Good day, and welcome to the Ryerson Holding Corporation's First Quarter 2025 Conference Call. Today's conference is being recorded. There will be a question-and-answer session. At this time, I'd like to turn the conference over to Mr. Pratham Dear, Manager of Investor Relations. Please go ahead, sir.

Good morning. Thank you for joining Ryerson Holdings Corporation's first quarter 2025 earnings call. On our call, we have Eddie Lehner, Ryerson's President and Chief Executive Officer; Jim Claussen, our Chief Financial Officer; and Molly Kannan, our Chief Accounting Officer and Corporate Controller. John Orth, our Executive Vice-President of Operations; Trent McFarland, our Senior Vice-President of Supply Chain; and Jorge Beristain, our Vice-President of Finance, will be joining us for Q&A. Certain comments on this call contain forward-looking statements within the meaning of the federal securities laws. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements. These risks include but are not limited to those set forth under Risk Factors and our Annual Report on Form 10-K for the year ended December 31, 2024, our quarterly report on Form 10-Q for the quarter ended March 31, 2025, and in our other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date they are made, and are not guarantees of future performance. In addition, our remarks today refer to several non-GAAP financial measures that are intended to supplement but not substitute for the most directly-comparable GAAP measures. A reconciliation of non-GAAP measures to the most directly-comparable GAAP financial measures is provided in our earnings release filed on Form 8-K yesterday, also available on the Investor Relations section of our website. I'll now turn the call over to Eddie.

Thank you, Pratham. Good morning, and thank you all for joining us to discuss our first quarter 2025 performance. During the first quarter of 2025, we continued our operating model renovations by progressing further, significant CapEx investments across our service center network that when fully operationalized are expected to provide an improved quality of earnings through the cycle. We are continuing to see promising indicators that our historical efforts to modernize our service center network and go-to-market capabilities are paying off even amidst very uniquely challenging market dynamics, especially given the scale and still newness of these CapEx investments throughout our network. I want to commend our entire Ryerson team, as we saw significant improvements across the business sequentially, but more importantly, we could see the vision we have for Ryerson taking better shape and effect as our investments plug in and begin playing within a strong culture of providing great customer experiences over the medium and longer term. During the quarter, excellent working capital management and encouraging spot transactional market share gains offset slow OEM contract business and lagging contract price adjustments. This was a quarter of three moves. January showed up as the 13th month of 2024, as depressed business conditions extended into the first month of the quarter and average selling prices bottomed. By February, we saw much improved quote and order activity, restocking mix with forward buying, which lasted through mid-March, after which came some deceleration in quoting and order levels as customer activity tailed off at quarter end, due to elevated levels of uncertainty across price, demand, capital markets and trade variables. On a relative basis, our carbon transactional sheet franchise saw some welcome improvement, while our non-ferrous franchise where our market share is strong, but the macro-environment is still depressed. Particularly, stainless steel remained a headwind. At present, buyers and customers are very cautious given significant volatility in LME aluminum and nickel markets, and notable backwardation in bellwether, hot-roll coil indexes as current spot prices are well above futures prices, given expectations of potential declines in inventory replacement cost. Looking ahead to the second quarter, industry inventories appear balanced, mill lead times have shortened, and domestic metal availability is generally good as Ryerson sources the overwhelming majority of its industrial metals from domestic suppliers. Price indicators have stabilized somewhat over the past several weeks, although non-ferrous surcharge resets are creating spot price oscillations month-to-month, and steel purchases remain affected by falling scrap prices and spot to futures curve backwardation. On the demand side, although quote and order activity has come in from mid-Q1 levels, and demand visibility is opaque at best, average selling price and transactional margin trends have improved early into the second quarter, leading to our guide, of sequentially improving operating income in Q2, 2025. At this point, I'll turn it over to Jim Claussen to discuss market conditions and our financial results.

Thanks, Eddie, and good morning, everyone. I would like to start by reviewing the demand environment across our industry and end-markets. Ryerson's first quarter sales volume of 500,000 tons was approximately 12% higher quarter-over-quarter, displaying normal seasonal restocking demand and some tariff pre-buying. Overall, volumes were in line with our guidance of shipments of up 11% to 13% versus the fourth quarter. North American industry sales volumes as measured by the Metal Service Center Institute or MSCI, increased by nearly 11% quarter-over-quarter. Over the same period, Ryerson North American shipments increased by almost 14%, implying an outperformance of 3 percentage points. The market share gain was experienced across most of our metal product categories. Similarly, we saw volume increases across all of our end-markets with the most pronounced in construction equipment, metal fabrication, industrial, machinery and equipment, HVAC and consumer durables during the first quarter. Let's now turn to our first-quarter performance compared to guidance and our second quarter 2025 outlook. During the first quarter, we exceeded our guidance range for adjusted EBITDA excluding LIFO and beat guidance on loss per share due to better-than-anticipated margins excluding LIFO and effective operating cost controls. In terms of expense management, we maintained our $60 million expense reduction target, which is evidenced by a $32 expense per ton reduction when comparing the first quarter of 2024 versus the first quarter of 2025, and annualizes above our $60 million target in cost savings. Looking at the second quarter of 2025, we expect volumes to be relatively flat, plus or minus 1% compared to the first quarter with daily shipments expected to come in below normal seasonal volume expansion in 2Q, as tariff-related uncertainty restrains normal seasonal restocking demand. Given this demand backdrop, we expect revenues to be in the range of $1.15 billion to $1.19 billion with average selling price increasing 3% to 4%. We expect to see the benefit of lag program price resets, partially mitigated by flatter pricing expectations on spot business. Based on this, we forecast adjusted EBITDA for the second quarter of 2025, excluding LIFO in the range of $40 million to $45 million and earnings per share in the range of $0.07 to $0.14 per diluted share. We expect LIFO expense be between $5 million and $7 million in the second quarter. Turning to our investments in the business, in the first quarter, we invested $8 million in capital expenditures, which included most notably the final components of our modernization, automation and expansion of our Shelbyville, Kentucky, non-ferrous coil processing facility as well as strategic equipment and infrastructure upgrades to increase productivity and value-added capabilities. After the last three years of service center enhancements, our 2025 CapEx projects are targeting productivity and customer service enhancements that support our model optimization. For the full year 2025, we reaffirm our $50 million annual CapEx target. Given the countercyclical volume and pricing conditions over the last 12 months, resulting in lower trailing 12-month adjusted EBITDA excluding LIFO, our leverage ratio for the quarter of 4.3 times was above our two times target range. As we progress through the optimization of our operations, we believe that the first-quarter marks a cyclical leverage peak, and expect that ratio to improve throughout the rest of 2025. In Q2, we expect earnings to improve, which coupled with a projected slight release in working capital for the quarter, leads to stronger operating cash flows and net-debt reduction. In terms of our cash generation and liquidity profile, in the first quarter, we used $41 million of cash in our operations, primarily due to an increase in accounts receivable, driven by increased customer sales volumes. We ended the period with $498 million of total debt and $464 million of net debt, which increased from $468 million and $440 million, respectively, as of the prior quarter. The company's available global liquidity remains healthy and increased to $490 million in the first quarter from $451 million in the fourth quarter on higher receivables. Turning to shareholder returns, Ryerson returned $6 million in the form of dividends during the quarter. We paid a quarterly dividend of $0.1875 per share and have announced a second-quarter 2025 cash dividend of the same amount. We did not repurchase any shares in the first quarter and ended the period with $38.4 million remaining on our share repurchase authorization. As we look forward to the second quarter and into the rest of 2025, we will continue to prudently evaluate our overall capital allocation. I will now turn the call over to Molly Kannan to discuss our financial performance highlights for the first quarter.

Thanks, Jim, and good morning, everyone. In the first quarter of 2025, Ryerson reported net sales of $1.14 billion, which was 12.7% higher than the fourth quarter of 2024. We saw low double-digit sequential volume growth across all three product categories. During the fourth quarter, Ryerson's average selling price of $2,271 per ton represented an increase of approximately 1% quarter-over-quarter, and came in within our guidance expectations. Looking at sequential changes in average selling prices across our product mix, our carbon products were roughly flat, and aluminum products were higher by 2% while stainless steel products were lower by approximately 3%. Gross margin during the quarter contracted 100 basis points versus the prior quarter, to 18%, influenced by $7 million in LIFO expense as rising commodity prices in the period translated to material costs increasing faster than average selling prices given the lagged nature of pricing recognized in our contractual business. Excluding LIFO, gross margin expanded sequentially by 220 basis points up to 18.6%. On the expense side, warehousing delivery, selling, general and administrative expenses increased by $13.6 million or 7.2% quarter-over-quarter to $202 million, driven by higher volumes and increases in variable incentive compensation. Increases in overall expenses were partially offset by decreases in reorganization expenses as CapEx projects continue winding down and are placed into service. Net loss attributable to Ryerson was $5.6 million or $0.18 loss per diluted share, compared to net loss attributable to Ryerson of $4.3 million and diluted loss per share of $0.13 in the prior quarter. Ryerson achieved adjusted EBITDA excluding LIFO of $32.8 million in the first quarter of 2025 which compares to $10.3 million in the prior quarter. And with this, I'll turn the call back to Eddie.

Thank you, Molly. When digesting and synthesizing all that's going on in the world, especially when seemingly every headline starts with could, might and maybe, we have to keep to the consistent and high-level execution of our fundamental basics and controllables, while bringing our investments to return and weaving everything together as intended within and throughout our network of intelligently connected and technology-enabled service centers. Again, I want to thank our entire Ryerson team for doing the hard work necessary to affect the change required to innovate and advance our next-generation operating model for the long-term benefit of all Ryerson stakeholders. As challenging as current industrial metal supply-and-demand dynamics are at present, we look forward to participating and competing in a more vibrant, robust and durable North-American manufacturing economy, as uncertainty around trade resolves and a more level and equitable trade playing field ensues. With that, we look forward to your questions. Operator?

Operator instructions. We'll take our first question from Samuel McKinney with KeyBanc Capital Markets.

Hi, good morning, Eddie and team.

Hi, Sam. Good morning.

Despite the overall debt load increasing about $30 million from the end of the year, you guys did a great job in the first quarter, bringing interest expense down sequentially. Could you talk about your plans to manage debt levels and further drive that interest expense lower in the periods ahead?

Yes, Sam, I'll start and I'll let Jim comment. I really think the key, and really try to highlight this in the release and in the script. It really comes down to winding down a lot of our CapEx projects and operationalizing those CapEx projects, what you started to see in the quarter, which was really encouraging, and we expected it was. As we start to normalize operations throughout the network, the disruption element to the record CapEx that we deployed, especially as a percentage of sales, it creates a lot of network costs. And you take, as you know, money goes out before it comes back in. And so, we needed to make these investments we needed to modernize the company. But as that starts to settle out and everything starts to normalize and it behaves as expected, we start to bring these investments to return, cash flow gets better, EBITDA gets better and the metrics that we're after, market-share growth, margin expansion, those things start to come as you start to move CapEx to a placed-in-service status. And we're doing that more and more, but there are a lot of big projects that we did across the network. And so the plan, is we understand how Ryerson can and should function, especially given the investments that we made. And as those things operationalize, debt will come down, cash flow will go up, EBITDA will go up. I mean, it's all relative to the cycle to some extent, but self-help being what we expect it to be, we'll be in a position to pay down debt and bring that down and interest expense will come down as a result. Jim?

Yes, Sam, I think Eddie handled most of the answer there for you. I think as you look near term, really as we generate more cash and earnings come up, it's that lower CapEx burden spend going out and really the ability to take the debt down with the higher cash flows. And so having that higher EBITDA and the lower debt, that's how we expect to see the leverage ratio trending down.

Yes, Sam, I mean, if you go back and look at our financials 12 or 13 years ago, depreciation expense was about half of what it is today. On the front end, you take an EPS hit and finance those expenditures out of cash flow, and then you start to see the returns, CapEx normalizes, things come back into balance, and that will give us the opportunity to do other things that are accretive to shareholders as well.

Absolutely. And then the second-quarter pricing outlook, a little bit below where we thought you guys might guide, and you did touch on this earlier, Eddie, but are you seeing pockets in a specific part of the portfolio, whether it's carbon, stainless, aluminum? Or is that more a function of mix with some customer destocking?

Yes. Sam, I'll tell you, it really smacks you right in the face when you look at it. OEM contracts got off to a rough start. Average selling prices bottomed in January and they started to come back. So if you really look at the deltas year-over-year, it's really a story of really good transactional growth and some of the CapEx investments really starting to pay off. But then on the contract OEM side, if you map through to what you're seeing in the Class A truck market, if you map through what you're seeing in the machinery and equipment market, you can see, and in the appliance market as well, you can see how that program OEM revenue and volume is off year-over-year. And that was really the, I would say, the biggest headwind when you look at those year-over-year comparisons, and maybe where some of the model estimates were pegged.

Okay. And then last one for me. Slide 15 of your presentation calls out ryerson.com 3.0. Just wanted to give you the opportunity to discuss some of the wins there given transactional sales were up double-digit percentages year-over-year in the first quarter.

Yes, unique transactional customer visits are up on dotcom. So really it's sort of a similar story to the last question that we have a lot of program accounts that use dotcom and they use it as a service portal. They also use it to enter orders. That part of the market was weak, but we're pleased with what we see on the transactional side, especially unique new customers that come to the site and establish login credentials. Look at what is more and more an endless aisle of product that we make available to them with additional value-added processing. So, we're seeing nice trends after having released that in the second half of last year, and we really kind of bring that up its own maturation curve.

Okay. Thank you guys.

Thank you, Sam.

Operator instructions. Our next question will come from Katya Jantzik with BMO Capital Markets.

Hi, thank you for taking my questions. Maybe staying on the transactional sales, can you update us on what the current split is between transactional versus contractual sales?

Sure. Right now, Jim, you want to take that?

Yes. Little under, we were moving up from the low 40s to about — it was about 47% in the first quarter transactional, moving up from — I believe we finished the year about 43% last year. So certainly seeing an increase in that. Yes, go ahead.

Sorry. And is the target still to reach about 60%, if I'm not mistaken?

Yes, it is. And we know that it's not going to be — it's not going to be a beautifully linear climb up. You just — this goes back to the investment cycle, not to be redundant. But when we look at where we placed assets, to shorten lead times and improve service levels and increase on-time delivery, it's all very intentional as to how you approach that transactional market. The law of this industry is, if you have it in stock and it's close to the customer, your chances of getting that spot bill of material order goes up significantly. So very intentionally, we want to position that product. We have the analytics to tell us what our customers buy, get it closer to the customer and improve those service levels, those lead times and that on-time delivery, and that's going to grow transactional over time.

And then maybe when looking at the portfolio or the metal mix, it seems that the stainless side has been a bit of a drag for a few quarters now. How are you thinking about this portfolio mix? Are you potentially looking at diversifying more away from the stainless market or how should we think about it?

Yes. I mean, I don't think stainless is going to be depressed forever. I think it's true enough that if you go back and you look at the peak of stainless, which was probably the second quarter of 2022, over the last 10 quarters, I would say eight out of those 10 quarters have really been — have been rough in stainless steel. And we're overweighted. So our market share is still strong. I mean, if anything, we gained market share in stainless. We made investments in the stainless franchise. So no need to really run away from that at all. I mean, if you look at the investment in Shelbyville, what I think is really promising there is you bring down the cost-to-serve, you process larger coils or closer to the customer, you get much better throughput and much better service out of that transactional marketplace, especially for stainless sheet and aluminum. So, routing out the answer, we are overweight in the market when you look at aluminum and stainless. We're 51% — I'm sorry, we're 51%, 52% carbon, we're 48%, 49% non-ferrous. So we're overweighted the market relative to our competitors who are more in-line with MSCI overall metrics and carbon, which tend to be somewhere between 67% and 70% of the industry. So we really have an opportunity to grow our carbon franchise, especially transactionally. And it's not so much taken away from stainless and aluminum as it is being more complementary on the carbon side and really being able to take market share on the carbon side that's profitable.

Thank you.

Thanks, Katya.

And it appears there are no further telephone questions. I'd like to turn the conference back to our presenters.

Thank you, everybody, for your interest and support in Ryerson, and we look forward to being with all of you next quarter.

And once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect.