Ryerson Holding Corporation Aktie

Good day, and welcome to the Ryerson Holding Corporation's First Quarter 2026 Conference Call. [Operator Instructions] Today's conference is being recorded. At this time, I'd like to turn the conference over to Justine Carlson. Please go ahead.

Good morning. Thank you for joining Ryerson Holding Corporation's First 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.

A recording of this call will be posted on our Investor Relations website at ir.yerson.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 tuning into WRYZ the RS. I just had to say that, to discuss our first quarter performance, and I am compelled to say again how delighted we are to be working together in common cause with our Olympic teammates. If 1/2 of a quarter is any indication, I can hardly wait to see what we will do together with full quarters.

We entered 2026 with order activity at stronger levels than we have seen in quite some time going back to 2022. We achieved double-digit sequential volume growth, market share gains, solid margin expansion, excellent working capital management and higher adjusted EBITDA, excluding LIFO, above our targeted range while already hard at work in getting at and to those synergies. The demand and order activity we referenced is corroborated by recent ISM Manufacturing Purchasing Managers Index readings, which reported expanding manufacturing activity for the past 4 consecutive months, the longest consecutive growth period since late 2022 or as I have been known to say, PMI don't lie.

Beneath the surface, we note that these early signs of recovery have been unevenly distributed across our customer base as our transactional customers showed particular strength, while many of our large OEMs exhibited ongoing demand stagnation following what had been a prolonged manufacturing contraction with high interest rates and prevailing tariff and geopolitical uncertainty. We would be remiss if we didn't mention the omnipresent AI infrastructure and compute build-out and its outsized impact to PMI and GDP growth as well as our increasing participation in this secular super cycle as an AI infrastructure partner to our customers. This has and continues to be a significant contributor to the improving demand environment noted both year-over-year and sequentially.

The most important question continues to be around the duration of demand conditions amidst supply side disruptions and inflationary wildcards, particularly considering heightened global unrest and whether economic expansion circuit breakers can absorb potential hyper shocks to the system. While industrial metal commodity price bellwethers continue moving higher, most notably aluminum, the real puzzle is how much and at what pace can higher input costs move through the value chain to end customers without triggering the dreaded boomerang effect, whereby we invert from current procyclical conditions to countercyclical conditions earlier than any of us would like. Further evidence of this ongoing dynamic is the onset of higher diesel fuel prices, coupled with ongoing tightness in the trucking market, resulting in further inflation of delivery costs industry-wide and the resulting lag effect in these cost increases propagating through the value chain.

Looking inside RYZ, in the last 6 weeks of the quarter, we began the vital work of integrating with Olympic Steel, and I could not be more encouraged by how the early stages are progressing. From an organizational standpoint, we moved quickly to establish a unified leadership structure, bringing together talent from both legacy companies to drive alignment, accountability and execution against our synergy targets. In a few moments, I will hand the call over to our President and Chief Operating Officer, Rick Marabito. But before I do, I would like to take the opportunity to express that it has been a true pleasure to participate in and witness the cross-collaboration of our teams and see the expanded product and service offerings begin to benefit our customers across our larger, more capable enterprise and footprint.

We are stacking wins and building synergy momentum, and I am exceedingly confident about the opportunities we have to create value together and creating the industry's best customer experience. I would like to thank my Ryerson and Olympic teammates for their adaptability, energy and passion during this process and their continued focus on the customer. Their efforts are transforming us into a fully integrated platform of combined strengths, enabling us to capture the full value of our synergies, foster growth and further elevate our offering to customers while further building enterprise value for our shareholders. And with that, I will ask Rick to join us to discuss market conditions and industry trends.

Thanks, Eddie, and it's great to be with you all, and good morning to everyone. So turning to the market. The North American service center industry shipping volumes as measured by the MSCI or the Metal Service Center Institute, experienced a seasonally aligned and momentum-driven start to 2026 with improved demand relative to the end of 2025. Ryerson's North American volumes by comparison grew significantly even on a same-store basis, outpacing the industry and realizing market share gains during the quarter with particular strength in carbon products.

Our first quarter total company tons shipped increased sequentially by 42.3% or 13.4% on a same-store basis, in line with guidance expectations. Year-over-year, total company shipments were up 31.2% in the first quarter of 2026. That's 4.6% up on a same-store basis. And as Eddie mentioned, transactional business led the way in growth and coupled with historically low service center industry inventory levels for plate and sheet products relative to shipments, we anticipate healthy transactional activity moving forward.

On the other side of the business, activity among our contract customers was steady during the quarter. And thematically, we're seeing data centers and power generation projects continue to drive strong backlogs, and we're also seeing optimism for the future in Class 8 truck trailer as that industry now views 2026 as a supply-driven transition year. And I would also like to take a moment before I turn the call over to Jim to echo Eddie's comments. and say that it's been a true pleasure joining our organizations together and being part of the collaboration and execution of what is truly a unique opportunity for us to create value for all of our stakeholders.

From an operating standpoint, we've been very deliberate about how we're building the combined organization because for us, culture isn't an abstract concept. It's actually the secret sauce, how we align our teams to make decisions, how we serve our customers and how we execute day in and day out. And for our customers, we've been focusing on expanding capabilities, enhancing our product offerings and leveraging our larger footprint to serve their needs, help solve their problems and enhance the value that they receive from us.

We're also very disciplined about synergy attainment, and I echo what Eddie said. I think we're -- as we're 6 weeks into it in the first quarter, we're more confident than ever in terms of the attainment of those synergies. And we're approaching synergies as a structured ongoing effort embedded in our operating model with mechanisms in place to build on those gains over time. By strengthening the foundation of our business through culture and shared values, synergy execution and a customer-centric focus, we are positioning the company to generate higher, more consistent earnings and drive long-term value for shareholders. So now I'll turn the call over to Jim Claussen to review our performance relative to first quarter guidance, discuss our expectations for second quarter and provide an overview of our synergy attainment progress and capital allocation activities.

Thank you, Rick, and good morning, everyone. In the first quarter, we achieved revenue at the top end of our guidance range with same-store volumes increasing as expected and same-store average selling prices exceeding our expectations as aluminum pricing was influenced by geopolitical events. Gross margin expanded as anticipated during the quarter as our contracts began to reset at current market pricing and improved demand conditions supported transactional pricing.

Net income for the quarter came in at $4.5 million or $0.10 per diluted share and our adjusted net income for the first quarter, which removes transaction-related expenses and a onetime impairment charge was $13.1 million or $0.30 per diluted share. Our same-store first quarter adjusted EBITDA, excluding LIFO generation of $54.9 million exceeded our expectations, while Olympic Steel contributed an additional $12.5 million, which was in range for the business' post-merger 6-week sub period. Altogether, our adjusted EBITDA, excluding LIFO in the first quarter was $67.4 million.

Turning to current expectations. Bookings have remained at healthy levels in recent weeks, and we expect the second quarter to fall in line with typical seasonal demand patterns, producing shipments 1% to 3% higher relative to the first quarter on a same-store basis. We, therefore, anticipate that total company tons shipped will be 18% to 20% higher compared to the first quarter of 2026, with Olympic Steel included in the entire period compared to only 6 weeks at the end of the prior period. Total company revenues are expected to be in the range of $1.86 billion to $1.93 billion, with same-store average selling prices expected to be up 2% to 4% sequentially and overall average selling prices to be up 1% to 3% quarter-over-quarter as our product mix shifts higher in carbon products with the full quarter inclusion of Olympic Steel and average selling prices for carbon products lower than those for aluminum and stainless.

In all, we anticipate generating net income for the second quarter in the range of $20 million to $22 million or $0.38 to $0.42 per diluted share. We expect our LIFO expense to be between $14 million and $16 million in the second quarter, leading to adjusted EBITDA, excluding LIFO generation in the range of $88 million to $92 million, with $21 million to $23 million of that attributed to Olympic Steel. Second quarter synergy realization is expected to be in the range of $4 million to $6 million.

Turning to our integration with Olympic Steel and our progress on attaining our announced $120 million of annual run rate synergies. In our first 6 weeks together, before the end of the first quarter, we were able to hit the ground running on many of our strategies and are seeing early encouraging progress across our synergy categories. One of our earliest priorities post close was to begin the alignment of our supply chain networks and realize initial harmonization of purchasing programs, which we are confident will lead to meaningful savings and further projected buildup in the future quarters as contracts cycle through and we continue to align our purchasing efforts.

We expect that in total, the procurement synergies that we executed during the first quarter will generate annual savings of approximately $15 million, and we are on track to meet our anticipated $40 million 2-year procurement target. We realized efficiency savings during the first quarter through the elimination of overlapping corporate subscriptions and fees, and we have more lined up for the second quarter. We anticipate that in total, the merger will realize approximately $5 million in annualized savings from reduced public company costs alone. We exited 2 leased facilities during the quarter, one in Hansville, Alabama and the other in Waterbury, Connecticut. Those operations moved into other facilities in Alabama and Connecticut, and we expect to realize annual savings of $1.5 million as a result.

We are seeing great progress in supply chain mapping and commercial synergies with several actions implemented to leverage our enhanced footprint. For example, our Hickman, Arkansas facility, where we recently had upgraded our Tempur mill, our capabilities are already being leveraged to service current and prospective Olympic customers. We are also exercising Ryerson's strength in Bright Metals to service Olympic accounts through our TSA processing facilities, which would have been brought into the Ryerson family of companies in 2023. In total, we realized about $1 million in savings within the first 6 weeks of integration.

As previously mentioned, we expect realization of approximately $4 million to $6 million in Q2, and we are well on our way to achieving our estimated first year attainment of $40 million in annual run rate synergies. As both Eddie and Rick expressed, we are exceedingly pleased with the collaborative efforts of both teams and are looking forward to providing further updates as we drive towards our 2-year target of $120 million in annual run rate synergies.

Turning to our investments in the business. In the first quarter, our capital expenditures totaled $12 million and primarily included investments in repair and maintenance projects at our facilities as well as small capability enhancement projects. As a reminder, we anticipated investing approximately $50 million in same-store capital expenditures in '26 with an additional $25 million allocated to Olympic Steel for a total this year of $75 million.

Turning to shareholder returns. During the first quarter, Ryerson distributed $9.7 million in the form of dividends or $0.1875 per share distributed to our expanded shareholder base. For the second quarter, we have announced a dividend of the same amount. Additionally, returned $1.6 million to our shareholders during the first quarter by opportunistically repurchasing approximately 74,000 shares from the open market under our share repurchase authorization.

We are also pleased to announce that following the expiration of our previous program on April 30, our Board of Directors has approved a new share repurchase program, which provides us with the authorization to repurchase up to $100 million worth of our shares over the next 2 years. We expect to prudently exercise this authority as opportunities in the market are presented. 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 2026, Ryerson generated net sales of $1.57 billion, an increase of 37.9% compared to the same quarter of 2025, with tons shipped 31.2% higher and average selling prices 5.2% higher. On a same-store basis, we generated net sales of $1.29 billion with tons shipped 4.6% higher and average selling prices 8.9% higher compared to the same period last year.

Compared to the previous quarter, same-store revenues were up 17.1% with shipments 13.4% higher and average selling prices 3.2% higher. Commodity prices rose slightly more than anticipated during the quarter and resulted in a LIFO expense of $10 million compared to our expected expense of $6 million to $8 million. Same-store gross margin expanded in the second quarter by 270 basis points to 18% and same-store gross margin, excluding LIFO, expanded by 150 basis points to 18.8%. Warehousing, delivery, selling, general and administrative expenses totaled $265.2 million for the first quarter or $217.6 million on a same-store basis, which represents an increase of $15.5 million compared to the first quarter of 2025.

On a per ton basis, total company warehousing, selling, general and administrative expenses were $404 per ton in the first quarter or $416 per ton on a same-store basis compared to $404 per ton in the year ago period or $445 in the previous period. First quarter same-store year-over-year expense increases were driven by higher compensation and benefits expenses, advisory service fees related to the Olympic Steel merger and higher delivery fees driven by increased diesel prices.

Our first quarter income taxes came in at $8.2 million, significantly higher than our normal effective tax rate due to $2 million in tax impacts from the merger, which included nondeductible transaction costs and changes to our state rate. We do not expect these impacts to be recurring and our effective rate should therefore return to approximately 25% to 26% in future quarters. In all, we generated total company net income of $4.5 million or $0.10 per diluted share in the first quarter of 2026 compared to net loss of $5.6 million in the first quarter of 2025. After removing the impacts of both the advisory service fees and the income tax provision related to the merger as well as an asset impairment charge, -- our adjusted net income generation for the quarter was $13.1 million or $0.30 per diluted share. Our total company adjusted EBITDA, excluding LIFO generation for the first quarter of 2026 was $67.4 million, which more than doubles the $32.8 million generated in the first quarter of 2025.

On a same-store basis, our adjusted EBITDA, excluding LIFO, increased by $22.1 million year-over-year. We used $179 million in cash from operating activities in the first quarter of 2026, primarily to satisfy the higher working capital requirements of the combined company within the seasonally stronger period. Inventory days of supply decreased by 5 days quarter-over-quarter to 74, which is back within our target range of 70 to 75 days. Our overall cash conversion cycle also remained well managed, coming in at 67 days for the first quarter, which is a day less than the prior quarter and in line with the same quarter of last year.

Our total debt increased to $908 million and net debt to $883 million during the first quarter, an increase of $445 million and $447 million, respectively, as we paid off Olympic Steel debt of approximately $300 million, paid merger-related costs and funded our working capital requirements. As a result of the combined debt base, Ryerson's leverage ratio for the first quarter rose to 5.1x compared to 3.1x for the previous quarter.

We expect our leverage ratio to move lower throughout the year as we anticipate that our trailing 12-month adjusted EBITDA, excluding LIFO, should increase with the addition of Olympic Steel contributions as well as with our forecasted first year synergy attainment. And finally, our global liquidity increased from $502 million at the end of the fourth quarter to $618 million at the end of the first as our borrowing base expanded with our working capital. And with that, I will turn the call back to Eddie to conclude our prepared comments.

Thank you, Molly. Throughout our call this morning, as we recounted our accomplishments in the quarter, we pointed to the dedication and commitment of our teammates -- and I would like to close our prepared comments on that high note because after all is said and done, we were well positioned for the first quarter's demand improvement because of the optimizing and refining work we have done internally, incorporating new capabilities from our record investment cycle, honing and bettering our practice of service center fundamentals and modernizing our operating model. And this quarter, the team, our collective RYZ team executed in an exemplary fashion of which we can all be proud.

By the way, have we mentioned synergies lately? Rest assured, there is much more work to do in bringing these home over the next couple of years while building our internal artificial intelligence capabilities as well as serving as a trusted partner to our customers in the AI-related build-out that is still in its early stages. So until next time, let's keep rising and rising toward realizing our maximum potential to the benefit of all RYZ stakeholders. With that, we look forward to your questions. Operator?

[Operator Instructions] And the first question today comes from Samuel McKinney with KeyBanc Capital Markets.

Congrats to you guys, too. You called out particular strength in the transaction business developing over the course of the first quarter, which continues the trend from last year. Could you just talk about the extent to which the divergence between spot and contract tons is continuing? And what do you need to see to really get that contract business moving again?

Yes, Sam, it's a really good question. I'll say this. I mean, I was very pleasantly surprised by the increase in transactional business across our entire footprint. I mean, relative to the MSCI, we really put out a really nice print when it came to market share growth. And I think that's a function of the CapEx investments we've made finally coming online, having inventory at the right place, really practicing service center fundamentals in really an exceedingly good way. And then on the contract side, and I'll have Andrew Greiff speak to this.

On the contract side, we're still lagging by about 4% to 5%. It's pretty uneven on that program side. As you know, when you look at residential construction, ag, heavy truck and trailer and consumer durables, they're still lagging some of the other growth areas that you're seeing in the economy. But let me have Andrew give you more color on that.

Yes, Eddie, I think you said it well. We have seen the first quarter, not the improvement that we had thought we'd see from Q4 in the second half of '25. But I will tell you, Sam, that as we came out of the first quarter coming into the second quarter, -- and certainly, the expectations that we're hearing from the industrial OEMs, the expectation is second quarter will improve upon first and then the belief is that the second half is going to be certainly better than the first half. We've seen it in the construction side, certainly with the industrials, a little bit more life in ag. Clearly, on the data center side, that has continued to stay very strong, impacting our flat roll in pipe and tube. And I think that the second half business, we'll see a nice pickup on the contract side.

Okay. That's helpful. And then the next one, if you could just discuss the capital allocation priorities within the context of instituting that new share repurchase program while the net debt level is approaching $900 million. And I understand the increased same-store earnings and incremental contribution from Olympic will help the ratio, but just trying to better understand the plans for bringing that debt load down.

Yes. Sure, Sam. Let me just give you some preamble of that and say that just given our experience in the industry, 255-plus years and the experience of the people in this room, looking at where we are having turned procyclical and getting past the stub period of quarters and being able to project out over 4 quarters as opposed to some of the, I'd say, some of the math that happens when you're only accounting for half a quarter.

We see our debt trends improving meaningfully as we go through the balance of the year and even more in terms of what we know is our free cash flow generating ability. And also, we're past that big part of the CapEx cycle. So CapEx is really normalizing. And we did find an opportunity through the quarter. When the stock was trading under 20, 21 to 20, it's so far below its intrinsic value. And given the liquidity position we have, which is still very, very strong, it made sense to go in and buy back some shares. But let me have Jim Claussen give you a little more color on that.

Yes. I think Eddie really answered the question is as we go forward, certainly going to be prioritization on the leverage ratio. But as we look opportunistically and we understand how the shares can perform, we wanted to make sure that we had the ability to repurchase in certainly a sub book value period, which we saw in the first quarter as we go forward. So we'll be prudent with it. Priority around the leverage ratio continues. As Eddie mentioned, we're through the CapEx cycle. Obviously, we had some merger-related transaction costs in the first quarter that were another drain on cash, and we're past that. So really, I feel really good. We've got the ABL redone. Liquidity is strong, and we're really just full steam ahead on synergies and growing as R.

[Operator Instructions] And our next question comes from Katja Jancic with BMO Capital Markets.

I might have missed this, but what is currently the split between contract and transactional business on a pro forma basis?

This is Eddie. Ryerson is running at about -- and I'm happy to say we're running at about 52% transactional, 48% contract on the Ryerson side. On the Olympics side, and I'll have Rick speak to this. I believe on the Olympics side, it's, say, 30% transactional and 40% program. And maybe, Rick, you can give a little more color on Olympics.

Yes. So that's right, 30%, roughly 30% transactional, 70% contractual. And I think getting back to the earlier question about the transactional business, one of the things I do want to stress is a strategic initiative of the combined company. And actually, one of the benefits of the merger is to really build out that transactional business. And with a much bigger footprint, we're able to do that. And I think you know the transactional, the contractual and transactional, it's tongue twister, business is a lot more difficult to do inside of the same facility versus when you have separate assets and separate facilities doing that.

So one of the initiatives going forward, and we're already seeing benefits of this is to move business so we can optimize that transactional business in those locations that are really set up to do same-day, next-day delivery. So I think what you'll see is that mix that we just talked about over time, I think you'll even see us as Ryerson tilt to a higher transactional percentage going forward. But that's where we are to start, and we're excited about the opportunities.

And Connie, from just a computational perspective, as we get Olympic hub onto our data warehouse, we'll be able to come up with a much more precise calculation. But if I just put my thunder the sun, I would tell you it's probably about 52% or 42% transactional 58% contract and you look at the combined companies and would expect that to move higher in the quarters and years ahead.

Is there an optimal level given that it works on a -- it depends on the footprint and so on. Is there an optimal level of how much in theory transactional sales you could get to?

Yes. I mean I believe with transactional value add, especially given the synergy plans that we have that Rick spoke to, where do you run business? If you're running program business and you're running transactional business on the same cut to length line, you have to do different setups, you have to keep different size coils and inventory. And we become adept at being amphibious in that way, but it's certainly not the way we'd like to do it to scale to that 60-40 target. And make no mistake about it, we love the program business -- it's just a different business. And the greater growth opportunity still in the economy when it comes to industrial metals to really get at that transactional spot bill of material business that really depends on having the inventory on hand and the equipment to run it with a same-day, 1-day or 2-day turnaround time. So I would say our goal is to still get to 60-40, but also optimize the profitability of that program business and continue to grow that as well because in a lot of cases, that same contract customer is also a transactional customer.

And I know you're still in the early stages of integration in a way. But so far, it seems like everything is going well. Have you experienced any issues, any early challenges with the integration?

Yes. I mean, Rich Manson is heading up our synergy effort for the overall company. So I'll have Rich speak to that. But we couldn't be more delighted with how the organizations are really collaborating really not just at the top, but as we go deeper in the organization, I think the way that the teams are working together has really even exceeded my expectations and my expectations were high going in. But I'll let Rich speak in more detail of the synergy efforts to date.

Sure. Thanks, D. I would echo your comments that I think as we were working on the due diligence, I think collectively, management was very comfortable around the $40 million savings in year 1 and $120 million after year 2. And I think the best part of this has been is we've engaged lower levels of the organization. We're seeing ideas that we didn't even think of, right? And so I think there's been great cooperation amongst the commercial organizations amongst the operators and do believe that the savings are very achievable and we'll have the numbers that we've laid out.

And the next question will come from Alan Weber with Robotti & Company.

So when you look at the presentation, can you talk about the third and fourth quarter, not specific estimates, but how you're thinking about them? And I ask that because your first quarter EBITDA is basically what last year's third and fourth was combined and your fourth quarter -- your second quarter EBITDA, your projection of $90 million is $25 million or so higher than the third and fourth combined. So just curious how you really think about the third and fourth quarter in terms of EBITDA.

Yes. I mean not wanting to get too far over our skis. I'll say this. Some of the good news that we see that's some of the good news we see that's really been building, especially given our book of business around contract pricing lags and really even looking at April activity and May activity so far, I would tell you that May activity, even though it's early in the month, is over year-to-date activity when we look at quote activity and order activity. So that's really positive. April trended really nicely, which is really positive.

We've learned, Alan, not to get too far ahead of ourselves just because there still is a reasonable amount of uncertainty just in the global economy, as you well know. But I think the second half of the year, I'd be very surprised that the second half of this year wasn't better than the second half of last year. But I'll have Rick append to that.

Yes. Alan, thanks for joining us. I think the second half, what I can comment on is the things that we can control. Obviously, there's a lot of variables out there in the marketplace. And those are the things I think Eddie is really referring to that make it difficult. But what I do know is inside of Ryerson, we are absolutely confident that we'll keep making internal improvements. You're going to see the ramp-up of those synergies. We talked about next quarter having around a $5 million synergy benefit.

Obviously, we're very comfortable to get to the $40 million. So I think one thing is sort of our own internal efforts, you're going to see improved results. So we're excited about that. I think second of all, you look at the business and one of the benefits of merging talking about that mix now where we're over 50% transactional for that really buoyed first quarter. And so as I look to the second half, the opportunity is really if we start to see some demand recovery in the big OEMs in the United States and our contract business. While it was fine in the quarter, I think there's a lot of room for growth in some of the industries that we talked about, ag and some construction business. I think if we see an improvement there, yes, we're -- we'd be pretty excited and pretty optimistic about the second half. So I think that's the real opportunity is the demand side of the equation and specifically from the big OEMs on the contract side. And pricing trends are positive.

Yes, Alan, I would just say pricing can be a real tempest, but pricing trends are really favorable right now, both -- I mean, across the board in carbon and aluminum and nickel has picked up in the last 30 days. And so looking -- as you try to see through pricing going through Q2 into Q3, there would have to be a significant reversion or inversion to really stop that momentum that seems to be building on the price side.

Okay. Because actually, the numbers that I mentioned, obviously don't really include the synergies for this year from the merger, which you're expecting most of those to take place in the second half also.

Yes, that's right. So being as transparent as we can be, $1 million having found its way into the financial statements in Q1, a $5 million midpoint of synergies getting into the financials in Q2. And then, yes, we'd expect to build momentum through the balance of the year in Q3 and Q4. And at this time, there are no further questions.

I'll now turn the conference back over to you for any additional remarks.

There is a question on the web. Thanks for sending that in. It's our expectations in the second half for synergy attainment compared to $40 million.

Yes. I mean I think Rich spoke very well to that, and we feel that we're tracking on pace to hit our annual run rate synergies and expect those to continue to propagate and get into the financial statements as we move through the balance of the year as we've discussed on our call so far this morning. Well, we want to thank everybody for tuning in to WRYZ. And I'll eventually outgrow that, by the way. I want to thank everybody for tuning in to the earnings call. We look forward to being with you on our Q2 earnings call later this summer. Thanks.

Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.

Good day, and welcome to the Ryerson Holding Corporation's Fourth Quarter 2025 Conference Call. Today's conference is being recorded. [Operator Instructions]. At this time, I would like to turn the conference over to Justine Carlson. Please go ahead

Good morning. Thank you for joining Ryerson Holding Corporation's Fourth Quarter 2025 Earnings Call. On our call, we have Eddie Lehner, Ryerson's Chief Executive Officer; Jim Claussen, our Chief Financial Officer; and Molly Kannan, our Chief Accounting Officer and Corporate Controller. A recording of this call will be posted on our Investor Relations website at ir.ryersonse.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. to discuss our fourth quarter and full year 2025 performance. Before diving in, I would like to first extend a warm welcome to Rick Marabito, Rich Manson and Andrew Greiff, who are joining this morning's call as our President and Chief Operating Officer; our Senior Vice President of Finance; and our Executive Vice President of Ryerson and President of the Olympic Steel business unit and all of our Olympic Steel following the successful merger of Ryerson and Olympic Steel, which we closed just a week ago today.

It is my absolute pleasure to be working alongside you to serve both our collective shareholders and our employee base, it's more than 6,000 strong in approximately 160 locations. I'm looking forward to the great things we are going to accomplish together as a unified enterprise with significantly greater scale and expanded product and service offerings.

We are in the very early days of integration but we've been sitting on a spring for several months and strong, and we're off to an excellent start. We have established an experienced integration team focused on realizing the expected $120 million in annual run rate synergies with an emphasis on combining best practices, optimizing asset utilization and capturing combined targeted cost and revenue merger benefits.

We are highly confident in our ability to deliver on the aforementioned synergies over the next 2 years and are looking forward to sharing our progress with you quarterly.

Turning to the business. The underlying commodity price gumbo for our mix of products increased at a faster rate than anticipated during the fourth quarter as supply side price drivers outpaced buyer price absorption and demand was still subdued and contractionary in the quarter. By the end of the quarter, supply side price increases had not yet materialized in our customer end markets due to contract customer pricing lags and transactional customer price stagnation.

With Q4 2025 in the rearview and as we progress through the first quarter of 2026, we are seeing encouraging strength in customer quote order activity relative to the past several years, and we expect to see gross margin expansion year-over-year and sequentially as better pricing propagates through the industrial metals value chain, along with improving demand signals. We also expect operating income improvement sequentially and year-over-year given better manufacturing demand, improved operating leverage and revenue growth.

These encouraging trends, though still early when looking at a more desirable duration of synchronized manufacturing growth certainly represent the best demand start to a year since 2022. It is always better to close a merger with improving industry fundamentals, and it is part and parcel of why the stage is also well set from a time perspective for our just completed merger with Olympic Steel.

Independently, over the past 4 years and now together, we have both invested significantly in our capabilities with strong balance sheets leading up to the merger, and now together, we expect to execute on $120 million on annual run rate synergies at the cusp of what we hope to be at least a multi-quarter cyclical inflection upward.

As we advance in 2026, our clear priorities are to continue integrating the combined organization in a way that preserves and enhances the customer experience as well as our employee culture, to begin realizing merger synergies as communicated to stakeholders, to improve the quality of earnings through disciplined execution of service center fundamentals across our expanded value-added service center network and to reduce leverage within our targeted range with updated shareholder capital allocation plans coinciding with synergy attainment.

Before we get into the details of our financial results, I want to thank all of my Ryerson and Olympic teammates for their hard work over these past 6 months, particularly given the additional time and effort involved in consummating our merger with Olympic Steel. We also appreciate the continued engagement and support of our customers, suppliers and shareholders as we enter this next phase together for the desired betterment of all.

With that, I'd like to turn the call over to Jim Claussen for a review of market conditions and financial results.

Thanks, Eddie, and good morning, everyone.

North American industry volumes as measured by the MSCI, or Metals Service Center Institute, experienced normal seasonal decline in the fourth quarter relative to the third, decreasing by 5.8% sequentially and 1.5% for the full year of '25 compared to 2024. By comparison, Ryerson's North American shipments decreased by 6.8% sequentially and less than 0.5 percentage point for the full year, indicating market share gains for the full year of '25 despite retracement during the quarter on majorly depressed OEM program demand and shipments.

Our total company tons shipped were down just under 5% quarter-over-quarter, in line with guidance and approximately 3% higher compared to the fourth quarter of last year. For the full year of '25, our total company tons shipped came in just ahead of last year, up by 0.5 percentage point.

Turning to performance at the end market level. I'd first like to note that we recently wrapped up a top to bottom review of our classifications and realigned our reporting to gain a clear, more accurate understanding of our business performance and better direct strategic decision-making.

Utilizing these new classifications, we saw the most year-over-year volume growth in our fabrication and welding sector followed by growth in the machine shop and machinery and equipment sectors. Partially offsetting that growth was weakness in the commercial transportation sector and, to a lesser degree, by weakness in our climate sector, which includes HVAC and in our heavy equipment sector, which includes agricultural and construction equipment.

Turning to fourth quarter performance. We achieved revenue within our guidance range with volumes in line with seasonal trends. However, as Eddie mentioned, material costs rose faster than anticipated during the quarter, outpacing our average selling price growth and the quarter expired before we were able to fully price these increases into the market.

As a result, we experienced weaker-than-expected gross margins and recorded a higher-than-expected LIFO expense for the quarter. Our operating expenses came in largely as expected. In all, our net loss of $38 million or $1.18 per share and our adjusted EBITDA, excluding LIFO generation of $20 million, came in below our guidance expectations.

Turning to current expectations. We have been seeing very strong activity in the first quarter of '26, and we anticipate finishing the quarter with tons shipped up 13% to 15% compared to the fourth quarter of '25. Same-store revenues are expected to be in the range of $1.26 billion to $1.3 billion, with average selling prices expected to be flat to up 2% quarter-over-quarter as fourth quarter material price increases start to flow into the market and expand gross margins.

We also expect to realize operating leverage as demand conditions improve. In all, we anticipate generating net income for the first quarter in the range of $10 million to $12 million before any merger-related fees. We also expect to record LIFO expense of between $6 million and $8 million and adjusted EBITDA, excluding LIFO, of $51 million to $54 million in the first quarter of '26.

Turning to our expectations for Olympic Steel. In the last 6 weeks of the quarter, we anticipate that Olympic will experience similar market dynamics and, therefore, generate accretive revenue in the range of $260 million to $280 million and adjusted EBITDA, excluding LIFO, in the range of $12 million to $13 million. For our combined companies, we anticipate first quarter revenue in the range of $1.52 million to $1.58 billion and adjusted EBITDA, excluding LIFO attainment, between $63 million and $67 million.

Turning to our investments in the business. In the fourth quarter, our capital expenditures totaled $21 million, contributing to a full year investment of $52 million. In '26, we anticipate investing approximately $50 million in capital expenditures on a same-store basis or $75 million including a prorated expectation for Olympic Steel.

We generated fourth quarter cash from operating activities of $113 million, as our seasonal working capital release more than offset the net loss generated. Inventory days of supply increased by 3 days quarter-over-quarter to 79 and was well managed, considering the typical fourth quarter trend. Our overall cash conversion cycle also remained well managed coming in at 68 days for the fourth quarter, which is consistent with the prior quarter and 11 days leaner than the same period last year.

Utilizing our cash flow generation we decreased our debt by $37 million and net debt by $34 million compared to the prior quarter. As a result of continued incremental improvements in both our net debt and trailing 12-month adjusted EBITDA, excluding LIFO, our leverage ratio decreased quarter-over-quarter from 3.7x to 3.1x, continuing to approach our target range of 0.5x to 2x.

From a global liquidity perspective, the company's profile remained healthy during the fourth quarter, and we ended the period with $502 million of liquidity compared to $521 million at the end of the third quarter. In conjunction with the closure of our merger with Olympic Steel, we successfully extended the maturity of our revolving credit facility and expanded its capacity from $1.3 billion to $1.8 billion. We expect to utilize the facility to fund our combined general corporate needs as well as support the pursuit of synergistic growth opportunities.

Turning to shareholder returns. Ryerson distributed $6.1 million in the form of dividends or $0.1875 per share during the fourth quarter and has announced a first quarter dividend of the same amount payable to our now combined shareholder base. We did not repurchase any shares in the fourth quarter and ended the period with 38.4 million remaining on our share repurchase authorization.

I will now turn the call over to Molly Kannan to discuss our financial performance highlights for the fourth quarter.

Thanks, Jim, and good morning, everyone. For the fourth quarter of 2025, Ryerson reported net sales of $1.1 billion a decrease of approximately 5% compared to the previous quarter, driven by lower tons shipped with average selling prices flat. Compared to the fourth quarter of 2024, net sales increased by 9.7% with average selling prices 6.3% higher as well as increased tons shipped of 3.1%.

As discussed, commodity prices rose more than anticipated during the quarter and resulted in a LIFO expense of $22.5 million compared to our expected expense of $10 million to $14 million and compared to the previous quarter expense of $13.2 million. Gross margin contracted by 190 basis points to 15.3% and gross margin, excluding LIFO, contracted by 100 basis points to 17.3% during the fourth quarter as we were unable to price these rapid increases into the market before the end of the period.

Warehousing, delivery, selling, general and administrative expenses totaled $205.3 million for the fourth quarter, an increase of $4.9 million compared to the third quarter, driven by advisory service fees related to the Olympic Steel merger. In all, the gross margin compression and onetime expenses contributed to our fourth quarter net loss attributable to Ryerson of $37.9 million or $1.18 per diluted share. This compares to a net loss of $4.3 million and a diluted loss per share of $0.13 for the fourth quarter of 2024. Our adjusted EBITDA, excluding LIFO generation for the fourth quarter, was $20.4 million, which compares to $10.3 million generated in the fourth quarter of 2024.

And with this, I'll turn the call back to Eddie.

Thank you, Molly. While fourth quarter results were adversely influenced by ongoing recess manufacturing conditions, we are seeing the signs of an improving manufacturing economy through the early part of 2026 and the combined potential and prospects of our merger have us aim much higher in the quarters and years ahead. Regardless, whatever the macro gives or takes away, our determination and conviction are resolute in making good on the $120 million in annual synergies we expect to deliver, and we as a team could not be more confident in the RYZ, riz or rise, whatever you prefer, organization that we have assembled to deliver it.

As Ronnie Coleman and you got to Google it, used to say, "Ain't nothing to it, but to do it." With that, we look forward to your questions. Operator?

[Operator Instructions]. We will take our first question from Katja Jancic from BMO Capital Markets.

Maybe starting on more, I guess, near term. The 4Q was negatively impacted by the fast increase in prices and you not being able to push prices higher. Are you right now still seeing any potential pushback from your customers about fully accepting these price increases?

Katja, it's Eddie. And we've got Rick and Jim and Rich and Andy and Nick in the room with us, so we could give you a really fulsome answer. I'll tell you that I've been pleasantly surprised by the increase in business activity overall. When we look at quoting rates and we look at conversion rates, it's the best we've seen in a really in a long, long time.

So that's very positive. I think getting price increases into the market, it's finally starting to happen. But I also said, you look at mill utilization rates and you look at some of the recoveries in certain end markets is still somewhat uneven, it really is sort of the end market by end market and customer by customer. So it's a gradual pricing through on that side as we look at mill pricing getting through the distribution channel to customers. But for the first 45-plus days of the quarter, it's been very positive overall. Rick?

Yes. Thanks, Eddie. I agree. I think -- and everybody knows, we closed on the 13th, so the first -- half of the first quarter is not included in our results going forward. But I agree with Eddie, we saw -- have seen a good start to the year in terms of both volumes and pricing. So we're optimistic, as Eddie said earlier in his comments, it's good to close the transaction and merge and have a little wind in our sails in terms of the market. So we're feeling good about that.

And Katja, I would say this, too, I mean you know from our attendance at the BMO conferences, which we're looking forward to seeing you again next week, last couple of years, I mean, it's been a long trough, and it got very tiresome to talk about the same things over and over again. Looking at the investments that we both made individually and collectively and looking at the execution of both companies and having a lot of the CapEx really behind us, I'll give you an example.

Shelbyville had a record month, and we had done a major expansion in Shelbyville. And we're starting to see the promise of those capital investments really show through in a meaningful tangible way. And the the opportunity to go through every single one. But just suffice to say, we're really pleased with how those investments now are starting to look when we see some operating leverage in the industry and across our assets.

And given that the markets are improving, right, and you have bigger portfolio now. How are you thinking about capital allocation moving forward? And I understand that you're in the process of combining -- fully combining or integrating the 2 companies, but how should we think about that?

Yes. So I'll start, and then I'm going to kick it over to Rick. So it's important to keep mentioning the main thing. And that is really getting after the $120 million in annual run rate and deleveraging. We still want to bring the debt down. People ask us about growth, but we just took a major quantum leap forward when it comes to growth through the merger.

So we want to delever, we want to get the synergies, we want to go ahead and optimize the footprint of the assets and that's job one. And I think when we get through the year as we get through the year and we have the success that we expect then I think we could start to keep 1 eye out for what may be on that horizon.

Rick, what do you think?

Yes, I agree. And I think, obviously, Eddie talked about continuing the dividend, which we thought was really important as a piece of the capital allocation. But yes, I think really focusing on the cash flow and getting the debt down is job one. But certainly, continuing to look to also reward the shareholders through dividends and then we'll frame in as we move forward some more specifics on that.

Perfect. And I'll see you next week.

As Katja, I look forward to it.

[Operator Instructions]. We will take our next question from Samuel McKinney from KeyBank Capital Markets.

Just going back to Katja's first question, this wasn't a Ryerson specific headwind this week. But you talked about the challenge in passing through rising mill prices to customers. Were there products and maybe aluminum where that strong was more pronounced than others?

Yes, I would say that -- of the 3 commodities, I would say that aluminum has probably been the slowest to propagate through, but that's picking up now in terms of the ability to start to get those price increases through the value chain. But yes, if you're asking about aluminum specifically, I would say of the 3, that's probably been the toughest when you look at when that price started to go up around April on on a regression line up, where it really started to turn up in April, and it's continued to move higher, sitting here today past the middle of February.

Carbon, you know that story. I mean it's like a right? And now finally, we've got some momentum upward on carbon, which has been good to see. And it's been somewhat gradual. It hasn't really spiked the way it has in years past, and that's a good story. And then stainless was really, I mean, stainless and nickel been beat up for, what I'll call, structural reasons and also cyclical reasons. But as Nick Webb said, we finally maybe caught a bid on stainless where we've seen that now move higher over the last several months and so that's starting to get into the price book as well.

Okay. And then the first quarter same-store volume guidance up in the mid-teens sequentially and safely above your historical seasonality. Are you starting to see some restocking or some more activity from some of your major industrial customers?

Yes. I mean the real story of 2025 for us was transactional was up 11-plus percent and OEM was down 8%. And that was really the first time we've seen that type of decoupling when it comes to directional movements within an industrial metals and manufacturing cycle. So I would say that overall, we're seeing -- on balance, as we referenced, we're seeing a stronger market consistent with a stronger PMI print and now industrial production and PMI are moving in the same direction.

So we're tracking that really well. I also think it's a function of the improvements that we've made. It's a function of how well Olympic has executed over the last several years and how well they continue to execute. And so I think it's also us getting better and improving and bringing those investments through finally to to full operating status. But let me take it over to Rick and he'll give you some more color.

Yes. I couldn't agree more. I think -- and you know, Sam, just from following the Olympic story, much the same in terms of some of the concentrations of investments over the last year, too. So we had a pretty heavy CapEx, I'll call it, last 18 to 24 months. A lot of those investments are really just coming to fruition right now and are phasing in over, I'll call it, fourth quarter into second quarter of this year. So again, a little wind in the sales from the market, plus some of the self-investment.

We're optimistic about growth. Eddie mentioned the PMI finally. I don't need to -- we don't need to keep continuing the historical bad news, but wow, how many months in a row and how many out of 2 years were we going to have PMIs printing down. So yes, I feel pretty good about the momentum in the market. I feel really good about the combination of the 2 companies and really excited about really showing everybody what we're going to be able to do in terms of those synergies and really bringing the combined strengths of the 2 companies together.

And really, that's what it's all about is being able to service our customers better with more capabilities, additional geography, and we're on it. I'd tell you, we got off to a -- I called it -- I said we want to get off to a running start, I think we got off to a sprinting start. But just excited about all that. And again, it's good to have a little wind behind us.

Sam, let me give you a little bit more, I would say, a little bit more of the inside when we look at how does our company operate and I think how does the industry operates. Stability is a big thing. I mean you're going to take a hit and you make investments. If you shut down a service center that's been in place for a long time and you build a new one and you do greenfields, I mean greenfields will shorten your length expectancy.

And I think it's hard to go through them, but once you're on the other side of them, it's really, really good. So I'll give you an example. Central where we moved out of we moved to University Park, that was a 900,000 square foot greenfield. And when we bottomed out during the construction, just before the grand opening, volumes went down to about 520 tonnes a day as an example, okay?

Well, bookings at CS&W -- very proud of the team and the leadership there, bookings at CS&W now over 780 tonnes a day, not including the intercompany work that they do for other virus locations. So when you think about that incremental 260 tonnes, it's very meaningful, but I also think it's indicative of what happens when you do major CapEx greenfields and you do heavy investments in facilities, you do ERP conversions, you take a hit.

And it's a hard thing to go through. But when you do get to the other side if things start to work and operate a lot better, and it then syncs up very well with what we see historically, where if you've got the right balance of investment to go with, I would say, stable, consistent, well-performing operations, you start to really realize that upside operating leverage in your network and things start to get it look a lot better.

Okay. I appreciate all the color on that question. And then last one for me: Increasing the revolver by $500 million to $1.8 billion. In the context of trying to get back down to the leverage range, what's the chance you use this to explore more M&A? And if so, could you do this before the achievement of synergies or are those mutually exclusive? And what do you feel you need to round out the now combined portfolio?

I think we finally have like half of the CFO questions, so we'll be able to pop that over to Jim and Rich, but I would just say, Sam, I mean, when it comes to M&A, we just did a huge transaction, and I want to emphasize or to keep the main the main thing. I don't think you ever look away from what would truly be an exceptional opportunity, but you're just so much more selective because you really don't want to frac the attention of the organization on what it is we really have to do first and foremost, which is hit our marks, get the synergies and boost the overall performance that flows through our financials. So that really is the priority. But let me send it over to Jim and Rich.

Yes. I mean, Eddie really touched on it. I mean we did amend and extend the ABL, raising it up in order to really work through this merger and put the company in a good spot to continue to grow forward. But right now, as we sit here, week 1 in, it's full speed ahead on working through the synergy case, continuing to operate the business, serve our customers, and we'll continue to work through our capital allocation plans.

And Rich Manson is the synergy So Rich, what do you think?

Yes. No, I think Rick said it a little earlier. As soon as the merger was done, we jumped in with both feet and started sprinting. And so lots of people involved, lots of great ideas. And we look forward to tackling and hitting all the numbers that we've set forth, and we'll do it.

[Operator Instructions]. We will now take our next question from Alan Weber from [ JP Capital ].

So a question, given you guys doing the merger, which sounds great, and then you have Klockner being announced that they're going to be acquired. Can you talk about how you think about it longer term more consolidation impact on Ryerson/Olympic and like that?

Sure, sure. Alan, I think members of the team here certainly socialized the reality that for a long, long time, M&A activity was lacking in our sector. And it really is just a mathematical fact. If you look at consolidation on the mill side, if you look at consolidation on the customer side, we in the middle would just continue to really get squeezed given that there's like 7,500 firms that identify themselves as metal distributors, wholesalers and processors.

So I do think there'll be more. I think there's a realization of recognition that there should be more just to kind of balance things out in our industry when you look at shipment levels since 2006 up to the present time. This was really a fantastic opportunity and move by both of our companies to do this, both when we look at the DNA of both organizations, but really in the larger industry as a whole.

So the answer is yes. I'm really, really thrilled that we did it. I think our prospects are fantastic. And I think that the Worthington Clutter announcement, I think, is overall, it's a positive, it's healthy for the industry. Rick?

I think you nailed it, I really have nothing to add to that. Consolidation is good for our industry, period.

And Alan and it also is the customer experience. Like we want to get closer to the customer. We have more touch points, we can get closer. Andy Greif started out leading the supply chain integration council, the commercial integration council. And can you give you some color on just how attractive the opportunities look with the combined companies. Andy?

Well, I think Eddie, you said it right. The opportunity to take 2 great storied companies. And as customers today, the industrial OEM is really looking for downstream help and one of the first things they look at is the balance sheet of the companies that can help support them. I think you take this combination, it really sends a very strong message to our large customers that not only are we there financially to be able to support them.

But if you look at the investments that the 2 companies have made over the last 3 to 5 years, we're taking everything downstream as the customer today is looking for not just the rectangle of what was once upon a time, important in our business. But finish well to product that's going directly into their assembly. And there's not a lot of people that can do that to the scale that our large customers are looking. And so I think the consolidation, in particular, this one is going to be fantastic for our customers. We've already gotten a number of calls as to what can we do collectively to try to help them grow their business, and we're excited to get in front of the customer.

Yes. And I mean I think a better solution we offer the more repeat business and growth we're going to see. We just have to really make sure that the experience we offer is to the highest level and meets our aspirations for what we want to deliver those

As we have no further questions, I would like to turn the conference back to Eddie Lehner for any additional or closing remarks.

No, really, thanks so much for your support. We really look forward to being with you next quarter to report out on how we're doing with our synergies, how the business is operating, and I look forward to the next call. Thank you, everybody, stay well.

This concludes today's call. Thank you for your participation. You may now disconnect.

Good day, and welcome to the Ryerson Holding Corporation's Third Quarter 2025 Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I'd like to turn the conference over to Justine Carlson. Please go ahead.

Good morning. Thank you for joining Ryerson Holding Corporation's Third 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.

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'll now turn the call over to Eddie.

Thank you, Justine. Good morning, and thank you all for joining us to discuss our third quarter 2025 performance and our announced merger agreement with Olympic Steel. I would like to start our call today with an abbreviated version of our prepared financial comments before asking Rick Marabito, Chief Executive Officer of Olympic Steel, to join us to discuss the announced merger agreement, its strategy and the benefits we believe it will yield for our stakeholders.

So turning to our performance first. The third quarter market backdrop continued to be difficult as we now find ourselves rounding out a third year of contractionary conditions. The quarter can be summed up as a continuation of industry recessionary conditions characterized by falling industry shipments year-over-year and sequentially with notable carbon steel margin compression with manufacturing activity well below mid-cycle levels.

Supply side tariffs and trade policy have placed to some extent floors under bellwether industrial metal commodity prices. However, demand in the aggregate remains stubbornly depressed. We have often said the supply side sets the price. However, our customers set the discount. And through the third quarter, customers continued quoting less and buying less.

Within our OEM book of business, especially the contract business, we have actually seen activity come in well below our OEM customer forecast and historical mid-cycle trends. As we are in the late stages of this counter cycle that is in its 13th quarter and has been of longer duration than is typical of historical counter cycles of between 4 and 6 quarters, the OEM side of the commercial portfolio should eventually inflect positively.

The offset to that is the very encouraging trend of Ryerson growing its transactional business as recent investments continue to operationalize, stabilize and scale throughout our network. This shows up in our service center fundamentals metrics of shorter lead times, higher service levels and improved on-time delivery.

As long as we keep on keeping on with improving the customer experience while optimizing our service center network productively and safely, our performance will continue to improve. As the market navigates the many dynamic factors currently in play around trade policy, investment, interest rates and geopolitical commerce volatility, we continue to drive what we can control, building earnings quality and earnings leverage by being excellent operators of our business with sunrise consistency.

We understand that decades of offshoring take time to unwind just as deleveraging, asset modernization and optimization have required long-term vision and commitment. We will persevere through this market environment working safely and passionately throughout and come out stronger on the other side.

I can't wait for Rick to join me on the call. But before we get there, I'll turn the call over to Jim Claussen to provide more details on our financial results and our outlook.

Thanks, Eddie, and good morning, everyone. During the third quarter, we achieved adjusted EBITDA, excluding LIFO, at the low end of our guidance range with revenue and shipments in line with expectations. Looking ahead to the fourth quarter of '25, we expect volumes to soften during the quarter by 5% to 7%. This aligns with typical seasonality patterns as our customers slow production around the holidays, and it also reflects our anticipation that the current demand challenges will persist at least through the close of the year.

From a pricing perspective, we anticipate that the current tariff structure will continue to be nominally supportive, leading to what we expect to be flat to 2% higher average selling prices, resulting in revenues in the range of $1.07 billion to $1.11 billion. We expect that gross margins will continue to be under pressure in the fourth quarter, given elevated input prices and the recessed demand environment.

In all, we forecast fourth quarter adjusted EBITDA, excluding LIFO, in the range of $33 million to $37 million and net loss per share in the range of $0.28 to $0.22 per diluted share, given projected LIFO expenses and depreciation higher than normalized go-forward CapEx of $50 million to $55 million.

We expect LIFO expense to be between $10 million and $14 million in the quarter and net CapEx to finish the year within our target range of $50 million. Turning to the balance sheet and cash flow highlights. We ended the third quarter with $500 million in total debt and $470 million in net debt, which represents a decrease of $10 million and $9 million, respectively, compared to the prior quarter.

As a result of incremental improvements in both our net debt and trailing 12-month adjusted EBITDA, excluding LIFO, our third quarter leverage ratio came in at 3.7x, moving us closer to our target range of 0.5 to 2.0x. As we progress through the fourth quarter, we expect cash flow generation to continue moving our leverage ratio back towards our target range.

From a global liquidity perspective, the company's profile remained healthy during the third quarter, and we ended the period with $521 million of liquidity compared to $485 million at the end of the second quarter. Third quarter operating cash use of $8.3 million was primarily driven by the net loss generated.

We ended the quarter with a cash conversion cycle of 68 days, which compares to 66 for the prior quarter as our higher-value inventory added 2 days of supply, while our payables and receivable cycles remain consistent. I'll now turn the call over to Molly Kannan to discuss our financial performance highlights for the third quarter.

Thanks, Jim, and good morning, everyone. In the third quarter of 2025, Ryerson reported net sales of $1.16 billion, a decrease of $7.8 million or less than 1% compared to the second quarter with average selling prices up 2.6% and tons shipped down 3.2%. Due to the rising price environment, we recorded LIFO expense of $13.2 million, which was consistent with the prior quarter.

Gross margin and gross margin, excluding LIFO, both contracted during the third quarter by 70 basis points to 17.2% and 18.3%, respectively, as we experienced price pressure amidst the soft demand environment. Warehousing, delivery, selling, general and administrative expenses totaled $201 million for the third quarter, a decrease of $3 million compared to the second quarter.

Despite decreased expenses and top line metrics within our guidance ranges, gross margin compression contributed to our third quarter net loss of $14.8 million or $0.46 per diluted share. This compares to net income of $1.9 million and diluted earnings per share of $0.06 for the prior quarter.

And finally, our adjusted EBITDA, excluding LIFO generation for the third quarter was $40.3 million, which, as Jim mentioned, was within our guidance range and compares to $45 million generated in the prior quarter. And with this, I'll turn the call back to Eddie.

Thank you, Molly. I would like to conclude our prepared comments by thanking the Ryerson team for their tremendous teamwork and passion for getting better every day. This quarter was another street fight. However, we continue executing our self-help principles and focusing on what we can control while continuing to bring our investment cycle to return and improving our financial performance through the cycle. And with that, I am delighted to invite Rick Marabito to join me as we share an overview of the announced merger of our companies.

Thank you so much, Eddie. Really appreciate being invited to be part of this call. And maybe before we begin, I just had just an opening comment to make. And just want to say how excited I am, how excited the Olympic team is for this combination of two great companies and really for the opportunity to work together with Eddie and his team at Ryerson.

We're looking forward to closing so we can get to work and deliver on the benefits of the merger and really unlock the value that this combination brings to shareholders, our customers, our employees and the communities where we all live and work. And I know I speak for you, Eddie. We're engaged. We're energized and committed to deliver the compelling value proposition in front of us with shared values and a shared vision for success.

And so with that, maybe we'll get right into the slide presentation, and let's start with the big picture. I think the combination, as you see, solidifies and enhances the new company's presence as the second largest metal service center in North America.

Together, we'll have over $6.5 billion of revenue, and we'll serve our customers from an expansive North American network of over 160 facilities, providing new breadth, new depth of products and processing services as well as a greater ability to offer our customers customized metal solutions and improve speed and efficiency.

Together, we expect to realize $120 million of synergies, and that will be phased in over 2 years, which is obviously a compelling contributor to the future margin enhancement and value creation. Eddie is going to provide some more details on the synergies in a moment.

So combined, our new company will have a stronger financial profile as the merger is an all-stock transaction. Greater free cash flow and a stronger, more flexible balance sheet only provide more opportunities for future growth than I think we'd be able to accomplish separately. So Eddie, I'll turn it over to you for the next slide.

Rick, thanks so much. And really, you spoke so beautifully at the outset. And I too want to welcome all of our stakeholders. I want to welcome everybody from Olympic and Ryerson that are on the call this morning. And to really continue why we think this is such a compelling and attractive merger between our two companies with a combined 255 years of experience in the service center business, hard won experience in the service center business.

When we look at the transaction and within the next page of our presentation, I want to go right to synergies. And I want to give you two examples of synergies because I think they're powerful examples. And we've renamed this room Synergy Central or prospective Synergy Central. So I want to share just a couple of things with you because I know synergies are really at the root and core of where we can derive multiples of value.

So if you look at Ryerson and you look at what's happened since September of 2022, just looking at Ryerson for now, 25% of our mix is in stainless, okay? So when we look at Q2 revenue, about 25% revenue in stainless, 25% revenue in aluminum and 50% revenue in carbon, and what's important to realize is we are underweighted the market in carbon when we look at MSCI numbers. The industry is 67% carbon and it's 33% nonferrous roughly.

So when you look at the industry, you look at Ryerson being underweighted carbon, but overweighted stainless and aluminum, just look at stainless. I mean, stainless was a wonderful gift horse in '21 and '22, and I don't want to punch a gift horse in the mouth. But in '23 and '24 and even in '25, think about what happened in the stainless market. MSCI shipments in stainless are off 22%.

Nickel prices are down by more than 50%. So we endure that going through a very large investment cycle to modernize our company, improve our company, but we take brutal compression in shipment declines over that 3-year period. And the story in aluminum from a shipments perspective, even though price, there's been a lot of volatility in aluminum price. And even though it's downward gradient has not been as extreme, shipments in the MSCI for aluminum are down more than 20% since September of 2022.

But carbon prices have been about on average, even though there's been a lot of modulation in the price, in general, in September of '22, carbon prices were $850 a ton, and that's kind of where they are today in that neighborhood of $850 a ton. But what's even more provocative in this example, the synergy is that carbon shipments in the industry only fell by 5% in that period.

So if you were overweighted carbon, in general, you did better in the industry than if you were overweighted nonferrous. So when you think about the combination of Olympic and Ryerson, Olympic has more carbon exposure, more carbon exposure in tube, more carbon exposure in plate. And so that's a natural synergy when we look at being very complementary when we look at our footprint and we look at what we do, certainly on the commodity mix side, that's a really, really strong synergy as we look forward in this transaction.

Let me share another one with you. It's no secret that since the pandemic, we've all had to look at things that maybe were not as prolific before the pandemic. And one of the things that's happened is the demographics in our industry, it's no secret that they skew older.

When you look at the voluntary rate of attrition in this industry, just folks that just leave on their own and people that retire, in this industry, it's between 5% and 15%. So I want that number to sink in for a second, 5% to 15%. Nothing the company does whatsoever. It's just people that retire or they decide they want to try something new.

So if you take the natural rate of attrition in this industry, you can see where we can create a really powerful synergy and efficiency just given the natural rate of voluntary attrition in this industry, you can take the combined employee census, you can take the average comp that we published per the MD&A. And you can do that math and you can model it and you can see how we create a synergy right in line with what we're bringing to our stakeholders and what we're articulating to our stakeholders.

So when we look at this, everything on this slide is true, presence, highly complementary match, opportunities for margin expansion, the synergies that I just spoke about, and there's many more, and we'll talk more about some of those other ones as we go through the presentation, accelerated growth, really the combination of talent pools.

I mean I've known because we've competed against Olympic for the entire time that I've been here over the last 13 years. And Olympic has incredible talent in their organization. They've got a great brand, a great culture. And I'd like to say that I'm proud of what Ryerson is and what we've been and where we're going over our 183 years.

And so when you look at the talent pools that we're combining in this merger, it is very unique, and it's highly accretive and valuable. And then we have an opportunity to deleverage. There's a lot of collateral in this deal, a lot of collateral in this deal that gives us the optionality to deleverage both on a combined basis, but also in terms of the asset quality that we have in working capital, property, plant and equipment. And then we have better access to the capital markets. And we also have better share flow. There's more liquidity in our combined equity than we have now. So with that, I'm going to kick it back over to Rick, and then I'll be back with you in just a minute.

So thanks, Eddie. We can go to the next slide, please. And really, let's review the details of the transaction. So as we said, the merger is structured as an all-stock deal, and Eddie just talked about that in terms of strengthening the balance sheet and giving us really the strength and power to go forward and grow.

Closing of the transaction is targeted for the first quarter of 2026. Olympic shareholders in terms of an exchange ratio will receive 1.7105 Ryerson shares for each Olympic share. And what that equates to is Ryerson shareholders owning 63% of the combined new company and Olympic Steel shareholders owning approximately 37% of the combined company.

And as we stated earlier, 2024 combined revenue, $6.5 billion with pro forma adjusted EBITDA margins approaching 6%, and that would include a phase-in of the forecasted synergies. And Eddie just talked about the synergies, $120 million, assuming about 1/3 of those synergies are completed at the end of the first year after closing and then 100% phased in completely at the end of year 2.

And we do -- as Eddie said, we do have high conviction in terms of achieving those synergies. I think as you look at all the opportunities, and Eddie just gave you a couple of examples, but there's quite a long list of potential opportunities and synergies. And I'll tell you, that's -- we're going to be quickly engaged on realizing those synergies.

In terms of leadership, the Board is going to broaden its talent by expanding to 11 Board members, and the Board will welcome Michael Siegal as Chairman of the Board. I think as most of you know, Michael is currently the Executive Chair of Olympic Steel. And then Olympic will also appoint three other directors to the Board, obviously, mutually satisfactory to the Board. And that will result in four Board members from Olympic and seven from Ryerson to round out the new Board.

And then in terms of executive leadership, Eddie will continue to serve as the Chief Executive Officer of the new company, and I'm very excited to serve as President and COO. And the Olympic executive team, I can tell you, is enthusiastically looking forward to continuing with the new combined company.

And again, since the merger is all stock in nature, the combined company will really benefit with reduced leverage. As we model that out as synergies take hold, we're looking at leverage of approximately 3x post close. And then the credit profile of the combined company should also be enhanced through scale, diversification, improved margins and profitability and obviously, greater cash flow. So a lot of positives here.

So Eddie, why don't you take us through the next slide?

Thanks, Rick. So when we go to the footprint, when we look at the footprint, and I think a picture really is worth a thousand words or more. But when we go under the hood of what does the prospective combined -- what do the respective combined companies look like.

If you look at this graphic, you can see and what always doesn't show up in the financial statements because you really have to drill down and you have to look at the drivers of what create the financial statements for respective companies in our industry. Think about the importance of selection, availability, lead time and on-time delivery.

I mean we have great brands. But really, when the customer calls or e-mails us for a quote, if we have it on the floor, it sells. If we can create short lead times, it sells. If we have wider selection, it sells. We can buy out from one another, makes it easier to make that sale. If we can use each other's outside processing network, it makes it easier to create that sale.

So when you look at this graphic, you have density and you have points to the customer that are closer to them, relying great -- I mean -- and we can realize greater reliability and consistency in how we make those connections with our customers.

When you look -- if you go West, we have an opportunity to take more of the combined company West, and we also have more of an opportunity to go to Mexico together where we already have a presence. And Olympic, I'm sure, has customers that are looking to get to Mexico in a more meaningful way.

So when you look at the footprint and the commercial synergies that are attainable in this transaction, I think the picture truly is worth a thousand words. Rick?

Yes. The next slide, this is something -- I tell you, I get -- this is an area I get really excited about. So if you look at the top there, the two companies combined over the last 3 years have invested a massive amount back into the company, $480 million, and I think the title of this slide is exactly right, Primed. I think we're Primed.

So the vast majority of the money on the current investments in CapEx, our portfolio has already been spent, and so what that means is we are both now primed to reap the returns on these investments, and I think the benefit of a merger is we're going to get there faster through a larger combined platform, and then let's not even mention what Eddie talked about earlier, and that's the opportunity for a power boost or a multiplier effect from tailwinds in the metal market. So demand has been off for several years. We get demand back to a normalized demand scenario with $480 million recently invested, and I think that is a very, very strong indication of what we can do together.

Briefly, I'll touch on Olympics side of the equation in terms of what some of the investments were, and then I'll have Eddie talk about Ryerson's recent investments. But Olympic, I like to refer to our capital spending over the last 1.5 years to 2 years as the Big 5.

So it includes a new cut-to-length line in Minneapolis, and we're targeting their carbon growth, coated carbon growth specifically. A new white metals cut-to-length line in Chicago, a high-speed specialty stainless slitter at Berlin Metals. Berlin is right outside of Gary, Indiana. The biggest of the five is in Chambersburg, Pennsylvania. That's one of our plate processing hubs. And in Chambersburg, we've got a massive automation project, which includes all new lasers and plasma processing equipment and capacity, coupled with material handling automation.

So a lot of our movements are going to be touchless. So we're really excited about that one. And then finally, we've expanded down south in Texas, in the stainless area through Action Stainless's expansion in Houston. So all these projects, they're poised for returns on the Olympic side for '26 through '28 time frame. And I'd say that's perfect upside timing for the merger. Eddie, you want to talk about from the Ryerson side, your investment?

Yes. No, thanks, Rick. When I started with Nucor in 1992, Ken Iverson, legendary CEO of Nucor, stopped by my office and was just talking about the story of Crawfordsville. And he was saying that when they built Crawfordsville in '87, they were losing $1 million a week on the project and they were asking, Ken, how he slept, and he said, he slept just like a baby, he woke up at the night and cried every hour.

When you do CapEx and you do greenfields and you do big projects to modernize your company, they all don't go beautifully, and you have to grind through it, but it's worth it, and certainly, as we've gone through this downturn, which has lasted for 3 years, I think Rick said that we're due for some tailwinds, for the last 3 years what we've had is space burn.

So when you look at the CapEx investments we've made, we made record CapEx investments to invest in our future. And as we see upside operating leverage and opportunities for the cycle to inflect and certainly, with the combined Olympic and Ryerson, when you look at University Park, 900,000 square feet of modern service center space for long products and tube primarily when you look at Shelbyville, which was a fantastic investment in our nonferrous franchise that's located so close to the bread basket of nonferrous supply in the United States.

You look at the release of ryerson.com 3.0 as we go further and further into digital commerce. So that's a synergy between Ryerson and Olympic as we go forward to bring a lot of the digital investments we've made and to actually put those in at scale in a very thoughtful way as we go forward as a combined company, and we have the Atlanta tube laser center.

We've made significant investments, and we've gone from nothing in 2016 to more than 10 work centers in Norcross, which has been a wonderful success story, and if you pair that up, for example, with Chicago Tube & Iron, which is in the Midwest, you could see a powerful synergy in that franchise of high value add between tube lasering and sheet lasering. And then, of course, we took a big swing on ERP integration. We've mentioned this before.

In our South region and in Texas, we were on legacy systems for 40 years, and we finally had to bite the bullet, we finally had to convert and get on a uniform ERP system. I mean that is a 2- to 3-year trail of tears. But once you come through it, once you come through it, all of a sudden, everybody knows that language and they find possibilities and capabilities they didn't have before within that system to create a better customer experience.

So we are on the other side of that. As you see restructuring and rework costs come down and we do the cleanups from a 3-year investment cycle coming through this downturn with the investments we've made. As you look at a combined Olympic and Ryerson, I think you can really start to see the potential of how those investments, they don't just pay off as individual organizations, but when you bring them together, the payoffs are very, very attractive. And that takes us to, again, the compelling synergy opportunity.

So I spoke to two very powerful synergies a couple of minutes ago, and I want to put a spotlight now on procurement and supply chain. So you go from 2 million tons to, say, 2.9 million to 3 million tons of combined purchasing spend and you pick up scale, and if you really break this down into math, metal on any given day is between 70% and 95% of our cost depending on the pound that you're quoting and the pound that you sell, 70% to 95%.

So if you don't buy well, it's really hard to operate your way out of suboptimal buying, but when you look at the combined scale that we generate now going to that supply chain marketplace, to that procurement marketplace, we're talking about $14 a ton over 2.9 million tons is what we're talking about, and we are highly confident that we know how to get $14 a ton in supply chain synergies, not the least of which follow through to fuller truckloads that we receive from our suppliers.

So we pick up savings, not just on the freight, but obviously, the main course is the metal, and now you've got greater optionality of how you purchase that, how you combine that spend and where you direct it through a more dense network to bring down your overall procurement costs. Rick?

Thanks, Eddie. Next, let's just talk about our profile in terms of pro forma mix on end markets and products here, and Eddie touched on it already, but really excited about, a, the growth markets and customers benefiting from our combined new mix.

Obviously, we've got a lot of potential growth happening in the United States in terms of infrastructure reinvestment, reshoring, outsourcing of fabrication and then, of course, the massive data center demand build-out where we're seeing significant growth.

I think as you bring the two companies together, you look at the product mix, it's enriched. Eddie talked about the balance of the specialty and the carbon, but you look at really the overall mix now, a great balance across flat and long, stainless and aluminum, carbon, especially coated carbon and then the increased value-add processing and fabricating capabilities I think fantastic, and then combine that with Olympic Steel's recent growing focus on end product manufacturing, wow, these are all margin enhancers.

So I think in summary, the combined company is going to be more diverse. We're going to have more high-margin processing capabilities. We're going to have a richer mix of metal products, and that's going to really provide a powerful and expansive one-stop solution for our customers. And when I look at that altogether, I think all this, what it means is it contributes to an improved and less cyclical earnings stream for the combined company going forward. Eddie?

Thanks, Rick. So when we look at moving up the value chain and what does this industry look like as you start to visualize margin accretion, on the pick, pack and ship side, it's a speed game, right? You quote fast, you quote short lead times, you have the inventory on the floor, you get it to the customer. You need to do that with running water like consistency.

But as you move that up and you pick up margin points when you do that, but the key there is consistency and scale. But as you move up through processing and finished parts and kits and assemblies and value add, our value-add franchises combined, I mean, individually, they're significant, but combined, there is another force multiplier when you look at going up that adjacency curve and going to every next step of service capability and value-add capability.

And then you get to end products where I'm highly complementary of the work that Olympic has done, forging a path into manufactured products and end products, and Rick is going to speak to that in just about a few seconds here. But you can start to see another very complementary fit as we go up that curve to getting more margin on that consistency for transactional spot build material business, the menu of offerings that you can take to a program account or an OEM and then all the way through to manufactured products. Rick?

Yes. Thanks, Eddie. And some of you may or may not know about Olympic strategy the past 5 or 6 years to acquire and integrate end product manufacturing into our mix. So for example, we make inside of Olympic, we make industrial hoppers. We make stainless steel bollards. We make metal canopies. We've got many different end products that go into HVAC applications.

And as I spoke before, the end product, it carries a higher margin and return profile than traditional service center business. And then the end products are also countercyclical to distribution margins. So for example, when metal pricing declines kind of the depression in the cycle of metals, service center margins tend to come under pressure, while end product margins have the offsetting effect.

In those types of declining price environments, end product margins typically expand. So the other beautiful thing about it is end products through our internal purchasing, through fabricating capabilities, which I think about Olympic and now triple that, given the newco size, we're able to provide synergies to the end product manufacturing companies that our competitors at the end market level just don't have.

So I think the new combined company is going to really be able to better leverage those synergies across the end product portfolio that we have, and then if you go right into the next slide, we also talk about stronger capital structure, wow, the ability to continue to invest at a faster pace in the areas that expand our margins.

So you could see on this slide, really, the summary is, on the left side, when you look at the margin profile, immediately accretive. Synergies give us the boost to earnings that Eddie talked about, improved EBITDA returns, getting to 6%, and then on the right side, you look at the capital structure and the balance sheet and you go, wow, stronger, more flexible balance sheet, synergies drive cash flow generation.

So more cash flow, reduced debt, reduced leverage, that's a beautiful thing for being able to fund future growth in the areas that give us higher returns and more profitability. So I think -- and it ties in with the slide we talked about before on having spent a lot of capital, too.

So we're entering into this from really a position of strength where we don't have big CapEx needs, so we can really focus on growth, whether it's M&A or whether it's on the internal investment side of the equation. So I just think it's another exciting piece of the way the two companies are coming together at this point in our history as well as the structure of the deal, again, by being an all-stock transaction. Eddie?

Thanks, Rick. And just to follow up on some of the points that Rick made. When you look at things like and avoidance is maybe not a great word, but we'll stay with it. When we look at CapEx avoidance, when you come through two investment cycles that Ryerson and Olympic have had over the last 3 years, given the quality of the assets, given the magnitude of the assets, now we have the opportunity even to think about how do you move things around, how do you beneficiate assets, how do you repurpose assets.

So one of the things you noticed in our earnings release was our depreciation expense is about $19 million in the quarter. If you think about what our normalized CapEx run rate is, depreciation should really be between $13 million and $14 million in the quarter, which is about $0.16 to $0.18 EPS.

So one of the ways that we envision EPS accretion is, we don't have to spend as much CapEx as a combined organization, not just gearing down from the CapEx we've had over the last 3 years, but really looking at what is really -- what is the right normalized rate of CapEx going forward as a combined organization and how much depreciation then do you book over time against that CapEx as you add to the balance sheet, but you also optimize the asset footprint that you have.

So moving then to the benefits of scale and scope, and I think Katja in her note, I mean, I think she summarized it really well. It's scale and scope within a highly fragmented space. I mean, trivia question for everybody, can anybody remember what the last transaction was of any significance. You'd have to go back to 2013 for the Reliance Metals USA transaction.

And then a better trivia question that I won't give you the answer to, even though I know it, is go back and find the three largest transactions of significance before that. But I'll tell you this, over the last 21 years, 4 transactions of any significance in the space.

So when you look at the combined company at $6.5 billion in revenue, it speaks to the benefits of densification of the network and creating a better customer experience because that's what I want to bring it around to. Creating a better consistent customer experience is really how you win in this industry.

When you get past all the big terms and all the business speak, there's a customer on the other end that just wants a consistently high-level experience from low touch to high touch from pick, pack and ship to finished part, and they want a reliable, dependable, professional and enjoyable experience with that supplier, with that partner. So those are the benefits of increased scale and scope, availability, selection within this proposed merger. Rick?

Thanks, Eddie. And really, the next two slides, I'm just going to touch on briefly, and it's really for those of you who may not be as familiar with Olympic Steel, and I'll tell you, most of the next 2 slides, we've already covered in our conversation, so I'm not going to go in depth.

Just wanted to make a couple of points here. So we talked about at Olympic moving down the values -- up the value stream, higher returns, less cyclicality and all the things that we're trying to do there. So I'll point out a couple of things here. 8% of our revenue mix is now from manufactured products. I'd say roughly 20% of our mix is from multi-process fabricating work.

Again, you combine those two, we're pushing 25% to 30% of our mix is of the kind of the highest end of the margin returns that we see for service centers. Touch really quickly our Specialty Metals segment. Specialty metals for us is aluminum and stainless. That's really been a growth engine for us, 10% compound annual growth.

Really excited about our aluminum opportunities and the growth there. We've seen enormous growth year-over-year for now 2 years in aluminum. So excited about that and excited about the opportunities when the two companies combine on aluminum.

If you look at the bottom of the slide, that's just how we report publicly. We report in three segments. We break it out by product. The carbon is really the traditional Olympic steel, and we've got a high degree of investment going into that in terms of the branded end products and some of the high-margin fabricating equipment.

Specialty metals, I talked about already. That's been a growth engine for us, and then, of course, the pipe and tube business, which is highly tilted to tube, and we do a lot of highly intricate value-add work on the tube. So it's really a higher EBITDA segment than the others when you look at it as a percentage of revenue. So -- and then the next page is really just a lot of what we've already talked about. So I'm not going to repeat ourselves. So Eddie, back to you.

Thanks, Rick. Appreciate it. So as we conclude our run through the presentation, I want to speak to this in summary because I think you've heard a lot of really good things, and really, I think you can really envision now the potential and possibilities of the merged company, and it really goes to the heart again of the spotlight on synergies.

And look, we're going to get them all. And I'm going to share with you briefly, again, a couple more because I want to put down these bread crumbs. I want to put down these nuggets. When you look at investments we made over the last 4 years, for example, in nonferrous polishing and buffing and grinding and you look at Olympics franchise in specialty metals, there really is another really excellent synergy between those two capacities.

When you look at slitting, for example, Ryerson has a lot of cut-to-length lines. We don't really match that cut-to-length capacity with as much slitting capacity as we need. Olympic has wisely made those investments in slitting both on the carbon and nonferrous side. So that's another really good fit as we look at creating better customer solutions over that horizon, really long, long, long into the future between our combined companies.

So with that, we'd like to go ahead and open it up to your questions and look forward to answering them all.

[Operator Instructions]

And our first question will come from Samuel McKinney with KeyBanc Capital Markets.

Congratulations, guys. Just want to start with one Ryerson-specific question. Fourth quarter, typically a strong cash flow quarter for you guys. Given the earnings guidance and the normal year-end working capital release, fair for us to expect some more solid cash generation again to close the year?

Yes. I mean, Jim has been silent the entire call. So I'm going to go ahead and let him answer that question.

Yes, you're correct on the cash generation, and we typically see somewhere between $70 million and $80 million of working capital release in the fourth quarter relative to volumes and natural release. So I expect again in this fourth quarter to get a decent working capital release and cash flow there from operations.

Yes, Sam, I can't resist to put another breadcrumb out there. So for all you modeling home gamers out there, when you look at traditionally the revenue that it takes, the working -- the net working capital it takes to generate an incremental dollar of revenue, you take the combined net working capital of both companies and look at that on a go-forward basis, post close.

You can also see where some of that free cash flow opportunity is really significant around optimizing the working capital of the combined companies, if you work with a ratio that we've been solidly in over my 13 years here, which is usually about $6 to $7 of revenue generated per dollar in net working capital. So I'll let you all go at it and model that, but it's a good result.

Okay. And then moving to the merger presentation. You call out driving market share growth, whether it's the recent multiyear CapEx cycle at Ryerson or the high-margin in-product businesses at Olympic, where is it that you see the greatest opportunities to win incremental pro forma market share as a combined company?

I guess I'll just make some opening comments, and then I'm going to kick it over to Rick. But I really think when you look at cross-selling and upselling opportunities over a shorter distance to the customer, I think that's the key. I mean, if you look at Ryerson's customer count, which we do share with the stakeholder public, it's about 40,000 active accounts.

Olympic is about 8,000 to 9,000 active accounts. When you look at the fragmentation of the industry and the ability to go to market from a cross-selling and upselling perspective, again, with greater selection, greater value add, but really getting closer to the customer, day-to-day as those quoting opportunities come in, it really is a function of I have it, I can do it in 1 day or 2 days.

I can give you the value-add solution you want or on the contract side, we have a menu of value-added options for you to select from, not just supply chain design, but risk management, scrap management and a whole bunch of other things that we can bring to the table when we're trying to create a better customer solution, Rick?

Yes, I couldn't agree more. I think, Sam, if you look at that map, I get excited at Olympic. You can see our dots are pretty much in the eastern 2/3 of the country. So while you look out West and the footprint of Ryerson, certainly great opportunities for new geographies for Olympic.

I think Eddie said it right, when you overlay all the products and capabilities of the combined companies, I think a much greater ability for one-stop shopping for customers, and it gets back to that cross-selling opportunity that Eddie just talked about.

So yes, I think we're not even touching on Mexico where Olympic has a very small presence, and so I see a lot of growth opportunities, at least on the Olympic side of the equation of what we do and where we are. So really excited about it.

Okay. And then last one for me. Currently, Ryerson generally reports the whole company, while, Rick, you touched on earlier, you guys provide results for carbon, specialty and pipe and tube. Are you planning for this merger to be a complete roll-up with no segments? Or are you going to provide some segments to the business?

We don't know. So we're going to figure out though because we're not...

Okay.

Because Sam, that's -- those are all the things you have to do between signing and close. So that goes into that category. But I'm sure Rick and Rich can give you some good color on that, too.

Yes. I mean I think we'll sit down and map that out and obviously do what we think is best for shareholders and potential shareholders to best understand the company and where we're going.

Yes, the guiding light experience.

[Operator Instructions]

Our next question will come from Alan Weber with Robotti & Company.

Alan, what took you so long?

So can you talk first about are there cash costs to get the synergies? And I just want to make sure that the synergies that you're talking about are under current market conditions, not based upon improved business cycle, et cetera.

Yes. Alan, again, I'm going to kick it over to Rick here in just a second. But look, all we've known for the last 3 years of the current conditions, and so we have to really go way back to remember better conditions. So the synergies are really founded and premised on current conditions and how we get them, and when you -- again, to me, I take great comfort.

When I look at the combined book value of both companies, there's really a strong underpinning for those synergies if this environment were to unfortunately continue for an unprecedentedly long time. Certainly, any upturn we get, we'll have a chance to really show off that operating leverage as a combined company, but the synergies are really premised on where we live today. Rick?

Yes, I agree 100% with Eddie, at least how we thought of it on the Olympics side in terms of synergies. Synergies are basically not -- in my opinion, synergies are not, oh, the market is going to improve, so we're going to call that a synergy.

The synergies in terms of how we thought about it are real enduring synergies based on our existing model and the model going forward. So I agree 100% with Eddie on that. And then you did ask about some costs that would be incurred to realize those synergies. And yes, obviously, there'll be some costs. I think on one of the slides, we talked about potentially that being up to $40 million.

Okay, and then I guess the last question is, when and if the markets do improve, how do you think about incremental EBITDA margins starting from your pro forma EBITDA?

Well, I'll start on that. I mean, certainly, again, what we've got in the deck and what we've talked about our pro forma margins using sort of the environment we're in and then looking on a pro forma basis and modeling out what that would be.

You know if you go back 2 or 3 years in terms of what the EBITDA margin profiles were for our sector, for Ryerson, for Olympic and for others, it was several points higher. I tend to think of if you can get in that 6% to 8% quartile consistently, on the distribution service center side of the business, that's pretty good.

Obviously, given the depressed market we've been in the last couple of years, the current margin profiles for really all of us in terms of service centers is depressed from that. So we've got a 6% pro forma in here, but you get market tailwinds and more of a normalized market, and I can see that going to 6% to 8%.

Okay.

Alan, when we look at it historically and you go back and look at, again, the last 20 years, and you can certainly spotlight years like 2014, 2018, 2021. And conversely, you can look at years like 2015, '09, 2020 and even the last several years of 2024 and even '25 year-to-date.

And you kind of -- you traverse that continuum of years. And here's what I would tell you, we're in the bottom quartile now. And so that feels like a 2% to 5% EBITDA margin. As you get to that second quartile, that feels like a 4% to 6% EBITDA margin. You get to that third quartile when you start to see mid-cycle trends and better, that gets you to 6% to 8%. And then when you get to that top quartile, we start to see 8% to 10% EBITDA margins, which is really a function of being able to sweat the assets to a greater extent, your demand is going up, you get some holding gains in inventory, but you also get more value add because at that point, when the economy is doing better, you also get more outsourcing of manufacturing where some of our customers bring things in-house during times like this.

As everybody gets busy, they need to go out to variable resources to go ahead and service that demand and so you get incremental margins on top of that. So really, as we've studied it over the years, it really looks like that 2% to 5%, 5% to 7%, 6% to 8% and 8% to 10%. So I hope that helps.

It does. And I guess my last question is, can you talk about assuming market conditions are flattish next year or similar to this year, kind of working capital for the combined company for next year, whether that will be a source of cash or...

Yes. Alan, I try to give a little bit of insight into that in terms of what we've seen over time where how much net working capital does it take for us to really finance an incremental dollar of revenue. And I think if you look at that in reverse, if conditions were to stay the same, depending on where price goes, but if conditions were to stay the same in a combined company scenario, there's certainly working capital there to be had and there's working capital release and free cash flow there.

More to come as we get through this signing to close period and as we really start to really enumerate that. But again, I want to kick it over to Rick, and I know he's got some thoughts around that as well.

No, I agree. I think, Eddie, you said it well. I think in a normal market, if we just stayed in the same market conditions, so let's not talk about the price side of the equation. There's big opportunity on working capital turnover, specifically on inventory, inventory sharing, improving inventory turns, absolutely will have a positive cash flow and a working capital release just from being more efficient.

And I guess my last question is, have you gotten any customer comments, good or bad or concerns?

No. But I mean it's early, but no.

Right.

Everything -- I have to say, I mean, so far, everything has been overwhelmingly positive, notwithstanding maybe the initial reaction of the market, but it's been overwhelmingly positive.

Same on our end, Alan.

And that does conclude the question-and-answer session. I'll now turn the conference back over to you.

Well, I really want to give the last word to Rick, and I'm going to do that. I just really want to thank everybody for tuning in with us today. We couldn't be more excited and more enthusiastic and optimistic about what lies ahead for our combined companies. And I really look forward to being with you on future calls as you start to see the realization of the vision we have for the combined companies. Everyone, have a great holiday season, and I know we're going to see you out there on the road. Rick?

Yes. Thank you, Eddie. Really appreciate the time and ability to talk to everybody about what I think is an incredible and exciting transformational opportunity for the two companies. And I'm not going to repeat what I said in the beginning.

I'll just leave you with this. I truly believe the best is yet to come, and what I will tell you is you've got a combined committed and engaged new combined team that is going to work really hard to make it happen. So thank you all. I appreciate your participation.

Thank you.

Thank you. That does conclude -- I'm sorry, go ahead.

No, no, no, nothing, thanks.

Thank you. That does conclude today's conference. We do thank you for your participation, and have an excellent day.

Good day, and welcome to the Ryerson Holding Corporation Second Quarter 2025 Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I'd like to turn the conference over to Justine Carlson. Please go ahead.

Good morning. Thank you for joining Ryerson Holding Corporation's Second 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; Trent McFarland, our Senior Vice President of Supply Chain; and Jorge Beristain, our Vice President of Finance, 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 to discuss our second quarter 2025 performance. As we continue winding through protracted industry downturn with PMI prints showing contraction in 30 of the past 32 months and with carbon and stainless commodity bellwethers continuing to grind lower through the second quarter. Self-help is the name of the game as we continue building operating leverage for the next cyclical upturn.

As necessary trade policy resets, along with relatively high interest rates, stagflation fears, global overcapacity management challenges and tariff uncertainty impede short-term manufacturing and industrial metals activity, there is optimism when looking toward the medium and longer-term secular demand trends that have been suppressed through this unique and extended downturn.

Ryerson continues operationalizing its CapEx systems and acquisition investments, where we have deployed more than $650 million in capital since 2021 to modernize our network of intelligently connected service centers. As these investments become fully operational and the network stabilizes around greater consistency at scale pertaining to lead times, service levels, on-time delivery and value-added processing, we expect to continue to see improvements in our performance and the experience we offer to our customers.

While we continue to complete projects and improve "signal to noise" ratio throughout our network, whereby investment-related disruptions give weighted network and service center consistency and stability, we are positioning Ryerson well for the next cyclical upturn.

During the second quarter, we saw customer activity turning increasingly cautious particularly within our OEM contract book of business, while self-help driven transactional field business pulled the plow with market share gains realized even amidst ongoing bellwether price declines in carbon and stainless steel commodity indexes. It is still a price market as competitive intensity for orders among service centers is high and customers in general are buying to minimum requirements quoting less.

That said, as we are early in the third quarter, we are seeing price trends stabilize, albeit amid slowing and below-trend demand. We are in the dog days of this extended downturn of the playbook calls for execution around continuing to take out non-value-added costs, precise working capital management and hustling for every order and proving out our investments and renovated operating model.

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. Given the market dynamics Eddie discussed, North American industry volumes as measured by the MSCI, or Metals Service Center Institute performed well below normal seasonal levels in the second quarter, decreasing by 2.1% relative to the first quarter. By comparison, our North American shipments decreased by 1.2% quarter-over-quarter, generating incremental market share gains with particular strength in carbon long, carbon plate and stainless long products compared to the industry.

Total company tons shipped were up fractionally quarter-over-quarter with relative strength among customers in our consumer durable sector, particularly in appliances and recreational vehicles and also among some of our customers in the HVAC sector.

On the other hand, we saw quarterly sequential volume contraction in our construction equipment sector. We noted subsector industry bright spots in data center and public infrastructure projects driven by federal investment spending. And finally, we saw relative quarter-over-quarter weakness in our commercial ground transportation sector as the industry appeared to align build rates with a cautious replacement cycle environment illustrated by the order data published by ACT Research.

Given that market backdrop, let's transition to our second quarter performance compared to guidance and our third quarter 2025 outlook. During the second quarter, we achieved adjusted EBITDA, excluding LIFO, at the high end of our guidance range with revenue and shipments within our range. Late in the quarter, we saw supply side increases in all 3 of our primary product lines, increasing our second half pricing and cost expectations. This rise in expected metal costs led to a higher LIFO charge for the second quarter as our full year estimate for LIFO grew to approximately a $40 million expense.

This LIFO catch-up drove net income to the low end of our range. We note that given our inventory levels and the nature of many of our contracts, we require more than 1 quarter of duration to see price changes realized in the market. We also recognize that given some fluidity in trade and tariff policy, some of these increases may be short-lived.

Looking ahead to the third quarter of 2025, we expect volumes to soften during the quarter by 2% to 4% as we anticipate that the demand environment will remain challenged by continued uncertainty across many of our large end markets as well as normal seasonality patterns. However, we do anticipate that the pricing environment will remain supportive, leading to average selling price appreciation of 1% to 3% and revenues in the range of $1.14 billion to $1.18 billion.

We expect that gross margins will benefit from modest price resets in our contract business. But given a recess demand outlook, we expect flatter pricing expectations and margin pressure in our spot business. In all, we forecast third quarter adjusted EBITDA, excluding LIFO, in the range of $40 million to $45 million and earnings per share in the range of $0.00 to $0.06 per diluted share.

We expect LIFO expense to be between $9 million and $11 million in the quarter. Turning to our investments in the business. In the second quarter, our capital expenditures totaled $10 million and included investments in processing capabilities and maintenance projects. Year-to-date, we have made $18 million in CapEx investments and remain on track with our stated $50 million full year target, which follows a record 3-year investment cycle and focuses on operationalizing final components of those investments while returning to a more normalized level of investment.

In the second quarter, we generated $24 million in cash from operations as our receivables normalized relative to the first quarter, but were partially offset by a modest inventory build as overall inventory cost per ton increased in the quarter more than anticipated as previously noted. Overall, although working capital was higher nominally than anticipated, we effectively managed our working capital during the second quarter, achieving a cash conversion cycle of 66 days, which is slightly lower than the first quarter and 11 days lower than the year ago period.

We ended the second quarter with $510 million of total debt and $479 million of net debt, which represents a modest increase compared to $498 million and $464 million, respectively, for the prior quarter. Our countercyclical trailing 12-month adjusted EBITDA, excluding LIFO generation, coupled with this sequential net debt increase of $15 million, resulted in a second quarter leverage ratio of 4.4x, which remains above our target range of 0.5x to 2x.

As we move into the back half of the year, we expect cash flow generation to move our leverage ratio back towards our target range. From a global liquidity perspective, the company's profile remained healthy and we ended the second quarter at $485 million of liquidity compared to $490 million at the end of the first quarter. Turning to shareholder returns. Ryerson distributed $6 million in the form of dividends during the second quarter.

We paid a quarterly dividend of $0.1875 per share and have announced a third quarter 2025 cash dividend of the same amount. We did not repurchase any shares in the second quarter and ended the period with $38.4 million remaining on our share repurchase authorization. As we look forward to the third quarter and into the rest of 2025, we will continue to prudently evaluate our overall capital allocation and tightly manage our expenses and working capital.

I will now turn the call over to Molly Kannan to discuss our financial performance highlights for the second quarter.

Thanks, Jim, and good morning, everyone. In the second quarter of 2025, Ryerson reported net sales of $1.17 billion, an increase of 3% compared to the first quarter, with average selling prices up 2.8% and tons shipped up fractionally. Average selling price growth quarter-over-quarter was driven by increases in aluminum and carbon products, which were up 6.8% and 2.1%, respectively. Gross margin during the quarter contracted by 10 basis points versus the prior quarter to 17.9%, influenced by a higher-than-anticipated LIFO expense of $13 million 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 40 basis points to 19%. On the expense side, second quarter warehousing, delivery, selling, general and administrative expenses increased to $204 million or by $1.5 million compared to the first quarter as a result of one additional business day. Expenses decreased sequentially both on a percentage of revenue and on a per day basis, illustrating our continued commitment to expense management.

Second quarter net income attributable to Ryerson was $1.9 million or $0.06 per diluted share compared to net loss attributable to Ryerson of $5.6 million and diluted loss per share of $0.18 in the prior quarter. In summary, our adjusted EBITDA, excluding LIFO achievement of $45 million in the second quarter of 2025 compared favorably to generation of $32.8 million in the prior quarter. And with this, I'll turn the call back to Eddie.

Thank you, Molly. I would like to conclude our prepared comments by thanking the Ryerson team for working safely and productively during the second quarter as we remain focused on what we can control. Integrating our new advanced capabilities into our interconnected network to provide our customers with a higher level customer experience while also managing the business well through the current business environment.

As challenging as current and near-term conditions may be, we are proving our resiliency and expanding our earnings quality through the cycle as we look forward to a revitalized U.S. manufacturing economy, glimmers of which are already materializing in the form of negotiated trade deals and emergent reshoring data points.

As I mentioned during a prior call and backed by popular demand from the movie to Crow, it can't rain all the time. And we're just looking forward to a period of some extended sunshine. With that, and after the Q&A, we would like to share a video on the upgrades at our Shelbyville facility. For those of you dialed in, the video is also available on our Investor Relations website. Operator, please open the line for questions.

[Operator Instructions] Our first question is going to come from Samuel McKinney, KeyBanc Capital Markets.

The presentation calls out North American market share growth in carbon longs and plate and the release noted another quarter of increasing transactional business. Just wanted to give you the opportunity to talk more about some of the biggest wins for this demand as more of your CapEx projects have become full contributors.

Yes, Sam, I mean, at the risk of going deep under the hood of the car. As you bring up these investments and you find out that what happens is you disconnect things within your ERP environment, for example. So you take out all these work centers, you build the equipment, cash goes out and then you install the equipment and you get through a commissioning and start-up curve, all things that I know you're aware of. It's the pity things.

When you go back to set up things like material masters and you set up bill of material routing and then you set up shuttle routings between processing centers and service center and then it's delivery. And all that stuff needs to get connected up again. So over time, you have a better service model, but you keep refining it, refining it, you take out frictional costs in your network, which is really a big part of this.

And the CapEx cycle being extended to the extent that it has been, we start to see improvements in lead times, service levels in terms of where inventory is placed, getting to the customer faster and really consistency, being more consistent on every order. And some of the tools we've built on the system side, the ERP conversion, very difficult. But once you start to move further and further away from that, some of the tools that we developed to quote faster, to convert faster, those things start to take center stage and start to become more prominent so that you can go out and provide that better customer experience. It's a process. But over time, we continue to improve, and those are the things that we can fundamentally control.

Okay. And then next one for me. The second quarter EPS enjoyed a tax benefit of over $0.25 a share. Just talk about the mechanics there and if we should expect a similar tailwind during the third quarter in which you expect EPS to be relatively flat sequentially.

Yes. I'm going to kick that over to Jim Claussen, our partner over here.

Really, what we saw in the second quarter was with obviously reduced earnings comes a lower tax provision. So that's in line. But we also did get some discrete state tax credits in the quarter. Occasionally, there's discrete tax items that come through on either a state or federal level. So what I would expect going forward is a basic effective tax rate around 25% to 26% between state and federal.

And our next question is going to come from Katja Jancic from BMO Capital Markets.

Maybe going back to the transactional sales. Can you update us what the split currently is between transactional and contractual sales?

Sure. On a ship and in book basis, we're up to about 46% transactional, about 54% program.

And how are you thinking about the split moving forward?

The way we think about the split is continue to perform well enough consistently. So we get that -- we get more and more of that spot building material business in the market, Katja. So it's really how you compete day in and day out. And it really goes back to the fundamentals of having inventory placed close to the customer having processing lead times that are short, quoting lead times that are short. And then when customers call anytime there's a jump ball, we win the ties. And not just winning the ties, but it's just a more consistent experience of being able to quote fast, locate the material, process the material and ship on time more consistently, and you do tend to win more transactional business when you do that.

We've noted the disruptions. I mean coming out of '21 and '22, obviously, very, very strong years and then really going through what I call the great unwinding of those things. A lot of commodity bellwether disinflation or deflation, if you will, demand has been falling. And then we had this investment cycle really over a 3- to 4-year period where we disrupted ourselves. And now that we come out of that disruption and we operationalize these investments, we can go to market in a much more consistent fashion.

I mean, even where we have new service centers and major new service centers, whether it's in the Pacific Northwest or University Park in the Chicago land area, customers still have to reacquaint themselves with Ryerson, and we have to reacquaint them with Ryerson in those geographies and providing those consistent experiences. And where we do that, we start to gain share and we start to gain more transactional opportunities as 2 of the more prominent examples.

I think Jim mentioned that data centers is one of the area where there's strong demand for steel. How much of your exposure goes to that market?

It's a subvertical, Katja. It's really hard to get an exact fix on that. We know that it's a secular build-out and we're certainly getting our share of those opportunities and looking to that opportunity. But it is a subsector, and we're refining in a more granular fashion what that impact is.

And one more, if I may. When looking at your CapEx, you maintained the $50 million for '25. But when I look at the first half of the year, it's trending below that. Is that just the timing? Or is there opportunity for CapEx to come below that $50 million?

It's really a function of timing. I mean -- and even having said that, I mean, you time the payments to when you hit certain milestones of commissioning and start-up. So we're going to stay with $50 million, but we'll certainly have a better picture of how we're going to finish out the year, when we see again in 3 months.

[Operator Instructions] Our next question is going to come from Alan Weber from Robotti & Company.

Eddie, can you talk about -- I don't know if it's possible, the investments that you've made over the last few years, how do you think about the benefits of what you ultimately expected? How far along are you really? Or what inning are you, however you want to phrase it?

Yes. I mean it's, Alan, it's hard to run away from market conditions. I mean, if you have higher volumes and I would say if you have more duration around an upturn in pricing and demand, the whole thing is going to look better. That said, if we focus on Shelbyville and we're going to play a video at the end of the call. But Shelbyville right now is probably at about 67% of its volume ramp-up. And so what you really -- what we're really looking for out of Shelbyville, where we've made a significant investment in our stainless franchises to get that to 100% of the expected volumes, meet that internal rate of return case and really start to provide a better service and lower cost model out to the market because we're taking in heavier coils.

We can process those coils more efficiently at a lower cost and we can fan that material out both to our service centers and to our customers with a better overall value proposition. I think the time line of return, just given market conditions has become a little bit extended, but the thesis is intact as you bring these investments up to full maturity, we operationalize these things. And then customers get used to that experience, and we can also sell to those assets and where that product is going to go. Right now...

It sounds like what you're saying is I understand market conditions, but if market conditions were flattish, it still sounds as though you're in the early stages of seeing the improvements there, and they'll come even if it takes a little longer than originally expected.

Yes. No, I think that's accurate. I mean it varies by project. But here's some encouraging news, right? I mean contract tons are down 50,000 tons year-over-year. Transactional tons are up 46,000 tons year-over-year. You typically don't see an inverse relationship between those different segments of our business when we look at order type. And I believe that the transactional pickups are really a result of us being able to normalize things in our network to a greater extent. For example, we put a new cut to length line into Dallas, and that is now fully operational. So we can start to get better volumes and throughput into that Southwest marketplace as an example. So happy about the transactional progress.

We got to continue to push on that. And at the same time, our program business, we know it's going to come back and just really getting these projects up and going to their fullest extent. But you're correct. I mean, it's still early in that return cycle for sure.

And then just a little bit unrelated. Can you talk about second half cash flow, what you're expecting and what you kind of -- where you hope to get the leverage ratio, say, by the end of the year?

Yes. I mean it's going to be a function, obviously, of EBITDA as we've discussed before. We believe we're going to generate cash through the balance of the year. It is dependent on where prices go and where demand goes. I mean, frankly, if demand spiked upward and prices went up too, I wouldn't mind it so much. So we might have to finance the working capital build in that case. But I do think our base case right now is we're going to generate cash through the balance of the year.

And there are no further questions in the queue at this time. I'll now pass it back over to Eddie for closing remarks.

We appreciate your continued support of and interest in Ryerson. Please stay safe and be well. I look forward to being with all of you in October for our third quarter 2025 earnings release and conference call. And please stay online or stay connected, and I hope you enjoy this video of Shelbyville.

[Presentation]

This concludes today's call. Thank you for your participation. You may now disconnect.