Russel Metals Inc. · TSX:RUS
Russel Metals — Q4 2023 Earnings Presentation
20 slides from Russel Metals's earnings presentation, Feb 9, 2024
Slide 1: Information Package for Investor Conference Call
INFORMATION PACKAGE FOR INVESTOR CONFERENCE CALL FEBRUARY 9, 2024
Slide 2: Index
INDEX 1. Cautionary Statement on Forward-Looking Information 3 2. Notes (Non-GAAP Measures) 4 3. Q4 2023 Observations 5-17 4. Financial Highlights 18 5. Other Financial Information 19-20 Russel Metals 2
Slide 3: Cautionary Statement on Forward-Looking Information
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION Certain statements contained in this presentation constitute forward-looking statements or information within the meaning of applicable securities laws, including statements as to our future capital expenditures, our outlook, the availability of fu
Slide 4: Notes (Non-GAAP Measures)
NOTES (NON-GAAP MEASURES) In this Information Package we use certain financial measures that do not comply with International Financial Reporting Standards (IFRS or GAAP) or have standardized meanings, and thus, may not be comparable to similar measures presented by other issuers, for example EBIT a
Slide 5: Market Conditions
MARKET CONDITIONS • HR sheet prices picked up in late Q3 and continued into Q4. Plate declined modestly at the same time. • Both benchmarks have been relatively stable during the past two months • The current spread between sheet and plate is back within the historical range • Supply chain inventori
Slide 6: Q4 2023 at a Glance
Q4 2023 AT A GLANCE • Revenues were down slightly vs. Q3 (seasonal volumes and lower average selling prices) • Increase in gross margins; EBITDA margin up when excluding the TriMark contribution in Q3 • Strong earnings, returns and free cash flow generation in the quarter and for the full year • Our
Slide 7: Summary: Financial Results
SUMMARY: FINANCIAL RESULTS $ mm, unless otherwise stated Q4 2022 Q3 2023 Q4 2023 Q4 2023 Observations: Income Statement: Revenues $1,100 $1,110 $1,019 • Revenues were down 8% vs Q3 due to slightly lower volumes (seasonal factor) and lower average selling prices Gross Margin ($ mm/%) $218 / 20% $225
Slide 8: Variance Analysis: EBITDA Q4 2023 vs. Q3 2023
VARIANCE ANALYSIS: EBITDA Q4 2023 VS. Q3 2023 $120 $4 $100 $96 $1 $3 ($1) ($8) $82 $80 ($13) j. C .Q .E $60 -v). u $40 • TriMark income/gain $12 mm in Q3 vs. $0 in Q4 • Thunder Bay terminals $4 mm in Q3 vs. $3 mm in Q4 • Mark-to-market on stock-based comp $1 mm in Q3 vs. $7 mm in vs. Q4 • Other expe
Slide 9: Segment Breakdown: Operating Results
SEGMENT BREAKDOWN: OPERATING RESULTS Revenue (C$ millions) Gross Margins % Earnings from Operations (C$ millions) $1,000 40% $130 35% $800 $110 30% 25% $90 $600 20% $70 $400 15% $50 10% $30 $200 5% $10 $0 0% ($10) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 202
Slide 10: Service Center Results
SERVICE CENTER RESULTS Tons Shipped (000’s) • Q4 2023 tons were down 1% vs. Q3 2023 due to normal 360 seasonal factors, but up 5% vs. Q4 2022. 340 • Price realizations decreased $114/ton which was offset by 320 a $115/ton decrease in CGS, resulting in slightly higher 300 280 margin/ton in Q4 vs. Q3.
Slide 11: Inventory Turns
INVENTORY TURNS • Q4 2023 inventory turns were strong compared to historical Q4 levels (which are impacted by seasonality). Inventory Turns 5.0 4.7 4.5 4.0 3.8 4.0 4.0 3.9 3.9 4.0 3.5 3.4 3.8 3.7 3.8 3.5 3.0 3.4 3.3 3.2 3.0 3.0 3.0 2.9 2.5 2.2 2.5 2.0 1.5 1.0 0.5 0.0 Dec. March June Sept. I Dec. Mar
Slide 12: Working Capital Management: Inventory
WORKING CAPITAL MANAGEMENT: INVENTORY Inventory Trends $1,200 $1,050 $1,031 $1,025 $1,008 $986 $1,000 $964 $957 $948 $941 $137 $124 $907 $211 $884 $894 $190 $883 $123 $862 $125 $228 $166 $123 $840 $100 $95 $790 $787 $120 $800 $95 $773 $153 $103 $87 $716 $720 $103 $121 $429 $378 $64 $74 $334 $320 $ m
Slide 13: Return on Capital
RETURN ON CAPITAL $1,800 80% $1,636 $1,600 $1,553 $1,492 $1,512 $1,466 70% $1,479 $1,462 $1,471 $1,435 $1,436 $1,424 $1,410 $1,388 $1,400 $1,299 $1,308 60% $1,242 $1,200 $1,132 $1,133 $1,148 $1,123 50% 51% $1,000 49% $ millions 48% 41% 43% 40% $800 33% 31% 32% 27% 25% 26% 30% $600 23% 19% 20% $400 1
Slide 14: Liquidity and Capital Structure Summary
LIQUIDITY AND CAPITAL STRUCTURE SUMMARY • Significant growth in cash flow, balance sheet flexibility and book value per share over the past year. Russel - Book Value per Share 12/31/22 9/30/23 12/31/23 $27.16 $30.00 (C$ mm) (C$ mm) (C$ mm) Cash $363 $569 $629 12 Month Change +$266 mm $25.00 Bank Lin
Slide 15: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Increase capital deployment with a target of >15% return over a cycle Over 40 equipment projects Five modernization projects are Closed Alliance acquisition in underway or in the planning underway. October stage in Canada and the US Value-Added Facility Acquisitions Sam
Slide 16: Capital Reallocation Summary: 2020 - 2023
CAPITAL REALLOCATION SUMMARY: 2020 - 2023 • Over the past four years, we have generated ~$1.7 billion of cash and substantially changed our business and capital structure profile. Cash Generation 1/1/20 to 12/31/23 ($ mm) Capital Deployment 1/1/20 to 12/31/23 ($ mm) NCIB; $110 Asset Sales; $403 Redu
Slide 17: Impact – Doing More with the Same Capital
IMPACT – DOING MORE WITH THE SAME CAPITAL Total Invested capital has averaged ~$1.3-1.4 Bl over the past 10 years…however, The margin profile is now stronger with lower downside risk, higher cycle upside the portfolio composition is substantially different vs. a few years ago. and lower volatility t
Slide 18: Financial Highlights
FINANCIAL HIGHLIGHTS Years Ended December 31 2023 2022 2021 2020 2019 OPERATING RESULTS (millions) Revenues $4,505.1 $5,070.6 $4,208.5 $2,688.3 $3,675.9 EBITDA (1) 425.6 578.9 664.0 125.2 203.0 Adjusted EBITDA (1) 425.6 578.9 666.6 159.0 203.0 Adjusted EBITDA as a % of revenue (1) 9.4% 11.4% 15.8% 5
Slide 19: Consolidated Statements of Earnings on an Adjusted Basis
CONSOLIDATED STATEMENTS OF EARNINGS ON AN ADJUSTED BASIS Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 ($ millions) 2023 2023 2023 2023 2022 2022 2022 2022 2021 2021 2021 2021 2020 2020 2020 2020 2019 2019 2019 2019 METALS SERVICE CENTERS Tons Shipped ('000's) 306.7 310.1 332.0 339.8 2
Slide 20: Consolidated Statements of Earnings on an Adjusted Basis
CONSOLIDATED STATEMENTS OF EARNINGS ON AN ADJUSTED BASIS Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 ($ millions) 2023 2023 2023 2023 2022 2022 2022 2022 2021 2021 2021 2021 2020 2020 2020 2020 2019 2019 2019 2019 Quarter ended: Revenue 1,019.3 1,109.5 1,189.5 1,186.7 1,099.8 1,269.9