10-Q: Ryerson Reports Q3 Loss Amid Soft Demand, Announces Olympic Steel Merger

Ryerson Holding Corporation reported increased net losses for the third quarter and first nine months of 2025, despite a slight revenue increase in Q3, while also announcing a definitive merger agreement to acquire Olympic Steel, Inc.

Summary

• Net loss attributable to Ryerson Holding Corporation increased to $14.8 million for the three months ended September 30, 2025, from $6.6 million in the prior year.
• For the nine months ended September 30, 2025, net loss attributable to Ryerson Holding Corporation widened to $18.5 million, compared to $4.3 million in the same period last year.
• Net sales for the third quarter of 2025 increased by 3.1% to $1,161.5 million, driven by higher average selling prices.
• Year-to-date net sales decreased by 3.5% to $3,466.5 million, primarily due to lower metal commodity prices and contracting industrial manufacturing demand.
• Gross profit declined by 1.2% in Q3 2025 to $199.5 million and by 4.6% year-to-date to $613.3 million, impacted by demand and metal prices.
• Operating profit shifted to a loss of $1.0 million in Q3 2025 from a profit of $5.3 million in Q3 2024, and decreased significantly year-to-date to $7.1 million from $28.9 million.
• Cash used in operating activities was $25.7 million for the first nine months of 2025, a significant shift from $112.7 million provided in the same period of 2024.
• Total debt increased to $499.7 million at September 30, 2025, from $467.4 million at December 31, 2024, with the debt-to-capitalization ratio rising to 39% from 36%.
• The company entered into a definitive merger agreement to acquire Olympic Steel, Inc. on October 28, 2025, subject to stockholder approvals.
• The U.S. government's repeated announcements and retractions of tariffs on steel and aluminum, including a 50% Section 232 tariff as of June 2025, create significant supply chain uncertainty.
• The "One Big Beautiful Bill Act" (OBBBA), signed July 4, 2025, is expected to favorably affect cash tax liabilities and investment incentives through restored bonus depreciation and R&E expensing.

Sentiment

Score: 3

Explanation: The company reported significantly increased net losses and a negative shift in operating cash flow, indicating deteriorating financial performance despite some market share gains. The announced acquisition introduces substantial integration risks and uncertainties, further clouding the near-term outlook. While there are some positive tax changes, the overall financial results and market conditions are challenging.

Positives

• Net sales increased by 3.1% in the third quarter of 2025 compared to the prior year, supported by tariff policy and rising input prices.
• Ryerson's North American volumes decreased by 0.9% in the first nine months of 2025, outperforming the MSCI industry average decrease of 2.5%, implying market share gains year-to-date.
• Total liquidity increased to $521 million at September 30, 2025, from $451 million at December 31, 2024.
• The "One Big Beautiful Bill Act" (OBBBA) is expected to favorably affect cash tax liabilities and investment incentives in future periods through restored 100% bonus depreciation and permanent full expensing of domestic research and experimental expenditures.
• Capital expenditures decreased to $30.7 million in the first nine months of 2025 from $76.1 million in the same period of 2024, indicating the completion of a three-year investment cycle.
• Interest and other expense on debt decreased in both the three-month and nine-month periods ended September 30, 2025, primarily due to lower interest rates on the revolving credit facility.
• The company declared a quarterly cash dividend of $0.1875 per share, maintaining the previous dividend level.

Negatives

• Net loss attributable to Ryerson Holding Corporation significantly increased to $14.8 million in Q3 2025 from $6.6 million in Q3 2024, and to $18.5 million year-to-date from $4.3 million year-to-date 2024.
• Operating profit (loss) declined to a loss of $1.0 million in Q3 2025 from a profit of $5.3 million in Q3 2024, and decreased by 75.4% year-to-date to $7.1 million.
• Gross profit decreased by 1.2% in Q3 2025 and by 4.6% year-to-date, primarily due to contracting industrial manufacturing demand and its impact on metals prices.
• Cash flow from operating activities shifted from a positive $112.7 million in the first nine months of 2024 to a negative $25.7 million in the same period of 2025.
• Total debt increased to $499.7 million at September 30, 2025, from $467.4 million at December 31, 2024, leading to an increased debt-to-capitalization ratio of 39%.
• The Purchasing Managers Index (PMI) reported a continuation of soft industrial activity with a September reading of 49.1, marking the seventh consecutive month of contraction and 33rd month of contraction in the past 36 months.
• Ryerson's North American volume decline outpaced the MSCI industry average on a quarterly sequential basis, decreasing by 3.3% in Q3 2025 compared to the industry's 2.9% decrease.
• Persistent weakness was noted in the ground transportation and agricultural sectors.
• LIFO expense was $13.2 million in Q3 2025 compared to LIFO income of $18.1 million in Q3 2024, and LIFO expense was $33.2 million year-to-date 2025 compared to LIFO income of $27.1 million year-to-date 2024, negatively impacting gross profit.

Risks

• The Olympic Steel, Inc. acquisition is subject to significant uncertainties and risks, including the possibility that it may not be completed on the terms or timeline currently contemplated, or at all.
• Failure to complete the Olympic acquisition may adversely affect the company's stock price, future business, and financial results.
• The company does not currently control Olympic Steel and will not until the acquisition is complete, meaning Olympic may not operate its businesses during the interim period in the same way Ryerson would.
• Adverse changes in Olympic's business or operations could occur or arise before or after the closing, negatively impacting Ryerson's future business, operating results, cash flows, financial conditions, or prospects.
• Ryerson may be unable to successfully integrate its and Olympic's businesses to realize anticipated benefits or synergies within the intended timeframe.
• The integration process will result in significant costs and divert management attention and resources, potentially delaying or preventing the realization of planned synergies and benefits.
• Difficulties may arise in retaining key employees, creating and enforcing uniform standards, and integrating complex systems, technology, and networks.
• Potential unknown liabilities and unforeseen increased expenses or delays associated with the Olympic acquisition could exceed current estimates.
• The acquisition could disrupt or cause a loss of momentum in each company's ongoing businesses or lead to inconsistencies in standards, controls, procedures, and policies.
• These acquisition-related risks are not limited to the Olympic acquisition and could apply to future acquisitions.
• The metals service center industry is cyclical, volatile in demand and pricing, and difficult to predict.
• Changes in average selling prices are primarily driven by commodity metals prices, which impact Ryerson's selling prices over the subsequent three to six-month period.
• When metals prices decline, customer demands for lower prices and competitors' responses could result in lower sale prices, gross profits, and earnings as existing inventory is sold.
• When metals prices increase, competitive conditions influence how much of the price increase can be passed on to customers.
• Tariffs introduce significant uncertainty towards customers' supply chains, and their impact on financial position, results of operations, and cash flows remains to be determined.
• Future pension contribution requirements depend on investment returns, discount rates, and regulatory changes, and cannot be determined with certainty, potentially having a material adverse effect on financial position or cash flows.
• A hypothetical 1% increase in interest rates on variable debt would have increased interest expense for the first nine months of 2025 by approximately $4.6 million.
• A hypothetical strengthening or weakening of 10% in foreign exchange rates could increase or decrease the fair value of foreign currency contracts by $0.3 million.
• A hypothetical strengthening or weakening of 10% in commodity and energy prices could increase or decrease the fair value of derivative contracts by $7.1 million.

Future Outlook

Management expects the "One Big Beautiful Bill Act" (OBBBA) to favorably affect the company's cash tax liabilities and investment incentives in future periods. The company anticipates a minimum required pension contribution funding of approximately $1.8 million for the remaining three months of 2025. Future quarterly dividends, if any, will be subject to Board approval. The consummation of the Olympic Steel acquisition is subject to customary closing conditions, including stockholder approval from both companies.

Management Comments

• The metals service center industry is cyclical, volatile in demand and pricing, and difficult to predict.
• In the third quarter of 2025, Ryerson's average selling prices increased by 2.6% while shipments declined by 3.2% compared to the second quarter of 2025.
• Average selling price increases were supported by tariff policy and rising input prices while the demand environment remained soft.
• Ryerson's North American volumes decreased by 0.9% over the same period [first nine months 2025 vs 2024], implying market share gains year-to-date.
• Management will continue to monitor regulatory guidance and implementation developments related to the OBBBA and will update its disclosures as necessary.
• We believe that cash flow from operations and proceeds from the Ryerson Credit Facility will provide sufficient funds to meet our contractual obligations and operating requirements in the normal course of business.
• Ryerson does not currently foresee a need to repatriate earnings from its non-U.S. subsidiaries.

Industry Context

The metals service center industry is characterized by cyclicality, volatile demand, and unpredictable pricing. The Institute for Supply Management's Purchasing Managers Index (PMI) for September 2025 at 49.1 indicates a continuation of soft industrial activity, marking the seventh consecutive month of contraction and 33rd month of contraction in the past 36 months. This broader industry weakness is reflected in Ryerson's declining year-to-date sales and gross profit. North American service center volumes, as reported by MSCI, decreased by 2.5% in the first nine months of 2025, aligning with the soft demand environment. Ryerson's ability to limit its volume decline to 0.9% in North America suggests market share gains despite the challenging conditions. The repeated tariff policy changes by the U.S. government introduce significant uncertainty across customer supply chains, impacting the entire industry.

Comparison to Industry Standards

• Ryerson's North American volumes decreased by 0.9% in the first nine months of 2025, which is better than the Metal Service Center Institute (MSCI) reported North American service center volume decrease of 2.5% for the same period, indicating market share gains.
• However, on a quarterly sequential basis, Ryerson's North American volume decline of 3.3% in Q3 2025 outpaced the MSCI's industry volume decrease of 2.9% for the same period.
• The Purchasing Managers Index (PMI) reading of 49.1 in September 2025 indicates a continuation of soft industrial activity, marking the seventh consecutive month of contraction (below 50) and the 33rd month of contraction in the past 36 months, reflecting a challenging broader economic environment for the metals industry.

Corporate Governance

Legal Proceedings

• No material changes to contingencies and legal matters from those disclosed in the Company's 2024 Form 10-K.

Stakeholder Impact

• Shareholders: Increased net losses and a significant shift to negative operating cash flow are negative. The announced acquisition of Olympic Steel, while potentially strategic, introduces substantial integration risks and uncertainties that could impact future share price and returns. The maintained dividend provides some stability.
• Employees: The freezing of the Ryerson Canada Salaried Pension Plan effective June 30, 2027, will impact Canadian salaried employees' future benefits. The acquisition of Olympic Steel could lead to integration challenges, potential workforce adjustments, or changes in corporate culture.
• Customers: The volatile metals market, tariff uncertainties, and soft industrial demand could affect product availability, pricing, and supply chain stability. The acquisition of Olympic Steel could lead to an expanded product offering or service network, but also potential disruptions during integration.
• Creditors: Increased total debt and debt-to-capitalization ratio indicate higher leverage. However, increased total liquidity and lower interest expense on the credit facility provide some counter-balance. The acquisition could alter the company's debt profile and risk assessment.
• Suppliers: Changes in purchasing activity due to working capital management and market conditions could impact supplier relationships. The acquisition of Olympic Steel could lead to consolidation of purchasing power or changes in supplier base.

Next Steps

• Ryerson and Olympic Steel, Inc. stockholders must approve the definitive merger agreement for the acquisition to be consummated.
• Management will continue to monitor regulatory guidance and implementation developments related to the "One Big Beautiful Bill Act" (OBBBA).
• The company anticipates a minimum required pension contribution funding of approximately $1.8 million for the remaining three months of 2025.
• The Ryerson Canada Salaried Pension Plan will be frozen effective June 30, 2027.
• The company plans to adopt ASU 2023-09 (Income Taxes) as of December 31, 2025.
• The company is assessing the impact of ASU 2024-03 (Income Statement Expense Disaggregation) and ASU 2025-06 (Internal-Use Software) for future adoption.

Key Dates

Recommendation

The company's financial performance has significantly deteriorated, evidenced by widening net losses and a substantial negative shift in operating cash flow. While market share gains are noted, the overall industrial demand environment remains weak and volatile. The announced acquisition of Olympic Steel, Inc. introduces considerable integration risks, potential for unforeseen costs, and uncertainty regarding the realization of anticipated synergies, which could further strain financial resources and management attention. The increased debt and debt-to-capitalization ratio, coupled with the negative cash flow from operations, suggest a challenging financial outlook that outweighs the potential long-term benefits of the acquisition or favorable tax changes. Investors should consider reducing exposure given the current financial trajectory and execution risks.

Keywords

Metals Distribution, Steel, Aluminum, Industrial Metals, SEC Filing, 10-Q, Ryerson Holding Corporation, RYI, Metals Service Center, Acquisition, Olympic Steel, Tariffs, Financial Results, Net Loss, Operating Profit, Cash Flow, Debt, PMI, MSCI, Commodity Prices, Supply Chain, Corporate Governance, Shareholder Approval