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RH

Ryerson Holding Corp (RYI)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue was $1.01B on 447k tons at $2,254/ton; GAAP diluted EPS was ($0.13) and adjusted diluted EPS was ($0.14). Gross margin expanded 110 bps QoQ to 19.0% (ex-LIFO 16.4%, +10 bps QoQ) on inventory cost tailwinds; adjusted EBITDA ex-LIFO was $10.3M .
  • Working capital execution drove $92.2M operating cash flow and $68.9M FCF; net debt fell $47M QoQ to $440M; LTM net leverage at 3.9x remains above the 0.5x–2.0x target but below the 10-year average .
  • Management met adjusted EBITDA ex-LIFO guidance and beat its EPS guidance on higher-than-expected LIFO income; Q1 2025 guide: shipments +11% to +13% QoQ, revenue $1.12–$1.15B, ASP +0% to +2%, LIFO expense $6–$8M, adjusted EBITDA ex-LIFO $28–$32M, diluted loss/share ($0.27)–($0.20) .
  • Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at time of analysis; result vs consensus not shown. Management cited signs of early-cycle improvement with transactional margins inflecting from mid-January and improved quoting/order momentum, while non‑ferrous remains a laggard .

What Went Well and What Went Wrong

  • What Went Well

    • Gross margin expanded 110 bps QoQ to 19.0% (ex‑LIFO +10 bps to 16.4%) as inventory cost declines outpaced ASP declines; LIFO income ($25M) exceeded prior expectations, improving EPS vs guide .
    • Cash generation and balance sheet: $92.2M operating cash flow, $68.9M FCF; net debt cut to $440M (from $487M QoQ) amid a $71M working capital release .
    • Cost actions tracking: achieved $60M annualized OpEx reductions; CEO emphasized the “integration and optimization” phase and ongoing returns from modernization, ERP rollout and e‑commerce platform upgrades .

  • What Went Wrong

    • Topline and profitability pressure: revenue fell 10.6% QoQ and 9.4% YoY on 3.0% ASP decline and seasonal volume down 7.8%; adjusted EBITDA ex‑LIFO fell to $10.3M (1.0% margin) from $21.0M (1.9%) QoQ .
    • Non‑ferrous weakness and margin compression: management highlighted 48% exposure to non‑ferrous and an “uncharacteristic” compression of transactional spreads (3–5% in 2024 vs typical 6–10%) as demand stayed recessed .
    • Leverage remains elevated at 3.9x LTM adj EBITDA ex‑LIFO (above target range) due to the capex cycle and lower EBITDA generation; management reiterated deleveraging as a priority in 2025 .

Financial Results

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Billions)$1.11 $1.13 $1.01
Gross Margin (%)22.2% 17.9% 19.0%
Gross Margin ex-LIFO (%)16.9% 16.3% 16.4%
Net Income (Loss) ($M)$26.0 ($6.0) ($4.2)
Net Income (Loss) Attrib. RYI ($M)$25.8 ($6.6) ($4.3)
Diluted EPS ($)$0.74 ($0.20) ($0.13)
Adjusted Diluted EPS ($)$0.73 ($0.20) ($0.14)
Adjusted EBITDA ex-LIFO ($M)$25.9 $21.0 $10.3
WD SG&A ($M)$203.7 $196.9 $188.5
Operating Cash Flow ($M)$90.1 $134.6 $92.2
Free Cash Flow ($M)$65.1 $103.4 $68.9
Volume/Price KPIsQ4 2023Q3 2024Q4 2024
Tons Shipped (000s)485 485 447
Average Selling Price/ton ($)$2,472 $2,323 $2,254
LIFO Income ($M)59.3 18.1 25.4
Gross Profit/ton ($)416 416 428
Product Net Sales ($M)Q4 2023Q3 2024Q4 2024
Carbon Steel$574 $585 $510
Aluminum$244 $250 $236
Stainless Steel$275 $276 $248
Balance Sheet/LeverageQ4 2023Q3 2024Q4 2024
Total Debt ($M)$436.5 $522.1 $467.4
Cash & Equivalents ($M)$54.3 $35.0 $27.7
Net Debt ($M)$382.2 $487.1 $439.7
Net Debt / LTM Adj. EBITDA ex-LIFO (x)1.7x 3.8x 3.9x

Notes: “WD SG&A” = Warehousing, delivery, selling, general & administrative.

Guidance Changes

  • Q4 2024 guidance (from Q3) vs actual delivery
MetricPeriodPrevious GuidanceActualOutcome
Net Sales ($B)Q4 2024$1.00–$1.04 $1.01 In line
Shipments QoQQ4 2024(8%)–(10%) (7.8%) Slightly better
ASP QoQQ4 2024(1%) to +1% (3.0%) Below guidance
LIFO ($M)Q4 2024+10 income +25.4 income Above (more favorable)
Adj. EBITDA ex-LIFO ($M)Q4 2024$10–$12 $10.3 Met low end
Diluted EPS ($)Q4 2024($0.53)–($0.47) ($0.13) Beat (helped by LIFO)
  • Q1 2025 forward guidance (new)
MetricPeriodPrevious GuidanceCurrent GuidanceChange
Shipments QoQQ1 2025N/A+11% to +13% New
Net Sales ($B)Q1 2025N/A$1.12–$1.15 New
ASP QoQQ1 2025N/A+0% to +2% New
LIFO ($M)Q1 2025N/A($6) – ($8) expense New
Adj. EBITDA ex-LIFO ($M)Q1 2025N/A$28–$32 New
Diluted EPS ($)Q1 2025N/A($0.27)–($0.20) New
Interest Expense ($M)Q1 2025N/A$9 New
Tax (benefit) ($M)Q1 2025N/A($3) – ($2) New
D&A ($M)Q1 2025N/A$19 New
Dividend/Share ($)Q1 2025$0.1875 (declared) $0.1875 (declared) Maintained

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
Modernization & CapexUniversity Park start-up; Shelbyville nearing commissioning; focus on optimization Investment cycle near end; reorg/start-up costs peaking; optimization to follow Capex cycle largely complete; 2025 capex dialing back to $50–$55M to operationalize assets Transition from invest to optimize
Cost ReductionRaised target to ~$60M annualized; logistics/ERP efficiencies Tracking toward $60M annualized; OpEx reduction continuing Achieved $60M annualized reduction; WD SG&A down QoQ Delivered, more to optimize
Demand/MarginsPricing declines in carbon, aluminum, stainless; ASP/margin compression Seasonal and cyclical bottoming; LIFO income aided margin Transactional margins inflecting higher since mid-Jan; non‑ferrous still lagging Early-cycle improvement
Tariffs/MacroMonitoring metals indices and PMI; non‑ferrous weakest Mills’ utilization low-70s, availability market persists Potential tariff impacts; replacement cost up in aluminum; futures re‑ratcheting in carbon Tariff pass‑through likely lifts replacement costs
Working Capital & LeverageInventory actions to right-size; leverage rose with capex More WC release planned; net leverage 3.8x $71M WC release; leverage 3.9x; deleveraging a 2025 priority Generate cash, reduce leverage

Management Commentary

  • CEO on cycle transition and investments: “We’re confident the payoff will come… renovating our operating model to generate higher and less volatile earnings through future business cycles” and bookings since mid‑January “at their highest levels since the second quarter of 2021” .
  • CFO on Q1 outlook: “We expect revenues to be in the range of $1.12 billion to $1.15 billion… adjusted EBITDA… excluding LIFO, in the range of $28 million to $32 million… LIFO expense… $6 million to $8 million” .
  • CEO on margins: “Transactional margins really start to expand… last year [transactional] spreads… 3% to 5% vs historical 6% to 10%; we bottomed in Q4” .
  • CEO on tariffs: “Master distributors [are] more aggressive pricing to replacement cost… a good indicator that prices are going to start to increase” .

Q&A Highlights

  • Margin trajectory: Management said transactional margins bottomed in Q4 and are expanding from mid‑January; contract resets with lag could improve into Q2–Q3 if trends hold .
  • Tariffs and replacement costs: Risk lead cited Midwest aluminum premiums up ~$0.10–$0.15 and conversion increases; carbon futures re‑ratcheted higher—expect price books to reflect replacement cost .
  • Capital allocation and leverage: Deleveraging is a priority in 2025; leverage above target due to capex and lower EBITDA but expected to normalize as assets ramp .
  • ERP progress: ~40% of revenue converted to SAP; operations have normalized with improving service levels; optimization ahead .
  • 2025 Capex: Dialing back to $50–$55M to focus on operationalizing assets and capturing returns .

Estimates Context

  • Street (S&P Global) Q4 2024 consensus EPS and revenue were unavailable at time of analysis due to data limits; result vs consensus not shown. Company reported it met adjusted EBITDA ex‑LIFO guidance and beat its EPS guidance due to higher‑than‑expected LIFO income .
  • Where estimates may adjust: Q1 2025 guide includes a seasonal shipment rebound and slight ASP lift, but also LIFO expense and expected loss/share, implying near‑term estimate revisions may reflect lagging contract margin resets offset by improving transactional pricing and volume .

Key Takeaways for Investors

  • Near-term: Q4 delivered in-line sales and better EPS vs guide on favorable LIFO; Q1 guide implies seasonal volume recovery but continued EPS pressure from lagging margin resets and LIFO expense—a setup where revenue beats may not translate to EPS near-term .
  • Cash and deleveraging: Strong cash generation (Q4 OCF $92M) and WC discipline reduced net debt QoQ; expect further deleveraging as optimization replaces investment in 2025 .
  • Margin inflection signals: Transactional margins are improving from mid‑January; watch Q2–Q3 for contract reset benefits if pricing trends persist .
  • Tariff/replacement cost dynamic: Aluminum premiums and carbon futures suggest replacement cost upshift; RYI’s pricing should migrate toward replacement cost, aiding margins as cycle turns .
  • Operating model upgrade: Network modernization, ERP, and e‑commerce are through the toughest phase; realized $60M OpEx reduction provides operating leverage into an upturn .
  • Product mix risk: Elevated non‑ferrous exposure kept pressure on 2024 spreads; upside as stainless/aluminum recover, with Shelbyville and Bright Metals platform positioned to benefit .
  • Positioning: Stock catalysts include seasonal restocking, tariff pass‑through momentum, and evidence of contract margin uplift in Q2–Q3; risks are pace of non‑ferrous recovery and timing of margin resets .

Additional Data Sources and Citations:

  • Q4 2024 press release with detailed financial schedules and guidance .
  • Q4 2024 earnings call transcript (management commentary and Q&A) .
  • Q3 2024 press release and schedules for prior-period comparisons .
  • Q2 2024 press release and call for trend context .