What is the current split between transactional and contract business for the combined enterprise?

The combined enterprise is currently at a 40-60 split (transactional-contract). The goal is to improve both, aiming for 45-55, by optimizing program business ('sweat the P') and growing transactional business ('grow the T'). “I'd say, 40-60 when you look at the two enterprises. And, you know, we're looking to improve both sides of the ledger... we're looking to get to that next benchmark of 45-55.”

How does the current 700-800 basis point margin gap between transactional and program business compare to historical gaps?

Historically, the gap has been around 600-700 basis points over the last 14 years. The current gap is wider than typical. “in my time over the last, call it 14 years with Ryerson, I've seen the gap. You really dial it into about 600 to 700 basis points difference between that transactional order, that spot bill of material order in the program order.”

What are the main factors causing program margins to lag, and what steps can be taken to reduce this lag?

Program business, especially carbon, is often index-based with a lag, typically pricing a quarter in arrears. Supply-side constraints and a slight downdraft in stainless also contribute. Opportunities exist to improve asset utilization by running contract business on Olympic assets and freeing up Ryerson assets for higher-margin transactional work. “so many of the contract businesses, especially on the carbon side, are index-based. So as you came out of 25 going into 26, the numbers were relatively fixed going up or down based on either monthly or quarterly contracts.”

RYZ

Ryerson (RYZ) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Industrials· Jul 30, 2026

Source: earnings call transcript

Executive summary

Ryerson Q2 FY26 — Merger Synergies Drive Above-Guidance Performance Amidst Mixed Market

Ryerson delivered strong Q2 FY26 results, exceeding revenue and adjusted EBITDA guidance, driven by merger synergies and robust transactional business. The company is effectively integrating Olympic Steel, realizing significant cost savings and commercial enhancements. While facing margin pressure from commodity price volatility and program pricing lags, management is focused on operational efficiencies and strategic capital allocation to reduce debt and capitalize on secular demand trends.

Highlights

Achieved revenue and adjusted EBITDA (ex-LIFO) above guidance ranges, with adjusted EBITDA reaching $101 million.
Realized $5 million in Q2 synergy attainment, on track to exceed first-year target of $40 million annual run rate synergies ahead of schedule.
North American same-store tons shipped increased by 5.8% year-to-date, outperforming industry growth of 2.9%.
Secular demand from data center and power generation projects represented ~7% of Q2 revenues, growing ~30% sequentially.
Leverage ratio decreased from 5.1x in Q1 to 4.0x in Q2, with a target of 3.0x by year-end.

Concerns

Net income impacted by a $15.7 million purchase accounting adjustment to COGS.
Transactional pricing and program pricing margin spreads widened to 700-800 basis points, the highest in three years.
Q3 outlook anticipates volumes 3-5% lower sequentially and margin compression due to rising material costs, program pricing lags, and inflationary labor/delivery pressures.
Non-ferrous commodity prices (stainless, aluminum) saw a 10-15% price reversion at the end of Q2 and into early Q3.
Agriculture market remains recessed, and consumer demand disciplined due to higher interest rates and inflation.

Guidance & targets

Category	Target	Timeline	Confidence
Q3 Volumes	3% to 5% lower medium materiality	Q3 · FY26	High
Q3 Average Selling Prices	flat to up by 2% medium materiality	Q3 · FY26	High
Q3 Revenues	$1.87 billion to $1.95 billion high materiality	Q3 · FY26	High
Q3 Inventory Purchase Accounting Adjustments	$5 million to $7 million medium materiality	Q3 · FY26	High
Q3 Net Income (excluding inventory purchase accounting)	$19 million to $21 million high materiality	Q3 · FY26	High
Q3 Diluted EPS (excluding inventory purchase accounting)	37 cents to 40 cents per diluted share high materiality	Q3 · FY26	High
Q3 LIFO Expense	$16 million to $18 million medium materiality	Q3 · FY26	High
Q3 Adjusted EBITDA excluding LIFO	$88 million to $92 million high materiality	Q3 · FY26	High
Q3 Olympic Steel Adjusted EBITDA excluding LIFO	$21 million to $23 million medium materiality	Q3 · FY26	High
Net Leverage Ratio	closer to three times high materiality	FY26	High
Annual Run Rate Synergy Attainment	$52 million to $56 million high materiality	Q3 · FY26	High
Total Two-Year Annual Run Rate Synergies	$120 million high materiality	Two-year target	High
Full-Year Capital Expenditures	$75 million medium materiality	FY26	High
Full-Year Same-Store Capital Expenditures	$50 million medium materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Total Company Exceeded guidance expectations on both revenue and shipment basis due to stronger same-store and total company performance, improved pricing, and effective execution. Tons shipped: 800,000+Tons shipped growth QoQ: 22.6%Average selling prices growth QoQ: 4.5%	$2.01 billion	—	28.1%	—
Same-Store North America Reflects broad sequential volume growth, better market conditions, stronger customer activity, and commercial collaboration. Average selling prices growth QoQ: 7.2%Tons shipped growth QoQ: 4%	$1.44 billion	—	11.5%	—
Olympic Steel Contributed $23.5 million to adjusted EBITDA excluding LIFO in Q2, exceeding expectations. This compares to $12.5 million contributed in Q1 (six-week sub-period).	—	—	—	$23.5 million adjusted EBITDA excluding LIFO

Capital programs

Mexico consolidation project completed

Benefit:$1.3 million annual run rate synergies

Completed consolidation project generating annual run rate synergies.

Connecticut project (Olympic Milford and Ryerson Specialty Alloys consolidation) advancing

Benefit:stronger operating platform with improved workflow, expanded processing capabilities, better product availability, lower fixed costs, and enhanced logistics

Consolidating Olympic Milford and Ryerson Specialty Alloys.

Risks & headwinds

Purchase accounting adjustments Q2 FY26

$15.7 million reduction to gross margin and net income in Q2 FY26

Mitigation:Expect $5-7 million additional inventory purchase accounting adjustments through year-end as acquired inventory is sold through.

Margin compression Q3 FY26

Expected in Q3 FY26

Mitigation:Driven by rising material costs, ongoing program customer pricing lags, and continued inflationary pressures across labor and delivery.

Non-ferrous commodity price reversion End of Q2 FY26 and into early Q3 FY26

Approximately 15% price reversion

Mitigation:Prices recently stabilizing within a lower trading range; expected to moderate working capital requirements in Q3.

Lag in passing through inflationary costs Q2 FY26 and ongoing

Impacts program pricing due to contract terms; fuel prices rose and truck capacity tightened

Mitigation:Synergy realization and network optimization are helping to offset variable cost increases; more flexibility on transactional side.

Weakness in cyclical end markets Near term

Agriculture market remains recessed; consumer demand disciplined due to higher for longer interest rates and inflation

Mitigation:Well-positioned through network to take advantage of demand upside in other verticals (AI, aerospace, defense, etc.).

What to watch in Q3 FY26

Net leverage ratio

by the end of the year

Current 4.0x

Target closer to 3.0x

Why it matters

Demonstrates progress on debt reduction, a key capital allocation priority and merger benefit.

This working capital requirement moderation, coupled with higher trailing 12-month EBITDA generation, is expected to move us closer to a net leverage ratio of three times by the end of the year.

Find out whether RYZ delivers this. Inve re-checks your case every morning.

Q&A highlights

Where are the market share wins coming from in the transactional business?

Wins are broad-based, driven by service center fundamentals like 95% service levels for A1A items, inventory positioning, and improved quoting technology. Investments made over the last 2-3 years are now coming to fruition in a better market.

“When that inventory is available, we do better. And it's really that simple.”

asked by Samuel McKinney · answered by Edward Lehner

2 min read 6 chapters

Detailed narrative

Merger Integration & Synergies Exceed Expectations

The first full quarter post-merger with Olympic Steel demonstrated significant integration progress, leading to $5 million in Q2 synergy realization. The company is on track to exceed its first-year target of $40 million in annual run rate synergies, expecting $52-56 million by Q3 FY26, and remains confident in achieving the $120 million two-year target.

This includes $6.5 million from procurement, $3 million from efficiency/public company cost savings, $2 million from commercial strategies, and $2 million from network optimization in Q3.

Mixed Market Dynamics and End-Market Performance

The market is characterized by improved but asymmetrical manufacturing demand, with a six-month streak of expanding ISM PMI readings. Strong demand is observed in AI, aerospace, defense, semiconductor, and electrification, while agriculture, consumer discretionary, and residential construction are still recovering. Commercial transportation saw solid single-digit volume growth QoQ, and climate-related demand (HVAC, data centers) delivered double-digit volume growth QoQ.

Pricing, Margin Spreads, and Commodity Volatility

Average selling prices increased, but a significant margin differential of 700-800 basis points emerged between transactional and program pricing, the widest in three years. Carbon was the best-performing commodity, followed by stainless and aluminum. Non-ferrous commodities (stainless, aluminum) experienced an approximately 15% price reversion at the end of Q2 and into early Q3, before stabilizing.

Operational Execution and Enhanced Customer Experience

Ryerson focused on enhancing customer experience through network optimization, shared inventory, increased in-house processing, and faster response times. Examples include moving Integrity Stainless product into Singer Steel facilities to reduce storage and logistics costs, and cross-company collaboration (e.g., Northeast market customer supported by Ryerson Los Angeles) for new business opportunities, leveraging the combined footprint.

Capital Allocation and Debt Reduction Progress

The company maintains a disciplined capital allocation strategy, including supporting its quarterly dividend of 18.75 cents per share, prudent share repurchases ($0.8 million in Q2), and debt reduction. Net debt increased sequentially by $30 million to $913 million due to working capital, but the net leverage ratio decreased from 5.1x in Q1 to 4.0x in Q2, with a target of 3.0x by year-end, supported by higher TTM adjusted EBITDA.

Working Capital and Cash Flow Management

Ryerson used $5.6 million in cash from operations in Q2, as net income generation was offset by higher working capital requirements supporting increased revenues. Inventory days of supply decreased by one day to 73 days, within the target range of 70-75 days.

The cash conversion cycle increased to 71 days from 67 days. Moderation in working capital is anticipated in Q3 due to stabilizing non-ferrous prices, which is expected to support free cash flow generation and net debt reduction.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.