Russel Metals Inc. · TSX:RUS
Russel Metals — Investor Presentation (May 2025)
37 slides from Russel Metals's investor presentation, May 2025
Slide 1: Company Update - May 2025
-Russel Metals COMPANY UPDATE - MAY 2025
Slide 2: 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 3: Non-GAAP Measures
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 and EBITD
Slide 4: Table of Contents
TABLE OF CONTENTS I. Overview II. Market Trends III. Capital Allocation Priorities IV. Financial Overview 4
Slide 5: I. Overview
Il. OVERVIEW
Slide 6: Q1 2025 in Review
Q1 2025 IN REVIEW GENERATED STRONG RESULTS Record quarterly shipments EBITDA of $86 mm Cash from Operating Activities before non-cash working capital of $82 mm INCREASED CAPITAL GREW U.S., SPECIALTY & INVESTMENTS VALUE-ADD % of TOTAL Record quarterly capex of $29 mm -- GREW CAPITAL DEPLOYED GENERATE
Slide 7: Business Highlights
BUSINESS HIGHLIGHTS Compelling Market Position with Strong Supplier Relationships and Market Insight • One of the largest metals distribution and processing companies in North America • Well-established relationships with North American steel producers and one of the largest independent steel import
Slide 8: Russel Metals At-A-Glance
RUSSEL METALS AT-A-GLANCE Overview Key Segments • Distribution of various industrial products across North America • Coast-to-coast in Canada • Three segments: Metal Service Centers, Energy Field Stores and • Strong US presence in mid-west Metals Service Steel Distributors and south Centers • Founde
Slide 9: Market Position
MARKET POSITION • Russel is one of the largest service center companies in North America • Leading market position in Canada • Strong market position in the US South and US Mid-West (1) Russel results are pro forma for the acquisitions of the Samuel assets and Tampa Bay Steel. Source: Metal Center N
Slide 10: Diversified Business
DIVERSIFIED BUSINESS Locations – 140 Branches Suppliers Product Mix Transactional Business Model: Small Avg. Order Size/Large Number of Transactions/Low Customer Concentration • ~45,000 customers; Top 10 customers <10% of revenues • Average >3,300 MSC transactions/day • Average MSC segment invoice <
Slide 11: Incentive Compensation Tied to Return on Capital
INCENTIVE COMPENSATION TIED TO RETURN ON CAPITAL • A large number of our employees participate in a profit-sharing program, with bonus pools tied to their local returns on net assets. • This approach is a significant element of the pay-for-performance and decentralized culture at Russel. • The varia
Slide 12: Business Transformation
BUSINESS TRANSFORMATION Actions Impacts • Divested underperforming business units and repatriated $400 mm of • Raise the cycle floor and ceiling underperforming capital • Reduce volatility • Improvement in working capital management (better turns and eliminated risk • Grow the business of OCTG/line
Slide 13: Impact of Portfolio Changes
IMPACT OF PORTFOLIO CHANGES • The portfolio changes over the past few years significantly reduced our EBITDA variance between the peak and trough on both an absolute basis and relative to our peers. Note: Results reflect the inclusion of non-recurring items (typically charges) and exclude LIFO incom
Slide 14: Working Capital Management/Counter Cyclicality of FCF
WORKING CAPITAL MANAGEMENT/COUNTER CYCLICALITY OF FCF • Working capital management is a long-term strategy and results in countercyclical cash flows. 14
Slide 15: ESG Focus
ESG FOCUS Summary From Sustainability Report Updated April, 2025 Environmental • Divested OCTG/Line Pipe business • Low carbon emissions from operations • GHG emissions in 2023 were 54,619 tonnes CO2(e). Over the past five years, our revenues grew by 63% vs. a 2% increase in GHG emissions. Social •
Slide 16: II. Market Trends
II. MARKET TRENDS
Slide 17: Revenue Volatility vs. Indexes
REVENUE VOLATILITY VS. INDEXES • Russel Metals’ revenue is less volatile than underlying steel prices. Relative Volatility Absolute Volatility Coefficient of Variation (%) Russel Metals Service Centres - Avg Price 30% Realization (C$)/Ton Russel Metals Total Revenue - (C$) millions 23% Hot Rolled Co
Slide 18: Business Conditions: Metal Pricing Trends
BUSINESS CONDITIONS: METAL PRICING TRENDS Source: Fastmarkets as of May 2025 18
Slide 19: Business Conditions: Supply Chain Dynamics
BUSINESS CONDITIONS: SUPPLY CHAIN DYNAMICS Steel Mills/Imports: • Capacity utilization has remained in the mid 70’s. • Imports are not a major factor and remain relatively consistent. Service Centers: • Supply chain tonnage remains modest. 19
Slide 20: III. Capital Allocation Priorities
III. CAPITAL ALLOCATION PRIORITIES
Slide 21: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Increase capital deployment with a target of >15% Flexible approach to returning capital to return over a cycle shareholders LTM NCIB Activity = $141 Share Buy mm Backs Facility • Q1: 623k acquired for $25 mm • Since NCIB established in Modernizations Aug/22: 7.1 mm acq
Slide 22: Capital Reallocation Evolution
CAPITAL REALLOCATION EVOLUTION • In the five-year period of 2020-2024, we generated >$2 billion of cash and substantially changed our business and capital structure profile. 22
Slide 23: Dividend and Share Buy Back Summary
DIVIDEND AND SHARE BUY BACK SUMMARY Note: Figures exclude the federal tax on share buy backs that came into effect on Jan. 1/24. 23
Slide 24: Capex Program
CAPEX PROGRAM • The opportunities for value-added projects and facility modernizations are ongoing. New 30k Lasers Being Installed 24
Slide 25: Acquisitions
ACQUISITIONS • We have completed several acquisitions over the past few years and continue to focus on tuck-in opportunities for our existing business units (e.g. Samuels, Alliance, Sanborn) or standalone/complementary businesses (e.g. Boyd, Tampa Bay). (1) Based on invested capital at Sept. 30/24 (
Slide 26: IV. Financial Overview
IV. FINANCIAL OVERVIEW
Slide 27: Trend of Recent Results
TREND OF RECENT RESULTS • Revenues were up 13% vs. Q4; full quarter from Tampa Bay, positive steel prices and strong volumes • Gross margin increased by 113 bps; EBITDA margin increased by 140 bps • Recovery from Q4 trough for all key metrics • Capital structure remains strong The quarterly figures
Slide 28: Summary: Financial Results
SUMMARY: FINANCIAL RESULTS $ mm, unless otherwise stated Q1 2024 Q4 2024 Q1 2025 Q1 2025 Observations: Income Statement: Revenues $1,061 $1,039 $1,174 • Revenues were up 13% vs. Q4’24 and up 11% vs. Q1’24 due to the seasonal recovery in volumes, improved steel prices part way Gross Margin ($ mm/%) $
Slide 29: Variance Analysis: EBITDA Q4 2024 vs. Q1 2025
VARIANCE ANALYSIS: EBITDA Q4 2024 VS. Q1 2025 Service Center Segment +$25 • Mark-to-market on stock-based comp $3 recovery in Q1 vs. $3 mm expense in Q4 • Thunder Bay down due to seasonality Service Centers 29
Slide 30: Segment Breakdown: Operating Results
SEGMENT BREAKDOWN: OPERATING RESULTS MSC: • Q1 included a full quarter from Tampa Bay and also had the benefit of a strong market environment • Prices, margins and EBIT were up significantly from Q4 Energy Field Stores: • Slow start to 2025, but it picked up in March • Revenues were up; margins and
Slide 31: Service Center Results
SERVICE CENTER RESULTS • Q1 2024 tons were a quarterly record - up 14% vs. Q4; up 11% on a same store basis. • Price realizations per ton up and CGS per ton down = increase in gross margin per ton to $430 (up $62/ton vs. Q4). 31
Slide 32: Inventory Turns
INVENTORY TURNS • Total inventory turns in Q1 improved vs. Q4 and followed typical seasonal patterns. 32
Slide 33: Working Capital Management: Inventory
WORKING CAPITAL MANAGEMENT: INVENTORY • Total inventory was up vs. Q4 reflecting higher volumes due to the pickup in market activity. 33
Slide 34: Liquidity and Capital Structure Summary
LIQUIDITY AND CAPITAL STRUCTURE SUMMARY • Significant balance sheet flexibility. • Completed inaugural investment grade term debt financing and extended/amended credit facility. • Grew book value per share. 12/31/24 3/31/25 (C$ mm) (C$ mm) Cash $43 $230 Bank Lines ($450 mm) - Maturity April 2029 (1)
Slide 35: Return on Capital
RETURN ON CAPITAL • Our total capital deployed grew in 2024 and our return on capital remained strong. 35
Slide 36: Relative Return on Capital
RELATIVE RETURN ON CAPITAL • Russel’s returns remain industry leading. Note: Results for competitors are based on operating profit before LIFO adjustments and after restructuring costs. 36
Slide 37: Contact Information
6600 Financial Drive, Mississauga, Ontario L5N 7J6 Email: info@russelmetals.com Visit us at: www.russelmetals.com Investor Relations Line: 905.816.5178