Yahoo Finance Ryerson Holding Corp (RYI) Q1 2024 Earnings Call Transcript Highlights: Navigating Market ...
Revenue: $1.24 billion, in line with guidance expectations.
Average Selling Price: $24.93 per ton, up 0.8% quarter over quarter.
Sales Volume: 497,000 tons, slightly above the top end of guidance.
Gross Margin: Excluding LIFO, expanded by 70 basis points from the previous quarter.
Net Loss: $7.6 million, or $0.22 per diluted share.
Adjusted EBITDA: $40 million, excluding LIFO, below guidance range.
Dividends: Paid quarterly dividend of 18.75 cents per share.
Share Repurchases: Approximately $1 million in the open market.
Debt: Total debt at $497 million; net debt at $455 million.
Capital Expenditures: $22 million, including significant investments in service centers and facilities.
Release Date: May 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Ryerson Holding Corp (NYSE:RYI) celebrated the start-up of operations at Central Steel & Wire's flagship location and completed the conversion of 17 service centers to a unified ERP system, enhancing operational efficiency.
The company met the top end of its volume guidance for the quarter, indicating strong operational execution.
Ryerson Holding Corp (NYSE:RYI) experienced incrementally higher quoting and order conversion rates in the latter half of the quarter, suggesting an improvement in market conditions.
Investments in modernizing service centers and integrating ERP systems across locations are set to improve customer experiences and operational leverage.
Ryerson Holding Corp (NYSE:RYI) returned cash to shareholders through dividends and share repurchases, demonstrating a commitment to shareholder value.
Negative Points
Ryerson Holding Corp (NYSE:RYI) faced margin compression across its carbon steel and stainless steel product franchises, impacting profitability.
The company reported a net loss of $7.6 million for the quarter, a significant downturn compared to the net income in the previous quarter.
Despite higher volumes, gross margin contracted due to pricing pressures and higher average costs in inventory.
Ryerson Holding Corp (NYSE:RYI) experienced increased expenses related to investment projects and acquisitions, which could weigh on short-term financial performance.
The company's net leverage exceeded its target range, raising concerns about its debt levels amidst ongoing investments.
Q & A Highlights
Q: Hi, thank you for taking my questions. Starting on the 25 million in cost savings, is any of that expected to be achieved during the second quarter or is this more second half of the year? A: Edward Lehner, President and CEO of Ryerson Holding Corp, indicated that some benefits are expected in the second quarter, but the impact will increase as the year progresses. James Claussen, CFO, added that the savings will amount to approximately $25 million for the year, with a full annualized rate of $40 million expected by the end of the year.
Q: Okay. And maybe on the CapEx, sorry, yes, I had on the 25 CapEx, the $50 million, how much of that is staining? A: James Claussen, CFO, explained that maintenance CapEx would be between $30 and $35 million, with additional growth projects continuing through 2025. He emphasized the significant investment cycle the company has been in, and the focus on optimizing these investments for better long-term value.
Q: So it seems now the focus will be more on optimization. Is it fair to say that this could translate to less M&A activity? A: James Claussen, CFO, stated that while Ryerson will continue to pursue attractive M&A opportunities, the focus will be on optimizing the network and the investments made, being selective about future acquisitions.
Q: How are you good. So just a few things. One is the ERP that you talk about. I'm a little confused. When is that actually going to be at all the centers that the plants. A: John Orth, EVP of Operations, clarified that the ERP system is already implemented in all centers except for some recent acquisitions. He discussed the challenges and the intensive work involved in integrating these systems, which is crucial for improving efficiency and customer service.
Q: Okay, thanks. And then the other question was in your comments you talked about warehousing SG&A being higher and I guess part of that was due to the acquisitions from last year. Are those acquisitions currently profitable? A: John Orth, EVP of Operations, confirmed that most acquisitions are profitable, although a few in alternative energy markets are experiencing challenges. He highlighted the broader issue of margin compression across the industry and the need for price stability to improve margins.
Q: How are the investments in customer experiences going to unlock greater than historical operating leverage as the cycle improves? A: Edward Lehner, President and CEO, and John Orth, EVP of Operations, discussed the strategic investments in ERP systems and customer service enhancements. They expressed strong conviction that these investments will lead to a competitively differentiated business model and significant operational efficiencies as market conditions improve.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
