管理層發言
Good day, and welcome to the Ryerson Holding Corporation's First Quarter 2026 Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Justine Carlson. Please go ahead.
Good morning. Thank you for joining Ryerson Holding Corporation's First Quarter 2026 Earnings Call. On our call, we have Eddie Lehner, Ryerson's Chief Executive Officer; Rick Marabito, our President and Chief Operating Officer; Jim Claussen, our Chief Financial Officer; and Molly Kannan, our Chief Accounting Officer and Corporate Controller. A recording of this call will be posted on our Investor Relations website at ir.ryerson.com. Please read the forward-looking statement disclosures included in our earnings release issued yesterday and note that it applies to all statements made during this call. In addition, our remarks today refer to several non-GAAP measures. Reconciliations of these adjusted numbers are also included in our earnings release. I will now turn the call over to Eddie.
Thank you, Justine. Good morning, and thank you all for tuning into Ryerson Holding Corporation's First Quarter 2026 Earnings Call. I'm pleased to discuss our first quarter performance. I am compelled to say again how delighted we are to be working together in common cause with our Olympic Steel teammates. If half of a quarter is any indication, I can hardly wait to see what we will do together with full quarters. We entered 2026 with order activity at stronger levels than we have seen in quite some time, going back to 2022. We achieved double-digit sequential volume growth, market share gains, solid margin expansion, excellent working capital management and higher adjusted EBITDA, excluding LIFO, above our targeted range while already hard at work in getting at and to those synergies. The demand and order activity we referenced is corroborated by recent ISM Manufacturing Purchasing Managers Index readings, which reported expanding manufacturing activity for the past four consecutive months, the longest consecutive growth period since late 2022. Beneath the surface, we note that these early signs of recovery have been unevenly distributed across our customer base as our transactional customers showed particular strength, while many of our large OEMs exhibited ongoing demand stagnation following what had been a prolonged manufacturing contraction with high interest rates and prevailing tariff and geopolitical uncertainty. We would be remiss if we didn't mention the omnipresent AI infrastructure and compute build-out and its outsized impact to PMI and GDP growth as well as our increasing participation in this secular super cycle as an AI infrastructure partner to our customers. This has and continues to be a significant contributor to the improving demand environment noted both year-over-year and sequentially. The most important question continues to be around the duration of demand conditions amidst supply-side disruptions and inflationary wildcards, particularly considering heightened global unrest and whether economic expansion circuit breakers can absorb potential hyper shocks to the system. While industrial metal commodity price bellwethers continue moving higher—most notably aluminum—the real puzzle is how much and at what pace higher input costs can move through the value chain to end customers without triggering the dreaded boomerang effect, whereby we invert from current procyclical conditions to countercyclical conditions earlier than any of us would like. Further evidence of this ongoing dynamic is the onset of higher diesel fuel prices, coupled with ongoing tightness in the trucking market, resulting in further inflation of delivery costs industry-wide and the resulting lag effect in these cost increases propagating through the value chain. Looking inside Ryerson, in the last six weeks of the quarter, we began the vital work of integrating with Olympic Steel, and I could not be more encouraged by how the early stages are progressing. From an organizational standpoint, we moved quickly to establish a unified leadership structure, bringing together talent from both legacy companies to drive alignment, accountability and execution against our synergy targets. I would like to take the opportunity to express that it has been a true pleasure to participate in and witness the cross-collaboration of our teams and see the expanded product and service offerings begin to benefit our customers across our larger, more capable enterprise and footprint. We are stacking wins and building synergy momentum, and I am exceedingly confident about the opportunities we have to create value together and to create the industry's best customer experience. I would like to thank my Ryerson and Olympic teammates for their adaptability, energy and passion during this process and their continued focus on the customer. Their efforts are transforming us into a fully integrated platform of combined strengths, enabling us to capture the full value of our synergies, foster growth and further elevate our offering to customers while further building enterprise value for our shareholders. With that, I will ask Rick to join us to discuss market conditions and industry trends.
Thanks, Eddie, and it's great to be with you all. Good morning to everyone. Turning to the market: the North American service center industry shipping volumes, as measured by the Metal Service Center Institute (MSCI), experienced a seasonally aligned and momentum-driven start to 2026 with improved demand relative to the end of 2025. Ryerson's North American volumes, by comparison, grew significantly even on a same-store basis, outpacing the industry and realizing market share gains during the quarter with particular strength in carbon products. Our first quarter total company tons shipped increased sequentially by 42.3% or 13.4% on a same-store basis, in line with guidance expectations. Year-over-year, total company shipments were up 31.2% in the first quarter of 2026, which is 4.6% up on a same-store basis. As Eddie mentioned, transactional business led the way in growth and, coupled with historically low service center industry inventory levels for plate and sheet products relative to shipments, we anticipate healthy transactional activity moving forward. On the other side of the business, activity among our contract customers was steady during the quarter. Thematically, we're seeing data centers and power generation projects continue to drive strong backlogs, and we're also seeing optimism for the future in Class 8 truck trailer as that industry now views 2026 as a supply-driven transition year. I would also like to echo Eddie's comments: it's been a true pleasure joining our organizations together and being part of the collaboration and execution of what is truly a unique opportunity for us to create value for all of our stakeholders. From an operating standpoint, we've been very deliberate about how we're building the combined organization because for us, culture isn't an abstract concept. It's actually the secret sauce—how we align our teams to make decisions, how we serve our customers and how we execute day in and day out. For our customers, we've been focusing on expanding capabilities, enhancing our product offerings and leveraging our larger footprint to serve their needs, help solve their problems and enhance the value that they receive from us. We're also very disciplined about synergy attainment, and as Eddie said, after six weeks into integration, we're more confident than ever in terms of the attainment of those synergies. We're approaching synergies as a structured ongoing effort embedded in our operating model with mechanisms in place to build on those gains over time. By strengthening the foundation of our business through culture and shared values, synergy execution and a customer-centric focus, we are positioning the company to generate higher, more consistent earnings and drive long-term value for shareholders. I'll now turn the call over to Jim Claussen to review our performance relative to first quarter guidance, discuss our expectations for the second quarter and provide an overview of our synergy attainment progress and capital allocation activities.
Thank you, Rick, and good morning, everyone. In the first quarter, we achieved revenue at the top end of our guidance range with same-store volumes increasing as expected and same-store average selling prices exceeding our expectations as aluminum pricing was influenced by geopolitical events. Gross margin expanded as anticipated during the quarter as our contracts began to reset at current market pricing and improved demand conditions supported transactional pricing. Net income for the quarter came in at $4.5 million, or $0.10 per diluted share, and our adjusted net income for the first quarter, which removes transaction-related expenses and a one-time impairment charge, was $13.1 million, or $0.30 per diluted share. Our same-store first quarter adjusted EBITDA, excluding LIFO generation, of $54.9 million exceeded our expectations, while Olympic Steel contributed an additional $12.5 million, which was in range for the business' post-merger six-week sub period. Altogether, our adjusted EBITDA, excluding LIFO, in the first quarter was $67.4 million. Turning to current expectations: bookings have remained at healthy levels in recent weeks, and we expect the second quarter to fall in line with typical seasonal demand patterns, producing shipments 1% to 3% higher relative to the first quarter on a same-store basis. We therefore anticipate that total company tons shipped will be 18% to 20% higher compared to the first quarter of 2026, with Olympic Steel included in the entire period compared to only six weeks at the end of the prior period. Total company revenues are expected to be in the range of $1.86 billion to $1.93 billion, with same-store average selling prices expected to be up 2% to 4% sequentially and overall average selling prices to be up 1% to 3% quarter-over-quarter as our product mix shifts higher in carbon products with the full quarter inclusion of Olympic Steel and average selling prices for carbon products lower than those for aluminum and stainless. In all, we anticipate generating net income for the second quarter in the range of $20 million to $22 million, or $0.38 to $0.42 per diluted share. We expect our LIFO expense to be between $14 million and $16 million in the second quarter, leading to adjusted EBITDA, excluding LIFO generation, in the range of $88 million to $92 million, with $21 million to $23 million of that attributed to Olympic Steel. Second quarter synergy realization is expected to be in the range of $4 million to $6 million. Turning to our integration with Olympic Steel and our progress on attaining our announced $120 million of annual run-rate synergies: in our first six weeks together, before the end of the first quarter, we were able to hit the ground running on many of our strategies and are seeing early encouraging progress across our synergy categories. One of our earliest priorities post-close was to begin the alignment of our supply chain networks and realize initial harmonization of purchasing programs, which we are confident will lead to meaningful savings and further projected buildup in future quarters as contracts cycle through and we continue to align our purchasing efforts. We expect that in total, the procurement synergies we executed during the first quarter will generate annual savings of approximately $15 million, and we are on track to meet our anticipated $40 million two-year procurement target. We realized efficiency savings during the first quarter through the elimination of overlapping corporate subscriptions and fees, and we have more lined up for the second quarter. We anticipate that in total, the merger will realize approximately $5 million in annualized savings from reduced public company costs alone. We exited two leased facilities during the quarter, one in Huntsville, Alabama and the other in Waterbury, Connecticut. Those operations moved into other facilities in Alabama and Connecticut, and we expect to realize annual savings of $1.5 million as a result. We are seeing great progress in supply chain mapping and commercial synergies with several actions implemented to leverage our enhanced footprint. For example, our Hickman, Arkansas facility, where we recently upgraded our temper mill capabilities, is already being leveraged to service current and prospective Olympic customers. We are also exercising Ryerson's strength in Bright Metals to service Olympic accounts through our TSA processing facilities, which Ryerson brought into the family of companies in 2023. In total, we realized about $1 million in savings within the first six weeks of integration. As previously mentioned, we expect realization of approximately $4 million to $6 million in Q2, and we are well on our way to achieving our estimated first-year attainment of $40 million in annual run-rate synergies. As both Eddie and Rick expressed, we are exceedingly pleased with the collaborative efforts of both teams and are looking forward to providing further updates as we drive towards our two-year target of $120 million in annual run-rate synergies. Turning to our investments in the business: in the first quarter, our capital expenditures totaled $12 million and primarily included investments in repair and maintenance projects at our facilities as well as small capability enhancement projects. As a reminder, we anticipated investing approximately $50 million in same-store capital expenditures in 2026 with an additional $25 million allocated to Olympic Steel for a total this year of $75 million. Turning to shareholder returns: during the first quarter, Ryerson distributed $9.7 million in the form of dividends, or $0.1875 per share distributed to our expanded shareholder base. For the second quarter, we have announced a dividend of the same amount. Additionally, we returned $1.6 million to our shareholders during the first quarter by opportunistically repurchasing approximately 74,000 shares from the open market under our share repurchase authorization. We are also pleased to announce that following the expiration of our previous program on April 30, our Board of Directors has approved a new share repurchase program, which provides us with the authorization to repurchase up to $100 million worth of our shares over the next two years. We expect to prudently exercise this authority as opportunities in the market are presented. I will now turn the call over to Molly Kannan to discuss our financial performance highlights for the first quarter.
Thanks, Jim, and good morning, everyone. In the first quarter of 2026, Ryerson generated net sales of $1.57 billion, an increase of 37.9% compared to the same quarter of 2025, with tons shipped 31.2% higher and average selling prices 5.2% higher. On a same-store basis, we generated net sales of $1.29 billion with tons shipped 4.6% higher and average selling prices 8.9% higher compared to the same period last year. Compared to the previous quarter, same-store revenues were up 17.1% with shipments 13.4% higher and average selling prices 3.2% higher. Commodity prices rose slightly more than anticipated during the quarter and resulted in a LIFO expense of $10 million compared to our expected expense of $6 million to $8 million. Same-store gross margin expanded year-over-year by 270 basis points to 18% and same-store gross margin, excluding LIFO, expanded by 150 basis points to 18.8%. Warehousing, delivery, selling, general and administrative expenses totaled $265.2 million for the first quarter, or $217.6 million on a same-store basis, which represents an increase of $15.5 million compared to the first quarter of 2025. On a per ton basis, total company warehousing, selling, general and administrative expenses were $404 per ton in the first quarter, or $416 per ton on a same-store basis, compared to $404 per ton in the year-ago period or $445 in the previous period. First quarter same-store year-over-year expense increases were driven by higher compensation and benefits expenses, advisory service fees related to the Olympic Steel merger and higher delivery fees driven by increased diesel prices. Our first quarter income taxes came in at $8.2 million, significantly higher than our normal effective tax rate due to $2 million in tax impacts from the merger, which included nondeductible transaction costs and changes to our state rate. We do not expect these impacts to be recurring and our effective rate should therefore return to approximately 25% to 26% in future quarters. In all, we generated total company net income of $4.5 million, or $0.10 per diluted share, in the first quarter of 2026 compared to a net loss of $5.6 million in the first quarter of 2025. After removing the impacts of both the advisory service fees and the income tax provision related to the merger as well as an asset impairment charge, our adjusted net income for the quarter was $13.1 million, or $0.30 per diluted share. Our total company adjusted EBITDA, excluding LIFO, for the first quarter of 2026 was $67.4 million, which more than doubles the $32.8 million generated in the first quarter of 2025. On a same-store basis, our adjusted EBITDA, excluding LIFO, increased by $22.1 million year-over-year. We used $179 million in cash from operating activities in the first quarter of 2026, primarily to satisfy the higher working capital requirements of the combined company within the seasonally stronger period. Inventory days of supply decreased by five days quarter-over-quarter to 74, which is back within our target range of 70 to 75 days. Our overall cash conversion cycle also remained well managed, coming in at 67 days for the first quarter, which is a day less than the prior quarter and in line with the same quarter of last year. Our total debt increased to $908 million and net debt to $883 million during the first quarter, an increase of $445 million and $447 million, respectively, as we paid off Olympic Steel debt of approximately $300 million, paid merger-related costs and funded our working capital requirements. As a result of the combined debt base, Ryerson's leverage ratio for the first quarter rose to 5.1x compared to 3.1x for the previous quarter. We expect our leverage ratio to move lower throughout the year as we anticipate that our trailing 12-month adjusted EBITDA, excluding LIFO, should increase with the addition of Olympic Steel contributions as well as with our forecasted first-year synergy attainment. Finally, our global liquidity increased from $502 million at the end of the fourth quarter to $618 million at the end of the first as our borrowing base expanded with our working capital. With that, I will turn the call back to Eddie to conclude our prepared comments.
Thank you, Molly. Throughout our call this morning, as we recounted our accomplishments in the quarter, we pointed to the dedication and commitment of our teammates—and I would like to close our prepared comments on that high note because, after all is said and done, we were well positioned for the first quarter's demand improvement because of the optimizing and refining work we have done internally, incorporating new capabilities from our record investment cycle, honing and improving our practice of service center fundamentals and modernizing our operating model. This quarter, the team—our collective Ryerson team—executed in an exemplary fashion of which we can all be proud. Rest assured, there is much more work to do in bringing these synergies home over the next couple of years while building our internal artificial intelligence capabilities as well as serving as a trusted partner to our customers in the AI-related build-out that is still in its early stages. Until next time, let's keep rising toward realizing our maximum potential to the benefit of all Ryerson stakeholders. With that, we look forward to your questions. Operator?
分析師問答
And the first question today comes from Samuel McKinney with KeyBanc Capital Markets.
Congrats to you guys. You called out particular strength in the transactional business developing over the course of the first quarter, which continues the trend from last year. Could you just talk about the extent to which the divergence between spot and contract tons is continuing? And what do you need to see to really get that contract business moving again?
Yes, Sam, that's a really good question. I was very pleasantly surprised by the increase in transactional business across our entire footprint. Relative to the MSCI, we put out a strong print when it came to market share growth. I think that's a function of the capital investments we've made finally coming online, having inventory in the right places and practicing service center fundamentals in a disciplined way. On the contract side, we're still lagging by about 4% to 5%, and it's pretty uneven across programs. When you look at residential construction, agriculture, heavy truck and trailer and consumer durables, they're still lagging some of the other growth areas in the economy. I'll have Andrew Greiff speak to this for more color.
Yes, Eddie said it well. We did not see as much improvement in the first quarter as we had hoped coming out of Q4 of 2025. However, as we moved from the first quarter into the second quarter, the expectations we're hearing from industrial OEMs are that the second quarter will improve upon the first and that the second half of the year will be certainly better than the first half. We've seen some improvement in construction, more life in ag and continued strength on the data center side, which affects our flat roll and pipe and tube business. I believe the second half will see a nice pickup on the contract side.
Okay, that's helpful. And then the next one: could you discuss the capital allocation priorities within the context of instituting that new share repurchase program while net debt is approaching $900 million? I understand the increased same-store earnings and incremental contribution from Olympic will help the ratio, but I'm trying to better understand the plans for bringing that debt load down.
Sure, Sam. Given our experience in the industry and the perspective of the people in this room, looking at where we are having turned procyclical and being past the stub period of quarters, we can project over four quarters rather than partial periods. We see our debt trends improving meaningfully through the balance of the year as our free cash flow generation strengthens. We're past the biggest part of the CapEx cycle, so CapEx is normalizing. We also found an opportunity during the quarter: when the stock was trading in the low $20s and under intrinsic value, and given our strong liquidity position, it made sense to repurchase some shares. I'll have Jim give you a little more color on that.
Yes. Eddie covered the philosophy. Going forward, our priority will be on improving the leverage ratio. However, we'll continue to look opportunistically at repurchases where appropriate. We wanted to make sure we had the ability to repurchase when the stock was trading below book value, which we saw in the first quarter. We'll be prudent: priority remains the leverage ratio. We're through the major CapEx cycle and past transaction costs from the merger, and our ABL is redone. Liquidity is strong, and we're focused on synergies and growing Ryerson.
Our next question comes from Katja Jancic with BMO Capital Markets.
I might have missed this, but what is currently the split between contract and transactional business on a pro forma basis?
On the Ryerson side, we're running at about 52% transactional and 48% contract. On the Olympic Steel side, it's roughly 30% transactional and 70% contract. Combined, we would expect the overall company to be around 42% transactional and 58% contract, and we would expect that mix to move higher in the quarters and years ahead as we deploy our combined footprint and capabilities.
That's right: Olympic Steel is roughly 30% transactional and 70% contractual. One of the strategic initiatives of the combined company—and actually one of the benefits of the merger—is to build out the transactional business. With a much bigger footprint, we're able to do that. Transactional and contractual business are difficult to run in the same facility because of different setups, inventory and turn times. One of our initiatives is to move business so we can optimize transactional activity in locations set up for same-day and next-day delivery. Over time, I think you'll see the combined mix tilt to a higher transactional percentage.
From a broader perspective, as we get Olympic Steel data into our data warehouse, we will be able to calculate the mix more precisely. Our goal is to move toward a 60/40 split in favor of transactional business, while also optimizing the profitability of the program business because many contract customers are also transactional customers.
I know you're still in early stages of integration, but so far it seems like everything is going well. Have you experienced any issues or early challenges with the integration?
Rich Manson is heading up our synergy effort, and I think as we've worked together we've been delighted with the collaboration at all levels. The way the teams are working together has exceeded my expectations. I'll have Rich speak in more detail about the synergy efforts to date.
Thanks, Eddie. I would echo those comments. During diligence, management was comfortable around the $40 million savings in year one and $120 million after year two. What has been encouraging is engagement from lower levels of the organization—we're seeing ideas that we didn't even think of. There's great cooperation among the commercial teams and operators, and I do believe the savings we've laid out are very achievable.
Our next question comes from Alan Weber with Robotti & Company.
When you look at the presentation, can you talk about the third and fourth quarters—not specific estimates, but how you're thinking about them? I ask because your first quarter EBITDA is basically what last year's third and fourth combined were, and your second quarter EBITDA projection of around $90 million is about $25 million higher than the third and fourth combined. How do you think about EBITDA in Q3 and Q4?
Alan, we try not to get too far over our skis given macro uncertainty, but some of the good news we're seeing is building momentum—contract pricing lags are working through and April and early May activity have trended positively. May activity, even early in the month, shows stronger quote and order activity year-over-year. I would be surprised if the second half of this year were not better than the second half of last year, but there are still variables in the global economy that could change that view.
Alan, what we control within Ryerson is our internal execution: continued operational improvements and the ramp-up of synergies. We talked about roughly a $5 million synergy benefit in the next quarter and being comfortable with our $40 million target. Another driver is the business mix—having more than 50% transactional really buoyed the first quarter. If we start to see demand recovery in the big OEMs on the contract side, there is meaningful upside. Pricing trends are also positive, so combined with our internal efforts and potential demand recovery, we feel optimistic about the second half.
Okay. Because actually the numbers I mentioned don't really include synergies for this year from the merger, which you're expecting most of those to take place in the second half also.
Yes, that's right. We had about $1 million of synergy-related savings flow into Q1 financials, and we're expecting roughly a $5 million midpoint of synergies to be in Q2. We expect to build momentum through Q3 and Q4 as well.
I'll now turn the conference back over to you for any additional remarks.
There is a question on the web. Thanks for sending that in. It's our expectations in the second half for synergy attainment compared to $40 million.
Rich spoke to this earlier and I would reiterate: we feel that we're tracking on pace to hit our annual run-rate synergies and expect those to continue to propagate into the financial statements as we move through the balance of the year. We want to thank everybody for joining us for Ryerson's call. We look forward to being with you on our Q2 earnings call later this summer. Thanks.
Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.