Russel Metals Inc. · TSX:RUS
Russel Metals — Q4 2024 Earnings Presentation
23 slides from Russel Metals's earnings presentation, Feb 13, 2025
Slide 1: Information Package for Investor Conference Call
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Slide 2: Index
INDEX 1. Cautionary Statement on Forward-Looking Information 3 2. Notes (Non-GAAP Measures) 4 3. Q4 2024 Observations 5-20 4. Financial Highlights 21 5. Other Financial Information 22-23 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 IFRS Accounting Standards (IFRS or GAAP) or have standardized meanings, and thus, may not be comparable to similar measures presented by other issuers, for example EBIT and EBITDA and Othe
Slide 5: 2024 in Review
2024 IN REVIEW Russel Metals 5
Slide 6: Market Conditions
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Slide 7: Q4 2024 at a Glance
Q4 2024 AT A GLANCE • Revenues were down 5% vs. Q3; full quarter contribution from Samuel offset by seasonal factors • Slight increase in gross margins; slight decrease in EBITDA margin • Solid earnings, returns and free cash flow in a challenging steel market; diversification remains beneficial • O
Slide 8: Summary: Financial Results
SUMMARY: FINANCIAL RESULTS $ mm, unless otherwise stated Q4 2023 Q3 2024 Q4 2024 Q4 2024 Observations: Income Statement: • Revenues were down 5% vs. Q3 due to seasonal impact Revenues $1,019 $1,089 $1,039 (somewhat offset by a full quarter of the Samuel and partial quarter of Tampa Bay acquisitions)
Slide 9: Variance Analysis: EBITDA Q3 2024 vs. Q4 2024
VARIANCE ANALYSIS: EBITDA Q3 2024 VS. Q4 2024 $90 Service Center Segment $(1) $80 $70 $67 $0 $61 $60 C $50 .Q E -\I} u $40 • Mark-to-market expense on stock-based comp $5 in Q3 vs. $2 mm in Q4 • Thunder Bay flat $30 $20 $10 $0 Q3 2024 Volumes Gross Margin Op Costs Energy Field Stores Distributors Ot
Slide 10: Segment Breakdown: Operating Results
SEGMENT BREAKDOWN: OPERATING RESULTS Revenue {C$ millions) Gross Margins % Earnings from Operations {C$ millions) _____________ $1,000 30% $80 $800 ............._ 25% $70 $60 20% $600 $50 15% $40 $400 $30 10% $20 ............__ $200 5% $10 $0 0% $0 f)cC> f)~ f)~ f)~ oJ oJ & <Y - MSC - Energy - Distr
Slide 11: Service Center Results
SERVICE CENTER RESULTS • Q4 2024 tons were up 6% vs. Q3 due to full quarter of Tons Shipped {000's) Samuel and partial quarter from Tampa Bay – down 1% on 380 a same store basis due to seasonality. 360 340 • Price realizations and CGS per ton decreased by similar 320 amounts vs. Q3. On a same store
Slide 12: Inventory Turns
INVENTORY TURNS • Total inventory turns in Q4 were comparable with previous Q4 patterns. Inventory Turns 5.0 - 4.7 ~~ 4.5 ·-I 3.8 4.0 4.( 4.0 3.9 4.0 -- -- -- -- -- r---,.._ 3.9 3.9 3.8 13 .9 3.5 ii 1' 3.8 -~ 3.8 3.5 3.1 r ~/ ~~ ~ - 3. ~ - 3.6 3.0 K 2.9 V - 'I-\~f ~ ~ 2. 2.5 - ,- ,- - - - - - - ,- -
Slide 13: Working Capital Management: Inventory
WORKING CAPITAL MANAGEMENT: INVENTORY • Total inventory was down slightly vs. Q3. The Q4 inventory included $14 mm related to Tampa Bay. On a same store basis, inventory was down 2% vs. end of Q3. Inventory Trends $1,200 $1,025 $1,050 $1,000 $907 $884 $800 $773 $720 C: .Q $600 E </I- $400 $200 $0 De
Slide 14: Return on Capital
RETURN ON CAPITAL Invested Capital at End of Year($ millions) Return on Invested Capital -Trailing 3 Years $2,000 50% $1,800 $1,626 40% 36% $1,600 $1,400 30% $1,200 20% $1,000 $800 10% $600 $400 0% 2019 2020 2021 2022 2023 2024 2019 2020 2021 2022 2023 2024 Russel Metals 14
Slide 15: Liquidity and Capital Structure Summary
LIQUIDITY AND CAPITAL STRUCTURE SUMMARY • Significant balance sheet flexibility. • Redeemed all legacy high yield notes and have an investment grade bank structure. • Grew book value per share. 12/31/23 12/31/24 (C$ mm) (C$ mm) (Cash) $(629) $(43) Bank Lines ($600 mm) - Maturity July 2026/28 -- $11
Slide 16: Capital Allocation Summary
CAPITAL ALLOCATION SUMMARY Increase capital deployment with a target of >15% Flexible approach to returning capital to return over a cycle shareholders 2024 NCIB Activity = $131 Share Buy mm Backs Facility • Q4: 330k acquired for $14 mm • Since NCIB established in Modernizations Aug/22: 6.5 mm acqui
Slide 17: Capex Program: Summary
CAPEX PROGRAM: SUMMARY • The recent capex activity is at a level that is in excess of historical levels due to the opportunities for value-added projects and facility modernizations. Russel Historical Capex By Quarter - $ mm 2024 total $90 mm $30 2023 total $72 mm $28 $25 ~24 $24 $21 21 $20 2015 tot
Slide 18: Acquisitions: Summary
ACQUISITIONS: SUMMARY • We have completed several acquisitions over the past few years and continue to focus on new opportunities that can be tuck- ins with our existing business units (e.g. Samuels, Alliance) or standalone/complementary units (e.g. Tampa Bay). $268 $167 $157 $139 $113 $106 $70 $36
Slide 19: Dividend and Share Buy Back Summary
DIVIDEND AND SHARE BUY BACK SUMMARY Historical (and Projected Q1'25) Quarterly Dividends Return of Capital to Shareholders (millions) $0.42 $80 $0.40 $69 $7 1 $0.38 $45 $40 $4 1 $39 $38 $35 $24 $24 $0.35 I I III III III ~~~~~~~~~~~~~~~~rorororommmmoooo~~~~NNNNnnnn~~~~~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Slide 20: Capital Reallocation Evolution
CAPITAL REALLOCATION EVOLUTION • In the five-year period of 2020-2024, we have generated >$2 billion of cash and substantially changed our business and capital structure profile. Cash Generation 1/1/20 to 12/31/24 ($ mm) Capital Deployment 1/1/20 to 12/31/24 ($ mm) Reduce Asset Sales; $403 NCIB;$244
Slide 21: Financial Highlights
FINANCIAL HIGHLIGHTS Years Ended December 31 2024 2023 2022 2021 2020 OPERATING RESULTS (millions) Revenues $4,261.2 $4,505.1 $5,070.6 $4,208.5 $2,688.3 EBITDA (1) 298.5 425.6 578.9 664.0 125.2 Adjusted EBITDA (1) 298.5 425.6 578.9 666.6 159.0 Adjusted EBITDA as a % of revenue (1) 7.0% 9.4% 11.4% 15
Slide 22: Consolidated Statements of Earnings on an Adjusted Basis
CONSOLIDATED STATEMENTS OF EARNINGS ON AN ADJUSTED BASIS Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 ($ millions) 2024 2024 2024 2024 2023 2023 2023 2023 2022 2022 2022 2022 2021 2021 2021 2021 2020 2020 2020 2020 METALS SERVICE CENTERS Tons Shipped ('000's) 359.0 340.0 328.4 322.4 3
Slide 23: 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) 2024 2024 2024 2024 2023 2023 2023 2023 2022 2022 2022 2022 2021 2021 2021 2021 2020 2020 2020 2020 Quarter ended: Revenue 1,039.2 1,089.4 1,071.5 1,061.1 1,019.3 1,109.5