Ryerson's Olympic Steel Integration Hits Escape Velocity

Ryerson Holding Corporation’s second quarter 2026 earnings call was a revelation for investors tracking the Olympic Steel merger. The company delivered record revenues of $2 billion, with adjusted EBITDA (ex-LIFO) of $101 million, surpassing its own guidance of $88–92 million. As CEO Eddie Lehner put it, “we delivered greater than expected shipments on a same store AND TOTAL COMPANY BASIS, achieved revenue, and adjusted EBITDA, excluding LIFO, well above our guidance ranges.” — Edward Lehner, Chief Executive Officer · 2026-07-30 The quarter marked the first full reporting period since the merger closed, and the integration is already showing its teeth.

We have achieved a great deal together in these first months, but we are just in the early stages of getting to escape velocity.

The Merger Thesis Starts to Pay

The synergy engine is running ahead of schedule. Management reported $5 million in realized synergies in Q2, with expectations for $13–14 million in Q3, implying an annual run rate of $52–56 million—well above the $40 million first-year target. The integration process is not just about cost cuts but about commercial expansion. The company is actively rebalancing its business mix between transactional and programmatic volumes. CFO Jim Claussen explained the strategy: “we're looking to improve both sides of the ledger.” — Edward Lehner, Chief Executive Officer · 2026-07-30 The current split is roughly 40% transactional to 60% contract, with the margin differential between the two segments running 700–800 basis points. By shifting more volume toward the higher-margin transactional business, Ryerson aims to drive structural margin improvement.

Since the merger announcement, management has consistently emphasized synergy attainment. On the May call, Eddie reiterated: “we feel that we're tracking on pace to hit our annual run rate synergies and expect those to continue to propagate and get into the financial statements.” — Edward Lehner, Chief Executive Officer · 2026-05-09 The Q2 results validate that confidence.

Data Centers and the Transactional Mix

One of the standout drivers this quarter was demand from data center and power generation projects, which accounted for approximately 7% of revenue and grew 30% sequentially. This aligns with a broader industrial theme of infrastructure buildout. Rick Marabito highlighted the breadth: "Our second quarter results also continue to benefit from secular demand tied to data center and power generation projects." The company is leveraging its expanded network to capture this opportunity, sharing inventory and processing capabilities across the combined footprint.

The transactional business has been the star, with volumes up double digits year-to-date. Eddie attributed the strength to investments made over the past few years finally maturing: “we're seeing that transactional growth because we do have a name and brand in the industry that gets us the quoting opportunity, but then we need to perform when we get that opportunity, increase win rates and get that product.” — Edward Lehner, Chief Executive Officer · 2026-07-30 This is a direct payoff from the CapEx cycle and the merger’s network optimization.

The entire strategy revolves around enhancing customer success by being faster and more reliable, a theme echoed throughout the call.

Guidance and Outlook

For Q3, management expects typical seasonal volume declines of 3–5% sequentially, with flat-to-up 2% average selling prices. Revenue is guided to $1.87–$1.95 billion, and adjusted EBITDA (ex-LIFO) to $88–92 million. Rising material costs and program pricing lags will pressure margins, but the company expects to cycle through these headwinds in about one inventory turn. Reported gross margin fell to 15.3% in the latest quarter, yet the adjusted figure excluding LIFO and purchase accounting expanded 20 basis points sequentially to 19.3%. This underscores the operational leverage emerging from the integration.

With higher trailing EBITDA, the company expects net leverage to approach 3x by year-end, down from 5.1x in Q1, a key deleveraging milestone. The prior call’s optimism about the cycle is now showing in the numbers: “I have been pleasantly surprised by the increase in business activity overall.” — Edward J. Lehner, Chief Executive Officer · 2026-02-20 The merger is not just a cost-savings story; it is creating a more resilient and higher-quality earnings profile for Ryerson.