Ryerson (RYI) Q2 EPS Drops 76%

Ryerson (RYI -1.10%), a prominent North American metals service center, reported results for Q2 2025 on July 29, 2025. The earnings release revealed that diluted earnings per share (GAAP) of $0.06 and revenue of $1.17 billion missed analyst estimates of $0.19 and $1.18 billion, respectively. Though revenue (GAAP) remained within the company's own guidance, Net income (GAAP) and diluted EPS (GAAP) came in below expectations. However, operating results highlighted ongoing profit-margin and debt challenges amid a slow industrial demand environment.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Overview of the Business and Strategy

Ryerson operates one of the broadest metals service center networks in North America. It specializes in distributing and processing carbon steel, stainless steel, and aluminum products. Its customer base spans construction, industrial machinery, transportation, and energy sectors, helping limit dependence on any single market or industry cycle.

The company's recent strategy has focused on expanding value-added services, such as metal processing and customized orders, as well as increasing its reach through both organic growth and targeted acquisitions. Key success factors for Ryerson include maintaining efficient operations, investing in processing technology, capturing more transactional business, and leveraging supplier relationships to ensure steady materials supply and competitive pricing.

Quarter Highlights: Operations and Financial Performance

The second quarter reflected notable but mixed operational achievements. Revenue dropped 4.6% compared to Q2 2024, which was in line with weak end-market demand, especially from large original equipment manufacturer (OEM) customers. Ryerson reported a 5.6% year-over-year increase in adjusted EBITDA. and managed to beat industry-wide shipment declines, indicating modest market share gains. Tons shipped were 501,000, a small decrease (down 1.4%) from the prior year, yet better than the 2.1% drop seen across the broader North American service center industry. This allowed Ryerson to incrementally increase its share in a shrinking market.

Average selling price per ton (GAAP) came in at $2,334, down 3.2% from a year earlier but up versus the first quarter, as metal pricing stabilized for carbon steel and aluminum prices increased. The company’s product segment data showed aluminum sales rising 10.5% year-over-year on both higher shipment volumes and selling prices, reaching $306 million. Carbon steel products, which make up the largest portion of sales, saw volumes and prices edge down year-over-year, reflecting ongoing demand softness. Stainless steel continued to underperform, with sales off 5.2% compared to Q2 2024, driven by weaker pricing trends.

One of the company’s recent priorities has been shifting its sales mix toward more transactional business—metal orders placed outside long-term contracts and often for urgent customer needs. For the fifth quarter in a row, transactional sales grew, helping offset persistent contraction in contractual OEM business. Management credits ongoing investments in processing capabilities and logistical improvements for this shift, as faster lead times and better inventory placement improved customer responsiveness.

Cost management delivered tangible results. Quarterly warehousing, delivery, and administrative expenses (GAAP) increased just 0.7% from Q1 to Q2 2025 and declined as a percentage of revenue. However, the company's profit margins came under pressure from a spike in LIFO (Last-In, First-Out) accounting expenses, which reflect how inventory costs rise in a period of higher input prices. LIFO expense was $13.2 million, substantially higher than both the prior quarter and the prior-year period. Excluding LIFO effects, gross margin expanded to 19.0% from 17.4% in Q2 2024. Net income attributable to Ryerson (GAAP) fell to $1.9 million, well below last year's $9.9 million result, primarily due to higher inventory costs.

Regarding capital return, the company maintained a quarterly dividend of $0.1875 per share, unchanged from the previous quarter. It made no share repurchases during the quarter, leaving $38.4 million authorized for buybacks. Capital expenditures rose to $9.9 million, in line with full-year plans for network and service center enhancement.

Looking Ahead: Guidance and Key Metrics for Investors

For Q3 2025, management projects GAAP revenue between $1.14 billion and $1.18 billion, essentially flat compared to the just-reported period. Shipments are forecasted to fall 2% to 4% quarter over quarter, reflecting normal seasonal patterns and continued subdued demand, especially for large OEM accounts. Average selling price per ton is expected to rise 1% to 3% sequentially, assuming current pricing trends hold stable. Adjusted EBITDA excluding LIFO is expected in the $40 million to $45 million range, while diluted EPS (GAAP) guidance is for $0.00 to $0.06. No new guidance was offered for the full fiscal year.

Management signaled continued cautiousness, citing “recessed manufacturing and industrial metal demand conditions” and noting that customers, particularly those in the large OEM segment, remain hesitant to ramp up orders. No changes were made to the current dividend. Investors should monitor further shifts in sales mix toward transactional business, persistent pressures on margins from inventory and pricing swings, and the company's progress toward managing its leverage and cash flow. Guidance indicates little near-term improvement in overall earnings or volume, highlighting the need for patience as Ryerson continues to adapt to ongoing market headwinds.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.