Russel Metals Inc. · TSX:RUS
Russel Metals — Investor Presentation (November 2020)
26 slides from Russel Metals's investor presentation, November 2020
Slide 1: Company Update November 2020
COMPANY UPDATE NOVEMBER 2020
Slide 2: Forward-Looking Information
FORWARD-LOOKING INFORMATION Certain information contained in this presentation constitutes forward-looking information within the meaning of applicable securities laws. Forward-looking information relates to future events or future performance. All statements, other than statements of historical fac
Slide 3: Non-GAAP Measures
NON-GAAP MEASURES This presentation includes a number of measures that are not prescribed by GAAP and as such may not be comparable to similar measures presented by other companies. We believe these measures are commonly employed to measure performance in our industry and are used by analysts, inves
Slide 4: 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 5: Russel Metals At-A-Glance
RUSSEL METALS AT-A-GLANCE Business Overview Key Segments • Russel Metals Inc. (“the Company”) is a metals distribution company which distributes steel and other metal products across North America Metals Service – One of the two largest metals service centers operating in Canada • Extensive metal pr
Slide 6: Table of Contents
TABLE OF CONTENTS I. Market Trends II. Company Overview III. Financial Overview 6
Slide 7: I. Market Trends
Il. MARKET TRENDS
Slide 8: Steel Prices vs. Russel EBIT
STEEL PRICES VS. RUSSEL EBIT HR Sheet, Plate & Russel EBIT(1) $1,200 $120 Carbon Plate HR Sheet EBIT $700 $1,000 $100 $650 Carbon Plate / HR Sheet (US$ per Ton) $800 $80 $600 EBIT (millions) $600 $60 $550 $500 $400 $40 $450 $200 $20 $400 Jul/10/20 Jul/24/20 Jun/12/20 Jun/26/20 Aug/07/20 Aug/21/20 Se
Slide 9: Scrap and Steel Production
C$ / ton $150 $200 $250 $300 $350 $400 $450 $500 Jan-11 Jul-11 Jan-12 Jul-12 AMM Scrap Values Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 SCRAP AND STEEL PRODUCTION Jan-20 Source: American Metal Market Jul-20 Net Tons (000's) 700 900 1,100 1,300
Slide 10: North American Rig Counts
NORTH AMERICAN RIG COUNTS 1000 2250 Canada U.S 900 2000 800 1750 700 1500 600 1250 500 1000 400 750 300 500 200 100 250 0 0 Source: Baker Hughes 10
Slide 11: II. Company Overview
II. COMPANY OVERVIEW
Slide 12: Service Center / Distribution Landscape
SERVICE CENTER / DISTRIBUTION LANDSCAPE Russel is one of the largest service center companies in North America Ranked by Revenue (in US$ billions) 2019 2018 Reliance Steel & Aluminum Co. $11.0 $11.5 Ryerson Inc. $4.5 $4.4 Thyssenkrupp Materials NA Inc. $3.2 $3.2 Kloeckner Metals Corp. $3.0 $3.2 Russ
Slide 13: Value-Added Processing
VALUE-ADDED PROCESSING @Russel Metals
Slide 14: Variable Cost Model – Breakdown of Cash Costs
VARIABLE COST MODEL – BREAKDOWN OF CASH COSTS THREE MONTHS ENDED SEPTEMBER 30, 2020 YEAR ENDED DECEMBER 31, 2019 $579 Million $3,499 Million Employee Operating Operating Employee Expenses - Expenses - Expenses - Expenses - Operating Fixed, $41 Fixed, $24 Fixed, $109 Fixed, $265 Expenses - Variable,
Slide 15: Countercyclical Cash Flows
COUNTERCYCLICAL CASH FLOWS Adj. EBITDA positive throughout the cycles; working capital repatriation during market downturns. Quarterly EBITDA vs. Change in Working Capital ($000’s) $250,000 $200,000 $150,000 $100,000 $50,000 $- $(50,000) $(100,000) $(150,000) Q3 2007 Q3 2008 Q3 2009 Q3 2010 Q3 2011
Slide 16: Diversified Business
DIVERSIFIED BUSINESS Geography - 138 Locations Supplier by Products Type Product Mix Tubing, OCTG, Other 4% OCTG, 2% 2% Bars 6% Non-Ferrous United Pipe, 3% 5% States - 39 Plate, 4% Others, 51% Structurals - Flat Roll, Plate, 27% 5% Flat Rolled 8% Tubing, 5% Long Product, Plate, Pipe, 5% Pipe 16% Pip
Slide 17: Return on Capital Employed Over the Cycle
RETURN ON CAPITAL EMPLOYED OVER THE CYCLE 25% 23% 20% 17% 15% Target: 15% 12% 10% 10% 10% 5% 0% 2016 2017 2018 2019 Sept 2020 YTD Annualized 17
Slide 18: Segment Breakdown: Inventories
SEGMENT BREAKDOWN: INVENTORIES At December 31, 2019 ($millions) At June 30, 2020 ($millions) At September 30, 2020 ($millions) Metals Metals Metals Steel Distributors Steel Distributors Steel Distributors Service Service Service $95 $95 $87 Centers Centers Centers $295 $297 $267 Total Total Total $8
Slide 19: Energy Sub-Segments
ENERGY SUB-SEGMENTS Field Stores Line Pipe/OCTG Energy Strategy: • Reduce absolute and relative exposure • Repatriate substantial working capital from OCTG/Line Pipe over the next 12-18 months • Rationalize operations and reduce costs • Distribution of highly engineered products • Distribution of st
Slide 20: ESG Focused
ESG FOCUSED Environmental Aggregate Emissions Sources: • Environment Management System • Low carbon emissions from operations Electricity • Our GHG emissions in 2019 were 30% Diesel Fuel approximately 56,346 CO2(e) company 41% wide which represents an emission intensity of 0.00001533 tonnes CO2(e) p
Slide 21: III. Financial Overview
III. FINANCIAL OVERVIEW
Slide 22: Financial Highlights
FINANCIAL HIGHLIGHTS $million, unless otherwise stated Q3 2019 Q2 2020 Q3 2020 Q3 2020 Observations: Income Statement: Revenues $869 $588 $615 • Gradual improvement in Q3 vs. Q2 Gross Margin ($million/ %) $152 / 17.5% $110 / 18.7% $117 / 19.0% • Gross margin % holding steady • Q3 operating results i
Slide 23: Liquidity and Capital Structure Summary
LIQUIDITY AND CAPITAL STRUCTURE SUMMARY • Following completion of the recent refinancing, Russel has over $350 mm of liquidity and no debt maturities for several years. Actual 9/30/20 Pro Forma 9/30/20 (C$ mm) (C$ mm) (1) Cash $122 -- Bank Lines - Maturity 2023 -- $32 6% Notes - Due 2022 $299 -- 5.7
Slide 24: Segment Breakdown: Operating Results
SEGMENT BREAKDOWN: OPERATING RESULTS Revenue Breakdown (C$ millions) Gross Margins % $600 25% $538 $535 21% 21% 21% $474 $500 19% 19% 19% 19% $437 20% $412 $393 19% $373 19% 16% $400 15% 17% 15% 17% $373 $300 $343 14% $316 14% 14% $298 $298 10% 11% $200 11% 10% 11% $158 $149 5% $100 $122 $100 $94 $8
Slide 25: 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 26: 6600 Financial Drive, Mississauga, Ontario
6600 Financial Drive, Mississauga, Ontario L5N 7J6 Email: info@russelmetals.com Visit us at: www.russelmetals.com Investor Relations Line: 905.816.5178
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