425: Ryerson Reports Q3 Loss, Announces Olympic Steel Merger

Ryerson Holding Corporation reported a net loss for Q3 2025 and simultaneously announced a definitive merger agreement to acquire Olympic Steel, Inc.

Summary

• Ryerson reported Q3 2025 net sales of $1.16 billion, a 0.7% decrease quarter-over-quarter, but within guidance.
• The company recorded a net loss attributable to Ryerson Holding Corporation of $14.8 million, or $0.46 diluted loss per share, compared to a net income of $1.9 million in Q2 2025.
• Adjusted EBITDA, excluding LIFO, was $40.3 million, down from $45.0 million in the prior quarter.
• Ryerson entered into a definitive merger agreement to acquire Olympic Steel, Inc., which will create the second-largest North American metals service center.
• Olympic Steel shareholders will receive 1.7105 Ryerson shares for each Olympic Steel share, owning approximately 37% of the combined entity.
• The merger is expected to generate approximately $120 million in annual synergies by the end of year two and be immediately accretive to shareholders.
• The Board of Directors declared a quarterly cash dividend of $0.1875 per share, payable on December 18, 2025.

Sentiment

Score: 6

Explanation: The sentiment is mixed. While Q3 financial results show a net loss and declining EBITDA, reflecting challenging market conditions, the announcement of a significant strategic merger with Olympic Steel, promising substantial synergies and market leadership, provides a strong positive counterbalance for future prospects. The immediate financial performance is weak, but the long-term strategic move is positive.

Positives

• Revenue of $1.16 billion was in-line with guidance, despite weak demand conditions.
• Average selling prices increased by 2.6% quarter-over-quarter.
• Debt decreased sequentially by $10 million to $500 million, and net debt decreased by $9 million to $470 million.
• Global liquidity improved to $521 million as of September 30, 2025, from $485 million in the prior quarter.
• The merger with Olympic Steel is expected to create the second-largest North American metals service center, enhancing market presence and capabilities.
• The merger is projected to generate approximately $120 million in annual synergies by the end of year two through procurement scale, efficiency gains, commercial enhancement, and network optimization.
• The transaction is expected to be immediately accretive to shareholders of the combined entity.
• The pro-forma leverage ratio is expected to be reduced to less than three times, assuming partial credit for synergies.
• A quarterly cash dividend of $0.1875 per share was declared for Q4 2025.

Negatives

• Reported a net loss attributable to Ryerson Holding Corporation of $14.8 million in Q3 2025, a significant decline from a net income of $1.9 million in Q2 2025.
• Diluted loss per share was $0.46, compared to diluted earnings per share of $0.06 in the previous quarter.
• Adjusted EBITDA, excluding LIFO, decreased by 10.4% quarter-over-quarter to $40.3 million.
• Tons shipped decreased by 3.2% quarter-over-quarter, reflecting weak demand.
• Gross margin contracted by 70 basis points to 17.2% (18.3% excluding LIFO) due to market conditions and carbon steel margin compression.
• Net cash used in operating activities was $8.3 million in Q3 2025, compared to cash generation of $23.8 million in Q2 2025.
• The Purchasing Manager's Index (PMI) has been at recessed levels for 33 out of the past 36 months, indicating a challenging market environment.
• MSCI (Metals Service Center Industry) demand has declined year over year.

Risks

• Inability to obtain requisite Ryerson and Olympic Steel shareholder approvals for the merger.
• Failure to obtain governmental and regulatory approvals for the proposed transaction, or such approvals resulting in adverse conditions.
• Risk that an event, change, or other circumstance could lead to the termination of the proposed transaction.
• A condition to the consummation of the proposed transaction may not be satisfied.
• Delays in completing the proposed transaction, including those related to any government shutdown.
• Businesses may not be integrated successfully, or integration may be more costly or difficult than expected.
• Cost savings and other synergies from the proposed transaction may not be fully realized or may take longer to realize than expected, or the transaction may be less accretive than expected.
• The merger may not provide shareholders with increased earnings potential.
• Any announcement relating to the proposed transaction could have adverse effects on the market price of Ryerson's or Olympic Steel's common stock.
• Risk of litigation related to the proposed transaction.
• Credit ratings of the combined company or its subsidiaries may differ from expectations.
• Diversion of management time from ongoing business operations and opportunities due to the proposed transaction.
• Adverse reactions or changes to business or employee relationships resulting from the announcement or completion of the proposed transaction.
• Adverse economic conditions and highly cyclical fluctuations (seasonality, market uncertainty, costs of goods sold).
• Ability to remain competitive and maintain market share in the highly competitive and fragmented metals distribution industry.
• Challenges in managing the costs of purchased metals relative to selling prices during periods of rapid price escalation or deflation.
• Customer, supplier, and competitor consolidation, bankruptcy, or insolvency.
• Impairment of goodwill due to market volatility.
• Impact of geopolitical events.
• Future funding for postretirement employee benefits may require substantial payments from current cash flow.
• Regulatory and operational risks associated with operations outside of the United States.
• Currency rate fluctuations.
• Adequacy of efforts to mitigate cyber security risks and threats.
• Reduced production schedules, layoffs, or work stoppages by the company, its suppliers, or customers.
• Underfunding of certain employee retirement benefit plans and actual costs exceeding current estimates.
• Prolonged disruption of processing centers.
• Failure to manage potential conflicts of interest between or among customers or suppliers.
• Unanticipated changes to, or inability to hire and retain key personnel at either company.
• Incurrence of substantial costs or liabilities to comply with, or as a result of, violations of environmental laws.
• Risk of product liability claims.
• Indebtedness or covenants in the instruments governing such indebtedness.
• Influence of a single investor group over either company's policies and procedures.

Future Outlook

For the fourth quarter of 2025, Ryerson expects customer shipments to decrease by 5% to 7% quarter-over-quarter due to normal seasonality and soft manufacturing demand. Net sales are anticipated to be in the range of $1.07 billion to $1.11 billion, with average selling prices flat to up 2%. LIFO expense is projected between $10 million to $14 million. Adjusted EBITDA, excluding LIFO, is expected to be in the range of $33 million to $37 million, and diluted loss per share is forecasted between $0.28 to $0.22.

Management Comments

• Eddie Lehner, Ryerson's President, CEO & Director, stated, 'During the third quarter, we executed on our self-help playbook, delivering on perennial service center fundamentals of speed, availability, consistency, and on-time-delivery as we effectively managed the business amidst a procession of challenges that have endured for 36 months running.'
• Lehner also noted, 'As the Purchasing Manager's Index (PMI) continues to live at recessed levels for 33 out of the past 36 months and MSCI (Metals Service Center Industry) demand has declined year over year, it is a buyers market evidenced by discounting and smaller orders sizes.'
• Regarding the merger, Lehner commented, 'This merger represents an immensely attractive and unique opportunity for Ryerson and Olympic Steel as it combines our two organizations, which couldn't be more complementary and synergistic around the products, services, footprint, and customer experience that will enhance our market presence while adding significant value to our stakeholders.'
• Steve Larson, Chairman of Ryerson's Board, added, 'We are very excited about the combination of Ryerson and Olympic Steel and the trajectory of the business going forward. We look forward to welcoming Michael and the additional Olympic directors to the already strong Ryerson board.'
• Rick Marabito, Olympic Steel CEO, expressed, 'We are thrilled to merge with Ryerson and for all of the opportunities that becoming a $6.5 billion company will provide to our key stakeholders. Together, we will offer new career growth to our employees, enhanced services to our customers, and greater value for our investors.'
• Michael Siegal, Executive Chairman of Olympic Steel, remarked, 'This is a significant milestone for the business my father and uncle started more than 70 years ago. We went from private to public in 1994, and now we enthusiastically take this next step to accelerate Olympic Steel's continued growth.'

Industry Context

The metals service center industry is currently facing protracted weak demand, evidenced by the Purchasing Manager's Index (PMI) remaining at recessed levels for 33 out of the past 36 months and year-over-year declines in MSCI demand. This has created a buyer's market with discounting and smaller order sizes. Ryerson's merger with Olympic Steel is a strategic move within this challenging environment, aiming to consolidate market share, achieve significant synergies, and enhance competitive positioning by becoming the second-largest North American player. This consolidation reflects a trend towards scale and efficiency in a fragmented and highly competitive industry facing margin compression, particularly in carbon steel.

Comparison to Industry Standards

• The combined Ryerson and Olympic Steel entity is projected to become the second-largest North American metals service center, indicating a significant competitive position within the regional market.
• The filing does not provide specific comparable company financial results or global benchmarks to assess Ryerson's Q3 performance against direct industry standards beyond general market conditions like the PMI and MSCI demand trends.

Management Changes

Corporate Governance

Legal Proceedings

• The filing mentions 'the risk of litigation related to the proposed transaction' as a forward-looking risk, but does not disclose any current or ongoing legal proceedings.

Stakeholder Impact

• **Shareholders (Ryerson & Olympic Steel)**: Expected to benefit from immediate accretion, increased earnings potential, strong cash flows, and compelling synergies from the merger. Olympic Steel shareholders will receive Ryerson shares, owning approximately 37% of the combined company. However, there is a risk of adverse effects on stock prices due to the announcement or if synergies are not fully realized.
• **Employees (Ryerson & Olympic Steel)**: The merger is expected to offer new career growth opportunities. There is a risk of adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction.
• **Customers**: Expected to benefit from greater network density, faster lead times, and a wider array of custom solutions due to the combined capabilities and footprint.
• **Suppliers**: Potential impact from procurement scale and network optimization, which could lead to changes in supplier relationships or terms.
• **Creditors**: The combined company is expected to have a reduced pro-forma leverage ratio of less than three times, which could be positive for creditors, but credit ratings may differ from expectations.

Next Steps

• Ryerson and Olympic Steel will file a joint proxy statement with the SEC.
• Ryerson intends to file a registration statement on Form S-4 with the SEC, which will include the joint proxy statement and constitute a prospectus.
• The merger is subject to the satisfaction or waiver of customary closing conditions, including regulatory and shareholder approvals from both companies.
• The merger is expected to close in the first quarter of 2026.
• Ryerson will host a conference call on October 29, 2025, to discuss Q3 2025 financial results and the merger agreement.

Key Dates

Recommendation

While Ryerson's Q3 2025 financial results show a net loss and declining EBITDA, reflecting a challenging market, the simultaneous announcement of a strategic merger with Olympic Steel is a significant long-term positive. The merger is expected to create the second-largest North American metals service center, generate substantial synergies ($120 million annually), and be immediately accretive to shareholders. However, the immediate financial weakness and the inherent risks associated with integrating two large companies, including regulatory approvals and synergy realization, warrant a cautious approach. Investors should hold to observe the progress of the merger, integration success, and the actual realization of projected synergies and financial improvements in a persistently weak industrial metals market.

Keywords

Metals Service Center, Industrial Metals, Merger, Acquisition, Ryerson, Olympic Steel, Q3 Earnings, Financial Results, Steel, Aluminum, Stainless Steel, Distribution, Manufacturing, Supply Chain