Slide 1: Information Package for Investor Conference Call
INFORMATION PACKAGE FOR INVESTOR CONFERENCE CALL AUGUST 1, 2024
Slide 2: Index
INDEX 1. Cautionary Statement on Forward-Looking Information 3 2. Notes (Non-GAAP Measures) 4 3. Q2 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 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 • Sheet and plate prices moderated down in Q2 Carbon Steel: Inventory (Canada) • Supply chain inventories remain modest Source: Metals Service Center Institute (MSG) • Demand is steady 1,600,000 - INDUSTRY INVENTORY 6.0 5.5 INV Months on Hand 5.0 Scrap vs Coil & Plate Pricing 1,400
Slide 6: Q2 2024 at a Glance
Q2 2024 AT A GLANCE • Revenues were up vs. Q1 • Slight decrease in gross margin; EBITDA margin stable in spite of steel price volatility • Solid earnings and returns; very consistent results over past several quarters amidst market volatility • Our capital structure remains strong with significant f
Slide 7: Summary: Financial Results
SUMMARY: FINANCIAL RESULTS $ mm, unless otherwise stated Q2 2023 Q1 2024 Q2 2024 Q2 2024 Observations: Income Statement: Revenues $1,189 $1,061 $1,072 • Revenues were up 1% vs. Q1 • Gross margins declined slightly in all segments Gross Margin ($ mm/%) $275 / 23% $238 / 22% $225 / 21% • EBITDA, EBIT
Slide 8: Variance Analysis: EBITDA Q1 2024 vs. Q2 2024
VARIANCE ANALYSIS: EBITDA Q1 2024 VS. Q2 2024 $100 $90 $3 $16 $86 $84 $80 $70 ($1) ($2) ($19) $60 C .Q .E $50 V). u $40 • Mark-to-market recovery on stock-based comp $8 in Q2 vs. NIL in vs. Q1 $30 • Thunder Bay terminals $4 mm in Q2 vs. $(1.8) mm in Q1 $20 $10 $0 Volumes Op Costs Distributors Q2 202
Slide 9: Segment Breakdown: Operating Results
SEGMENT BREAKDOWN: OPERATING RESULTS Revenue (C$ millions) Gross Margins % Earnings from Operations (C$ millions) $1,000 40% $130 35% $800 $110 30% 25% $90 $600 20% $70 $400 15% $50 $200 ----------------..--...._____ 10% $30 5% $10 $0 0% ($10) MSC Energy Distributors MSC Energy Distributors MSC Ener
Slide 10: Service Center Results
SERVICE CENTER RESULTS Tons Shipped (000’s) • Q2 2024 tons were up 2% vs. Q1 as demand remains steady. 360 340 • Price realizations decreased $74/ton and CGS decreased 320 $17/ton -- lower margin/ton in Q2 vs. Q1. 300 280 260 240 220 Revenue and CGS/Ton 200 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 11: Inventory Turns
INVENTORY TURNS • Q2 2024 inventory turns remained consistent with Q1. Inventory Turns 5.0 4.7 4.5 4.0 3.8 4.0 4.0 3.9 3.9 4.0 3.9 3.9 3.5 3.4 3.8 3.7 3.8 3.5 3.0 3.0 3.0 3.2 3.0 2.9 2.5 2.2 2.5 2.0 1.5 1.0 0.5 0.0 June Sept. L Dec. March June Sept. Dec. March June Sept. Dec. March June Sept. Dec. M
Slide 12: Working Capital Management: Inventory
WORKING CAPITAL MANAGEMENT: INVENTORY Inventory Trends $1,200 $1,050 $1,008 $1,025 $986 $1,000 $964 $957 $948 $941 $124 $907 $894 $190 $211 $884 $883 $123 $862 $125 $861 $228 $166 $123 $840 $843 $100 $95 $790 $787 $120 $800 $95 $773 $153 $103 $116 $143 $87 $716 $720 $103 $121 $378 $64 $74 $334 $320
Slide 13: Return on Capital
RETURN ON CAPITAL $1,800 80% $1,636 $1,600 $1,553 70% $1,471 $1,492 $1,512 $1,462 $1,466 $1,435 $1,436 $1,424 $1,410 $1,388 $1,400 $1,418 $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% 26% 30% 23% $600 25% 19% 19%
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. • More flexible capital structure with new unsecured bank deal and calling of $150 mm of 6% Notes. 6/30/23 3/31/24 6/30/24 Russel - Book Value per Sha
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 $108 mm Backs • Q2: 1.5 mm acquired for $56 mm (avg. $38.08/share) + tax Facility • Since NCIB established in Modernizat
Slide 16: Dividend and Share Buy Back Summary
DIVIDEND AND SHARE BUY BACK SUMMARY Historical (and Projected Q3'24) Quarterly Dividends $0.42 Return of Capital to Shareholders (millions) $80 $0.40 $69 $0.38 $45 $56 $40 $44 $41 $39 $35 $20 I I $24 $16 $17 $15 $12 $24 $0.35 III II I II I I II I II I II I II I I II I II I II I II I I I $24 $24 $24
Slide 17: Samuel Acquisition Update
SAMUEL ACQUISITION UPDATE • The transaction is expected to close on August 12 • The closing working capital is expected to be comparable to the level that was disclosed at Sept. 30/23 (ie. the last balance sheet at the time of the acquisition announcement). There are two main changes: • Significant
Slide 18: Capex Project Update – Saskatoon Greenfield
CAPEX PROJECT UPDATE – SASKATOON GREENFIELD • The $14 mm Saskatoon project is progressing on track with completion expected in late summer. • The project will involve closing the existing Saskatoon location, monetizing the real estate and moving equipment into this new facility. Russel Metals 18
Slide 19: Capex Project Update – Other Modernizations
CAPEX PROJECT UPDATE – OTHER MODERNIZATIONS • There are four other modernizations projects that are evolving through the later part of 2024. Joplin, MO - US$9 mm Green Bay, WI – US$11 mm Little Rock, AR – US$8 mm Texarkana, TX – US$9 mm 19
Slide 20: Portfolio Changes and Impact
PORTFOLIO CHANGES AND IMPACT • The portfolio changes Business Segment Relative Performance - 2020 80% significantly reduced Business our free cash flow 60% improvement/reorganization • /.· . .• .. . program in 2021/22 Capital limits changed and variable Business rationalization is underway volatilit
Slide 21: Financial Highlights
FINANCIAL HIGHLIGHTS Six Months Ended Years Ended December 31 June 30 2024 2023 2023 2022 2021 2020 OPERATING RESULTS (millions) Revenues $2,132.6 $2,376.3 $4,505.1 $5,070.6 $4,208.5 $2,688.3 EBITDA (1) 169.8 247.8 425.6 578.9 664.0 125.2 Adjusted EBITDA (1) 169.8 247.8 425.6 578.9 666.6 159.0 Adjus
Slide 22: Financial Highlights
FINANCIAL HIGHLIGHTS Six Months Ended Years Ended December 31 June 30 2024 2023 2023 2022 2021 2020 OPERATING RESULTS (millions) Revenues $2,132.6 $2,376.3 $4,505.1 $5,070.6 $4,208.5 $2,688.3 EBITDA (1) 169.8 247.8 425.6 578.9 664.0 125.2 Adjusted EBITDA (1) 169.8 247.8 425.6 578.9 666.6 159.0 Adjus
Slide 23: Consolidated Statements of Earnings on an Adjusted Basis
CONSOLIDATED STATEMENTS OF EARNINGS ON AN ADJUSTED BASIS Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 ($ millions) 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) 328.4 322.4 306.7 310.1 332.0 339.8 293.1
Slide 24: Consolidated Statements of Earnings on an Adjusted Basis
CONSOLIDATED STATEMENTS OF EARNINGS ON AN ADJUSTED BASIS Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 ($ millions) 2024 2024 2023 2023 2023 2023 2022 2022 2022 2022 2021 2021 2021 2021 2020 2020 2020 2020 Quarter ended: Revenue 1,071.5 1,061.1 1,019.3 1,109.5 1,189.5 1,186.7 1,099.8 1,269.9