Russel Metals (RUS) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues were $1.1 billion, up 1% sequentially but down from $1.2 billion in Q2 2023, with EBITDA of $86 million at an 8% margin and EPS of $0.84.

• Maintained solid earnings and returns despite significant steel price volatility, supported by a strong capital structure and liquidity.

• Samuel acquisition expected to close August 12, with integration planning underway and anticipated operational and financial benefits.

• Active capital allocation through facility modernizations, share buybacks, and a dividend increase, supported by a strong net cash position.

• Book value per share rose to $28.22 at June 30, 2024.

Financial highlights

• Q2 2024 revenue: $1.1 billion, up 1% from Q1, with gross margin of 21%, EBITDA of $86 million (8%), and net income of $50 million.

• Six-month revenues ended June 30, 2024, were $2.13 billion, with adjusted EBITDA of $170 million (8%) and net earnings of $100 million.

• Net cash position of $237 million and liquidity of $768 million at quarter-end, further increased by a new bank facility in July.

• Book value per share at June 30, 2024: $28.22.

• Q2 2024 capital expenditures totaled $24 million; $48 million for the first half of 2024.

Outlook and guidance

• Q3 expected to be a transition quarter with margin and bottom-line pressure due to price/margin compression and fewer operating days.

• Margin recovery anticipated in early Q4 and into 2025, supported by price stabilization and facility upgrades.

• Samuel acquisition to contribute from mid-Q3, but limited immediate bottom-line impact due to transitional costs.

• Capex run rate for 2024 expected at $100 million, with five modernization projects underway.

• Medium-term growth anticipated from onshoring and infrastructure spending in North America.