Financial Data and Key Metrics Changes - In Q3 2024, Ryerson reported revenues of $1.13 billion, which was 8.1% lower than Q2 2024, driven by lower volumes and average selling prices [25][14] - Adjusted EBITDA excluding LIFO was $21 million, down from $42.6 million in the prior quarter, with a net loss of $6.6 million or $0.20 loss per diluted share compared to a net income of $9.9 million in the previous quarter [28][17] - Gross margin contracted by 30 basis points to 17.9%, with a further contraction of 110 basis points to 16.3% when excluding LIFO [25][26] Business Line Data and Key Metrics Changes - Ryerson's sales volume of 485,000 tons was 4.5% lower quarter-over-quarter, influenced by a slow demand environment and extreme weather events [15][14] - The average selling price per ton decreased by 3.7% quarter-over-quarter, with carbon products experiencing a 6% decline in average selling prices [14][28] - The OEM contract business underperformed relative to the spot bill and material transactional business [12] Market Data and Key Metrics Changes - North American industry volumes decreased by 5.1% compared to the prior three months, while Ryerson's North American shipments decreased by 5.5% [15] - Year-to-date 2024 industry volumes for the Metal Service Center Institute were down 3.2%, while Ryerson's volumes were down 1.4%, indicating market share gains across product lines [16] Company Strategy and Development Direction - Ryerson is focused on completing its investment cycle, which is expected to enhance productivity and customer experience [23][29] - The company is implementing a cost reduction plan aimed at reducing operating expenses by $25 million during 2024, with an annualized target of $40 million [22] - Investments in modernization and automation are expected to drive better customer experiences and improve asset utilization [23][29] Management's Comments on Operating Environment and Future Outlook - Management noted that the current downturn in the manufacturing sector has lasted 25 months, but signs of improvement are emerging as cyclical drivers are expected to improve [8][10] - The company anticipates a challenging Q4 2024, with expected revenues between $1 billion to $1.04 billion and a forecasted loss per share of $0.53 to $0.47 [18] - Management expressed optimism about 2025, expecting better conditions and opportunities for cash flow generation [35] Other Important Information - Ryerson generated $135 million of cash flow from operations in Q3 2024, ending the period with $522 million of total debt [19] - The company returned $42 million to shareholders in Q3, including $36 million in share repurchases and $6 million in dividends [24] - Ryerson's available global liquidity decreased to $491 million from $585 million in the previous quarter [19] Q&A Session Summary Question: How much of the $60 million in cost savings has already been realized? - Management indicated that the heavy lifting for cost reductions has been done, with further optimizations expected as automation is implemented [32] Question: Are there opportunities for further working capital release in Q4? - Management confirmed that there are opportunities for additional working capital release, with expectations for improved cash flow in 2025 [35] Question: What is the outlook for reorganization expenses? - Management expects reorganization expenses to trend down, estimating between $8 million and $12 million for Q4 [42] Question: Can you discuss the investment efforts at Shelbyville? - Management highlighted that investments at Shelbyville will enhance operational efficiency and competitive differentiation in the region [44][46] Question: What does the Production Metals acquisition bring to Ryerson? - The acquisition provides an entry point into aerospace and defense markets, complementing Ryerson's existing offerings [50][52] Question: How is the new ERP system implementation progressing? - Management reported that the worst of the ERP conversion challenges are over, with expectations for optimization and benefits to customer service moving forward [56]
Ryerson(RYI) - 2024 Q3 - Earnings Call Transcript