Q3 2024 Ryerson Holding Corp Earnings Call

Good day and welcome to the Ryerson Hoding Corporation, third quarter 2024 conference call. Today's conference is being recorded. There will be a question and answer session later. If you would like to ask a question, please press star 1 on your telephone keypad at any time. Again, that is star 1 to ask a question.

Speaker Change: Manager of Investor Relations.

Speaker Change: Good morning. Thank you for joining, Brian Sincooling Corporations 3rd, 4204, our ex-call. On our call we have any later, Brian Sincense President and Chief Executive Officer. Like Burbach, our Chief Operating Officer.

Speaker Change: Chief Financial Officer and Molly Canan, Pratham, and the Chief Accounting Officer in Corporate Controller.

Speaker Change: John Ford, our Executive Vice President of Operations and Courtney Beerus-Stay, our Vice President of Finance, will be joining us for Q&A.

Speaker Change: Turn comments on this call and take forward-looking statements within the meeting of the Federal Security Laws.

Speaker Change: These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those implied by the forward-looking statements.

Speaker Change: These risks include, but are not limited to, those set forth under risk factors in our annual report on

Speaker Change: Form 10-K for the year ended December 31st, 2023. Our quarterly report on Form 10-Q for the quarter ended September 30th, 2024 and in our other filing with the Securities and Exchange Commission.

Speaker Change: You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made and are not guarantees of future performance.

Speaker Change: A reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures is provided in our earnings release filed on Form 8K yesterday and also available on the Investor Relations section of our website.

Speaker Change: I'll now turn the call over to Eddie.

Eddie: Thank you Pratham, and thank you all for joining us this morning.

Eddie: I want to start by recognizing the dedicated efforts

Eddie: of our entire Ryerson team.

Eddie: Myers and family of companies.

Eddie: for prioritizing.

Eddie: A safe and productive operating environment for our over 110 facilities.

Eddie: across North America and China.

Eddie: Since the cyclical peak demand and pricing environment last seen during the first half of 2022, we have experienced extended counter-cyclical conditions.

Eddie: over the ensuing 24 months characterized by falling average selling prices, unrelenting gross margin compression, and declining demand.

Eddie: We experienced and are experiencing this particular industry downturn in parallel with a record Ryerson investment cycle.

Eddie: So, two things can be true at the same time.

Eddie: We can soldier through a protracted industry downturn while curing an investment deficit.

Eddie: of the prior 20 years to come through to the other side and into the next upturn.

Eddie: as the best version of Ryerson.

Eddie: and several generations.

Eddie: despite some upsets.

Eddie: and discomfort along the way.

Eddie: and some tough weather figuratively and literally.

Eddie: The investments we have made are necessary, worthwhile.

Eddie: and we'll prove out in the years to come.

Eddie: This has been a long manufacturing downturn going on its 25th month. However, evidence is mounting that we're moving off this counter-cyclical bottoming as we move through the balance.

Eddie: of 2024 and on to 2025.

Eddie: More specifically, the third quarter.

Eddie: China economy weakness

Eddie: 24-month moving average PMI readings well below 50.

Eddie: demonstrating ongoing manufacturing contraction.

Eddie: a strong dollar as well as post-pandemic residuals and geopolitical turbulence.

Eddie: are taking us through a longer-than-usual manufacturing and industrial metals downturn.

Eddie: Looking further ahead through Q4 and into 2025.

Eddie: probabilities are increasing.

Eddie: that cyclical drivers are improving as the stocking abates.

Eddie: Industrial Metal Commodity Price Curves

Eddie: are showing contangos moving into 2025, and China economic policies are turning stimulative along with incrementally declining interest rates.

Eddie: across the G7 economies to go with plenty of latent.

Eddie: Secular Manufacturing and Industrial Metal Demand

Eddie: Pertaining more specifically to Ryerson and Q3, we were within our guidance range for adjusted EBITDA, excluding LIFO, as ongoing investment activities in extreme weather events.

Eddie: and Packard results to the downside.

Eddie: but fundamental company indicators of service levels, positive account sharing.

Eddie: and On Time Delivery continue to improve.

Eddie: our spot fill of material, transactional business.

Eddie: as the OEM contract business has continued its relative underperformance through the year to date.

Eddie: Other positives of the quarter included $103 million of free cash flow generation, $42 million of capital returned to shareholders, plus aligning equity and operating leverage for the next upturn.

Eddie: and ongoing cost reductions ahead of target.

Eddie: As our new investments continue coming online and our service center fundamentals continue to improve, we are setting the table.

Eddie: for realization of our next stage financial targets. With that, I'll turn the call over to Mike.

Mike: Thanks, Eddie, and good morning, everyone.

Mike: During the third quarter, Ryerson earned $1.13 billion in revenue, which met the low end of our guidance expectations.

Mike: and was influenced by an average selling price of $2,323 per ton, which also came within our guidance expectations.

Mike: Our sales volume of 485,000 tons was below our guidance range and was impacted by a slow demand environment and the impacts of Hurricane Helene towards the end of the quarter.

Mike: Our average selling price per ton was down 3.7%, quarter over quarter, meeting expected pricing pressure across our product mix.

Mike: Due to a combination of lagged pricing in our customer contracts in a lower demand environment, metals commodity pricing led to margin compression during the quarter and was most acutely felt in our carbon products.

Mike: whereby our average selling prices for carbon products decreased six percent.

Mike: on the other hand, in our Bright Metals franchise.

Mike: We saw a 1% increase in aluminum and a 2% decrease in stainless steel average sell prices over the quarter.

Mike: Turning to the demand environment, Ryerson's sales volume of 485,000 tons was 4.5% lower quarter over quarter, as a historically slower period met with a lower demand environment and extreme weather events during the quarter.

Mike: In the third quarter, North American industry volumes, as measured by the Metal Service Center Institute, or MSCI, decreased 5.1 percent.

Mike: compared to the prior three months. Over the same period, Ryerson North American shipments decreased by 5.5 percent.

Mike: Year-to-date 2024, industry volumes for the MSCI were down 3.2%.

Mike: This is compared to down 1.4% for Ryerson's North American volumes, with Ryerson noting market share gains across all three product lines, led by stainless steel and followed by carbon and aluminum.

Mike: Ryerson's overall volume decrease in the third quarter of 2024 was driven by contractions across most end markets.

Speaker Change: which were partially offset by volume increases in HVAC and with that I will turn the call over to Jim for third quarter financial highlights as well as our fourth quarter 2024 outlook.

Jim: Thanks, Mike, and good morning, everyone.

Jim: Before discussing guidance for the fourth quarter, I'd like to highlight the drivers of our third quarter performance compared to our guidance expectations.

Jim: In the quarter, with adjusted EBITDA excluding LIFO of $21 million and net sales of $1.13 billion, we met the low end of our guidance range.

Jim: Due to the combination of lower-than-expected sales volumes, as well as acute and greater-than-anticipated margin compression, our results of a net loss of $6.6 million and diluted loss per share of $0.20 were below expectations.

Jim: Looking to the fourth quarter of 2024, we expect volumes to be down 8% to 10% sequentially compared to the third quarter.

Jim: As such, we expect revenues to be in the range of $1 to $1.04 billion, with average selling prices between 1% up and 1% down for the quarter.

Jim: Based on these expectations, we forecast adjusted EBITDA for the fourth quarter of 2024, excluding LIFO.

Jim: in the range of $10-$12 million on seasonally and cyclically bottoming conditions and a loss per share in the range of $.53-$.47 per diluted share.

Jim: We expect approximately a $10 million LIFO credit for the quarter.

Jim: In the third quarter, we generated $135 million of cash flow from our operations.

Jim: We ended the period with $522 million of total debt and $487 million of net debt, which decreased from $525 million and $497 million, respectively, as of the prior quarter.

Jim: The company's available global liquidity remains healthy but decreased to $491 million in the third quarter from $585 million in the second quarter.

Speaker Change: Thank you. Thank you.

Speaker Change: Finishing off our investment cycle has led to a greater drawdown on our credit facility over lower adjusted EBITDA generation.

Speaker Change: We ended the quarter above our two-times target range for net leverage at 3.8 times.

Speaker Change: Our credit facility has allowed Ryerson the flexibility to engage in our investment cycle without the high fixed overhead of structured debt and fits the nature of our business where we can fluctuate our borrowings up and down based on our needs.

Speaker Change: Well we remain mindful of our balance sheet and reaffirm the importance of a healthy balance sheet as a central long-term fulcrum balancing growth and financial discipline.

Speaker Change: We anticipate being above 2.0 times net leverage as we complete our investment cycle and begin generating revenue and cash across recent and near-term new assets, with our continued commitment to our long-term range of 0.5 to 2 times net leverage.

Speaker Change: As we announced in the first quarter of 2024, in order for Ryerson to operate more efficiently, we initiated a cost reduction plan to help us reduce operating expenses by $25 million during 2024 and annualizing to $40 million.

Speaker Change: Over the second and third quarters, we were able to achieve a reduction in expenses.

Speaker Change: partially driven by the reduction of start-up, pre-operating, reorganization, and duplicative expenses related to logistics and SG&A from our completed investments over the prior few quarters, as well as streamlining our workforce.

Speaker Change: In the third quarter, we invested $32 million in capital expenditures.

Speaker Change: which included most notably the modernization, automation, and expansion of our Shelbyville, Kentucky non-ferrous coil processing facility and strategic equipment and infrastructure upgrades throughout our network to increase productivity and value-added capabilities.

Speaker Change: The investments we are making are expected to drive better customer experiences, improve asset utilization, improve working capital efficiency, increase productivity, and provide a safer operating environment for our employees.

Speaker Change: We are very excited about the modernization efforts across our network and the better customer experiences they will provide.

Speaker Change: Turning to shareholder returns, Ryerson returned $42 million in the quarter, which was comprised of $36 million in share repurchases and $6 million in dividends.

Speaker Change: We paid a quarterly dividend of $0.1875 per share and have announced a fourth quarter cash dividend of the same amount.

Speaker Change: As for share repurchases, after repurchasing just under 1.85 million shares for approximately $36 million in the open market during the quarter, we ended the quarter with about $38.4 million remaining in the share repurchase authorization.

Speaker Change: With that, I'll turn the call over to Molly to provide further details on our third quarter financial results.

Molly Canan: Thank you, Jim, and good morning, everyone.

Molly Canan: In the third quarter of 2024, Ryerson reported net sales of $1.13 billion, which was 8.1% lower than the second quarter of 2024, driven by lower volumes and lower average selling prices.

Molly Canan: Partially supported by $18 million in LIFO income recorded in the third quarter of 2024, compared to $10 million of LIFO income recorded in the second quarter of 2024.

Molly Canan: Excluding LIFO, gross margin contracted 110 basis points from the second quarter to 16.3% as compression in our average selling price for our sales mix outpaced a decreased cost of goods sold. This is especially true for our carbon products, as Mike explained earlier.

Molly Canan: On the expense side, warehousing, delivery, selling, general and administrative expenses decreased by $2.1 million.

Molly Canan: or 1% quarter over quarter to $197 million.

Molly Canan: Decreases in expenses were partially offset by increases in startup expenses related to our investment cycle project.

Molly Canan: For the third quarter of 2024, net loss attributable to Ryerson was $6.6 million, or $0.20 a loss per diluted share, compared to net income attributable to Ryerson of $9.9 million and diluted earnings per share of $0.29 in the prior quarter.

Molly Canan: Finally, Ryerson achieved adjusted EBITDA excluding LIFO of $21 million in the third quarter of 2024, which compares to $42.6 million in the prior quarter.

Speaker Change: And with this, I'll turn the call back to Eddie.

Eddie: Thank you, Molly.

Speaker Change: As we are emerging from what has been a long counter-cycle

Eddie: and bring our three-year investment cycle to harvest.

Eddie: I couldn't be more optimistic about what comes next as we flex our optimization cycle to maximize the growth and earnings potential of our facilities, our network, and our overall business to the benefit of all Ryers and stakeholders.

Eddie: While counter cycles don't last forever, Ryerson has improved over each preceding downturn.

Eddie: and this one will be no different.

Eddie: Despite some upsets and growing pains along the way, we wish all of you

Eddie: A safe, healthy, joyous holiday season with lots more metal. I look forward to being with all of you in the new year.

Eddie: With that, we look forward to your questions, Operator.

Speaker Change: And as a reminder, that is star one if you would like to ask a question. And if you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach your equipment. We'll take our first question from Katja Jancic with BMO Capital Markets.

Katja Jancic: Hi, thank you for taking my questions.

Katja Jancic: I might have missed this, but of the $60 million in cost savings you're targeting, how much of that has already been realized so far?

Speaker Change: Hi Katja, good morning. I'm gonna go ahead and I'm gonna kick that.

Speaker Change: Edward Lehner, James Claussen, Edward Lehner, Molly Kannan, Pratham Dear, Edward Lehner,

Speaker Change: Hi Katja, good morning. Yeah, as we look through the expense reductions

Speaker Change: I would say the heavy lifting has been done. There's always some optimization that can be done as we, you know, further implement the automation at our facilities. But as you look at our expense per ton from the first quarter to the third quarter, you see a trend down there. So we would expect as our as our projects

Speaker Change: Payal out, we'll finish through those optimizations and cost reductions, but the heavy lifting has been tough. Yeah, Katia, and this is Eddie, I would append to that by saying we've been carrying some redundant investment costs that you just carry

Speaker Change: because

Speaker Change: You need to ship over greater distances. You need to maintain more inventories.

Speaker Change: The magnitude of some of the things we've done, like University Park, 900,000 square feet, Centralia, 200,000 square feet.

Speaker Change: Shelbyville. And it's a long list of major improvement projects that we're going to see the benefit of. But while you're going through it, you carry excess costs. So in addition to...

Speaker Change: the controllables and some costs we've taken out, as we wrap up this investment cycle, we'll see other costs start to melt away from our P&L, which of course we're looking forward to. And I would direct you to the slide that we put in the...

Speaker Change: and Festertack.

Speaker Change: It shows productivity at University Park at Central Steel & Wire as an example of how you go from a very antiquated model and a very antiquated facility to something that is modern and highly productive. And it's already showing really good emerging signs.

Speaker Change: really hitting its KPIs for service and growth, even as we kind of bottom through this cycle.

Speaker Change: And maybe looking, you generated a very strong free cash flow this quarter, aided by working capital release. When we look to 4Q, are there still any opportunity to further working capital release, or how should we think about that?

Speaker Change: Yeah, there is more opportunity to...

Speaker Change: We expect 2025 to be a better year, of course.

Speaker Change: We don't have, you know, a perfect crystal ball, but it looks like indicators are turning more favorable than what we've seen over 23 and 24. And it's been a, you know, if Paul McCarty would have written a song about it, he would have titled it The Long and Grinding Road. It's been a long grind. It's been a long grind downturn. But we see it ending, and we look forward to 2025, and there is more cash flow that we can generate as we move through the year.

Speaker Change: Thank you for watching. Please subscribe to our channel. We hope you enjoy the rest of your day.

Speaker Change: Just one last one on the CapEx. I know in the past you said next year CapEx should go down to $50 million. Is this still true?

Speaker Change: Yes.

Speaker Change: Okay, perfect. Thank you.

Speaker Change: And as a final reminder, that is star 1 if you would like to ask a question. We'll now take a question from Samuel McKinney with KeyBank Capital Markets.

Samuel Mckinney: Hey, good morning.

Speaker Change: Hey Sam, how you doing?

Speaker Change: Good.

Samuel Mckinney: How do you feel about your current inventory levels and given your expectation for relatively stagnant pricing in the fourth quarter, how should we think about them?

Speaker Change: Yeah, sure. I think we are seeing a bottoming.

Speaker Change: Take 4-5 days out of DOS, and that includes replacement costs still moving below average costs. So you'll get some, what I'll call, cost variance that will be favorable to cash flow, and you'll get some volume variance that will be favorable to cash flow.

Speaker Change: Okay, thanks Eddie. And then reorganization expense.

Speaker Change: was about $13 million in the second quarter, $16 million this quarter. A two-part question, first trying to bucket that out of the $16 million in the third quarter, how much do you feel that, you know, cost of goods sold in OPEX are theoretically overstated because of these frictional costs?

Speaker Change: Secondly, how much longer do you expect these costs to weigh on earnings?

Speaker Change: Yeah, that's a good question. I mean, we roll it up and give you that number when you think about something you're familiar with from other companies that you cover when you look at pre-operating startup and reorganization costs.

Speaker Change: without really teasing that out into those three buckets.

Speaker Change: I'll put it I'll put pronouns to it.

Speaker Change: University Park

Speaker Change: That's certainly coming to an end.

Speaker Change: as we move to the balance of the year in terms of

Speaker Change: Additional cost that we're carrying on that major investment Shelbyville is coming through really its peak now It's commissioning and starting up. So there's still costs associated with Shelbyville, but those will be completed by the first quarter

Speaker Change: We've had costs associated with a brand new splitter at Norcross. The ERP conversion expenses, which have been a big item for us, those are starting to tail out and those should really be

Speaker Change: All said and done by, I'd say again, Q1 of 2025. So we're coming to the end of carrying these costs.

Speaker Change: of seeing startup and reorg.

Speaker Change: and pre-operating costs as we start to normalize that CapEx spend.

Speaker Change: More to maintenance.

Speaker Change: and some targeted growth CapEx projects, a little bit of carryover, and then we're going to get a really good clean look at what all of our investments have done as we move through the year.

Speaker Change: 2025, a more modern Ryerson, a much more productive company.

Speaker Change: that really can create the customer experiences that we've been speaking to for some time now.

Speaker Change: Thank you.

Speaker Change: I appreciate that. Any way to frame up, you know, what we should think about with reorganization this quarter and next quarter versus the 15 million dollar average we've seen the last few?

Speaker Change: Yeah, I think it's going to start to turn down. I mean, it'll still be probably, if I had to give you the best educated guess, I would say it's going to be between $8 and $12 million.

Speaker Change: in Q4. We have some, we had some flood related costs in Connecticut with production metals. We had some storm costs with Hurricane Helene, but those are those are insurable expenses.

Speaker Change: that we expect some recovery from. So if I gave you an estimate right now, I'd say 8 to 12 million.

Speaker Change: Okay. Thanks, guys.

Speaker Change: Thanks Jim

Speaker Change: It appears there are no further telephone questions. I'd like to turn the conference back to our presenters for any additional or closing comments.

Speaker Change: We've got some written in questions from investors.

Speaker Change: The first one is, can you discuss more about the investment efforts at Shelbyville? How will they competitively differentiate our offerings in that region? That's a great question. We had a group go through Shelbyville, and I can have John speak to this in just a moment.

Speaker Change: for just a minute.

Speaker Change: The reviews from Shelbyville have been just outstanding. Let me sketch it out for you.

Speaker Change: is within a 500 mile radius.

Speaker Change: of Shelbyville.

Speaker Change: from Aluminum and Stainless suppliers and we think about the size coils that we can bring in now We can bring in very very heavy coils. We can process mill edge coils and we can do all the value add in line

Speaker Change: And when you combine that with other investments we've made at

Speaker Change: S&P specialty metals processing, when you think about the investments we made in TSA, when the stainless market recovers, and it will, it will, it's been long, but it will, when that market recovers we've got really what I think is the industry-leading value-added network.

Speaker Change: for Stainless Value Add in the U.S. and really in North America for that matter. So that investment, it looks really sensational and we're really just excited to get it started up and get it operationalized fully as we move into 2025. And I'm going to have John give you some more color on that.

John Ford: Thanks Eddie. Really well said. Our investments at Shelbyville include a state-of-the-art cut-to-length line, a highly automated storage and retrieval system, along with the packaging system for our bright metal sheet products.

John Ford: These investments will improve the safety, the ergonomics of our operation, and most importantly also our productivity and throughput.

John Ford: As Eddie mentioned, we are on schedule with this project and beginning commissioning of all of our systems, including systems integration, and we see a path to being fully operational in Q1.

Speaker Change: We have some more written-in questions. The second one is, when will we see cost reductions from recently acquired plants? Do you expect Ryerson will be able to cut costs and improve efficiency at those locations?

Speaker Change: you know we look at it more as how do we how do we evaluate the entire network of services.

Speaker Change: Whether it's recent acquisitions or...

Speaker Change: you know, customer and supplier patterns change. So there are some really good concurrent opportunities.

Speaker Change: As we operationalize and bring these investments online, we'll continue to do that work. We've identified areas to do that work.

Speaker Change: John and his team, headed up by some really talented people. They're looking right now at cut-to-length line optimizations throughout our network given the investments we've made in Shelbyville, University Park.

Speaker Change: Singer Steele, Norcross, Dallas. It opens up a lot of opportunities for us to really optimize that CTL network where you take out maintenance costs, you free up more space, and you can position inventory now, especially A and A1 item inventory. You can position that inventory to do really quick service.

Speaker Change: fills to your customers which really really improve the customer experience, so

Speaker Change: We look at it as a beneficiation opportunity. When you come through this investment cycle, it opens up a lot of other opportunities.

Speaker Change: to take costs out because you want to realize.

Speaker Change: the full productivity and benefit of those investments throughout that network.

Speaker Change: As a follow-up, can you discuss the production metals acquisition? What does this bring to Ryerson? How does it complement our other offerings in the aerospace industry?

Speaker Change: Yeah, sure. I mean, going back to 2015, when I presented my first SWOT analysis to the board.

Speaker Change: Strengths, Weaknesses, Opportunities, and Threats.

Speaker Change: We identified three things that we really wanted to address in that SWOT analysis.

Speaker Change: All things considered, which is a longer conversation than what we have time for on this call, but let me summarize it like this.

Speaker Change: We identified digitalization being a digitally enabled enterprise, we identified 3D printing and additive manufacturing, and we also identified finding an entry point.

Speaker Change: into aerospace, defense, and semiconductor. Now if you look at valuations of companies since the middle of 2022, the ones that had more exposure to non-residential construction, the ones that had more exposure to aerospace,

Speaker Change: Really, really happy to have them.

Speaker Change: And it also gives us an opportunity to expand that production metals expertise through our network as well. So, given that we have 110 service centers, we can start to move that capability and that product expertise and that value-added processing.

Speaker Change: to other parts of Ryerson's network and footprint.

Speaker Change: maybe threats and weaknesses into opportunities and strengths.

Speaker Change: Thanks Eddie. One more is can you give an update on the new ERP system implementation? How has this been flowing through the southern service centers? Are there other any other major ERP initiatives outside of the southern region?

Speaker Change: So look, ERP conversions are tough. If you go, I'll tell you what, if you go to the graveyard of ERP conversions and transitions, it's...

Speaker Change: It's a big space, and I'm proud of the team, the way we weathered it, it was a heavy lift.

Speaker Change: We're through really the worst of it. I think we're gonna get on to the best of it. Once you learn that new language It's a new language. It really is. You have to learn a new language. You have to remap

Speaker Change: Mission-critical business systems and processes. I mean we were working with a legacy system that was

Speaker Change: 50 years old.

Speaker Change: And as you know with legacy systems, eventually the day finally comes when you have to move on from that legacy system.

Speaker Change: When you put in a new system, folks that have been doing things for a long time one way have to learn another way, and that's never easy.

Speaker Change: And that also causes some pain and disruption. But we are certainly through the worst of it. I believe we're going to get on to the best of it, which is you have one universal ERP platform for the great majority of the organization except for some bolt-on acquisitions. And now, you have this.

Speaker Change: Base with your data warehouse slash data lake where now a lot of the real value-added higher-level Application development we're doing can really be done scalably at a lower cost, but really delivers some of the benefits

Speaker Change: to our customers such as faster quoting, better fulfillment, better visibility, a lot of things that we've been working on for a long time can really now begin to optimize and scale because

Speaker Change: because we're on one ear.

Speaker Change: I'm going to talk a little bit about what we're doing with the ERP platform, but definitely a tough process to go through. And really, like our investment cycle, now we're more into maintenance and optimization, meaning we don't need to do a lot of new work with an ERP, but we need to optimize with an ERP. And so those costs start to melt away, and we start to see more of the benefits of that conversion as we move forward.

Speaker Change: Thanks Eddie. One final one. Okay. Let's go man, let's keep going. Yeah. I'm just getting warmed up. Relate to your opening comments, where do you believe the balance is right now between U.S. steel mill supply and demand?

Speaker Change: Dr.

Speaker Change: It's a good question. Let me answer it like this.

Speaker Change: When you see operating rates in the low 70s, there's a lot of capacity. We don't find capacity to be short anywhere right now.

Speaker Change: There's plenty of capacity. Mills are taking outages because they have the time to make outages. They'd rather run than take the outages that they're taking. You know, before I got to Ryerson, I spent a good bulk of my career on the mill side, so I haven't forgotten all those learnings. So plenty of capacity in the industry.

Speaker Change: Out!!

Speaker Change: Lead times will go out. Inventories are definitely getting to the point of, I think they're at the point of equilibrium now. I don't think anybody's really overstocked, but they're not understocked.

Speaker Change: So the mills

Speaker Change: have capacity, operating rates at 73% to 74% are historically low. Until you move to utilization rates above 80%, you don't start to see tension come back into the supply side. And when we look at pricing, you know, I'll just, I'll give you some value out of here on the call. The way we look at price in our industry is

Speaker Change: Supply generally sets what we call the book price but customers and demand really set the discount to that book price.

Speaker Change: So...

Speaker Change: When we look at today's market, it's a price market, it's not an availability market.

Speaker Change: 21 and 22 were availability markets. This has been a price market.

Speaker Change: So plenty of capacity, lead times are short, but as we inflect and we move through the counter cycle, you can probably bet and expect that some folks will get caught short with inventory. They'll have to replenish, replenish fast, and then they'll lead times will go out. But that's not the case right now.

Speaker Change: Alright, thanks Eddie. I'll give it to you for a closing comment. Yeah, look, I appreciate all the questions. This was great. It's a good workout. And I really appreciate everyone's interest in Ryerson. I thank you all for tuning in with us today. And please have a safe, healthy, happy, and joyous holiday season.

Speaker Change: Thanks operator.

Speaker Change: You're welcome. Once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect.