Russel Metals Inc. · TSX:RUS
Russel Metals — Q1 2024 Earnings Presentation
20 slides from Russel Metals's earnings presentation, May 2, 2024
Slide 1: Information Package for Investor Conference Call
INFORMATION PACKAGE FOR INVESTOR CONFERENCE CALL MAY 2, 2024
Slide 2: Index
INDEX 1. Cautionary Statement on Forward-Looking Information 3 2. Notes (Non-GAAP Measures) 4 3. Q1 2024 Observations 5-17 4. Financial Highlights 18 5. Other Financial Information 19-20 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 moderated down in Q1, but have stabilized over the past month • Plate prices declined over the past several quarters – the spread to HR sheet has normalized • The prevailing prices remain strong compared to historical reference points • Supply chain inventories re
Slide 6: Q1 2024 at a Glance
Q1 2024 AT A GLANCE • Revenues were up vs. Q4 • Slight increase in gross margin; EBITDA margin stable in spite of steel price volatility • Solid earnings and returns • Our capital structure remains strong with significant flexibility The quarterly figures are the results for each respective quarter
Slide 7: Summary: Financial Results
SUMMARY: FINANCIAL RESULTS $ mm, unless otherwise stated Q1 2023 Q4 2023 Q1 2024 Q1 2024 Observations: Income Statement: Revenues $1,187 $1,019 $1,061 • Revenues were up 4% vs. Q4 due to the seasonal recovery • Gross margins improved in all segments Gross Margin ($ mm/%) $260 / 22% $217 / 21% $238 /
Slide 8: Variance Analysis: EBITDA Q4 2023 vs. Q1 2024
VARIANCE ANALYSIS: EBITDA Q4 2023 VS. Q1 2024 • Mark-to-market on stock-based comp • Thunder Bay terminals • Samuel transaction costs + Other Service Centers 8
Slide 9: Segment Breakdown: Operating Results
SEGMENT BREAKDOWN: OPERATING RESULTS MSC: • Revenues picked up vs. Q4 and remain at a strong level • Prices, volumes, margins and EBIT were up vs. Q4 Energy Field Stores: • Market conditions and sentiment continue to remain positive Distributors: • Revenues were down due to overseas logistics issues
Slide 10: Service Center Results
SERVICE CENTER RESULTS • Q1 2024 tons were up 4% vs. Q4 2023 due to normal seasonal rebound. • Price realizations increased $52/ton and CGS increased $7/ton -- higher margin/ton in Q1 vs. Q4. 10
Slide 11: Inventory Turns
INVENTORY TURNS • Q1 2024 inventory turns improved vs. Q4, with an increase in MSC and energy field stores. 11
Slide 12: Working Capital Management: Inventory
WORKING CAPITAL MANAGEMENT: INVENTORY 12
Slide 13: Return on Capital
RETURN ON CAPITAL $ millions $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 $1,479 $1452 64 435 $1,436 g1 424 $1,299 $1,242 $1,636 $1,553 $1,471 $1,410 $1,132 $1,183 $5148 g1 493 2394 19%] saq 49% 439 3294 16% 159% Qt Q2 a3 Q4 Qi a2 a3 a4 al 2019 2019 2019 2019 2020 2020 2020 2020 2021 mm
Slide 14: Liquidity and Capital Structure Summary
LIQUIDITY AND CAPITAL STRUCTURE SUMMARY • Significant balance sheet flexibility; growth in cash position and book value per share over the past year. 3/31/23 12/31/23 3/31/24 (C$ mm) (C$ mm) (C$ mm) Cash $401 $629 $575 1 Year Change +$174 mm Bank Lines - Maturity 2025 -- -- -- 5.75% Notes - Due 2025
Slide 15: 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 Activity = Share Buy $96 mm Backs • Q1: 339k shares acquired for $15 mm (avg. $44.12/share) Facility • Since NCIB established in Modernizatio
Slide 16: Dividend and Share Buy Back Summary
DIVIDEND AND SHARE BUY BACK SUMMARY 16
Slide 17: Business Transformation
BUSINESS TRANSFORMATION Actions Objectives • Divested underperforming business units • Raise the cycle floor and ceiling • Reinvested in value-added equipment, facility modernizations, and acquisitions • Reduce volatility • Strengthened the balance sheet • Grow the business 17
Slide 18: Financial Highlights
FINANCIAL HIGHLIGHTS Three Months Ended Years Ended December 31 March 31 2024 2023 2023 2022 2021 2020 OPERATING RESULTS (millions) Revenues $1,061.1 $1,186.7 $4,505.1 $5,070.6 $4,208.5 $2,688.3 EBITDA (1) 84.0 116.4 425.6 578.9 664.0 125.2 Adjusted EBITDA (1) 84.0 116.4 425.6 578.9 666.6 159.0 Adju
Slide 19: Consolidated Statements of Earnings on an Adjusted Basis
CONSOLIDATED STATEMENTS OF EARNINGS ON AN ADJUSTED BASIS Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 ($ millions) 2024 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) 317.7 306.7 310.1
Slide 20: Consolidated Statements of Earnings on an Adjusted Basis
CONSOLIDATED STATEMENTS OF EARNINGS ON AN ADJUSTED BASIS Q4 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 2023 2022 2022 2022 2022 2021 2021 2021 2021 2020 2020 2020 2020 2019 2019 2019 2019 Quarter ended: Revenue 1,061.1 1,019.3 1,109.5 1,189.5 1,186.7