8-K: Ryerson, Olympic Steel Merge to Form Metals Giant

Ryerson Holding Corporation announced an all-stock merger with Olympic Steel, creating the second-largest metals service center in North America, alongside reporting its Q3 2025 financial results.

Summary

• Ryerson Holding Corporation and Olympic Steel, Inc. have entered into a definitive merger agreement.
• Olympic Steel shareholders will receive 1.7105 Ryerson shares for each Olympic Steel share, resulting in approximately 37% ownership of the combined entity.
• The merger is expected to create the second-largest metals service center in North America, processing approximately 2.9 million tons and generating over $6.5 billion in annual revenue.
• Anticipated annual synergies of approximately $120 million are expected by the end of year two, with 33% realization in year one, derived from procurement, efficiency gains, commercial enhancement, and network optimization.
• One-time implementation costs for achieving these synergies are estimated at approximately $40 million.
• The transaction is expected to be immediately accretive pre-synergies, with further accretion as synergies are realized.
• The combined entity's pro forma leverage post-closing is expected to be below 3x.
• Ryerson reported Q3 2025 revenue of $1.16 billion, which was in-line with its guidance range.
• Q3 2025 net loss attributable to Ryerson Holding Corporation was $14.8 million, or a diluted loss per share of $0.46.
• Adjusted EBITDA, excluding LIFO, for Q3 2025 was $40.3 million.
• Ryerson ended Q3 2025 with total debt of $500 million and net debt of $470 million, representing sequential decreases of $10 million and $9 million, respectively.
• A fourth-quarter 2025 dividend of $0.1875 per share was declared.
• Q3 2025 tons shipped decreased by 3.2% quarter-over-quarter, while average selling prices increased by 2.6%.
• Gross margin contracted by 70 basis points to 17.2% in Q3 2025.
• LIFO expense for Q3 2025 was $13.2 million.
• Warehousing, delivery, selling, general, and administrative expenses for Q3 2025 decreased by $3.1 million (1.5%) quarter-over-quarter to $200.5 million.

Sentiment

Score: 7

Explanation: While Q3 2025 financial results showed a net loss and decreased EBITDA amidst challenging market conditions, the strategic all-stock merger with Olympic Steel is a transformative event. The merger is expected to create significant value through $120 million in annual synergies, immediate accretion, reduced leverage, and an expanded market presence, positioning the combined entity for long-term growth and stability in a consolidating industry.

Positives

• The merger creates the second-largest metals service center in North America, with over $6.5 billion in revenue and approximately 2.9 million tons processed annually.
• Expected annual synergies of approximately $120 million by the end of year two, with 33% realization in year one, are anticipated from procurement, efficiency gains, commercial enhancement, and network optimization.
• The merger is expected to be immediately accretive pre-synergies, with meaningful incremental accretion as synergies are realized.
• The combined entity's pro forma leverage post-closing is expected to be below 3x, ensuring balance sheet flexibility.
• The expanded presence and enhanced ability to serve customers will be achieved through a diversified network of approximately 164 facilities.
• The addition of Olympic Steel's value-added downstream business lines is expected to be accretive to margins and provide incremental stability through all economic cycles.
• Strong free cash flow of the combined entity bolsters the ability to invest organically and execute a disciplined M&A strategy.
• An expanded shareholder base is expected to improve trading liquidity in public equity markets and access to capital markets.
• Q3 2025 revenue of $1.16 billion was in-line with guidance, demonstrating effective business management amidst challenging conditions.
• Average selling prices increased by 2.6% quarter-over-quarter in Q3 2025.
• Debt was reduced by $10 million and net debt by $9 million sequentially in Q3 2025.
• Global liquidity remained strong at $521 million as of September 30, 2025.
• A quarterly cash dividend of $0.1875 per share was declared.

Negatives

• Ryerson reported a net loss attributable to Ryerson Holding Corporation of $14.8 million in Q3 2025, compared to a net income of $1.9 million in Q2 2025.
• Diluted loss per share was $0.46 in Q3 2025, a decrease from $0.06 diluted earnings per share in Q2 2025.
• Adjusted EBITDA, excluding LIFO, decreased to $40.3 million in Q3 2025 from $45.0 million in Q2 2025.
• Tons shipped decreased by 3.2% quarter-over-quarter in Q3 2025.
• Gross margin contracted by 70 basis points to 17.2% in Q3 2025.
• Net cash used in operating activities was $8.3 million in Q3 2025, compared to cash provided of $23.8 million in Q2 2025.
• OEM contract shipments and carbon steel margin compression were identified as areas of particular weakness in Q3 2025.
• The Purchasing Manager's Index (PMI) has remained at recessed levels for 33 out of the past 36 months, indicating persistent weak manufacturing demand.
• Metals Service Center Industry (MSCI) demand has declined year over year.

Risks

• Inability to obtain requisite Ryerson and Olympic Steel shareholder approvals.
• Inability to obtain governmental and regulatory approvals required for the proposed transaction, or such approvals resulting in the imposition of conditions that could adversely affect the combined company or the expected benefits.
• An event, change, or other circumstance could give rise 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 as related to any government shutdown.
• The businesses may not be integrated successfully or integration may be more costly or difficult than expected.
• Cost savings and any other synergies from the proposed transaction may not be fully realized or may take longer to realize than expected, or the proposed 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.
• Litigation related to the proposed transaction.
• The credit ratings of the combined company or its subsidiaries may be different from what the companies expect.
• Diversion of management time from ongoing business operations and opportunities as a result of the proposed transaction.
• Adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the proposed transaction.
• Adverse economic conditions.
• Highly cyclical fluctuations resulting from, among others, seasonality, market uncertainty, and costs of goods sold.
• Each company's ability to remain competitive and maintain market share in the highly competitive and fragmented metals distribution industry.
• Managing the costs of purchased metals relative to the price at which each company sells its products during periods of rapid price escalation or deflation.
• Customer, supplier, and competitor consolidation, bankruptcy, or insolvency.
• The impairment of goodwill that could result from, among other things, volatility in the markets in which each company operates.
• The impact of geopolitical events.
• Future funding for postretirement employee benefits may require substantial payments from current cash flow.
• Regulatory and other operational risks associated with operations located outside of the United States.
• Currency rate fluctuations.
• The adequacy of each company's efforts to mitigate cybersecurity risks and threats.
• Reduced production schedules, layoffs, or work stoppages by each company's own, its suppliers, or customers personnel.
• Any underfunding of certain employee retirement benefit plans and the actual costs exceeding current estimates.
• Prolonged disruption of each company's processing centers.
• Failure to manage potential conflicts of interest between or among customers or suppliers of each company.
• Unanticipated changes to, or any inability to hire and retain key personnel at either company.
• The incurrence of substantial costs of liabilities to comply with, or as a result of, violations of environmental laws.
• The risk of product liability claims.
• Either company's indebtedness or covenants in the instruments governing such indebtedness.
• The influence of a single investor group over either company's policies and procedures.

Future Outlook

For Q4 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, and Adjusted EBITDA, excluding LIFO, is expected to be in the range of $33 million to $37 million. Loss per diluted share is estimated between $0.28 to $0.22. The merger with Olympic Steel is expected to close in Q1 2026, with the combined entity targeting $350 $400 million through-the-cycle adjusted EBITDA in its next phase.

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."
• Lehner highlighted, "Areas of particular weakness in the quarter were OEM contract shipments and carbon steel margin compression. Areas of strength were transactional sales growth and further operationalization of new investments made over the past three years."
• 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."
• Lehner further added, "We believe this merger presents our shareholders with increased earnings potential in the form of accretive margins, strong cash flows, and compelling synergies."
• Steve Larson, Chairman of Ryerson's Board, expressed, "We are very excited about the combination of Ryerson and Olympic Steel and the trajectory of the business going forward."
• Rick Marabito, CEO of Olympic Steel, said, "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's Board, 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 merger between Ryerson and Olympic Steel is a significant consolidation event within the highly competitive and fragmented North American metals service center industry. It creates the second-largest player, substantially altering the competitive landscape. The combined entity's expanded presence with approximately 164 facilities will increase network density and improve customer service capabilities, aligning with industry trends towards greater efficiency and customer proximity. The strategic addition of Olympic Steel's value-added downstream business lines is expected to enhance margins and provide stability, reflecting a broader industry shift towards specialized, higher-margin products to mitigate cyclicality. The combined company is also well-positioned to capitalize on macroeconomic tailwinds such as domestic infrastructure spending and the U.S. reshoring push, indicating a strategic alignment with national economic priorities.

Comparison to Industry Standards

• The combined Ryerson and Olympic Steel entity will become the second-largest metals service center in North America, processing approximately 2.9 million tons and generating over $6.5 billion in revenue annually (based on 2024 company results), positioning it as a major competitor in the market.
• The pro forma EBITDA margin of approximately 6% (including forecasted run-rate synergies) provides a benchmark for operational efficiency, indicating a competitive level of profitability within the metals service center industry.
• The expected pro forma net leverage ratio below 3x post-closing, with a target range of 0.5x to 2.0x, demonstrates a commitment to maintaining a strong balance sheet, which is a key indicator of financial health and stability for industrial companies.
• The strategic focus on value-added processing and diversification into higher-margin end markets, with less than 10% hot rolled exposure, reflects an industry-wide trend to reduce exposure to volatile commodity prices and improve returns, a strategy that Olympic Steel has historically pursued successfully.

Management Changes

Corporate Governance

Legal Proceedings

• The filing mentions a risk of litigation related to the proposed transaction as a forward-looking risk.

Stakeholder Impact

• Shareholders: Olympic Steel shareholders will receive a ~21% premium and own ~37% of the combined entity. Ryerson shareholders are expected to benefit from immediate accretion, strong cash flows, and compelling synergies. The expanded shareholder base is anticipated to improve trading liquidity and access to capital markets.
• Employees: The merger is expected to offer new career growth opportunities for employees of both companies.
• Customers: The combined entity will offer an enhanced market presence, greater network density, faster lead times, and a wider array of custom solutions, from pick-pack-and-ship to finished parts, improving the overall customer experience.
• Creditors: The expected pro forma leverage post-closing below 3x, along with no anticipated impact to credit ratings, suggests a stable financial position for creditors, with retained flexibility for growth capital deployment.

Next Steps

• Obtain requisite Ryerson and Olympic Steel shareholder approvals for the merger.
• Obtain governmental and regulatory approvals required for the merger.
• File a joint proxy statement with the SEC.
• Ryerson to file a registration statement on Form S-4 with the SEC.
• Complete the integration of Ryerson and Olympic Steel businesses post-closing, expected in Q1 2026.
• Realize approximately $120 million in annual synergies by the end of year two post-merger.
• Ryerson will host a conference call on October 29, 2025, to discuss Q3 results and the merger.

Key Dates

Recommendation

The all-stock merger between Ryerson and Olympic Steel is a highly strategic and transformative event, creating the second-largest metals service center in North America with substantial revenue and processing capacity. The projected $120 million in annual synergies, immediate accretion, and improved balance sheet flexibility (pro forma leverage below 3x) present a compelling value proposition. While Q3 2025 results were soft, the long-term strategic benefits of this merger, including enhanced market presence, diversified offerings, and positioning to capitalize on domestic infrastructure spending, significantly outweigh the near-term operational challenges. The leadership team structure also appears robust, combining experienced executives from both entities. This transaction positions the combined company for sustained growth and improved profitability, making it an attractive investment.

Keywords

metals service center, industrial metals, merger, acquisition, Ryerson, Olympic Steel, steel distribution, metal processing, corporate synergies, financial results, Q3 2025, EBITDA, net debt, shareholder value, North America