carbon by roughly 1%, and stainless steel by 1.9% during Q2 [13] Market Data and Key Metrics Changes - Industry-wide stainless shipments were down 21% and aluminum sheet shipments down 14% since Q3 2022, while carbon sheet shipments increased by 1.5% [7] - The overall metals service center industry shipments continued to decline, reflecting a challenging market environment [5] Company Strategy and Development Direction - Ryerson is optimistic about long-term growth in stainless and aluminum despite current counter-cyclical conditions, with continued investments in these areas [8] - The company aims to optimize its operations and reduce costs, targeting $60 million in annualized cost savings [19] - Ryerson is focusing on enhancing customer experience through investments in service centers and e-commerce capabilities [9][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing counter-cyclical conditions affecting the metals industry, particularly in aluminum and stainless steel [5][6] - The company expects a decline in volumes of 2% to 4% sequentially in Q3 2024, with revenues projected between $1.12 billion and $1.16 billion [16] - Management remains committed to generating positive cash flow and managing working capital effectively [11][18] Other Important Information - Ryerson repurchased 647,330 shares below book value during the quarter and announced a $50 million increase to its share repurchase authorization [20][21] - The company achieved a gross margin of 18.2%, a 60 basis point increase from the prior quarter, primarily due to LIFO income [22] Q&A Session Summary Question: Cost savings program details - Management indicated that the majority of the $18 million in operating cost reductions is attributable to the $60 million target, with some reductions in variable compensation not included [29][30] Question: Incremental savings sources - Management highlighted logistics and material movement optimizations as key areas for the additional $20 million in savings [35][36] Question: Current inventory levels - Management noted that stainless and aluminum inventories still have destocking to go, while carbon inventory levels have improved [38] Question: Third quarter pricing guidance - Management expects carbon volumes to outpace stainless and aluminum in Q3 and Q4, despite ongoing margin compression [39] Question: Future cash flow and working capital - Management anticipates improved cash flow as investments are completed and operationalized, leading to a more normalized CapEx spend [42][43]