Executive Summary

Q1 revenue was $1.24B, in line with guidance, on 497k tons and ASP of $2,493/ton, but EPS missed as Ryerson posted a diluted loss of $0.22; adjusted EBITDA ex-LIFO was $40.2M, below guidance, as gross margin contracted on stainless weakness and lagging higher-cost inventory through the quarter .
Management initiated a pivot from investment to optimization, announcing $40M annualized cost reductions (≈$25M to be realized over the balance of 2024) while completing a multi-year ERP unification across 31 service centers and starting up the 900k sq. ft. University Park, IL facility .
Balance sheet remained liquid ($684M global liquidity) but net leverage rose to 2.5x (above 0.5–2.0x target) driven by working capital build and lower EBITDA; debt and net debt increased to $497M and $455M, respectively .
Q2 outlook: shipments +1–3% q/q, net sales $1.25–$1.29B, ASP +0–1%, LIFO expense ~$1M, adjusted EBITDA ex-LIFO $47–$53M, EPS $0.15–$0.25; management cites stabilization in carbon and improving bright metals indices as potential catalysts .
Catalysts: cost-out execution, value-added mix benefits, pricing stabilization in stainless/aluminum, and ERP-enabled service improvements; constraints include counter-cyclical market conditions and near-term margin sensitivity to spot pricing and inventory cost lags .

What Went Well and What Went Wrong

What Went Well
- Completed ERP unification across 31 service centers and commenced operations at University Park IL; modernization and automation initiatives aimed at operating leverage and customer experience improvements .
- Sequential improvement in adjusted EBITDA ex-LIFO to $40.2M from $25.9M, with gross margin ex-LIFO expanding 70 bps to 17.6% as value-added fabrication sales grew and ASPs outpaced COGS for the sales mix .
- Outperformed industry volumes; North American shipments increased 13.7% q/q vs. 7% for MSCI, with strength in transportation, construction equipment, and industrial manufacturing .
What Went Wrong
- EPS miss and margin compression: diluted EPS of $(0.22) and adjusted EPS of $(0.18) missed guidance due to stainless price pressure, higher-cost inventory lag, and transitory investment-related operating expenses; GAAP gross margin fell 460 bps q/q to 17.6% (LIFO swing vs. Q4) .
- Net leverage rose to 2.5x (above the 0.5–2.0x target) as operating cash flow was $(47.8)M on working capital build (inventory/receivables) amid service level improvement objectives .
- Stainless pricing and channel inventory overhang compressed margins; management noted the need for several months of price momentum to sustainably improve spot margins .

Financial Results

Revenue and EPS vs Estimates (S&P Global consensus unavailable today)

Metric	Q1 2024 Actual	Consensus (S&P Global)	Beat/(Miss)
Revenue ($B)	$1.2392	N/A	N/A
Diluted EPS ($)	$(0.22)	N/A	N/A

Comparative P&L and Profitability

Metric	Q1 2023	Q4 2023	Q1 2024
Revenue ($B)	$1.4061	$1.1124	$1.2392
Tons Shipped (000)	519	450	497
Avg Selling Price/ton ($)	2,709	2,472	2,493
Gross Margin (%)	18.8%	22.2%	17.6%
Gross Margin ex-LIFO (%)	19.1%	16.9%	17.6%
WD SG&A ($M)	194.2	203.7	216.8
WD SG&A (% of Rev)	13.8%	18.3%	17.5%
Net Income (Loss) Attr. ($M)	47.3	25.8	(7.6)
Diluted EPS ($)	1.27	0.74	(0.22)
Adjusted Diluted EPS ($)	1.27	0.73	(0.18)
Adjusted EBITDA ex-LIFO ($M)	90.1	25.9	40.2
Adjusted EBITDA ex-LIFO Margin (%)	6.4%	2.3%	3.2%

KPI and Balance Sheet Metrics

KPI	Q1 2023	Q4 2023	Q1 2024
LIFO (Income)/Expense ($M)	(59.3)	(59.3)	1.0
Cash from Operations ($M)	80.4	90.1	(47.8)
Capital Expenditures ($M)	25.4	25.4	21.8
Debt ($M)	395.1	436.5	497.3
Net Debt ($M)	351.4	382.2	455.4
Global Liquidity ($M)	656	656	684
Net Leverage (Net Debt/LTM Adj. EBITDA ex-LIFO) (x)	0.8x	1.7x	2.5x
Cash Conversion Cycle (days)	77.4	84.6	75.6

Product Mix – Net Sales, Shipments, ASP

Metric	Q1 2023	Q4 2023	Q1 2024
Carbon Steel Net Sales ($M)	692	575	645
Aluminum Net Sales ($M)	310	241	276
Stainless Steel Net Sales ($M)	378	271	297
Carbon Tons (000)	402	347	385
Aluminum Tons (000)	52	48	50
Stainless Tons (000)	63	52	61
Carbon ASP ($/ton)	1,721	1,657	1,675
Aluminum ASP ($/ton)	5,962	5,021	5,520
Stainless ASP ($/ton)	6,000	5,212	4,869

Notes: Q4 LIFO income was significant and accounted for the sequential gross margin delta vs Q1 (Q4 LIFO income $59.3M vs Q1 LIFO expense $1.0M) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance/Actual	Change
Shipments (% q/q)	Q1 2024	+8% to +10%	+10.4% actual	In line/Top end
Avg Selling Price (% q/q)	Q1 2024	+1% to +3%	+0.8% actual	Slightly below
Revenue ($B)	Q1 2024	$1.21–$1.25	$1.2392 actual	Met
LIFO impact	Q1 2024	≈0	$1M expense	Slightly worse
Adj. EBITDA ex-LIFO ($M)	Q1 2024	$58–$62	$40.2 actual	Lower
Diluted EPS ($)	Q1 2024	$0.24–$0.34	$(0.22) actual	Lower
Shipments (% q/q)	Q2 2024	—	+1% to +3%	New
Avg Selling Price (% q/q)	Q2 2024	—	+0% to +1%	New
Revenue ($B)	Q2 2024	—	$1.25–$1.29	New
LIFO expense ($M)	Q2 2024	—	~$1	New
Adj. EBITDA ex-LIFO ($M)	Q2 2024	—	$47–$53	New
Diluted EPS ($)	Q2 2024	—	$0.15–$0.25	New
Quarterly Dividend ($/sh)	Q2 2024	Q1 2024: $0.1875	$0.1875 declared	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’23 and Q4’23)	Current Period (Q1’24)	Trend
ERP/Modernization	ERP conversions and network modernization underway; start-up activities at University Park, Las Vegas; value-add focus .	ERP unification completed across 31 service centers; University Park start-up; optimization phase begins .	Execution milestone achieved; moving to optimization.
Cost Structure	Expense management highlighted; reorg costs during ERP/start-ups .	Announced $40M annualized cost reductions; ≈$25M benefit in 2024; restructuring costs $3–$4M .	Cost-out catalyst emerging.
Pricing/Margins	Counter-cyclical headwinds, stainless weakness; LIFO income aided margins in Q3/Q4 .	Stainless pressure and higher-cost inventory lag compressed margins; bright metals pricing inflected late in Q1 .	Early stabilization; still margin-sensitive.
End-market demand	Q3 seasonality/softening; mix not heavy in auto/aero; transportation/oil & gas held up .	Seasonal restocking; transportation strongest; outperformed MSCI volumes .	Sequential improvement.
Leverage/Liquidity	Net leverage within target (1.7x) at YE’23; liquidity $656M .	Net leverage to 2.5x on WC build; liquidity improved to $684M; commitment to 0.5–2.0x LT .	Temporary elevation; LT target reaffirmed.
Capital Allocation	Dividend increases and buybacks; capex ~$110M in 2024 .	Capex plan reaffirmed ($110M 2024; ~$50M 2025); dividend maintained; modest buybacks .	Normalizing capex in 2025.
AI/Tech/Secular	Secular drivers cited (electrification, mobility, AI) supporting long-term metals demand .	Reiterated secular support; ERP/digitalization as enablers .	Longer-term bullish backdrop unchanged.

Management Commentary

“We… mark two important milestones: the start of operations at our University Park, IL service center and the completion of the final stage of our ERP system unification program across 31 service centers… creating Ryerson’s next generation operating model” .
“We met our guidance range for revenue and shipments but missed on earnings per share and Adjusted EBITDA, excluding LIFO… due to lower than expected gross margins… and transitory operating expenses…” .
“It is now the appropriate time to transition to an investment, integration and optimization phase… targeting $40 million in annual cost take-outs… ~$25 million in savings during the balance of 2024” .
“We expect volumes to be up… Q2 revenues $1.25–$1.29 billion… adjusted EBITDA ex-LIFO $47–$53 million and EPS $0.15 to $0.25” .
“Due to… business investments and strategic inventory positioning… we exceeded our 2x target range for net leverage… we reiterate our commitment to our long-term range of 0.5 to 2x net leverage” .

Q&A Highlights

Cost savings cadence: ~$25M realized over Q2–Q4’24; annualized $40M exiting 2024 into 2025 .
2025 capex normalization: ~$50M in 2025, with maintenance capex ~$30–$35M; remaining growth projects to finish with attractive ROIs .
ERP conversion status: Essentially complete across the network (except recent bolt-ons); expect benefits as conversions move past the disruptive phase .
Acquisition profitability: Majority are profitable; margin compression more about commodity curves and spot competitiveness than M&A drag .
Pricing dynamics: Need 2–4 months of sustained price momentum for spot margins to improve; risk of “double squeeze” if prices tick up then fall back .

Estimates Context

Wall Street consensus (S&P Global) for Q1 2024 EPS and revenue was unavailable today; comparisons vs consensus cannot be provided. Management’s prior Q1 guidance implied adjusted EBITDA ex-LIFO of $58–$62M and EPS of $0.24–$0.34, while actuals were $40.2M and $(0.22), respectively, reflecting margin compression and transitory costs .
Q2 2024 guidance (adjusted EBITDA ex-LIFO $47–$53M; EPS $0.15–$0.25) suggests modest sequential improvement; estimate models may need to reflect lower stainless ASPs, higher-cost inventory lag, cost-out benefits ramping through 2H, and stable LIFO assumptions (~$1M expense) .

Key Takeaways for Investors

Execution pivot: The investment phase (ERP/start-ups) is largely complete; $40M annualized cost reductions are a tangible earnings bridge into 2H’24/2025 as modernization benefits are monetized .
Margin sensitivity: Stainless pricing and inventory cost lag drove the Q1 miss; sustained price momentum over several months is needed to lift spot margins and EBIT conversion .
Liquidity intact, leverage near-term elevated: $684M liquidity supports operations and optimization; expect leverage normalization as cost-outs flow and WC unwinds .
Mix and value-add: Continued progress on value-added capabilities and network ERP integration supports higher, less volatile through-cycle earnings once pricing stabilizes .
Near-term setup: Q2 guide implies incremental improvement; watch for execution on $25M 2024 cost savings, stainless/aluminum price traction, and volume seasonality into summer .
Capital deployment: 2024 capex at ~$110M then normalizing to ~$50M in 2025, maintaining dividend and opportunistic buybacks within leverage guardrails .
Risk factors: Prolonged counter-cycle or renewed price declines could delay margin recovery and leverage normalization; competitive pricing intensity remains high .

Ryerson Holding Corp (RYI)·Q1 2024 Earnings Summary