Cuộc họp công bố kết quả kinh doanh Quý 3/2026 của Ryerson (RYZ): Doanh thu kỷ lục và lợi ích từ hiệu ứng hiệp lực

Thông tin trọng tâm

• Ryerson Holding Corporation đạt doanh thu kỷ lục 2,2 tỷ USD trong quý 3 năm 2026 với sản lượng giao hàng 814.000 tấn. Doanh thu tăng 8,6% so với quý trước, trong khi sản lượng giao hàng tăng 1,2% mặc dù dự báo trước đó của công ty là giảm 3% đến 5%.
• Lợi nhuận ròng phân bổ cho Ryerson đạt 32 triệu USD, tương đương 0,61 USD trên mỗi cổ phiếu pha loãng. EBITDA điều chỉnh không bao gồm LIFO đạt 115 triệu USD, cao hơn khoảng dự báo của công ty là 88 triệu USD đến 92 triệu USD.
• Sản lượng giao hàng cùng cửa hàng tăng 1,8% so với quý trước, đạt mức theo quý cao nhất trong hơn 5 năm. Sản lượng giao hàng cùng cửa hàng tại Bắc Mỹ tăng 8,8% từ đầu năm đến nay, so với mức tăng trưởng 5% của ngành theo dữ liệu từ Viện Trung tâm Dịch vụ Kim loại (Metals Service Center Institute).
• Các dự án trung tâm dữ liệu và phát điện chiếm khoảng 9% doanh thu, tăng từ mức 6% trong quý 2. Sản lượng phục vụ trung tâm dữ liệu tăng khoảng 65% so với quý 1 năm 2026.
• Hiệu quả cộng hưởng từ sáp nhập đạt khoảng 13 triệu USD trong quý 3. Ban quản lý kỳ vọng đạt 14 triệu USD đến 15 triệu USD trong quý 4, tương đương tỷ lệ quy năm từ 56 triệu USD đến 60 triệu USD, và tiếp tục tự tin vào mục tiêu 120 triệu USD trong hai năm.
• Trong quý 4 năm 2026, ban quản lý dự kiến doanh thu đạt từ 1,96 tỷ USD đến 2,04 tỷ USD, EBITDA điều chỉnh không bao gồm LIFO đạt từ 100 triệu USD đến 104 triệu USD, và EPS pha loãng đạt từ 0,30 USD đến 0,38 USD, không bao gồm các điều chỉnh kế toán mua hàng tồn kho còn lại.

Dữ liệu tài chính cốt lõi

Biên lợi nhuận gộp chịu ảnh hưởng bởi hàng tồn kho chi phí cao hơn, độ trễ định giá hợp đồng và điều chỉnh kế toán mua hàng tồn kho trị giá 4 triệu USD. Ryerson cũng ghi nhận 30 triệu USD chi phí LIFO, cao hơn mức dự báo trước đó là 16 triệu USD đến 18 triệu USD do chi phí nguyên vật liệu tăng nhiều hơn dự kiến.

Hoạt động kinh doanh và vận hành

Hoạt động kinh doanh theo giao dịch ngắn hạn vẫn là nguồn tăng trưởng sản lượng chính từ đầu năm đến nay, trong khi sản lượng hợp đồng cũng cải thiện so với cùng kỳ năm ngoái. Ban quản lý cho biết quý 4 đã bắt đầu một cách mạnh mẽ, với biên lợi nhuận của cả mảng giao dịch ngắn hạn và chương trình dài hạn đều tăng. Tuy nhiên, chênh lệch biên lợi nhuận giữa giao dịch ngắn hạn và chương trình dài hạn đã mở rộng lên khoảng 1.000 điểm cơ bản do giá giao dịch ngắn hạn cải thiện nhanh hơn.

Nhu cầu từ trung tâm dữ liệu và phát điện đã hỗ trợ sản lượng của các mảng kiểm soát khí hậu, gia công và hàn, cũng như máy móc và thiết bị. Sản lượng mảng kiểm soát khí hậu cùng cửa hàng tại Bắc Mỹ tăng gần 9% so với quý trước, dẫn đầu là các khách hàng HVAC phục vụ cho các dự án trung tâm dữ liệu và các dòng sản phẩm truyền thống.

Vận tải thương mại là một lĩnh vực tăng trưởng tốt khác. Sản lượng cùng cửa hàng tại Bắc Mỹ tăng gần 3,5% so với quý trước, nhờ các khách hàng sản xuất cabin xe tải và rơ-moóc. Ban quản lý cho biết khối lượng đơn hàng tồn đọng dồi dào sẽ hỗ trợ việc sản xuất xe tải hạng nặng Class 8 kéo dài sang năm 2027, đồng thời thừa nhận áp lực lạm phát và lãi suất vẫn tiếp diễn.

Việc tích hợp Olympic Steel đang mở rộng khả năng kiểm soát hàng tồn kho và sự linh hoạt trong xử lý đơn hàng. Khoảng 90% dữ liệu hàng tồn kho và giao dịch của Olympic Steel đã được tích hợp vào hệ thống thông tin của Ryerson. Ban quản lý cho biết mạng lưới kết hợp đang giúp công ty xác định vị trí nguyên vật liệu, cải thiện hiệu suất sử dụng tài sản và đáp ứng các yêu cầu về thời gian giao hàng của khách hàng.

Số ngày tồn kho giữ ở mức 73 ngày, nằm trong khoảng mục tiêu từ 70 đến 75 ngày của Ryerson. Năng suất đạt 2,25 tấn trên mỗi nhân viên mỗi ngày, mức mà ban quản lý đánh giá là cao hơn nhiều so với mức tiêu chuẩn.

Ryerson đã chi 21 triệu USD cho chi tiêu vốn trong quý 3 và 50 triệu USD từ đầu năm đến nay. Chi tiêu vốn cho cả năm 2026 vẫn dự kiến đạt khoảng 75 triệu USD, bao gồm 50 triệu USD cho Ryerson hiện hữu và 25 triệu USD cho Olympic Steel.

Công ty đã mua lại khoảng 159.000 cổ phiếu với giá 3,8 triệu USD, bình quân 23,85 USD mỗi cổ phiếu. Công ty còn 96,2 triệu USD trong hạn mức mua lại cổ phiếu có hiệu lực đến tháng 4 năm 2028. Hội đồng quản trị cũng tuyên bố chia cổ tức hàng quý ở mức 0,1875 USD mỗi cổ phiếu.

Dự báo của ban quản lý

Triển vọng giao hàng phản ánh số ngày làm việc ít hơn và sự sụt giảm nhẹ mang tính mùa vụ vào kỳ nghỉ lễ. Giá thép cacbon cao hơn dự kiến sẽ bù đắp cho sự suy yếu tương đối của giá thép không gỉ và nhôm.

Ban quản lý kỳ vọng EBITDA 12 tháng gần nhất tăng trưởng mạnh hơn và nhu cầu vốn lưu động theo mùa thấp hơn sẽ giảm tỷ lệ đòn bẩy xuống dưới 3,0 lần vào cuối năm.

Rủi ro và các yếu tố cần theo dõi

• Biên lợi nhuận gộp tiếp tục đối mặt với rủi ro từ chi phí nguyên vật liệu gia tăng và độ trễ giữa việc tăng chi phí với đợt điều chỉnh giá hợp đồng hàng quý, đặc biệt là đối với các sản phẩm thép cacbon.
• Ban quản lý dự kiến nguồn cung thép cacbon cán nóng sẽ tiếp tục rất căng thẳng trong nửa đầu năm 2027 và có khả năng kéo dài suốt cả năm. Nguồn cung nhôm cũng có thể thắt chặt.
• Nhu cầu vốn lưu động cao hơn đã khiến dòng tiền từ hoạt động kinh doanh âm trong quý 3, đồng thời làm tăng tổng nợ và nợ ròng.
• Nhu cầu vẫn không đồng đều. Ban quản lý nhận định sự tăng trưởng mạnh mẽ trong hạ tầng AI, năng lượng, quốc phòng và hàng không vũ trụ, trong khi nông nghiệp, tiêu dùng và các thị trường nhạy cảm với lãi suất khác vẫn trầm lắng.
• Dự báo giao hàng quý 4 đã bao gồm sự sụt giảm thông thường trong kỳ nghỉ lễ và số ngày giao hàng ít hơn, mặc dù hoạt động báo giá và đặt hàng trong tháng 10 vẫn diễn ra mạnh mẽ.

Tóm tắt phần Hỏi & Đáp với chuyên gia phân tích

Biên lợi nhuận của chương trình dài hạn: Ban quản lý cho biết biên lợi nhuận của chương trình dài hạn đang bắt đầu cải thiện, nhưng các đợt điều chỉnh giá hàng quý vẫn chậm hơn so với chi phí thép cacbon gia tăng. Sản lượng hợp đồng cũng tăng lên, trong khi biên lợi nhuận của giao dịch ngắn hạn tăng nhanh hơn.

Sản lượng quý 3 vượt dự báo: Ryerson cho biết kết quả giao hàng tốt hơn dự báo là nhờ nhu cầu cải thiện, năng suất cao hơn, hàng tồn kho có sẵn và khả năng của công ty hợp nhất trong việc cung ứng nguyên vật liệu cũng như đáp ứng thời gian giao hàng cho khách hàng từ 24 đến 48 giờ.

Sức mua sau sáp nhập: Ban quản lý xác nhận rằng Ryerson và Olympic Steel đang tiếp cận các nhà máy sản xuất thép với vị thế là một bên mua duy nhất. Công ty cho biết các thỏa thuận cung ứng doanh nghiệp cho năm 2027 đang tiến triển tốt và sẽ hỗ trợ cả khách hàng theo hợp đồng lẫn tăng trưởng giao dịch ngắn hạn.

Tối ưu hóa chi phí: Việc hợp nhất cơ sở, tối ưu hóa mạng lưới và loại bỏ các chi phí hành chính trùng lặp dự kiến sẽ giúp chi phí hoạt động tăng chậm hơn sản lượng giao hàng. Ban quản lý đã dẫn chứng khoản tiết kiệm quy năm khoảng 9 triệu USD từ việc cắt giảm khoảng ba mươi vị trí công việc, cùng khoảng 3 triệu USD tiết kiệm bổ sung đã được xác định.

Cộng hưởng thương mại: Hiệu quả cộng hưởng thương mại trong quý 4 dự kiến đạt khoảng 4 triệu USD, tương đương tỷ lệ quy năm là 16 triệu USD và tiến gần đến mục tiêu 20 triệu USD trong hai năm cho danh mục này.

Toàn văn Biên bản Cuộc họp Báo cáo Kết quả Kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good day, and welcome to the Ryerson Holding Corporation's Third Quarter 2026 Conference Call. Today's conference is being recorded. [Operator Instructions]

At this time, I'd like to turn the conference over to Justine Carlson. Please go ahead, ma'am.

Justine Carlson

Good morning, and thank you all for joining Ryerson Holding Corporation's Third Quarter 2026 Earnings Call.

On our call, we have Eddie Lehner, Ryerson's Chief Executive Officer; Rick Marabito, our President and Chief Operating Officer; Jim Claussen, our Chief Financial Officer; and Molly Kannan, our Chief Accounting Officer and Corporate Controller. Rich Manson, Ryerson's Senior Vice President of Finance and Chief Financial Officer of Olympic Steel; Andrew Greiff, Executive Vice President of Ryerson and President of Olympic Steel; and Trent McFarland, our Senior Vice President, Supply Chain and Ryerson Processed Metals will be joining us for Q&A. A recording of this call will be posted on our Investor Relations website at ir.ryerson.com.

Please read the forward-looking statement disclosures included in our earnings release issued yesterday and note that it applies to all statements made during this call. In addition, our remarks today refer to several non-GAAP measures. Reconciliations of these adjusted numbers are also included in our earnings release.

I will now turn the call over to Eddie.

Edward Lehner

Thank you, Justine. Good morning, and thank you all for joining us.

Ryerson delivered its strongest quarter of the year, exceeding guidance across the board while eclipsing its first year synergy run rate target ahead of schedule in what continues to be a high-friction industrial economy. These achievements reflect our teammates' commitment, passion and ability to execute together as one unified organization, building toward the industry's best customer and stakeholder experience.

Our results were supported by improved market demand, which allowed us to give the CapEx investments we've made over the past several years, a good run around the track under better overall industry conditions. As we move through the first month of the fourth quarter, quote and order activity remains strong, carrying for the momentum we experienced in Q3 when daily shipment volumes and invoice counts increased each month of the quarter. We played the score sheet well in Q3, hitting the high notes as we gained market share, outperformed typical industry seasonality, increased net book value per share, managed asset efficiency at a high level and bought back $3.8 million in shares below book value.

When looking at the bigger and brighter picture, we see the continuing validation of the timing and substance of Ryerson's merger with Olympic Steel this past February. Our collaborative effort, teamwork, resourcefulness, cognitive scale and playmaking ability is really shining through as we see the tremendous potential available to us as RYZ.

With that, I will turn the call over to Rick to discuss market conditions and how we are executing operationally across the business.

Richard Marabito

Thanks, Eddie, and good morning, everyone.

On a total company basis, Ryerson generated third quarter net sales of $2.2 billion on shipments of 814,000 tons. That's a volume increase of 1.2% sequentially, better than our guidance for a seasonal decline of 3% to 5%. Same-store shipments increased by 1.8% to their highest quarterly level in more than 5 years. Our performance reflects strong customer demand across many of our end markets and our team's dedication to meeting that demand through commercial collaboration and strong execution across our expanded network, even amid tight product availability.

On a year-to-date North American basis, Ryerson's tons shipped increased by 57.3% compared with the first 9 months of 2025. On a same-store basis, Ryerson's North American shipments increased by 8.8% during the same period. That implies market share gains when compared to the industry's growth of 5%, and that's according to the Metals Service Center Institute.

Ryerson's year-to-date volume growth continues to be led by strong double-digit growth in its transactional business and is also now supported by year-over-year improvement in our contract book of business. Data center and power generation projects remain strong drivers of customer demand in the third quarter, representing an estimated 9% of revenues compared to 6% in the second quarter. And our data center volumes increased by approximately 65% in the third quarter of 2026 when compared with the first quarter of this year.

Our participation in this secular megatrend comes through our direct exposure to OEMs as well as through our support of subcontractors and spans applications like power, IT hardware, cooling and fabrication. This demand is illustrated across several of our traditional end market categories, including climate, where North American same-store volumes increased nearly 9% sequentially. Growth was led by larger HVAC customers serving both data center projects and traditional product lines with additional strength in air purification, exhaust and blower applications.

Data center and power generation activity also supported growth in our fabrication and welding sector with growth in tank and metal and closure subindustries as well as growth in our machinery and equipment sector. Our scale, processing capabilities, product breadth, access to inventory and customer relationships position us to meet more of these customer needs and win additional business in these growing markets.

And beyond these markets, commercial transportation remains another area of strength with North American same-store volumes increasing nearly 3.5% quarter-over-quarter, led by our truck cab and tractor trailer subsectors. We are optimistic about the developing recovery in Class 8 demand as healthy backlogs support production into 2027 despite persistent inflation and interest rate headwinds. Meeting this demand required our teams to coordinate resources across the network and develop tailored customer solutions. For example, in Minneapolis, our Shaw Stainless and Ryerson Coon Rapids teams work together to build out and share production operations to service the customer with growing demand for cooling component. Enabled by our merger, this collaboration is turning a new business opportunity into a meaningful contributor to our commercial synergies.

Internally, our IT teams are unlocking more of the combined network's potential with approximately 90% of Olympic Steel's inventory and transaction data now incorporated into Ryerson's information system. This creates the visibility needed to connect available material with customer demand across our facilities, enabling more effective inventory sharing and coordinated fulfillment. With mill lead times extending and inventories exceptionally lean, this capability is especially valuable.

Our increasing interconnectivity also supports our ongoing work of aligning customer programs with the facilities best equipped to serve them. We continue to evaluate opportunities to direct program volumes to Olympic facilities best suited for that business, increasing asset utilization and lowering our cost to serve our program customers, while at the same time, creating capacity for additional transactional business within Ryerson facilities. And this enables us to grow our transactional book of business with greater speed and reliability.

What enables success in all of these efforts is the willingness of our people to share their expertise, to solve problems together and to perform for our customers. Our recently introduced shared core values builds on the cultural strengths of both organizations. And our Tulsa teams offer a great example of our 2 core values in action, and that's customer commitment and teamwork. Neighboring Ryerson and Central Tube and Bar facilities are coordinating production capabilities and combining recruiting efforts to support newly awarded business while working with local educational institutions to develop a shared pipeline of skilled talent for future growth.

So I want to thank our teams across Ryerson for putting our shared values to work every day, helping our customers succeed and turning the possibilities of our combined network into new business and stronger results.

And now I'll turn the call over to Jim Claussen to review our performance relative to our third quarter guidance, discuss our expectations for the fourth quarter and provide an update on synergy attainment and capital allocation.

Jim Claussen

Thank you, Rick, and good morning, everyone.

Ryerson's third quarter performance exceeded our expectations across the board. As Rick noted, we generated record revenue of $2.2 billion on shipments of 814,000 tons and produced net income attributable to Ryerson of $32 million or $0.61 per diluted share. These results reflect effective execution by our teams, supported by strong shipment activity that persisted through a quarter when we typically experience seasonally softening demand.

As anticipated in our second quarter outlook, we experienced gross margin compression as higher cost inventory, particularly for carbon products, flowed through our cost of sales ahead of corresponding price adjustments for program customers. Our third quarter results also include a $4 million inventory purchase accounting adjustment to cost of materials sold, which reduced our gross margin and net income generation. This adjustment was approximately $12 million lower than the one recorded in the second quarter, and we expect these impacts to continue declining through the fourth quarter as we sell through the remaining acquired inventory.

Adjusted EBITDA, excluding LIFO, was $115 million in the third quarter, which exceeded our guidance range of $88 million to $92 million. Olympic Steel's contribution to adjusted EBITDA, excluding LIFO, was $30.2 million, which also exceeded our guidance. Our LIFO expense was $30 million in the third quarter compared to our guidance of $16 million to $18 million as material costs increased more than anticipated during the quarter, led by continued increases in carbon mill pricing.

Turning to our outlook for the fourth quarter. We expect that shipments will decline by 6% to 8% sequentially, reflecting fewer business days and some mild seasonal softness around the holidays. We also anticipate that average selling prices will be flat to up by 2% as higher carbon pricing is expected to slightly offset relative softness in stainless and aluminum pricing. We, therefore, expect that our fourth quarter revenues will be in the range of $1.96 billion to $2.04 billion.

Excluding residual inventory purchase accounting adjustments, we anticipate net income generation in the range of $16 million to $20 million or $0.30 to $0.38 per diluted share in the fourth quarter. We expect to record LIFO expense in the range of $28 million to $32 million in the fourth quarter, leading to adjusted EBITDA, excluding LIFO, in the range of $100 million to $104 million, with $28 million to $30 million of that generation expected to be contributed by Olympic Steel. We anticipate that higher trailing 12-month EBITDA generation, in combination with our expectation for seasonally lower working capital requirements will reduce our leverage ratio to below 3.0x by year-end.

Turning to our progress on synergies. We realized approximately $13 million across our 4 synergy pillars in the third quarter, in line with the expectations we communicated last quarter. On an annualized run rate basis, this brings our achievement substantially above the $40 million target we set for our first year together, well ahead of our February '27 merger anniversary. This is a significant milestone in delivering on the merger's value thesis, reflecting our team's success in translating the scale and capabilities of our combined network into customer solutions and earnings contributions.

Through the third quarter, we incurred $2.6 million in onetime costs to support these synergy initiatives. Based on actions already implemented and those underway, we expect to realize approximately $14 million to $15 million in synergies in the fourth quarter or $56 million to $60 million on an annualized run rate basis. Of our fourth quarter synergy attainment, we expect that our procurement synergies will generate approximately $6 million in synergies. Efficiency and public company cost savings will create approximately $2.5 million in savings and approximately $2 million of expected benefits from network optimization actions. This network optimization category is picking up steam, and we are building on the completed project in Mexico by progressing on our Connecticut consolidation, which brings together Olympic Milford and Ryerson Specialty Alloys. This consolidation is expected to be completed in the first quarter of 2027 and create a stronger operating platform with improved workflow, expanded processing capabilities, better product availability, lower fixed costs and more efficient logistics.

Turning to our commercial enhancement pillar. We continue to see performance ahead of our expectations, as Rick mentioned. Our fourth quarter forecast includes approximately $4 million in realized commercial synergies, which annualizes to $16 million and is closing in already on our 2-year commercial target of $20 million in annual synergy benefits generated by commercial strategies. This performance has been enabled by the collaboration of our commercial, supply chain and operations teams across the enterprise as they leverage the scale of our combined facilities, equipment, customer relationships and geographic reach. These actions are expected to continue to support EBITDA performance while enhancing our ability to serve customers during a period of extended lead times and constrained availability. I want to thank the Ryerson team for advancing our integration ahead of plan. With our first year synergy targets surpassed ahead of schedule, we remain increasingly confident in our ability to achieve our 2-year target of $120 million in annual run rate synergies.

Turning to our investments in the business. Capital expenditures totaled $21 million in the third quarter and included investments in the maintenance of our facilities as well as projects supporting our transactional and value-added growth. Year-to-date, we have invested $50 million in CapEx, and we still expect our full year 2026 spend to be approximately $75 million, $50 million of which we anticipate to be allocated to legacy Ryerson and $25 million to Olympic Steel.

During the third quarter, we returned $3.8 million to shareholders through the opportunistic repurchase of approximately 159,000 shares with an average price of $23.85. Following these repurchases, the company has $96.2 million remaining under its share repurchase authorization through April 2028. Our Board has declared a quarterly dividend of $0.1875 per share, which is consistent with the prior quarter and will be paid on December 17 to shareholders of record as of December 3.

Overall, our capital allocation strategy continues to be focused on enabling free cash flow generation and reducing debt. That means maintaining a disciplined approach to capital expenditures, evaluating M&A opportunities against a high strategic and financial bar, continuing to support our dividend and preserving the flexibility to prudently exercise our share repurchase authorization as conditions warrant.

I'll now turn the call over to Molly Kannan to discuss our financial performance highlights for the third quarter.

Molly Kannan

Thanks, Jim, and good morning, everyone.

In the third quarter of 2026, Ryerson generated net sales of $2.2 billion, an increase of 8.6% compared to the prior quarter, with tons shipped 1.2% higher and average selling prices 7.2% higher. On a same-store basis, revenue was $1.58 billion, an increase of 9.3% sequentially with average selling prices 7.3% higher and tons shipped 1.8% higher. Due to the material cost pressures and the onetime purchase accounting adjustment that Jim mentioned, gross margin contracted during the third quarter by 50 basis points to 17.2% compared to 17.7% in the prior quarter. Excluding our third quarter LIFO expense of $30 million and the impact of inventory purchase accounting, adjusted gross margin contracted by 60 basis points to 18.7% compared to gross margin, excluding LIFO and purchase accounting adjustments of 19.3% in the second quarter of 2026.

Warehousing, delivery, selling, general and administrative expenses or WDSG&A totaled $326.1 million in the third quarter, an increase of 1.6% compared to the second quarter, driven by variable compensation and inflationary cost pressures. WDSG&A decreased as a percentage of sales quarter-over-quarter from 16% to 15%, but increased marginally on a per ton basis from $399 per ton to $401 per ton.

In all, we generated net income attributable to Ryerson of $32 million or $0.61 per diluted share in the third quarter compared to net income attributable to Ryerson of $15.5 million or $0.30 per share in the second quarter. Third quarter adjusted EBITDA, excluding LIFO, totaled $115 million compared with $101 million in the second quarter. Olympic Steel contributed $30.2 million, up from $23.5 million in the prior quarter, while same-store adjusted EBITDA, excluding LIFO, reached $84.8 million, our highest quarterly amount achieved in 3.5 years.

Turning to cash flow. Ryerson used $18.2 million in cash from operations in the third quarter as net income generation was offset by higher working capital requirements, which supported our higher revenue generation. Our inventory remained well managed in the third quarter as our days of supply remained consistent quarter-over-quarter at 73 days, which is within our target range of 70 to 75 days. Our cash conversion cycle also remained consistent sequentially at 71 days.

We ended the quarter with total debt of $1.01 billion and net debt of $966 million, which represents sequential increases of $51 million and $53 million, respectively, due to higher working capital requirements. Our leverage ratio decreased from 4x in the second quarter to 3.2x in the third, driven by higher trailing 12-month adjusted EBITDA, excluding LIFO. As Jim discussed, we anticipate that our leverage ratio will continue its downward trend given our expectations for higher trailing 12-month adjusted EBITDA, excluding LIFO and lighter working capital requirements in the fourth quarter.

And finally, total global liquidity increased from $757 million at the end of the second quarter to $865 million at the end of the third as our borrowing base continued to expand with our working capital. Overall, our third quarter results reflect stronger sales, improved earnings and consistent working capital management with ample liquidity to support our growth strategy.

With that, I will turn the call back to Eddie to conclude our prepared comments.

Edward Lehner

Thank you, Molly.

Although growth remains uneven, and we continue to operate in a 2-speed economy with AI infrastructure, energy, defense and aerospace driving substantial growth, while agriculture, consumer and other interest rate-sensitive markets remain more subdued, we are getting a good look at how our company can perform when manufacturing activity is invigorated with much needed investment that drives higher productivity, quality jobs growth and broader-based prosperity.

We are encouraged by recent survey findings, which show more manufacturers bringing sourcing and production back to the United States with a growing pipeline of reshoring projects and plans for further investment in U.S. production capacity. This is tangible evidence of the manufacturing revitalization we have long believed can strengthen America's economic resilience, create quality jobs and expand opportunities in the communities where we live and work. This renaissance is in its early phase, and it will take time to take root, but we have to stick with it and keep it a front and center priority.

Our investments in people, technology and processing, together with the greater density and product availability of our combined intelligent network of industrial metal service centers position us to support the revitalization and grow alongside our customers. Bringing our 2 organizations together was and it is the smart play. And there is a real joy in seeing that work awarded as our people put our plans and investments into action to deliver results that are highly accretive to enterprise value and demonstrate that we are making good on what we set out to accomplish for the benefit of all Ryerson stakeholders.

With that, we look forward to your questions. Operator?

Operator

[Operator Instructions] We'll take our first question from Katja Jancic with BMO Capital Markets.

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Katja Jancic

Maybe starting on the program business. It seems that the margins remain pressured there. Can you talk a bit more about what's -- why that is? And are you seeing any signs that, that could start inflecting?

Edward Lehner

This is Eddie. So on the program side, we've noted that we've been catching up because you've got COGS that throughout the year has increased faster than the pass-throughs to average selling price. We've seen improvement on the program side, both in volume and in margin. And it really is a catch-up, especially on the carbon side, given that aluminum and stainless have inflected somewhat, but carbon, as you know, continues to power higher. So we do see improvement in that book. And it's been a welcome surprise in Q3, especially on the volume side. We are seeing margins start to tick higher. But I'm going to have Andrew Greiff give some more color on that.

Andrew Greiff

Yes, Eddie, I think you said it well. I think we've been encouraged by seeing the program business growing. On the real side, Katja, what we're seeing is on the transactional side of the business, that really has taken to a different level. And I think that we'll continue to see that into the fourth quarter. We're finishing up negotiations for 2027, both on the -- for the customer side and for the mill side. So we'll have a better feel in the next month what that's going to look like. But certainly, what we've seen in the third quarter will continue into the fourth quarter.

Katja Jancic

And maybe as a follow-up, when you look at the margins on the program business versus the transactional, has that difference narrowed? Or how is that tracking?

Edward Lehner

Yes, it's a good question. I'm happy to say that Q4 is really off to a very promising start, and we've seen the margin differential between a transactional pound and a program pound, even though both of them are moving higher, that spread has gotten up to about 1,000 basis points, which really, I think, indicates the robustness of that transactional spot bill of material market, while the program side continues to move higher, but not at the rate that we're seeing on the transactional side. And I would ask Rick to go ahead and just add some additional color to that.

Richard Marabito

Yes. Thanks, Eddie. And Katja, you know on the contractual side, the majority of the contractual business has quarterly resets on pricing. So as Eddie commented earlier, it's just the steady rise, especially in the carbon pricing through the year. You get the bump up in the pricing at the beginning of each new quarter. And then as you work your way through the quarter as costs keep rising on the price of steel, your cost of goods sold rises and you get the reset. So -- but it's -- we're really pleased and promising how the quarter started out. I think Eddie mentioned it earlier, the contract business is in 2 ways, really starting to show some good resilience. Number one is the volumes are strengthening on some of those accounts. So it's always good when you've got the demand side of the equation starting to pick up, and we're starting to catch up a little bit on that lag. So more to come on that. But I think as we look at the start of the fourth quarter, we're encouraged.

Edward Lehner

And let me append one thing to that to kind of join the 2 questions together. And that is on the transactional side, one of the synergies we have with the combined Ryerson Olympic Enterprise, we've seen Olympics assets really rise to the occasion and find the ability to find material in the channel or even exchanging carbon through both companies. But Olympics transactional business, that half truckload, full truckload business has really picked up in the third quarter going into the fourth. And that added a really nice synergy to the overall margin and EBITDA profile as we come into Q4 and even look forward into 2027.

Richard Marabito

Yes. Not to keep prolonging our answers, but another good point to what Eddie just commented on, and I mentioned it in the prepared comments, one of the other real positives is how quickly we've been able to integrate the 2 systems. So I commented that about -- we're about 90% of the way there. So the transparency and visibility of the entire company's network of inventory now being available is a huge benefit to those things that Eddie just commented on.

Operator

[Operator Instructions] We'll now take a question from Samuel McKinney with KeyBanc.

Samuel McKinney

Can you start with the third quarter volumes increasing just a little bit quarter-over-quarter versus your guidance of a 3% to 5% decline? And whether it was tight customer inventory, you guys getting more of the product you need from the mills given your stronger buying power or something else. Can you give us some more details on what drove such an upside surprise during the quarter?

Edward Lehner

Yes. I think it was the ability to respond to quotes to meet lead time needs of our customers. And it's really kind of an all of the above answer. Very, very pleased with the performance of the RYZ team. Productivity was up. We did get expense leverage in the quarter and really did a nice job turning over the backlog as much resourcefulness as really was required to go find material given the number of past due tons we have on order with the mills, really proud of the organization we responded to the demand opportunity to increase those volumes, Sam.

And again, I'll ask Andrew to go ahead and add some more color to that.

Andrew Greiff

Well, Sam, I'd say 2 parts. So certainly, on the program contract side of the business, we started to see some life from some of our traditional. So heavy-duty equipment, truck trailer, all of those key industries that we have seen on the transportation side, but even the climate side really started to improve. And so there was a -- as you know, there was a real flatness, I'd say, if you go back second half of '23, almost through the end of '25, but we did start seeing some life in '26. And certainly, in the third quarter, we started to see that.

And the other part of it which I think is really important because the ability for -- in the growth of the transactional, the success really comes from the ability to keep inventory on the floor and continuously replenishing that inventory and growing it so that you can meet the needs of the customers because the lead times, which traditionally may have been 2 or 3 days, customers are looking for more like 24 to 48 hours. And if you don't have that inventory available on the floor, you're going to lose out. And Ryerson has done an extraordinary job to -- we've used to capitalize on the assets that are available to put more inventory on the floor and to be able to respond better to the customer.

Samuel McKinney

Okay. And then the fourth quarter volume guidance, it's relatively in line with seasonal patterns normally, but the fewer shipping days and the holiday-related seasonal softness that you cited in the release impact the fourth quarter every year. Given all the positive dynamics you just talked about remain in place, and you mentioned today, Eddie, that the October ordering trends have been really strong. Why wouldn't fourth quarter volumes do better than just meeting normal seasonality?

Edward Lehner

Sam, that's a great question. I guess we're going to have to wait until February to answer that. But we are really pleased with the start of the quarter. Looking at historic seasonality and just what happens going into the holidays and coming out of the holidays, I think we wanted to guide thoughtfully to that effect while noting that the business is performing very well, and we are very encouraged with the start of the fourth quarter as we look out through most of October being the first month of the quarter.

Samuel McKinney

All right. And then last one, excluding the higher LIFO expense, the third quarter gross margins were down just a little bit versus the second quarter, and you guys dealt with rising material costs, pricing program lags that you talked about and nonferrous pricing declines. But when are you expecting to see those dissipate in margins maybe to more fully reflect the strength of this new combined business?

Edward Lehner

We recognize that margin growth is one of our biggest opportunities as a combined company as we really start to elevate and realize the potential that we have as a combined enterprise. I would say that the real culprits in Q3 that maybe were a drag on margins, we had some mark-to-market hedging amounts come through that were subtractors from margin. And in addition to that, you do have the contract pricing lags that might have caused a little bit of margin compression. But in general, really feel positive about where we can go with respect to our gross margin profile as we move forward based on the synergies that we know are available to us and the plans that we have to grow the transactional business and also beneficiate the program side of our commercial portfolio.

Operator

And it appears there are no further telephone questions at this time.

Edward Lehner

We did have a couple of questions come in online. So we'll go ahead and take those at this time. It says -- the first question is, are you approaching the mills as one buyer now? What is the competitive environment like for accessing tons to fuel profitable share gains?

So what I'd like to do is kick that question over to Andrew and then have Trent go ahead and tend to that answer as well.

Andrew Greiff

Yes. So the easy answer is yes. We are speaking as one voice to the mills. I would tell you that on the supply side, the collaboration has been exactly as we had expected. Trent will speak more in a minute. But I will tell you on the carbon and on the white metal side of it, it has been a singular voice to the mills. Talking about tonnage and where we expect to be next year, certainly, we've seen challenges, in particular, on the carbon side of the business, the mills, domestic mills, fortunately, for the combination, we have excellent relationships with the mills.

And we've been very pleased so far, although the negotiations aren't over, we've been very pleased so far in our ability to be able to get the inventory that we have asked for and expect that our enterprise will be able to grow our business in 2027 and certainly support the growth of our long-time gold standard customers as well as supporting the increasing transactional business. We're seeing this on the carbon side. Hot roll is going to be very tight through the first half of '27 and maybe even through '27. And aluminum will also have some tightness. I think stainless will have a very appropriate year from the mills. But I think we're going to be in a very good position to be able to support our customers.

And Trent, if you want to talk a little bit more about that.

Trent McFarland

Yes. Thanks, Andrew. Yes, I would say post-merger 2026 even, the combination of the group proved very attractive in our synergy savings as we went through this year. As we approach '27, as noted, we are looking for opportunities to expand our supply chain network and also optimize that network where we have opportunities to grow and place material at a transactional level close to our customers. So whether it's contracts or transactional packages, the enterprise supply chain agreements are shaping up nicely for '27.

Edward Lehner

Thanks, Trent. And then the second question that came in online is looking out 2 to 3 years, what would allow operating expenses to grow slower than shipments?

And I thought we would go ahead and kick this over to our synergies. So Rich Manson to go ahead and take that question.

Richard Manson

Sure. Thanks, Eddie. I think it's a function of the synergies. And we've highlighted a number of those, right? So on the warehouse side, we've already consolidated operations in Mexico and didn't miss a beat. And in fact, we'll actually increase sales, which will be a further commercial synergy. Jim highlighted in his comments that the Connecticut operations will be combined by first quarter, again, reducing fixed costs without missing a beat on the commercial side. We've got a lot of opportunities like that. I think Rick highlighted the one about Tulsa, where we're literally across the street from each other. We're going to move equipment into the building that has capacity to maximize the assets. And I think you talk about it all the time, Eddie. It's about sweating the assets. And I think we have a number of opportunities whether it be in Cleveland, Minneapolis, outside of Atlanta, a lot of those type of projects are underway and will show fruition within the next year or 2.

On top of that, on the administrative side, we've done a great job of eliminating duplicated expense. And then also, we've been really smart where people have just chosen to leave, we're filling the positions with existing people. I think as of the end of the third quarter, something like 3 dozen positions were essentially eliminated without causing any friction, and it's a $9 million annualized savings. And there's probably another $3 million to go with another dozen, dozen and a half positions that we know of in the next quarter. So very optimistic that those will be very achievable in the next 2 to 3 years. As we've highlighted, we're only 9 months into this thing, and we've already exceeded the $40 million of savings. We're in the $60 million run rate, and we feel very committed to achieving the under $120 million at the end of the 2-year anniversary of the merger.

Edward Lehner

Thanks, Rich. And I would also reference our productivity this quarter at 2.25 tons per employee per day was really well above our benchmark. And I think that is evidence already of the opportunities we have to create expense leverage as we grow the business and really take full advantage of the assets and network that we do have.

Do we have any more questions? Good. One more. All right.

Justine Carlson

We have one more.

Edward Lehner

We're just getting warmed up.

Justine Carlson

It kind of plays on the last one asks if we could talk more about the learnings from the commercial enhancement synergy efforts and how are we expanding those best practices across the network.

Edward Lehner

Yes. So Rick?

Richard Marabito

Yes. I think that area in terms of synergy has been probably the biggest pleasant surprise. When you go into a merger, you always have some concerns on the commercial side where you may have overlap or customer concentrations. But boy, that's been an area I think our teams have really done a great job. Andrew Greiff led that effort with our presidents and our senior commercial people. I think we got on it literally day 1, and we were organized and committed to have one voice to the customer, listen to our customers in terms of how they would like us to serve them going forward as a new united company. So I think that's been fantastic.

I think the other part of it is we are continuing to pick up a lot of new business. And I think that just speaks to some of the benefits we knew going into the merger in terms of expanded footprint, availability of processing capabilities. So we've been really pleased with that. And it ties in, you're right, Justine, it ties in with the last question also, boy, when you've got kind of the demand engine going and you're picking up new business, and that's our expectation to continue to do that. You also gained some nice expense leverage and productivity. So thanks for the question. That's been really an area that we're really proud of the progress we made.

Edward Lehner

Seeing that there are no more questions, we want to wish everybody a safe and happy holiday season, and we look forward to being with all of you again in early 2027. Thank you.

Operator

And once again, that does conclude today's conference. We thank you all for your participation. You may now disconnect.