Ryerson Holding Corporation 2026 Q3 Earnings Call

Please go ahead, ma'am. Good morning, and thank you all for joining Ryerson Holding Corporation's third 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. Rich Manson, Ryerson's Senior Vice President of Finance and Chief Financial Officer of Olympic Steel. Andrew Greiff, Executive Vice President of Ryerson and President of Olympic Steel, and Trent McFarland, our Senior Vice President of Supply Chain and Ryerson Processed Metals will be joining us for Q&A. 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 joining us. Ryerson delivered its strongest quarter of the year, exceeding guidance across the board while eclipsing its first-year synergy run rate target ahead of schedule in what continues to be a high-friction industrial economy. These achievements reflect our teammates' commitment, passion, and ability to execute together as one unified organization, building toward the industry's best customer and stakeholder experience. Our results were supported by improved market demand, which allowed us to give the CapEx investments we've made over the past several years a good run around the track under better overall industry conditions. As we move through the first month of the fourth quarter, quote and order activity remains strong, carrying forward the momentum we experienced in Q3 when daily shipment volumes and invoice counts increased each month of the quarter.

We played the score sheet well in Q3, hitting the high notes as we gained market share, outperformed typical industry seasonality, increased net book value per share, managed asset efficiency at a high level, and bought back $3.8 million in shares below book value. When looking at the bigger and brighter picture, we see the continuing validation of the timing and substance of Ryerson's merger with Olympic Steel this past February. Our collaborative effort, teamwork, resourcefulness, combinative scale, and playmaking ability is really shining through as we see the tremendous potential available to us as RYZ. With that, I will turn the call over to Rick to discuss market conditions and how we are executing operationally across the business.

Thanks, Eddie, and good morning, everyone. On a total company basis, Ryerson generated third-quarter net sales of $2.2 billion on shipments of 814,000 tons. That's a volume increase of 1.2% sequentially, better than our guidance for a seasonal decline of 3%-5%. Same-store shipments increased by 1.8% to their highest quarterly level in more than five years. Our performance reflects strong customer demand across many of our end markets and our team's dedication to meeting that demand through commercial collaboration and strong execution across our expanded network, even amid tight product availability. On a year-to-date North American basis, Ryerson's tons shipped increased by 57.3% compared with the first nine months of 2025. On a same-store basis, Ryerson's North American shipments increased by 8.8% during the same period. That implies market share gains when compared to the industry's growth of 5%, and that's according to the Metals Service Center Institute.

Ryerson's year-to-date volume growth continues to be led by strong double-digit growth in its transactional business and is also now supported by year-over-year improvement in our contract book of business. Data center and power generation projects remained strong drivers of customer demand in the third quarter, representing an estimated 9% of revenues, compared to 6% in the second quarter. Our data center volumes increased by approximately 65% in the third quarter of 2026 when compared with the first quarter of this year. Our participation in this secular mega-trend comes through our direct exposure to OEMs, as well as through our support of subcontractors, and spans applications like power, IT, hardware, cooling, and fabrication. This demand is illustrated across several of our traditional end-market categories, including climate, where North American same-store volumes increased nearly 9% sequentially.

Growth was led by larger HVAC customers serving both data center projects and traditional product lines, with additional strength in air purification, exhaust, and blower applications. Data center and power generation activity also supported growth in our fabrication and welding sector, with growth in tank and metal enclosure sub-industries, as well as growth in our machinery and equipment sector. Our scale, processing capabilities, product breadth, access to inventory, and customer relationships position us to meet more of these customer needs and win additional business in these growing markets. Beyond these markets, commercial transportation remains another area of strength, with North American same-store volumes increasing nearly 3.5% quarter over quarter, led by our truck cab and tractor-trailer sub-sectors. We are optimistic about the developing recovery in Class 8 demand as healthy backlogs support production into 2027, despite persistent inflation and interest rate headwinds.

Meeting this demand required our teams to coordinate resources across the network and develop tailored customer solutions. For example, in Minneapolis, our Shaw Stainless and Ryerson Coon Rapids teams worked together to build out and share production operations to service a customer with growing demand for cooling components. Enabled by our merger, this collaboration is turning a new business opportunity into a meaningful contributor to our commercial synergies. Internally, our IT teams are unlocking more of the combined network's potential, with approximately 90% of Olympic Steel's inventory and transaction data now incorporated into Ryerson's information system. This creates the visibility needed to connect available material with customer demand across our facilities, enabling more effective inventory sharing and coordinated fulfillment. With mill lead times extending and inventories exceptionally lean, this capability is especially valuable.

Our increasing interconnectivity also supports our ongoing work of aligning customer programs with the facilities best equipped to serve them. We continue to evaluate opportunities to direct program volumes to Olympic facilities best suited for that business, increasing asset utilization, and lowering our cost to serve our program customers, while at the same time creating capacity for additional transactional business within Ryerson facilities. This enables us to grow our transactional book of business with greater speed and reliability. What enables success in all of these efforts is the willingness of our people to share their expertise, to solve problems together, and to perform for our customers. Our recently introduced shared core values builds on the cultural strengths of both organizations. Our Tulsa teams offer a great example of our two core values in action, and that is customer commitment and teamwork.

Neighboring Ryerson and Central Tube & Bar facilities are coordinating production capabilities and combining recruiting efforts to support newly awarded business while working with local educational institutions to develop a shared pipeline of skilled talent for future growth. I want to thank our teams across Ryerson for putting our shared values to work every day, helping our customers succeed, and turning the possibilities of our combined network into new business and stronger results. Now I will turn the call over to Jim Claussen to review our performance relative to our third quarter guidance, discuss our expectations for the fourth quarter, and provide an update on synergy attainment and capital allocation.

Thank you, Rick, and good morning, everyone. Ryerson's third quarter performance exceeded our expectations across the board. As Rick noted, we generated record revenue of $2.2 billion on shipments of 814,000 tons and produced net income attributable to Ryerson of $32 million or $0.61 per diluted share. These results reflect effective execution by our teams, supported by strong shipment activity that persisted through a quarter when we typically experience seasonally softening demand. As anticipated in our second quarter outlook, we experienced gross margin compression as higher cost inventory, particularly for carbon products, flowed through our cost of sales ahead of corresponding price adjustments for program customers. Our third quarter results also include a $4 million inventory purchase accounting adjustment to cost of materials sold, which reduced our gross margin and net income generation.

This adjustment was approximately $12 million lower than the one recorded in the second quarter, and we expect these impacts to continue declining through the fourth quarter as we sell through the remaining acquired inventory. Adjusted EBITDA, excluding LIFO, was $115 million in the third quarter, which exceeded our guidance range of $88 million to $92 million. Olympic Steel's contribution to adjusted EBITDA, excluding LIFO, was $30.2 million, which also exceeded our guidance. Our LIFO expense was $30 million in the third quarter compared to our guidance of $16 million to $18 million, as material costs increased more than anticipated during the quarter, led by continued increases in carbon mill pricing. Turning to our outlook for the fourth quarter, we expect that shipments will decline by 6%-8% sequentially, reflecting fewer business days and some mild seasonal softness around the holidays.