Ryerson(RYI) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, Ryerson reported net sales of $1.01 billion, a decrease of 10.6% compared to Q3 2024 [27] - The average selling price (ASP) was$ 2,254 per ton, down 3% quarter over quarter [28] - Gross margin expanded by 110 basis points to 19% due to $25 million in LIFO income, which was$ 7 million greater than the previous quarter [28] - Net loss attributable to Ryerson was $4.3 million or$ 0.13 per diluted share, an improvement from a net loss of $6.6 million in the prior quarter [31] - For the full year 2024, net sales were$ 4.6 billion, down from $5.1 billion in 2023, primarily due to a 10% decrease in average selling prices [31][32] Business Line Data and Key Metrics Changes - Ryerson's Q4 sales volume was 447,000 tons, a decrease of 7.8% quarter over quarter, slightly better than expectations [13] - North American shipments decreased by 8.5%, in line with normal seasonality [13] - For the full year 2024, Ryerson's sales volume was approximately 1.9 million tons, roughly equivalent to 2023 [14] Market Data and Key Metrics Changes - North American industry volumes decreased by 7.1% quarter over quarter, while Ryerson's North American volume was down 1% year over year [15] - December 2024 prices were 18% lower for carbon, 29% lower for stainless steel, and 8% lower for aluminum compared to December 2023 [32] Company Strategy and Development Direction - Ryerson is transitioning from an investment cycle to an optimization cycle, focusing on operational efficiency and customer experience [21][22] - The company plans to reduce CapEx to the range of$ 50 to $55 million in 2025 to operationalize existing assets [44] - Ryerson aims to generate higher and less volatile earnings through future business cycles as investments operationalize [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, citing improvements in macro manufacturing conditions and increased sales quote and order activity since mid-January [9][10] - The company expects Q1 2025 volumes to increase by 11% to 13% sequentially compared to Q4 2024 [17] - Management acknowledged the challenges of a contracting environment in 2024 but noted market share gains in North America [15] Other Important Information - Ryerson generated$ 92 million of cash flow from operations in Q4 2024 and ended the period with $468 million of total debt [24] - The company returned$ 6 million in dividends during Q4 2024 and repurchased 2.5 million shares for approximately $51 million in the full year [25] Q&A Session Summary Question: How is the company thinking about CapEx for 2025? - Management plans to dial back CapEx to the$ 50 to $55 million range to focus on operationalizing existing assets [44] Question: Can you provide updates on University Park's progress? - Bookings at University Park are up by 20% from their bottom, and the facility is improving in productivity and service levels [52] Question: How did core unit gross margins trend through Q4 and into Q1? - Transactional margins are starting to expand as the market improves, with expectations for favorable resets in contract pricing as lagging prices catch up [58][59] Question: How is the company managing tariffs and their impact? - Management noted potential currency headwinds but emphasized that the majority of revenue is generated in the US, which mitigates some risks [61] Question: What is the status of the new ERP system? - The ERP conversion is progressing well, with improved service levels and operational normalization at service centers that have transitioned to SAP [81]