Ryerson(US:RYI)2025-07-30 15:00Financial Data and Key Metrics Changes - Ryerson reported net sales of $1,170 million, an increase of 3% compared to the first quarter, with average selling prices up 2.8% and tons shipped up fractionally [16] - Gross margin during the quarter contracted by 10 basis points to 17.9%, influenced by a higher than anticipated LIFO expense of $13 million [16] - Adjusted EBITDA excluding LIFO achieved $45 million in Q2 2025, compared to $32.8 million in the prior quarter [17] Business Line Data and Key Metrics Changes - North American shipments decreased by 1.2% quarter over quarter, generating incremental market share gains, particularly in carbon long, carbon plate, and stainless long products [7] - The consumer durable sector, especially in appliances and recreational vehicles, showed relative strength, while the construction equipment sector experienced sequential volume contraction [8] - Transactional sales accounted for approximately 46% of the business, with a focus on improving service levels and lead times to gain more transactional opportunities [31][32] Market Data and Key Metrics Changes - North American industry volumes decreased by 2.1% relative to the first quarter, with Ryerson's performance slightly better than the industry average [7] - The company noted bright spots in subsector industries such as data centers and public infrastructure projects driven by federal investment spending [9] - The pricing environment is expected to remain supportive, leading to average selling price appreciation of 1% to 3% in the upcoming quarter [11] Company Strategy and Development Direction - Ryerson continues to operationalize its capital expenditures, having deployed over $650 million since 2021 to modernize its service center network [4] - The company is focused on managing non-value-added costs and precise working capital management to prepare for the next cyclical upturn [6] - Investments in processing capabilities and maintenance projects are ongoing, with a full-year capital expenditure target of $50 million [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about medium to long-term demand trends despite current industry downturn challenges, including high interest rates and tariff uncertainties [4] - The company anticipates a softening of volumes by 2% to 4% in the upcoming quarter, but expects pricing to remain supportive [10] - Management highlighted the importance of improving customer experience through operational efficiencies and better service models [26] Other Important Information - Ryerson ended the second quarter with $510 million of total debt and $479 million of net debt, resulting in a leverage ratio of 4.4 times, above the target range [13] - The company distributed $6 million in dividends during the second quarter and announced a similar cash dividend for the third quarter [14] - The Shelbyville facility is currently at about 67% of its volume ramp-up, with expectations for further improvements as investments mature [42] Q&A Session Summary Question: Can you discuss the North American market share growth in Carbon Long and Plate? - Management noted that investments have improved service models and reduced frictional costs, leading to better customer experiences and market share gains [24][26] Question: What was the tax benefit impact on EPS in the second quarter? - The tax benefit was due to reduced earnings and discrete state tax credits, with an expected effective tax rate of around 25% to 26% going forward [28][29] Question: What is the current split between transactional and contractual sales? - The current split is approximately 46% transactional and 54% contractual, with a focus on increasing transactional sales through improved service [31][32] Question: How is the CapEx trend compared to the $50 million target? - Management indicated that the CapEx is a function of timing, and they remain committed to the $50 million target for the year [36] Question: What are the expectations for second half cash flow and leverage ratio? - Management expects to generate cash through the balance of the year, with the leverage ratio anticipated to move back towards the target range [48]