Russel Metals: 2026 1st Quarter Financial Report

Management's Discussion and Analysis 2

Consolidated Financial Statements 16

The accompanying condensed consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") have been prepared by management and approved by the Audit Committee and the Board of Directors of the Company.

These condensed consolidated financial statements were prepared in accordance with IFRS Accounting Standards, as issued by the International Accounting Standards Board, and, where appropriate, reflect management's best estimates and judgements. Management is responsible for the accuracy, integrity and objectivity of the condensed consolidated financial statements and the MD&A within reasonable limits of materiality.

To assist management in the discharge of these responsibilities, the Company has developed, documented and maintained a system of internal controls in order to provide reasonable assurance that its assets are safeguarded; that only valid and authorized transactions are executed; and that accurate, timely and comprehensive financial information is prepared in accordance with IFRS Accounting Standards. In addition, the Company has developed and maintained a system of disclosure controls in order to provide reasonable assurance that the financial information is relevant, reliable and accurate.

The Company's Audit Committee is appointed annually by the Board of Directors. The Audit Committee, which is composed entirely of outside directors, meets with management to satisfy itself that management is properly discharging its financial reporting responsibilities and to review the condensed consolidated financial statements and the MD&A. The Audit Committee reports its findings to the Board of Directors for consideration in approving the condensed consolidated financial statements and the MD&A for presentation to the shareholders.

May 5, 2026

/s/ J. G. Reid President and

Chief Executive Officer

/s/ M. L. Juravsky

Executive Vice President and Chief Financial Officer

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") of Russel Metals Inc. and its subsidiaries provides information to assist readers of, and should be read in conjunction with, the condensed consolidated financial statements for the three months ended March 31, 2026, including the notes thereto, and the MD&A and the audited consolidated financial statements for the year ended December 31, 2025, including the notes thereto. In the opinion of management, such condensed consolidated financial statements contain all adjustments necessary for a fair presentation of the results for such periods. The results of operations for the periods shown are not necessarily indicative of what our results will be for the full year. All dollar references in our financial statements and in this report are in Canadian dollars unless otherwise stated.

Additional information related to Russel Metals Inc., including our Annual Information Form, may be obtained from SEDAR+ at https://www.sedarplus.ca or on our website at https://www.russelmetals.com.

Unless otherwise stated, the discussion and analysis contained in this MD&A are as of May 5, 2026.

Certain statements contained in this MD&A 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 future financing and our ability to pay dividends. Forward-looking statements relate to future events or our future performance. All statements, other than statements of historical fact, are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar expressions. Forward-looking statements are necessarily based on estimates and assumptions that, while considered reasonable by us, inherently involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements, including the factors described below.

We are subject to a number of risks and uncertainties which could have a material adverse effect on our future profitability and financial position, including the risks and uncertainties listed below, which are important factors in our business and the metals distribution industry. Such risks and uncertainties include, but are not limited to: volatility in product prices; cyclicality of the industry; future acquisitions; product claims; significant competition; sources of supply and supply chain disruptions; manufacturers selling directly; material substitution; failure of our key computer-based systems; cybersecurity; credit risk; currency exchange risk; restrictive debt covenants; the unexpected loss of key individuals; decentralized operating structure; labour interruptions; laws and governmental regulations; litigious environment; environmental liabilities; climate change; carbon emissions; health and safety laws and regulations; geopolitical risk and common share risk.

While we believe that the expectations reflected in our forward-looking statements are reasonable, no assurance can be given that these expectations will prove to be correct, and our forward-looking statements included in this MD&A should not be unduly relied upon. These statements speak only as of the date of this MD&A and, except as required by law, we do not assume any obligation to update our forward-looking statements. Our actual results could differ materially from those anticipated in our forward-looking statements, including as a result of the risk factors described above and under the heading "Risk" later in this MD&A, and under the heading "Risk Management and Risks Affecting Our Business" in our most recent Annual Information Form and as otherwise disclosed in our filings with securities regulatory authorities which are available on SEDAR+ at https://www.sedarplus.ca.

This MD&A includes a number of measures that are not prescribed by IFRS Accounting Standards ("IFRS" or "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, investors, lenders and other interested parties to evaluate financial performance and our ability to incur and service debt to support our business activities. Investors may find these non-GAAP measures, which include non-GAAP financial measures and non-GAAP ratios as defined in National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure, useful in understanding how management views underlying business performance.

These measures and ratios are defined below and include EBIT, EBITDA, free cash flow, liquidity and inventory turns. We believe that these may be useful in assessing our operating performance and as an indicator of our ability to service or incur indebtedness, make capital expenditures and finance working capital. The items excluded in determining EBIT and EBITDA are significant in assessing operating results and liquidity. EBIT, EBITDA and free cash flow should not be considered in isolation or as an alternative to net income, cash flows generated by operating, investing or financing activities, or other financial statement data presented in accordance with GAAP. A reconciliation of EBITDA to net income in accordance with GAAP is found below.

Cash from Working Capital - represents cash generated from changes in non-cash working capital. EBIT or Operating Profits - represents net earnings before interest and income taxes.

EBITDA - represents net earnings before interest, income taxes, depreciation and amortization.

Free Cash Flow - represents cash from operating activities before changes in non-cash working capital less capital expenditures.

Gross Margin - represents revenues less cost of materials.

Gross Margin Percentage - represents gross margin over revenues. Gross Margin per Ton - represents gross margin divided by tons shipped.

Inventory Turns - represents annualized cost of sales divided by ending inventory. Invested Capital - net debt plus shareholders' equity.

Liquidity - represents cash on hand less bank indebtedness plus excess availability under our bank credit facility. Net Debt - long-term debt less cash on hand.

Selling Price per Ton - represents revenues divided by tons shipped.

Stock-based Compensation - represents the mark-to-market of stock-based compensation.

Tons Shipped - represents revenue volumes in our standardized metal service center unit of measure, which is imperial tons.

Return on Invested Capital - represents EBIT divided by average invested capital (net debt plus shareholders' equity).

The following table provides a reconciliation of net earnings to EBITDA1:

Three Months Ended

Our first quarter 2026 results reflected a continuation of improving trend line metrics as a result of favourable market conditions and the realization of benefits from our strategic initiatives.

• Revenues reached a record quarterly level of $1.4 billion in the first quarter of 2026, which represented a 21% increase over the first quarter of 2025 and a 30% increase over the fourth quarter of 2025.

• We completed the sale of a property related to our branch in Delta (BC) for cash proceeds of $39 million, which resulted in a pre-tax gain of $36 million. In addition, we relocated and repurposed a series of equipment that had been at the Delta branch to our other operations. This initiative was part of the plan to streamline our Western Canadian footprint and reduce redundant capital that evolved from the 2024 acquisition of the Samuel branches. With the completion of the property sale, we have exceeded the upper end of our capital reduction target of $100 million. In addition to the capital reduction benefit, the sale of the Delta (BC) property illustrates that certain of our real estate holdings have market values in excess of their book values. As such, we will continue to explore selected opportunities to identify and crystallize potential value.

• Our average gross margin percentage for the first quarter of 2026 was 21.3%, which was a slight improvement over the fourth quarter of 2025, despite the lower margin profile from the assets that were acquired from Kloeckner Metals Corporation ("Kloeckner") on December 31, 2025. On a same store basis, the average gross margin percentage for our metal service centers segment increased by 111 basis points in the first quarter of 2026 versus the fourth quarter of 2025.

• In the first quarter of 2026, our EBITDA was $124 million, which was a 44% increase over the first quarter of 2025, and an 80% increase over the fourth quarter of 2025. After excluding the $36 million non-recurring gain on sale of the Delta (BC) property and the mark-to-market on stock-based compensation our comparable EBITDA is as follows:

  ($ millions)	Mar 31 2026	Dec 31 2025	Mar 31 2025
  EBITDA	$ 124	$ 69	$ 86
  Gain on sale	(36)	-	-
  Mark-to-market expense/(recovery)
  on stock-based compensation	5	3	(3)
  	$ 93	$ 72	$ 83

• The metal service centers segment had record shipments in the first quarter of 2026 despite severe weather conditions across most of eastern Canada and the U.S. in late January. The first quarter 2026 tons shipped increased by 32% over the fourth quarter of 2025, and 18% compared to the first quarter of 2025 primarily as a result of the Kloeckner acquisition. On a same store basis, shipments in the first quarter of 2026 were up 9% versus the fourth quarter of 2025.

• In the first quarter of 2026, our U.S. operations represented 53% of our revenues and 58% of our segment operating profits (excluding the impact from the gain on the Delta (BC) property) versus 44% of revenues and 45% of operating profits in 2025 and 39% of revenues and 36% of operating profits in 2024. This shift is the result of a series of targeted U.S. growth initiatives.

In the first quarter of 2026, we generated earnings per share of $1.30, which was higher than the $0.55 per share reported in the fourth quarter of 2025 and the $0.75 per share recorded in the first quarter of 2025. In the quarter, we generated an annualized return on capital of 22%, which was higher than the 15% generated in the first quarter of 2025 and the 11% generated in the fourth quarter of 2025.

During our 2026 first quarter, we generated $78 million of cash from operating activities before non-cash working capital, invested $18 million of capital expenditures to further our internal growth initiatives and returned $31 million of capital to our shareholders through share repurchases and dividends.

‌Market Conditions

Market conditions in the first quarter of 2026 were generally favourable, with demand being solid across most of our operating regions in combination with the benefits from steel price increases over the past several months. In the first quarter of 2026, U.S. prices for plate and hot rolled coil averaged US$1,073 per ton and US$984 per ton, respectively, which represented increases of 8% for plate and 15% for hot rolled coil versus the fourth quarter of 2025 averages. In addition, the U.S. prices for plate and hot rolled coil increased through the first quarter of 2026, with the March 31, 2026 prices being 8% higher for plate and 5% higher for hot rolled coil than the first quarter of 2026 averages.

‌Capital Investment Growth Initiatives

On December 31, 2025, we closed the acquisition of seven branches in the U.S. from Kloeckner. In April 2026, we finalized the adjusted purchase price at US$94 million, which resulted in a payment back to us of US$8 million. During the first quarter of 2026, the former Kloeckner branches contributed $183 million of revenue and $8 million of EBITDA to our results. In addition, we are working through a number of initiatives to integrate the acquired Kloeckner branches into our U.S. footprint, including pursuing opportunities for targeted capital investments.

In the first quarter of 2026, we invested $18 million in capital expenditures, which was an increase from the levels of the past three quarters as we advanced a series of discretionary projects. We continue to have an active pipeline of such projects that are expected to be completed in the later part of 2026 and into 2027.

‌Returning Capital to Shareholders

We have a flexible approach to returning capital to shareholders through: (i) our ongoing dividend; and (ii) share buybacks. In the first quarter of 2026, we paid $24 million of dividends and repurchased $7 million of our shares (excluding the impact of the federal tax on share repurchases).

In the 2026 first quarter, we paid dividends of $24 million or $0.43 per share. On May 5, 2026, we declared an increase in our quarterly dividend to $0.44 per share payable on June 15, 2026, to shareholders of record at the close of business on May 28, 2026. This increase is the fourth consecutive year with a dividend increase and represents a 16% cumulative increase versus the dividend level in the first quarter of 2023.

In the first quarter of 2026, we purchased 0.15 million common shares at an average price per share of $47.42 for a total of $7 million. In the period since the normal course issuer bid was established in August 2022, we have purchased 8.7 million common shares, which represents over 14% of our then shares outstanding, at an average price per share of $38.13 for total consideration of $333 million (excluding the impact of the federal tax on share repurchases).

‌Liquidity and Capital Structure

One of our key strategies is to maintain a strong capital structure in order to navigate through market cycles and be in a position to capitalize on opportunities. In March 2026, DBRS Morningstar reaffirmed our investment grade credit rating of BBB (low) with a stable trend, which is consistent with the S&P Global credit rating of BBB-. We ended the quarter with net debt of $170 million and total available liquidity of $500 million.

We are one of the largest metals distribution companies in North America. We conduct business primarily in three segments: metals service centers, energy field stores and steel distributors.

The following table provides segment information including revenues, gross margins and earnings before interest and income taxes. The corporate expenses included are not allocated to specific operating segments. Gross margins as a percentage of revenues for the operating segments are also shown below. The table shows the segments as they are reported to management and are consistent with the segment reporting in our condensed consolidated financial statements.

Three Months Ended

Results of our U.S. operations reported for the three months ended March 31, 2026, were converted at $1.3715 per US$1 compared to $1.4350 per US$1 for the three months ended March 31, 2025 and $1.3979 per US$1 for the three months ended December 31, 2025. Our U.S. operations represented approximately 53% of our total revenues compared to 44% in the same period of 2025. The exchange rate used to translate the balance sheet on March 31, 2026, was $1.3939 per US$1 versus $1.3706 per US$1 on December 31, 2025.

1. ‌Description of operations

   We provide processing and distribution services to a broad base of approximately 47,000 end users through a network of 51 Canadian locations and 31 U.S. locations. Our metals service centers carry a broad line of products in a wide range of sizes, shapes and specifications, including carbon hot rolled and cold finished steel, pipe and tubular products, stainless steel and aluminum. We purchase these products primarily from steel producers in North America and process and package them in accordance with end user specifications. We service all major geographic regions of Canada as well as the South, Northeast and Midwestern regions in the United States.

2. ‌Metals service centers segment results

Three Months Ended

Revenues increased 36% from the 2025 fourth quarter and 26% over the 2025 first quarter. Tons shipped in the first quarter of 2026 were significantly higher than both the fourth quarter of 2025 and the first quarter of 2025 primarily as a result of the Kloeckner acquisition. On a same store basis, the tons shipped were 2% lower than the 2025 first quarter and 9% higher than the 2025 fourth quarter. On a same store basis, our average selling price increased 5% compared to the first quarter of 2025 and up 1% compared with the fourth quarter of 2025.

Gross margin as a percentage of revenues of 20.9% was higher than the 20.3% in the fourth quarter of 2025. The gross margin per ton of $458 in the 2026 first quarter increased $25 per ton as compared to the 2025 fourth quarter. On a same store basis, gross margin as a percentage of revenues was 21.4% and gross margin per ton was $469 per ton in the first quarter, which reflects a $36 per ton sequential improvement versus the fourth quarter of 2025 due to an improvement in market conditions.

Operating expenses were $172 million in the first quarter of 2026 compared to $132 million in the 2025 first quarter. The increase was primarily driven by $26 million of operating costs attributable to the Kloeckner branches and additional variable compensation expense due to higher profitability.

Operating profits for the three months ended March 31, 2026, were $49 million versus $27 million in the 2025 fourth quarter and $44 million in the same period of 2025.

1. ‌Description of operations

   We distribute flanges, valves, fittings and other products, primarily to the energy industry in Western Canada and the United States. We operate from 46 Canadian and 12 U.S. facilities in our operations. We purchase our products from North American mills, independent manufacturers of flanges, valves and fittings and other products, international mills and other distributors.

2. ‌Energy field stores segment results

Three Months Ended

‌Revenues increased 15% in the 2026 first quarter compared to the fourth quarter of 2025, due to the normal seasonal recovery. Revenues in the first quarter of 2026 were up 4% compared to the 2025 first quarter as a result of more favourable market conditions.

Gross margin as a percentage of revenues was 24.5% for the three months ended March 31, 2026, which was within the typical range for this business segment, and comparable to the 24.8% from the fourth quarter of 2025, and higher than the 23.8% for the same period in 2025.

Operating expenses of $42 million were consistent with those in the 2025 first and fourth quarters.

Operating profits of $20 million for the three months ended March 31, 2026, were higher than the $15 million in the fourth quarter of 2025 and the $17 million for the same period in 2025.

1. ‌Description of operations

   Our steel distributors act as master distributors selling steel in large volumes to other steel service centers and equipment manufacturers mainly on an "as is" basis. Our U.S. operation has a cut-to-length facility located in Houston, Texas, where it processes coil for its customers. Our steel distributors source their steel both domestically and offshore.

   The main steel products sourced by this segment are structural beam, plate, coils, pipe and tubing; however, product volumes vary based on the economy and trade actions in North America.

2. ‌Steel distributors segment results

   Three Months Ended

   	Mar 31 2026	Dec 31 2025	Mar 31 2025
   Financial Highlights
   Revenue ($ millions)	$ 109	$ 92	$ 89
   Gross margin ($ millions) 1	20	16	18
   Gross margin (%) 1	18.0%	17.8%	20.5%
   Operating profits ($ millions) 1	8	9	10

   Revenues in the first quarter of 2026 were higher than the same quarter in 2025 and the fourth quarter of 2025.

   Gross margin as a percentage of revenues was 18.0% for the three months ended March 31, 2025, which was stronger than the 17.8% in the fourth quarter of 2025 but slightly lower than 20.5% in the same period in 2025.

   Operating expenses were $11 million for the first quarter of 2026 compared to $8 million for the first quarter of 2025 and $7 million in the fourth quarter of 2025.

   Operating profits for the three months ended March 31, 2026, of $8 million compared to $10 million for the three months ended March 31, 2025, and $9 million for the fourth quarter of 2025.

   ‌GAIN ON SALE OF PROPERTY

   In March 2026, we completed the sale of the real estate associated with our Delta (BC) service center branch for cash proceeds of $39 million, resulting in a pre-tax gain on sale of $36 million.

   ‌CORPORATE EXPENSES AND OTHER

   Three Months Ended

   ($ millions)	Mar 31 2026	Dec 31 2025	Mar 31 2025
   Corporate expenses	$ 8	$ 5	$ 9
   Stock-based compensation	5	3	(3)
   Other expenses (income)	2	(1)	2
   	$ 15	$ 7	$ 8

   Corporate expenses in the above table excludes the mark-to-market on stock-based compensation, which is disclosed separately in the above table.

   Corporate expenses of $8 million for the three months ended March 31, 2026, were lower by $1 million compared to the three months ended March 31, 2025, but higher than the $5 million in the fourth quarter of 2025. The mark-to-market on our stock-based compensation was an expense of $5 million compared to an expense of $3 million in the fourth quarter of 2025 and an expense recovery of $3 million in the first quarter of 2025.

   ‌INTEREST EXPENSE

   Three Months Ended

   ($ millions)	Mar 31 2026	Dec 31 2025	Mar 31 2025
   Interest on Senior Unsecured Notes	$ 3	$ 3	$ -
   Interest on lease obligations	4	4	4
   Other interest (income) expense, net	-	(2)	1
   	$ 7	$ 5	$ 5

   Net interest expense of $7 million for the first quarter of 2026 compared to $5 million for the first and fourth quarter of 2025 due to the utilization of capital for the Kloeckner acquisition that closed on December 31, 2025.

   ‌INCOME TAXES

   We recorded a provision for income taxes of $19 million for the first quarter of 2026 compared to $14 million for the first quarter of 2025. Our effective income tax rate for the three months ended March 31, 2026 was 20.9% compared to 25.2% for March 31, 2025. The lower effective tax rate in the first quarter of 2026 was due to a portion of the pre-tax earnings being a capital gain on the property sale, for which lower effective rates are applied.

   ‌NET EARNINGS

   Net earnings for the first quarter of 2026 of $72 million compared to $30 million in the fourth quarter of 2025 and

   $43 million in the first quarter of 2025. Earnings per share for the first quarter of 2026 were $1.30 compared to

   $0.55 for the fourth quarter of 2025 and $0.75 per share for the first quarter of 2025.

   ‌SHARES OUTSTANDING AND DIVIDENDS

   The weighted average number of common shares outstanding for the first quarter of 2026 was 55.0 million compared to 57.0 million for the first quarter of 2025. Common shares outstanding on March 31, 2026, and on May 5, 2026, were 54.9 million.

   We paid common share dividends of $24 million or $0.43 per share in the first quarter of 2026 and $24 million or

   $0.42 per share in the first quarter of 2025.

   ‌CAPITAL EXPENDITURES

   Three Month Ended

   ($ millions)	Mar 31 2026	Dec 31 2025	Mar 31 2025
   Capital expenditures - property, plant and equipment	$ 18	$ 14	$ 29
   Additions - right-of-use assets	6	6	6
   Depreciation - property, plant and equipment	15	13	14
   Depreciation - right-of-use assets	9	7	7

   ‌LIQUIDITY AND CAPITAL RESOURCES

   On March 31, 2026, we had net debt, defined as bank indebtedness and term debt less cash, of $170 million compared to $184 million on December 31, 2025. At March 31, 2026, we had $300 million of senior unsecured notes that are due on March 28, 2030.

   ‌Cash Flows

   The following table represents our cash flow movement for the periods noted:

   Three Month Ended

   ($ millions)	Mar 31 2026	Dec 31 2025	Mar 31 2025
   Cash flow from (used) in operating activities	$ 23	$ 106	$ (17)
   Cash flow (used) from financing activities	(39)	(55)	229
   Cash flow from (used) in investing activities	21	(142)	(28)
   Effect of exchange rates on cash and cash equivalents	9	(6)	-
   Increase (decrease) in cash and cash equivalents	14	(97)	185

   ‌Cash Flow from Operating Activities

   During the three months ended March 31, 2026, we generated $78 million in cash from operating activities before non-cash working capital, utilized $46 million of cash for working capital and utilized $10 million for the payment of income taxes.

   The balances disclosed in our consolidated cash flow statements are adjusted to remove the non-cash component related to foreign exchange rate fluctuations impacting inventory, accounts receivable, accounts payable and income tax balances of our U.S. operations.

   ‌Cash Flow for Financing Activities

   During the three months ended March 31, 2026, we used $39 million of cash for financing activities. We utilized

   $7 million to repurchase shares and $24 million for dividends.

   ‌Cash Flow From/Used in Investing Activities

   During the three months ended March 31, 2026, we had $21 million in cash from investing activities, which was comprised of a utilization of $18 million for capital expenditures and cash generated of $39 million from the sale of real estate.

   ‌Working Capital

   Inventory and accounts receivable represent a large percentage of our total assets employed and comprise our largest liquidity risks. However, our cash flows are counter cyclical, and we typically generate cash from working capital during market downturns.

   Total assets were $2.8 billion on March 31, 2026, and $2.7 billion on December 31, 2025. The increase was due in part to the seasonal increase in accounts receivable of $158 million. On March 31, 2026 and December 31, 2025, current assets excluding cash represented 67% and 65% of our total assets respectively.

   Inventories represented 39% of our total assets, excluding cash, on March 31, 2026, and 42% on December 31, 2025.

   Inventory by Segment ($ millions)	Mar 31 2026	Dec 31 2025	Sep 30 2025	Jun 30 2025	Mar 31 2025
   Metals service centers	$ 737	$ 726	$ 626	$ 662	$ 652
   Energy field stores	227	225	221	217	220
   Steel distributors	107	133	126	133	122
   Total	$ 1,071	$ 1,084	$ 973	$ 1,012	$ 994

   Cost of Sales by Segment ($ millions)	Mar 31 2026	Dec 31 2025	Sep 30 2025	Jun 30 2025	Mar 31 2025
   Metals service centers	$ 835	$ 620	$ 657	$ 661	$ 664
   Energy field stores	192	167	169	190	186
   Steel distributors	89	75	95	75	71
   Total	$ 1,116	$ 862	$ 921	$ 926	$ 921

   Inventory Turns 1 (quarters ended)	Mar 31 2026	Dec 31 2025	Sep 30 2025	Jun 30 2025	Mar 31 2025
   Metals service centers	4.5	3.4	4.2	4.0	4.1
   Energy field stores	3.4	3.0	3.0	3.5	3.4
   Steel distributors	3.3	2.3	3.0	2.3	2.3
   Total	4.2	3.2	3.8	3.7	3.7

   For the quarter ended December 31, 2025, our inventory turns in metals service centers, excluding the December 31, 2025, Kloeckner acquisition, would have been 3.9 turns and our total turns would have been 3.5 turns.

   ‌1 Refer to Non-GAAP Measures and Ratios on page 3

   Our inventory turns for the quarter ended March 31, 2026 were stronger than the fourth quarter of 2025 and the comparable first quarter of 2025. At March 31, 2026, our inventory tonnage at our metals service centers was 5% lower, and the average cost was 6% higher than the levels on December 31, 2025. Inventory at our energy field stores was comparable with the level at December 31, 2025. In steel distributors, the inventory at March 31, 2026, was 20% lower than at December 31, 2025, due to offshore shipping delays.

   Accounts receivable utilized cash of $154 million at March 31, 2026 and represented 26% of our total assets, excluding cash, on March 31, 2026, compared to 22% on December 31, 2025.

   ‌Debt

   ($ millions)	March 31 2026	December 31 2025
   4.423% $300 million Senior Unsecured Notes due March 28, 2030	$ 298	$ 298
   	$ 298	$ 298

   ‌Cash and Bank Credit Facilities

   ($ millions)	March 31 2026	December 31 2025
   Bank borrowings	$ -	$ -
   Cash net of outstanding cheques	128	115
   Net cash	128	115
   Letters of credit	(68)	(24)
   	$ 60	$ 91
   Facility
   Borrowings and letters of credit	$ 400	$ 400
   Borrowings	-	-
   Letters of credit	50	50
   Facilities availability	$ 450	$ 450

   We have a $450 million committed, unsecured credit facility with a syndicate of Canadian and U.S. banks that provides: (i) Facility A - $400 million for borrowings or additional letters of credit; (ii) Facility B - $50 million for letters of credit; which expire on April 30, 2029.

   On March 31, 2026, we had no borrowings and $68 million of letters of credit outstanding under the facilities. On December 31, 2025, we had no borrowings and $24 million of letters of credit.

   On March 31, 2026, we were in compliance with all of our financial covenants.

   With our cash, cash equivalents and our bank facilities we had access to approximately $500 million of cash on March 31, 2026. The use of our bank facilities has been predominantly to fund working capital requirements, acquisitions and trade letters of credit for inventory purchases.

   ‌CONTRACTUAL OBLIGATIONS

   On March 31, 2026, we were contractually obligated to make payments as per the following table:

   Payments due in
   Contractual Obligations ($ millions)	2026	2027 and 2028	2029 and 2030	2031 and thereafter	Total
   Accounts payable	$ 638	$ -	$ -	$ -	$ 638
   Long-term debt	-	-	300	-	300
   Long-term debt interest	7	26	20	-	53
   Operating leases	34	81	55	93	262
   Total	$ 679	$ 107	$ 375	$ 93	$ 1,253

   We are obligated to pay $68 million in letters of credit when they mature in 2026. We have outstanding US$97 million in forward exchange contracts that mature in 2026.

   We expect our 2026 capital expenditure level to be approximately $100 million. These investments are being planned but not legally committed expenditures.

   We provide defined contribution pension plans for a majority of our Canadian and U.S. employees; however, we have obligations related to multiple defined benefit pension plans in Canada and one in the U.S., as disclosed in Note 16 of our annual 2025 consolidated financial statements.

   For our Canadian plans as provided in the plan text, we are using our defined benefit surplus to fund some of the employer portion of our defined contribution plan contributions. During the three months ended March 31, 2026, we used $1 million of our defined benefit surplus to fund the defined contribution plan, and we expect to use approximately $4 million of our defined benefit surplus to fund the defined contribution plan during the remainder of 2026. The defined benefit obligations reported in the consolidated financial statements use different assumptions than the going concern actuarial valuations prepared for funding. In addition, the actuarial valuations provide a solvency valuation, which is a valuation assuming the plan is wound up at the valuation date. We do not have additional funding obligations on a solvency basis and no additional funding would be required based on solvency if the plans were wound up. We estimate the impact of a 0.25% change in the discount rate on the solvency obligation would be approximately $2 million.

   For our U.S. defined benefit pension plan, we expect to contribute $0.4 million to these plans in 2026. We estimate the impact of a 0.25% change in the discount rate on the solvency obligation would be approximately

   $1 million.

   We have disclosed our obligations related to environmental litigation, regulatory actions and remediation in our Annual Information Form under the heading "Environmental Regulation". These obligations, which are not material, relate to previously divested or discontinued operations and do not relate to current businesses.

   ‌OFF-BALANCE SHEET ARRANGEMENTS

   Our off-balance sheet arrangements consist of the letters of credit disclosed in the bank credit facilities table and short-term and low value operating lease obligations disclosed in the contractual obligations table.

   ‌ACCOUNTING ESTIMATES

   The preparation of our consolidated financial statements requires management to make estimates and judgements that affect the reported amounts. On an ongoing basis, we evaluate our estimates, including those related to bad debts, inventory valuation, useful lives of fixed assets, asset impairment, fair values, income taxes, pensions and benefits obligations, guarantees, decommissioning liabilities, contingencies, litigation and assigned values on net assets acquired. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

   Our most significant assets are accounts receivable and inventories.

   ‌Accounts Receivable

   An allowance for expected credit losses is maintained for estimated losses resulting from the inability of our customers to make required payments. Assessments are based on aging of receivables, legal issues (bankruptcy status), past collection experience, current financial information, credit agency reports and the experience of our credit personnel. Accounts receivable which we determine to be uncollectible are reserved in the period in which the determination is made. If the financial condition of our customers was to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. Our allowance for expected credit losses on March 31, 2026, was consistent with our allowance on December 31, 2025.

   ‌Inventories

   We review our inventories to ensure that the cost of inventories is not in excess of its estimated net realizable value and for obsolete and slow-moving product. Inventory reserves or write-downs are recorded when cost exceeds the estimated selling price less cost to sell and when product is determined to be slow moving or obsolete. Our inventory reserves at March 31, 2026, were consistent with our reserves at December 31, 2025.

   Other areas involving significant estimates and judgements include:

   ‌Long-lived Asset Impairment

   The determination of whether long-lived assets, including goodwill and intangibles assets, are impaired requires the estimation of future cash flows and an appropriate discount rate to determine value in use. An impairment occurs when the book value of the assets associated with a particular cash generating unit is greater than the higher of the value in use or its fair value less costs to sell. The assessment of future cash flows and a discount rate requires significant judgement.

   During the quarter ended March 31, 2026, no long-lived asset impairments were recorded. There is no certainty that there will not be a future impairment should the economic markets in which we operate deteriorate.

   ‌Income Taxes

   We believe that we have adequately provided for income taxes based on the information that is currently available. The calculation of income taxes in many cases requires significant judgement in interpreting tax rules and regulations, which are constantly changing. Our tax filings are also subject to audits, which could materially change the amount of current and future income tax assets and liabilities. Any change would be recorded as a charge or reduction in income tax expense.

   ‌Business Combinations

   For each acquisition we review the fair value of assets acquired. Where we deem it appropriate, we hire outside business valuators to assist in the assessment of the fair value of property, plant, equipment, intangible assets and contingent consideration, if any, of acquired businesses.

   ‌Contingent Liabilities

   Provisions for claims and potential claims are determined on a case-by-case basis. We recognize contingent loss provisions when it is determined that a loss is probable and when we are able to reasonably estimate the obligation. This determination takes significant judgement and actual cash outflows might be materially different from estimates. In addition, we may receive claims in the future that could have a material impact on our financial results.

   The Company and certain of its subsidiaries have been named defendants in a number of legal actions. Although the outcome of these legal actions cannot be determined, management intends to defend all such legal actions and has recorded provisions, as required, based on its best estimate of the potential losses. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on our financial position, cash flows or operations.

   ‌Employee Benefit Plans

   At least every three years, our actuaries perform a valuation for each defined benefit plan to determine the actuarial present value of the benefits. The valuation uses management's assumptions for the interest rate, rate of compensation increase, rate of increase in government benefits and expected average remaining years of service of employees. While we believe that these assumptions are reasonable, differences in actual results or changes in assumptions could materially affect employee benefit obligations and future net benefit plan cost. We account for differences between actual and assumed results by recognizing differences in benefit obligations and plan performance immediately in other comprehensive income.

   Our Canadian plan assets were approximately $96 million in plan assets on March 31, 2026, which is a decrease of approximately $5 million from December 31, 2025. The discount rate used on the Canadian employee benefit plan obligation for the quarter ended March 31, 2026, was 5.1% which is 20 basis points higher than the discount rate on December 31, 2025. Our U.S. plan assets were approximately $23 million on March 31, 2026, which approximated the plan assets at December 31, 2025. The discount rate used on the U.S. employee benefit plan obligation for the quarter ended March 31, 2026, was 5.6% which was 18 basis points higher than the discount rate on December 31, 2025.

   ‌Leases

   We recognize right-of-use assets and lease obligations which includes our arrangements that contain a lease. The determination of the asset and obligation requires an assessment of whether we are reasonably certain that an extension option will be exercised, calculation of a discount rate inherent in the lease or an incremental borrowing rate and whether the right-of-use asset is impaired. These determinations require significant judgement.

   ‌CONTROLS AND PROCEDURES

   Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management on a timely basis so that appropriate decisions can be made regarding public disclosure.

   The purpose of internal controls over financial reporting as defined by the Canadian Securities Administrators is to provide reasonable assurance that:

   1. financial statements prepared for external purposes are in accordance with the Company's generally accepted accounting principles,

   2. transactions are recorded as necessary to permit the preparation of financial statements, and records are maintained in reasonable detail,

   3. receipts and expenditures of the Company are made only in accordance with authorizations of the Company's management and directors, and

   4. unauthorized acquisitions, uses or dispositions of the Company's assets that could have a material effect on the financial statements will be prevented or detected in order to prevent material error in financial statements.

The President & Chief Executive Officer and the Executive Vice President & Chief Financial Officer have caused management and other employees to design and document our disclosure controls and procedures and our internal controls over financial reporting. The design of internal controls was completed using the framework and criteria established in "Internal Control - Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission. In accordance with National Instrument 52-109 we have limited our scope for reporting on disclosure controls and procedures and internal controls over financial reporting during the first year of acquiring the Kloeckner locations.

No changes were made in our internal controls over financial reporting at our non-Klockner locations during the first quarter of 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

‌Summary Financial Information - Kloeckner Locations

The line items that could be affected by this limited scope at the Kloeckner locations are revenue, earnings before interest, taxes, depreciation and amortization, current assets and current liabilities.

The metals distribution business is a mature and cyclical industry. We believe we enhance returns by managing costs and working capital throughout the cycle. In addition, our facility modernization initiative and our value-added processing investments enable us to better service our customers and enhance margins.

Capital allocation priorities and limits are managed centrally with day-to-day decision making delegated to the various operations. Furthermore, our variable compensation model is based on the return on net assets for each business unit, which provides our business leaders a basis to proactively adjust costs and working capital to local market conditions. Management believes that this strategy will result in higher average earnings over the cycle and in the top quartile of the industry. We continue our facility modernization initiative which, along with our multi-year expansion of our value-added processing equipment, will enhance our capabilities and provide improved service to our customer base.

Growth from selective acquisitions is also part of our strategy. We focus on investment opportunities in businesses that have strong market niches or provide scale to our existing operations. New acquisitions could be either major stand-alone operations or ones that complement our existing operations.

Returning capital to our shareholders through our ongoing dividends and opportunistic share buybacks is also part of our strategy.

A summary of the risks affecting our business is described under the heading "Risk Management and Risks Affecting Our Business" in our most recent Annual Information Form, which section is incorporated by reference in this "Risk" section of our MD&A.

The timing and extent of future price changes from steel producers and their impact on us cannot be predicted with any certainty due to the cyclical nature of the steel industry, capacity utilization rates for North American steel producers and changing import levels and tariffs. Future tariff changes to country or product exemptions, including possible modifications to the section 232 trade actions, may impact steel prices and product availability. In the case of significant increases in tariffs, we evaluate alternative sources of supply and when these are not available, tariff increases are passed onto our customers.

During the first quarter of 2026, the U.S. Supreme Court threw out certain tariffs imposed in 2025, but these were replaced with other tariffs. Subsequent to quarter end, the U.S. issued a presidential proclamation modifying the application of Section 232 tariffs on various products including steel and steel derivative products. There is continued risk related to the imposition of various tariffs, including risks related to the potential impacts on certain of our customers. We will continue to evaluate existing or potential tariffs and quotas and adjust our procurement and sales activities as required.

During the first quarter, the conflict in Iran has had a significant impact on global energy and transportation costs and affected the availability of some products out of that region causing prices on some products to increase. We will continue to evaluate the impact of the conflict in Iran, and adjust our supply chain or pricing accordingly.

A portion of our revenues is dependent on the oil and gas industry, whose activity fluctuates with oil and gas prices. Our energy field store operations provide a more stable stream of earnings than other businesses in the sector as their products are used in maintenance and repair as well as new drilling activity and large energy projects.

The impact of inflation, interest rates changes, geopolitical uncertainty, prevailing oil price conditions and other macro-economic factors may lead to changes in estimates in our financial statements and the effect of such changes could be material and result in impairments of long-lived assets, including goodwill and intangible assets, provisions for inventory and credit losses.

During the past several years, various tariff measures were imposed on steel and aluminum by the U.S. government and countered by other countries, including Canada. Future steel prices and certain of our customers may be impacted by further changes in such tariffs.

Over the past several months, steel and aluminum prices have increased as a result of solid demand, ongoing tariffs that have limited international supply into North America and inflationary impacts on energy and transportation costs. We expect the recent steel price levels to continue over the near term. As a result, we expect our service center average margins to improve slightly in the second quarter as compared to the first quarter average. In addition, we expect our second quarter service center shipments to remain at levels near those experienced in the first quarter as a result of steady activity across most of our geographic regions.

Over the medium-term, we expect to benefit from further rebuilding of the U.S. industrial manufacturing base, Canadian nation building projects, as well as infrastructure related investments in areas such as data centers. In addition, we are positioned to gain market share through our ongoing investments in value-added equipment, facility modernizations and acquisitions.

Our energy field stores are expected to continue to benefit from solid energy activity in 2026. Our energy field store segment is also expected to continue to gain market share while maintaining a solid margin profile.

Three Months Ended March 31

Three Months Ended March 31

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Three Months Ended March 31

The accompanying notes are an integral part of these condensed consolidated financial statements.

The accompanying notes are an integral part of these condensed consolidated financial statements.

Russel Metals Inc. (the "Company"), a Canadian corporation with common shares listed on the Toronto Stock Exchange, is a metals distribution company operating in various locations within North America.

The Company's registered office is located at 6600 Financial Drive, Mississauga, Ontario, L5N 7J6.

These condensed consolidated financial statements were authorized for issue by the Board of Directors on May 5, 2026.

These condensed consolidated financial statements, including comparatives, have been prepared using the same accounting policies and methods as those used in the Company's consolidated financial statements for the year ended December 31, 2025. These condensed consolidated financial statements are in compliance with International Accounting Standard 34, Interim Financial Reporting ("IAS 34"). Accordingly, certain information and footnote disclosure normally included in annual financial statements prepared in accordance with IFRS Accounting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB"), have been omitted or condensed. The preparation of financial statements in accordance with IAS 34 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity or areas where assumptions and estimates are significant to the financial statements have been set out in the Company's consolidated financial statements for the year ended December 31, 2025. These condensed consolidated financial statements should be read in conjunction with the Company's consolidated financial statements for the year ended December 31, 2025.

These condensed consolidated financial statements have been prepared on a going concern basis under the historical cost convention, as modified by the revaluation of certain financial assets and financial liabilities (including derivative instruments) at fair value through the condensed consolidated statement of earnings. Historical cost is generally based on the fair value of the consideration given in exchange for assets at the time of the transaction.

These condensed consolidated financial statements are presented in Canadian dollars, which is the Company's functional currency.

IFRS 9 Financial Instrument and IFRS 7, Financial Instruments

The amendments to IFRS 9 and IFRS 7 provide clarification regarding the classification of financial assets linked to environmental, social, and governance matters, as well as the timing of derecognition of a financial asset or financial liability. The adoption of these amendments effective January 1, 2026, did not have a significant impact on the Company's financial position or results of operations.

IFRS 18 Presentation and Disclosure in Financial Statements

IFRS 18 will replace IAS 1 Presentation of Financial Statements and is expected to have an impact on how the Company presents and discloses its financial statements and the notes thereto. The new standard will provide guidance on a more structured income statement presentation, introduce disclosure requirements on management-defined performance measures and provide guidance on when additional disaggregation is required for items presented on the face of the financial statements or in the notes thereto. The standard is effective for annual periods beginning on or after January 1, 2027, with early adoption permitted and is to be applied retrospectively. The new standard will affect the Company's disclosure and presentation of its financial performance but not measurement or recognition.

The Company is currently evaluating the standard and developing an implementation plan.

2025 Acquisition

On December 31, 2025, the Company completed its acquisition of the assets and certain liabilities of seven service centers from Kloeckner Metals Corporation ("Kloeckner"). The Company acquired Kloeckner's metal service centers in Dubuque (Iowa), Charlotte (North Carolina), Suwanee (Georgia), Houston (Texas), Austin (Texas), Jackson (Florida) and Pompano Beach (Florida). The acquisition is a complementary fit with the Company's other U.S. locations. The following summarizes the final allocation of the consideration for this acquisition:

The consolidated statement of earnings for the year ended December 31, 2025, does not include any revenues or operating profits for the acquired locations.

If the acquisition had taken place at the beginning of the 2025 fiscal year, management estimates that the acquired business would have provided revenues of approximately $770 million and contributed segment operating profits of approximately $37 million (after depreciation and amortization expense of $5 million).

The transaction costs for this acquisition were $1.2 million and were included in other operating expenses in the consolidated statement of earnings for the year ended December 31, 2025.

On April 2, 2026, the Company received $11.2 million from Kloeckner as a recovery of the purchase price due to final working capital adjustments, which included an immaterial adjustment from the December 31, 2025 estimate. The resulting final purchase price was $128.4 million.

Inventories expensed in cost of sales for the three months ended March 31, 2026 were $1.1 billion (2025: $921.2 million).

During the three months ended March 31, 2026, the Company recorded a net increase of $0.4 million in inventory provisions (2025: net reduction of $2.6 million).

During 2025, the Company entered into binding sale agreements to sell land and building associated with its Saskatoon (Saskatchewan) and Delta (British Columbia) branches within the metals service centers segment. The Company transferred its book value of $4.9 million from property, plant and equipment and presented it under current assets as held for sale.

In March 2026, the Company completed the sale of the land and building associated with its Delta (British Columbia) metals service centers branch for cash proceeds of $38.5 million, resulting in a pre-tax gain on sale of

$35.6 million. The gain on sale has been recognized in the consolidated statements of earnings within operating income.

During the first three months of 2026, the Company agreed to a revised sale agreement related to the land and building associated with its Saskatoon (Saskatchewan) metals service centers branch, whereby the closing date for the sale was extended and the Company entered into a lease agreement with the prospective acquiror. The Saskatoon assets were previously classified under current assets held for sale and have been reclassified to property, plant and equipment and are being depreciated over its remaining useful life.

All items of property, plant and equipment are recorded and held at cost.

Land, included in land and buildings, was $72.0 million (December 31, 2025: $75.0 million).

Three Months Ended March 31

Leased land and buildings represented approximately 71% (2025: 79%) of the right-of-use assets with the remainder comprised of leases of vehicles and equipment.

The carrying value of right-of-use assets and depreciation by class of underlying assets are as follows:

Three Months Ended March 31

The continuity of cost and accumulated depreciation for intangibles, which comprised of customer relationships and non-competition agreements acquired through business combinations, is as follows:

The remaining amortization period for customer relationships is 1 to 18 years.

The Company has a credit agreement which consists of: (i) $400 million under Facility A to be utilized for borrowings and letters of credit, and (ii) $50 million under Facility B to be utilized only for letters of credit. Letters of credit are issued under Facility B first and additional needs are issued under Facility A. These facilities expire on April 30, 2029. These facilities are unsecured and are guaranteed by the Company and certain of its subsidiaries.

The Company had no borrowings as at March 31, 2026, (December 31, 2025: $nil) and letters of credit were

$68.5 million as at March 31, 2026, (December 31, 2025: $23.8 million) under this facility. The Company was in compliance with its financial covenants at March 31, 2026.

On March 28, 2025, the Company issued, through a private placement, $300 million 4.423% senior unsecured notes due March 28, 2030, for net proceeds of $298 million. Interest is due semi-annually on March 28 and September 28 of each year. These notes are senior unsecured unsubordinated obligations of the Company and rank pari passu with other existing and future unsecured unsubordinated debt.

Prior to February 28, 2030, the Company, at its option, may redeem, in whole or in part, at any time at a redemption price equal to the greater of: (a) 100% of the principal amount of the notes redeemed; and (b) the Canada Yield Price, in each case plus accrued and unpaid interest. The Canada Yield Price is equal to the sum of the present values of the remaining scheduled payments of interest and the principal on the notes to be redeemed from the redemption date to the par call date discounted at the Government of Canada yield plus 43.5 basis points. The Company may redeem the notes at par on or after February 28, 2030.

As at March 31, 2026, the Company determined its accrued benefit obligations related to the Canadian employee future benefit plans using a discount rate of 5.1% (December 31, 2025: 4.9%) and the U.S. employee future benefit plans using a discount rate of 5.6% (December 31, 2025: 5.4%). The Company determined the fair value of the defined benefit pension plan assets as at the statement of financial position date. The net change in the accrued benefit obligations less the fair value of the defined benefit plan assets resulted in an actuarial loss on employee future benefit plans of $1.1 million for the three months ended March 31, 2026 (2025: loss of $2.9 million).

The benefit obligations and plan assets for the Company's pension and other post-retirement benefit obligations are as follows:

The following table provides the defined benefit (assets) obligations for partially funded plans and unfunded plans.

Pension Plans Other Benefit Plans

1. At March 31, 2026 and 2025, the authorized share capital of the Company consisted of:

   1. an unlimited number of common shares without nominal or par value;

   2. an unlimited number of Class I preferred shares without nominal or par value, issuable in series; and

   3. an unlimited number of Class II preferred shares without nominal or par value, issuable in series.

      The Directors have the authority to issue the Class I and Class II preferred shares in series and fix the designation, rights, privileges and conditions to be attached to each series, except that the Class I shares shall be entitled to preference over the Class II shares with respect to the payment of dividends and the distribution of assets in the event of liquidation, dissolution or winding-up of the Company.

2. The number of common shares issued and outstanding was as follows:

During the three months ended March 31, 2026, the Company purchased 150,000 shares under the Company's normal course issuer bid at an average cost of $47.42 per share for a total cost of $7.1 million excluding the impact of 2.0% federal tax on share repurchase amounting to $0.1 million. The original cost of these shares of

$1.4 million was recorded as a reduction of share capital and the balance of $5.8 million as a reduction of retained earnings. The common shares purchased through this bid have been cancelled.

Dividends paid and declared are as follows:

Three Months Ended March 31

Restricted Share Units (RSU)

The Company has an RSU Plan for eligible employees as designated by the Board of Directors. Continuity of RSUs outstanding is as follows:

The RSU liability at March 31, 2026 was $20.3 million (December 31, 2025: $14.7 million). The fair value of RSUs was $29.0 million at March 31, 2026 (December 31, 2025: $18.7 million). Dividends declared on common shares accrue to units in the RSU plan in the form of additional RSUs.

Deferred Share Units (DSU)

The Company has a DSU Plan for non-executive directors. Continuity of DSUs outstanding is as follows:

The liability and fair value of DSUs was $19.8 million at March 31, 2026 (December 31, 2025: $17.7 million). Dividends declared on common shares accrue to units in the DSU plan in the form of additional DSUs.

Share Appreciation Rights (SAR)

The Company has a SAR plan for certain employees. The following is a continuity of SARs outstanding:

Number of SARs

Weighted Average Exercise Price

The SARs liability and fair value at March 31, 2026, was $5.4 million and $5.8 million respectively (December 31, 2025: $4.1 million and $4.3 million respectively).

Performance Share Units (PSU)

The Company has a PSU Plan for certain employees as designated by the Board of Directors. Continuity of PSUs outstanding is as follows:

The PSU liability at March 31, 2026, was $4.1 million (December 31, 2025: $2.4 million). The fair value of PSUs was $6.3 million at March 31, 2026 (December 31, 2025: $3.1 million). Dividends declared on common shares accrue to units in the PSU plan in the form of additional PSUs.

The net income used in the calculation of basic and diluted earnings per share for the three months ended March 31, 2026 was $71.8 million (2025: $43.0 million). The weighted average number of shares outstanding for the three months ended March 31, 2026, was 55,025,588 (2025: 56,984,456). As there were no dilution investments outstanding, diluted weighted average shares were the same.

Three Months Ended March 31

Three Months Ended March 31

Interest expense on long-term debt and lease obligations is charged to earnings using the effective interest method.

Interest expense on long-term debt is comprised of the interest calculated on the face value of long-term debt, issue costs and accretion of the carrying value of the long-term debt. Debt accretion and issue cost amortization for the three months ended March 31, 2026 was $nil (2025: $nil).

The consolidated effective tax rates for the three months ended March 31, 2026 and March 31, 2025, were 20.9% and 25.2% respectively. The Company recorded a lower effective tax rate in the first quarter of 2026 due to a lower effective tax rate on the realized gain on the assets that were previously held for sale.

Deferred compensation includes the RSU, DSU, SAR and PSU liabilities. The DSU and RSU liabilities that will be paid within 12 months are reclassified as current accrued liabilities.

For the purpose of segment reporting, operating segments are identified as a component of an entity:

• that engages in business activities from which it may earn revenues and incur expenses;

• whose operating results are regularly reviewed by the Company's Chief Executive Officer to make decisions about resources to be allocated to the segment and assess its performance; and

• for which discrete financial information is available.

Accordingly, the Company conducts business in Canada and the U.S. in three operating and reportable segments.

Metals Service Centers

The Company's network of metals service centers carry an extensive line of metal products in a wide range of sizes, shapes and specifications, including carbon hot rolled and cold finished steel, pipe and tubular products, stainless steel and aluminum and other non-ferrous specialty metals. The Company purchases these products primarily from North American steel producers, and processes, packages and sells them to end users in accordance with their specific needs.

Energy Field Stores

The Company's energy field store operations carry a specialized product line focused on the needs of energy industry customers. These operations distribute flanges, valves and fittings and other products through our field store operations in Western Canada and the United States.

Steel Distributors

The Company's steel distributors operations act as master distributors selling steel to customers in large volumes to other steel service centers and large equipment manufacturers mainly on an "as is" basis. The main steel products sourced by this segment are carbon steel plate, flat rolled products, beams, channel and pipe.

The Company has segmented its operations on the basis of management reporting. For the three months ended March 31, 2026, the inter-segment sales from steel distributors to metals service centers were $12.9 million (2025:

$14.5 million). These sales, which are at market rates, are eliminated in the following table.

1. Results by business segment:

   Three Months Ended March 31

   ($ millions)	2026	2025
   Segment Revenues
   Metals service centers	$ 1,055.3	$ 840.0
   Energy field stores	254.1	244.2
   Steel distributors	108.7	88.9
   Other	1,418.1	1,173.1
   	0.2	0.5
   	$ 1,418.3	$ 1,173.6
   Segment Operating Profits
   Metals service centers	$ 48.6	$ 43.7
   Energy field stores	20.4	17.1
   Steel distributors	8.3	9.9
   	77.3	70.7
   Corporate expenses	(12.8)	(6.4)
   Other	(2.4)	(2.1)
   Gain on disposal of assets held for sale	35.6	-
   Earnings before interest and provision for income taxes	97.7	62.2
   Interest expense, net	7.0	4.7
   Provision for income taxes	18.9	14.5
   Net earnings	$ 71.8	$ 43.0
   Capital Expenditures
   Metals service centers	$ 16.5	$ 25.4
   Energy field stores	1.0	1.8
   Steel distributors	0.2	0.2
   Other	0.4	1.5
   	$ 18.1	$ 28.9
   Depreciation and Amortization Expense
   Metals service centers	$ 20.2	$ 17.5
   Energy field stores	5.0	5.1
   Steel distributors	0.4	0.4
   Other	0.4	0.5
   	$ 26.0	$ 23.5

   ($ millions)	March 31 2026	December 31 2025
   Current Identifiable Assets
   Metals service centers	$ 1,261.8	$ 1,125.9
   Energy field stores	399.0	363.9
   Steel distributors	153.1	179.1
   Non-Current Identifiable Assets	1,813.9	1,668.9
   Metals service centers	734.2	727.1
   Energy field stores	103.5	104.8
   Steel distributors	12.0	12.0
   Total identifiable assets included in segments	2,663.6	2,512.8
   Assets not included in segments
   Cash and cash equivalents	128.1	114.6
   Income taxes receivable and deferred income tax assets	2.3	6.6
   Financial and other assets	7.1	5.1
   Pension and benefits	34.9	37.0
   Corporate and other operating assets	8.3	8.5
   Total assets	$ 2,844.3	$ 2,684.6
   Liabilities
   Metals service centers	$ 595.6	$ 537.2
   Energy field stores	151.8	127.3
   Steel distributors	34.4	26.2
   Total liabilities included in segment	781.8	690.7
   Liabilities not included in segments
   Income taxes payable and deferred income tax liabilities	36.8	32.1
   Long-term debt	298.3	298.3
   Pension and benefits	1.4	1.5
   Corporate and other liabilities	77.8	73.1
   Total liabilities	$ 1,196.1	$ 1,095.7

2. Enterprise-wide disclosure - results by geographic region:

   Three Months Ended March 31

   ($ millions)	2026	2025
   Segment Revenues
   Canada	$ 665.2	$ 661.2
   United States	752.9	511.9
   	$ 1,418.1	$ 1,173.1
   Segment Operating Profits
   Canada	$ 32.7	$ 37.3
   United States	44.6	33.4
   	$ 77.3	$ 70.7

   ($ millions)	March 31 2026	December 31 2025
   Identifiable Assets
   Canada	$ 1,355.9	$ 1,334.1
   United States	1,307.7	1,178.7
   	$ 2,663.6	$ 2,512.8

3. Revenues by product:

Three Months Ended March 31

1. Financial assets and liabilities

   Financial assets and liabilities are as follows:

   March 31, 2026 ($ millions)	Loans and Receivables	Other Financial Liabilities	Total
   Cash and cash equivalents	$ 128.1	$ -	$ 128.1
   Accounts receivable	709.9	-	709.9
   Other financial assets	5.9	-	5.9
   Accounts payable and accrued liabilities	-	(637.6)	(637.6)
   Lease obligations	-	(187.9)	(187.9)
   Long-term debt	-	(298.3)	(298.3)
   Total	$ 843.9	$ (1,123.8)	$ (279.9)

   December 31, 2025 ($ millions)	Loans and Receivables	Other Financial Liabilities	Total
   Cash and cash equivalents	$ 114.6	$ -	$ 114.6
   Accounts receivable	554.2	-	554.2
   Other financial assets	3.8	-	3.8
   Accounts payable and accrued liabilities	-	(552.2)	(552.2)
   Lease obligations	-	(185.4)	(185.4)
   Long-term debt	-	(298.3)	(298.3)
   Total	$ 672.6	$ (1,035.9)	$ (363.3)

   For the three months ended March 31, 2026, the fair value of derivative financial instruments on the condensed consolidated statement of earnings was a gain $3.0 million (2025: loss of $1.6 million) including embedded derivatives and forward contracts.

2. Fair Value

   The fair value of cash and cash equivalents, accounts receivable, bank indebtedness, accounts payable and accrued liabilities approximate their carrying amounts because of the short-term maturity of these instruments.

   The fair values of long-term debt are set forth below.

   Carrying Amounts

   Amounts recorded in the consolidated statements of financial position are referred to as "carrying amounts". The carrying amounts of primary debt are reflected in "Long-term debt" and "Current portion long-term debt".

   Fair Value

   The Company records its debt at amortized cost using the effective interest method. The fair value of long-term debt is estimated based on the last quoted trade price, where it exists, or based on current rates available to the Company for similar debt with the same period to maturity. The carrying amount and fair value of the Company's

   $300 million senior unsecured notes at 4.423% as at March 31, 2026, were $298.3 million and $300.9 million respectively.

3. Credit risk

   Credit risk is the risk of financial loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligation. Credit risk arises from cash and cash equivalents and derivative financial instruments, as well as credit exposure to customers including accounts receivable.

   The Company attempts to minimize credit exposure as follows:

   • Cash investments are placed with high-quality financial institutions with limited exposure to any one institution. At March 31, 2026, nearly all cash and cash equivalents were held in institutions that were rated R1 High by DBRS;

   • Counterparties to derivative contracts are members of the syndicated banking facility (Note 10);

   • Credit limits minimize exposure to any one customer; and

   • The customer base is geographically diverse and in different industries.

     No allowance for credit losses on financial assets was required as of March 31, 2026 and December 31, 2025, other than the allowance for expected credit losses in accounts receivable. As at March 31, 2026, trade accounts receivable greater than 90 days represented less than 2% of trade accounts receivable (December 31, 2025: less than 2%).

4. Interest rate risk

   Interest rate risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in market rates of interest. The Company is not exposed to significant interest rate risk. The Company's long-term debt is at a fixed rate. The Company's bank borrowings, net of cash and cash equivalents, used to finance working capital, which is short-term in nature, is at floating interest rates.

5. Foreign exchange risk

   Foreign exchange risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company uses foreign exchange contracts with maturities of less than a year to manage foreign exchange risk on certain future committed cash outflows. As at March 31, 2026, the Company had outstanding forward foreign exchange contracts in the amount of US$96.6 million maturing in 2026 (2025: US$136.0 million). A 1% change in foreign exchange rates would not result in a significant increase or decrease in accounts receivable, accounts payable or net earnings.

6. Liquidity risk

   Liquidity risk is the risk that the Company will not meet its financial obligations when due. Liquidity adequacy is assessed in view of seasonal needs, growth requirements, capital expenditures, and the maturity profile of indebtedness. As at March 31, 2026, the Company has access to $499.8 million from cash on hand and the undrawn portion of its committed credit facility. Cash is managed by the centralized treasury function and is invested in money market instruments or bank deposits, with durations ranging up to sixty days. A centralized treasury function ensures that the Company maintains funding flexibility by assessing future cash flow expectations and by maintaining its committed borrowing facilities.

   As at March 31, 2026, the Company was contractually obligated to make payments under its financial liabilities that come due during the following periods:

   ($ millions)	Accounts Payable	Long-term Debt Maturities	Long-term Debt Interest	Lease Obligations	Total
   2026	$ 637.6	$ -	$ 6.7	$ 33.6	$ 677.9
   2027	-	-	13.3	42.5	55.8
   2028	-	-	13.3	38.1	51.4
   2029	-	-	13.3	31.4	44.7
   2030	-	300.0	6.5	23.5	330.0
   2031 and beyond	-	-	-	93.3	93.3
   Total	$ 637.6	$ 300.0	$ 53.1	$ 262.4	$ 1,253.1

   At March 31, 2026, the Company was contractually obligated to repay its letters of credit under its bank facilities

   (Note 10).

7. Capital management

The Company manages capital in order to safeguard its ability to continue as a going concern, provide returns to shareholders through its dividend policy and provide the ability to finance future growth. Capital includes shareholders' equity, bank indebtedness and long-term debt, net of cash. The Company manages its capital structure and may make adjustments to the amount of dividends paid to shareholders, purchase shares for cancellation pursuant to issuer bids, issue new shares, issue new debt, repurchase existing debt and extend or amend its banking facilities.

In the three months ended March 31, 2026, the Company repurchased 0.1 million shares for $7.2 million under its normal course issuer bid and paid dividends of $23.7 million.

1. Lawsuits and legal claims

   The Company and certain of its subsidiaries have been named defendants in a number of legal actions. Although the outcome of these legal actions cannot be determined, management intends to defend all such legal actions and has recorded provisions, as required, based on its best estimate of the potential losses. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Company's financial position, cash flows or operations.

   The Company has also entered into other agreements that provide indemnifications to counterparties in certain transactions including underwriting agreements. These indemnifications generally require the Company to indemnify the counterparties for costs incurred as a result of losses from litigation that may be suffered by counterparties arising from those transactions except in the case of gross negligence by the counterparties.

2. Decommissioning liability

The Company is incurring site cleanup and restoration costs related to properties not utilized in current operations. Remedial actions continue at two sites. Decommissioning liabilities have been estimated using discounted cash flow valuation techniques for cleanup costs based on management's best estimates of the amount required to settle the liability.

The Company has asset retirement obligations relating to the land lease for its Thunder Bay Terminal operation whose lease term expires in 2031. The landlord has the option to retain the equipment or to require the Company to remove it. In addition, the Company has end-of-lease obligations in certain service center operations.

6600 Financial Drive, Mississauga, Ontario L5N 7J6 Tel: 905-819-7777 Fax: 905-819-7409

Email: [email protected] Website: https://www.russelmetals.com