Russel Metals Announces 2025 First Quarter Results
Revenues of
Record Quarterly Shipments – Up 14% from Q4 2024 and 29% from Q1 2024
Balanced Approach to
Quarterly Dividend Increase of 2.4% – Cumulative 13.2% Increase since 2023
Issued
Strong Capital Structure with Pro Forma Liquidity of $605 Million
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|
Three Months Ended |
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|
|
|
|
|
|
Revenues |
$ 1,174 |
$ 1,039 |
$ 1,061 |
|
EBITDA 1 |
86 |
61 |
84 |
|
Net Income |
43 |
27 |
50 |
|
Earnings per share |
0.75 |
0.47 |
0.82 |
|
All amounts are reported in millions of Canadian dollars except per share figures, which are in Canadian dollars. |
Non-GAAP Measures and Ratios
We use 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. These non-GAAP measures include EBITDA and Liquidity and are defined below. Refer to Non-GAAP Measures and Ratios on page 2 of our Management Discussion and Analysis.
EBIT - represents net earnings before interest and income taxes.
EBITDA - represents net earnings before interest, income taxes, depreciation and amortization.
Liquidity - represents cash on hand less bank indebtedness plus excess availability under our bank credit facility.
Cash (for) from working capital - represents the change in non-cash working capital.
The following table shows the reconciliation of net earnings in accordance with GAAP to:
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Three Months Ended |
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($ millions, except per share data) |
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|
|
|
Net earnings |
$ 43.0 |
$ 26.9 |
$ 49.7 |
|
Provision for income taxes |
14.5 |
8.8 |
16.7 |
|
Interest (income) expense, net |
4.7 |
4.0 |
(0.1) |
|
EBIT 1 |
62.2 |
39.7 |
66.3 |
|
Depreciation and amortization |
23.5 |
21.6 |
17.7 |
|
EBITDA 1 |
$ 85.7 |
$ 61.3 |
$ 84.0 |
|
Basic earnings per share |
$ 0.75 |
$ 0.47 |
$ 0.82 |
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_______________________________ |
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1 Defined in Non-GAAP Measures and Ratios |
Our first quarter 2025 results reflected a seasonal improvement in demand, particularly for our metals service centers and steel distributors segments, and strong sequential increases in gross margin, EBITDA and net earnings. In addition, we delivered on a number of important milestones:
- Our metals service centers segment generated the highest tonnage sales in our history. This record reflected the favourable market conditions, a full quarter contribution from last year's acquisitions and organic market share gains.
- We invested a record amount in capital expenditures during the quarter, as we continued with our internal investments in value-added equipment and facility modernizations. This involved the completion of a series of prior projects along with the initiation of new projects.
- We continued to expand our
U.S. platform on both relative and absolute terms, as 44% of our first quarter 2025 revenues were generated in theU.S. , as compared to 39% in 2024 and 30% in 2019. - We advanced the multi-year migration of our debt structure, as we completed an inaugural
$300 million term debt issuance into the investment grade debt market in late March and we extended/amended our bank credit agreement in late April. The term debt financing reflects the lowest cost that we have ever achieved and further strengthened our capital structure.
Revenues of
Our average gross margin grew sequentially to 21.5% in the first quarter of 2025 as compared to 20.4% in the fourth quarter of 2024 due to the increase in steel prices through the first quarter of 2025.
In the first quarter of 2025, we generated
During our 2025 first quarter, we generated
Market Conditions
Market conditions in the first quarter of 2025 were impacted by the imposition of 25% tariffs on steel and aluminum that came into effect on
Capital Investment Growth Initiatives
In the first quarter of 2025, we invested
We remain focused on realizing the benefits from our most recent acquisitions, including a number of initiatives to integrate the acquired Samuel branches and realize synergies related to metals procurement for the
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 2025 first quarter, we paid dividends of
We have declared a 2.4% increase in our quarterly dividend to
In the first quarter of 2025, we purchased and cancelled 0.6 million common shares at an average price per share of
Liquidity and Capital Structure
On
On
Outlook
During the first quarter of 2025, steel pricing increased substantially as a result of the tariffs imposed by the
Our recent shipment levels have benefited from some element of customer buying in anticipation of the imposed tariffs, a strong seasonal recovery and market share gains. Our near-term activity could be impacted by international trade policies and North American industrial activity. Over the medium-term, we expect to benefit from further rebuilding of the
Our energy field stores are expected to continue to benefit from solid energy activity in 2025. Our energy field store segment is also expected to continue to gain market share while maintaining a solid margin profile.
Supplemental Information
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.
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Three Months Ended |
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(in millions, except percentages) |
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Segment Revenues |
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|
|
|
Metals service centers |
$ 840.0 |
$ 723.0 |
$ 723.6 |
|
Energy field stores |
244.2 |
220.3 |
247.1 |
|
Steel distributors |
88.9 |
89.2 |
90.1 |
|
Other |
0.5 |
6.7 |
0.3 |
|
Total |
$ 1,173.6 |
$ 1,039.2 |
$ 1,061.1 |
|
Segment Gross Margins 1 |
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|
|
|
Metals service centers |
$ 175.6 |
$ 131.5 |
$ 154.8 |
|
Energy field stores |
58.1 |
59.8 |
63.4 |
|
Steel distributors |
18.2 |
13.8 |
19.4 |
|
Other |
0.5 |
6.7 |
0.3 |
|
Total operations |
$ 252.4 |
$ 211.8 |
$ 237.9 |
|
Segment Operating Profits and EBIT 1 |
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|
|
|
Metals service centers |
$ 43.7 |
$ 20.9 |
$ 43.8 |
|
Energy field stores |
17.1 |
20.2 |
22.7 |
|
Steel distributors |
9.9 |
4.4 |
10.5 |
|
Corporate expenses |
(6.3) |
(9.8) |
(8.9) |
|
Other |
(2.2) |
4.0 |
(1.8) |
|
Earnings before interest and income taxes |
$ 62.2 |
$ 39.7 |
$ 66.3 |
|
Segment Gross Margin as a % of Revenues 1 |
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|
|
|
Metals service centers |
20.9 % |
18.2 % |
21.4 % |
|
Energy field stores |
23.8 % |
27.1 % |
25.7 % |
|
Steel distributors |
20.5 % |
15.5 % |
21.6 % |
|
Total operations |
21.5 % |
20.4 % |
22.4 % |
|
Segment Operating Profit and EBIT as a % of Revenues 1 |
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|
|
|
Metals service centers |
5.2 % |
2.9 % |
6.1 % |
|
Energy field stores |
7.0 % |
9.2 % |
9.2 % |
|
Steel distributors |
11.1 % |
4.9 % |
11.7 % |
|
Total operations |
5.3 % |
3.8 % |
6.2 % |
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Additional Information on |
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Tons shipped (thousands of imperial tons) |
409 |
359 |
318 |
|
Gross margin per ton ($) |
$ 176 |
$ 132 |
$ 155 |
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______________________________ |
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1 Defined in Non-GAAP Measures and Ratios |
Investor Conference Call
The Company will be holding an Investor Conference Call on
A replay of the call will be available at 289-819-1450 (
Additional supplemental financial information is available in our investor conference call package located on our website at www.russelmetals.com.
About
Cautionary Statement on Forward-Looking Information
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 metal prices; cyclicality of the metals industry; volatility in oil and natural gas prices; capital budgets in the energy industry; climate change; product claims; significant competition; sources of metals supply; manufacturers selling directly; material substitution; credit risk; currency exchange risk; restrictive debt covenants; asset impairments; the unexpected loss of key individuals; decentralized operating structure; future acquisitions; the failure of our key computer-based systems, labour interruptions; laws and governmental regulations; litigious environment; environmental liabilities; carbon emissions; health and safety laws and regulations, geopolitical 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 www.sedarplus.ca.
If you would like to unsubscribe from receiving Press Releases, you may do so by emailing info@russelmetals.com; or by calling our Investor Relations Line: 905-816-5178.
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Three Months Ended |
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|
(in millions of Canadian dollars, except per share data) |
2025 |
2024 |
|
Revenues |
$ 1,173.6 |
$ 1,061.1 |
|
Cost of materials |
921.2 |
823.2 |
|
Employee expenses |
113.0 |
99.8 |
|
Other operating expenses |
77.2 |
71.8 |
|
Earnings before interest and provision for income taxes |
62.2 |
66.3 |
|
Interest expense (income), net |
4.7 |
(0.1) |
|
Earnings before provision for income taxes |
57.5 |
66.4 |
|
Provision for income taxes |
14.5 |
16.7 |
|
Net earnings for the period |
$ 43.0 |
$ 49.7 |
|
Basic earnings per common share |
$ 0.75 |
$ 0.82 |
|
Diluted earnings per common share |
$ 0.75 |
$ 0.82 |
|
|
Three Months Ended |
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|
(in millions of Canadian dollars) |
2025 |
2024 |
|
Net earnings for the period |
$ 43.0 |
$ 49.7 |
|
Other comprehensive (loss) income |
|
|
|
Items that may be reclassified to earnings |
|
|
|
Unrealized foreign exchange (losses) gains on translation of foreign operations |
(0.9) |
22.2 |
|
Items that may not be reclassified to earnings |
|
|
|
Actuarial (losses) gains on pension and similar obligations, net of taxes |
(2.0) |
3.6 |
|
Other comprehensive (loss) income |
(2.9) |
25.8 |
|
Total comprehensive income |
$ 40.1 |
$ 75.5 |
|
(in millions of Canadian dollars) |
|
|
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ASSETS |
|
|
|
Current |
|
|
|
Cash and cash equivalents |
$ 230.2 |
$ 45.6 |
|
Accounts receivable |
590.3 |
490.4 |
|
Inventories |
994.0 |
919.8 |
|
Prepaids and other |
37.7 |
29.0 |
|
Income taxes receivable |
1.8 |
14.5 |
|
|
1,854.0 |
1,499.3 |
|
|
|
|
|
Property, Plant and Equipment |
506.6 |
492.4 |
|
Right-of-Use Assets |
155.3 |
157.0 |
|
Deferred Income Tax Assets |
1.0 |
0.8 |
|
Pension and Benefits |
42.1 |
45.5 |
|
Financial and Other Assets |
5.8 |
5.9 |
|
|
143.1 |
145.8 |
|
Total Assets |
$ 2,707.9 |
$ 2,346.7 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
Current |
|
|
|
Bank indebtedness |
$ - |
$ 13.4 |
|
Accounts payable and accrued liabilities |
522.6 |
442.1 |
|
Short-term lease obligations |
23.5 |
22.4 |
|
Income taxes payable |
4.5 |
0.7 |
|
|
550.6 |
478.6 |
|
|
|
|
|
Long-Term Debt |
298.0 |
- |
|
Pensions and Benefits |
1.5 |
1.5 |
|
Deferred Income Tax Liabilities |
24.6 |
25.8 |
|
Long-term Lease Obligations |
159.5 |
161.0 |
|
Provisions and Other Non-Current Liabilities |
24.6 |
21.4 |
|
Total Liabilities |
1,058.8 |
688.3 |
|
Shareholders' Equity |
|
|
|
Common shares |
522.7 |
528.1 |
|
Retained earnings |
915.8 |
918.7 |
|
Contributed surplus |
9.9 |
10.0 |
|
Accumulated other comprehensive income |
200.7 |
201.6 |
|
Total Shareholders' Equity |
1,649.1 |
1,658.4 |
|
Total Liabilities and Shareholders' Equity |
$ 2,707.9 |
$ 2,346.7 |
|
|
Three Months Ended |
|
|
(in millions of Canadian dollars) |
2025 |
2024 |
|
Operating Activities |
|
|
|
Net earnings for the period |
$ 43.0 |
$ 49.7 |
|
Depreciation and amortization |
23.5 |
17.7 |
|
Provision for income taxes |
14.5 |
16.7 |
|
Interest expense (income), net |
4.7 |
(0.1) |
|
Gain on sale of property, plant and equipment |
(0.2) |
(0.2) |
|
Difference between pension expense and amount funded |
0.7 |
0.7 |
|
Interest (paid) received net, including interest on lease obligations |
(4.3) |
0.4 |
|
Cash from operating activities before non-cash working capital |
81.9 |
84.9 |
|
Changes in Non-Cash Working Capital Items |
|
|
|
Accounts receivable |
(99.9) |
(50.4) |
|
Inventories |
(74.5) |
4.6 |
|
Accounts payable and accrued liabilities |
83.3 |
(19.7) |
|
Other |
(8.7) |
(0.3) |
|
Change in non-cash working capital |
(99.8) |
(65.8) |
|
Income tax paid, net |
1.3 |
(16.9) |
|
Cash (used in) from operating activities |
(16.6) |
2.2 |
|
Financing Activities |
|
|
|
Issue of common shares |
0.3 |
0.8 |
|
Repurchase of common shares |
(25.8) |
(14.9) |
|
Dividends on common shares |
(23.9) |
(24.1) |
|
Decrease in bank indebtedness |
(13.4) |
- |
|
Issuance of long-term debt |
300.0 |
- |
|
Deferred financing costs |
(2.0) |
- |
|
Lease obligations |
(5.9) |
(4.7) |
|
Cash from (used in) financing activities |
229.3 |
(42.9) |
|
Investing Activities |
|
|
|
Purchase of property, plant and equipment |
(28.9) |
(23.8) |
|
Proceeds on sale of property, plant and equipment |
0.5 |
0.2 |
|
Cash used in investing activities |
(28.4) |
(23.6) |
|
Effect of exchange rates on cash and cash equivalents |
0.3 |
9.6 |
|
Increase (decrease) in cash and cash equivalents |
184.6 |
(54.7) |
|
Cash and cash equivalents, beginning of the period |
45.6 |
629.2 |
|
Cash and cash equivalents, end of the period |
$ 230.2 |
$ 574.5 |
|
(in millions of Canadian dollars) |
Common |
Retained |
Contributed |
Accumulated |
Total |
|
Balance, |
$ 528.1 |
$ 918.7 |
$ 10.0 |
$ 201.6 |
$ 1,658.4 |
|
Payment of dividends |
- |
(23.9) |
- |
- |
(23.9) |
|
Net earnings for the period |
- |
43.0 |
- |
- |
43.0 |
|
Other comprehensive loss for the period |
- |
- |
- |
(2.9) |
(2.9) |
|
Share options exercised |
0.4 |
- |
(0.1) |
- |
0.3 |
|
Shares repurchased |
(5.8) |
(20.0) |
- |
- |
(25.8) |
|
Transfer of net actuarial losses on defined benefit plans |
- |
(2.0) |
- |
2.0 |
- |
|
Balance, |
$ 522.7 |
$ 915.8 |
$ 9.9 |
$ 200.7 |
$ 1,649.1 |
|
(in millions of Canadian dollars) |
Common |
Retained |
Contributed |
Accumulated |
Total |
|
Balance, |
$ 556.3 |
$ 954.6 |
$ 10.3 |
$ 118.7 |
$ 1,639.9 |
|
Payment of dividends |
- |
(24.1) |
- |
- |
(24.1) |
|
Net earnings for the period |
- |
49.7 |
- |
- |
49.7 |
|
Other comprehensive income for the period |
- |
- |
- |
25.8 |
25.8 |
|
Share options exercised |
0.8 |
- |
(0.1) |
- |
0.7 |
|
Shares repurchased |
(3.1) |
(11.8) |
- |
- |
(14.9) |
|
Transfer of net actuarial gains on defined benefit plans |
- |
3.6 |
- |
(3.6) |
- |
|
Balance, |
$ 554.0 |
$ 972.0 |
$ 10.2 |
$ 140.9 |
$ 1,677.1 |
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