Ryerson Holding Corp. Q4 FY2024 earnings call

• The fourth quarter was part of a long manufacturing downturn with commodity price declines. Ryerson completed the third year of a record CapEx cycle. In the fourth quarter, $24 million was invested in CapEx, and $100 million was invested全年. A cost reduction plan was initiated in 2024 to reduce operating expenses by $60 million annually. For 2025, CapEx is dialed back to the $50 to $55 million range to operationalize assets. - In the fourth quarter, sales volume was 447,000 tons, 7.8% lower quarter-over-quarter. For the full year 2024, sales volume was 1.9 million tons, roughly equivalent to 2023. Operating expenses were reduced in 2024 by reducing personnel-related expenses, lowering fixed expenses, and creating efficiencies.

In the fourth quarter of 2024, Ryerson reported net sales of $1.01 billion, which was 10.6% lower than the third quarter of 2024. The average selling price (ASP) in the fourth quarter was $2,254 per ton, a 3% quarter-over-quarter decrease. For the full year 2024, net sales were $4.6 billion, down 9.8% from $5.1 billion in 2023. The average selling price decreased across product mixes, with carbon products down 8%, stainless steel down 15%, and aluminum down 4% year-over-year. In the fourth quarter, adjusted EBITDA including LIFO was $10.3 million, and for the full year 2024, adjusted EBITDA excluding LIFO was $114 million.

• For the first quarter of 2025, volumes are expected to be up 11% to 13% sequentially compared to the fourth quarter. Revenues are expected to be in the range of $1.12 billion to $1.15 billion with average selling price increasing 0% to 2%. - Adjusted EBITDA excluding LIFO for the first quarter of 2025 is forecasted to be in the range of $28 million to $32 million. Loss per share is expected to be in the range of $0.27 to $0.20 per diluted share, and LIFO expense is expected to be between $6 million to $8 million.

• Industry cyclicality which can lead to lower volumes and margin compression. - Uncertainty regarding tariffs and trade policy impacts on demand and price conditions. - Current net debt leverage is 3.9 times, above the two times target range, and there is a need to normalize net debt level.

Q: How are you all thinking about CapEx for 2025?

A: We're dialing it back to the $50 to $55 million range. We've invested a lot in CapEx and it's time to operationalize those assets and integrate them well into the network.

Q: Can you take us through some of the progress on University Park since the September showing?

A: University Park is on a nice glide path now. Bookings are up by 20% from their bottom. They're refining their inventory profile and the equipment is working beautifully.

Q: How are you all thinking about the tariffs or managing your business around it?

A: There'll be some currency headwinds in Canada, Mexico, and China. But the majority of our revenue is generated in the US. Our inventory and supply chains are well positioned.

Q: Why is net debt reduction not part of your capital allocation if you are so far out of your leverage target?

A: It is a priority. We'll bring our leverage down as we operationalize our CapEx investments and as the industry stabilizes.

Q: Given generally rising prices, how are you thinking about working capital as a use or benefit to cash flow in 2025?

A: Historically, we can finance seven dollars of revenue for a one dollar investment in net working capital. Our working capital management is at a high standard and we expect to continue managing it well.

Q: Can you discuss progress on the new ERP system?

A: We converted about 40% of our revenue to SAP and a uniform ERP environment. We're through the hardest part of the conversion and service levels have improved.