JUNE 2019
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION Certain statements contained in this document 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 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. Our actual results could differ materially from those anticipated in our forward-looking statements including as a result of the risk factors described in our MD&A and Annual Information Form. 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 document should not be unduly relied upon. These statements speak only as of the date of this document and, except as required by law, we do not assume any obligation to update our forward- looking statements. RISK FACTORS: Such risks and uncertainties include, but are not limited to: the volatility in metal prices; volatility in oil and natural gas prices; cyclicality of the metals industry and the industries that purchase our products; decreased capital and other expenditures in the energy industry; product claims from customers; significant competition that could reduce our market share; the interruption in sources of metals supply; manufacturers selling directly to our customer base; material substitution; credit risk of our customers; lack of credit availability; change in our credit ratings; currency exchange risk; restrictive debt covenants; non-cash asset impairments; the unexpected loss of key individuals; decentralized operating structure; the availability of future acquisitions and their integration; the failure of our key computer-based systems, including our enterprise resource and planning systems; failure to renegotiate any of our collective agreements and work stoppages; litigious business environment; environmental liabilities; environmental concerns or changes in government regulations; legislation on carbon emissions; workplace health and safety laws and regulations; significant changes in laws and governmental regulations; fluctuation of our common share price; dilution; and variability of dividends. Russel Metals 2
O VERVIEW OF R USSEL M ETALS We are one of the largest metals distribution and processing companies in North America. We are one of the largest pipe, valve and fittings companies in North America. Consolidated Revenues: Six months ended 2019 - $2.0 billion Six months ended 2018 - $1.9 billion Year ended 2018 - $4.2 billion Based on revenues for the quarter ended June 30, 2019: 71% Canada 29% U.S. Declared dividend of $0.38 per share payable September 16, 2019. Dividend yield 6.9%. Market cap based on $22.10 per share is $1.4 billion. Listed on TSX. Russel Metals 3
EPS (2013 – 2019) $3.53 $3.75 $3.50 $3.25 $3.00 $2.75 $2.50 $2.25 $2.01 $2.00 $2.00 $1.69 $1.75 $1.37 $1.50 $1.05 $1.25 $1.02 $1.00 $0.75 $0.50 $0.25 $(1.42) $- 2013 2014 2015 2016 2017 2018 Six months Six months 2018 2019 Russel Metals 4
D EBT E QUITY R ATIO 0.70 0.60 0.50 0.40 0.30 0.20 0.10 - 2013 2014 2015 2016 2017 2018 19-Jun Russel Metals 5 Note: 2013 and 2014 adjusted for convertible debentures
T HREE D ISTINCT S EGMENTS REVENUE EBIT SIX MONTHS ENDED 2019 (2018) SIX MONTHS ENDED 2019 (2018) Steel Steel Distributors Distributors Metals Service 11% (10%) 13% (15%) Centers Metals Service 42% (50%) Centers 55% (53%) Energy Products Energy 34% (37%) Products 45% (35%) Russel Metals 6
O PERATING U NITS CANADA Metals Service Centers (48 units) Energy Products (48 units) Steel Distributors (2 units) British Columbia Apex Distribution Wirth Steel Comco Pipe Alberta (A.J. Forsyth) (Alberta) (Alberta) (Montreal) Fedmet Tubulars Triumph Tubulars Ontario Man/Sask (Color & Pemco) (Alberta) (Alberta) Quebec Atlantic (Acier Leroux) UNITED STATES Metals Service Centers (16 units) Energy Products (22 units) Steel Distributors (3 units) South East Wisconsin Pioneer Spartan Sunbelt (JMS Russel Metals) (Williams Bahcall) (Colorado) (Texas) (Texas) Ohio North Carolina Apex Remington (Baldwin) (DuBose) (Oklahoma) Russel Metals 7
B ALANCE S HEET AS OF J UNE 2019 (millions) ASSETS EMPLOYED Cash $ 98 5% Accounts Receivable 532 25% Inventories 1,008 48% Property, Plant and Equipment 264 12% Goodwill/Intangibles 83 4% Other 132 6% $ 2,117 100% FINANCED BY Bank Indebtedness $ 136 6% Trade Creditors 407 19% Long-term Debt 444 21% Lease Obligations and Other 147 7% Shareholders Equity 983 47% $ 2,117 100% Russel Metals 8
B ROAD P RODUCT F OCUS B REAKDOWN FOR S IX M ONTHS E NDED J UNE 30, 2019 (2018) Flat Rolled Non Ferrous 7.9% (8.7%) 3.7% (3.5%) Other Bars 5.1% (4.8%) 5.0% (5.0%) Pipe Products 17.0% (20.0%) Plate 19.7% (19.1%) Flanges, Valves, Fittings & Other Energy Structurals 17.8% (18.0%) (Beams & HSS) 23.8% (21.0%) Russel Metals 9
T OP M ILL S UPPLIERS S IX M ONTHS E NDED J UNE 30, 2019 % of total purchased Products Purchased Supplier 1 7.4% Long Products Supplier 2 5.5% Long Prod / Plate / Pipe Supplier 3 5.5% Flat Roll / Plate / Long Products Supplier 4 4.6% Tubing Supplier 5 4.3% Plate Supplier 6 4.2% Long Products / Plate / Flat Roll Supplier 7 3.5% Flat Roll / Plate Supplier 8 3.5% Pipe Supplier 9 2.7% Tubing & OCTG Supplier 10 2.3% Long Prod / Plate / Pipe Top 10 Suppliers 43.5% Russel Metals 10
S ERVICE C ENTER / D ISTRIBUTION C OMPETITORS RANKED BY REVENUE Public/ 2018 2017 Private Headquarters (in billions) Reliance Steel & Aluminum Co. $ 11.5 $ 9.7 Public U.S Ryerson Inc. 4.4 3.4 Public U.S MRC Global 4.2 3.6 Public U.S Russel Metals Inc. 4.2 3.3 Public Canada * Samuel, Son & Co. 4.0 3.6 Private Canada * Worthington Steel Co. 3.6 3.0 Public U.S Klockner (North America) 3.2 2.9 Public U.K. NOW Inc. 3.1 2.6 Public U.S ThyssenKrupp Materials NA, Inc. 3.0 2.5 Public U.S. O'Neal Steel Inc. 2.7 2.3 Private U.S Steel Technologies LLC 2.6 2.3 Private U.S Alro Steel Corp. 2.0 1.7 Private U.S Olympic Steel Inc. 1.7 1.4 Public U.S * Noted in Canadian Funds Source: Metals Center News or public data Russel Metals 11
MARKET ET T TREN ENDS DS Russel Metals 12
13 US Shipments-Tons in Thousands 1,000 1,500 2,000 2,500 3,000 3,500 4,000 500 Russel Metals S TEEL P RODUCTS M ONTHLY S ERVICE C ENTER S HIPMENTS – 0 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 US Oct-16 Nov-16 Dec-16 CANADA Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 0 100 200 300 400 500 600 700 800 900 Canadian shipments -Tons in Thousands
14 1,000 1,100 1,200 200 300 400 500 600 700 800 900 Jan-11 Mar-11 US$ per Ton Russel Metals P RICE OF HR S HEET & HR P LATE May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 HR Sheet Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Source: American Metal Market Sep-17 Nov-17 Jan-18 Carbon Plate Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19
15 $100 $150 $200 $250 $300 $350 $400 $450 $500 Jan-11 Mar-11 Russel Metals S CRAP P RICING May-11 Jul-11 Sep-11 Nov-11 AMM Scrap Values Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Source: American Metal Market Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19
16 US $ / Ton $1,000 $1,200 $200 $400 $600 $800 $0 Jan-16 Russel Metals S CRAP VS C OIL AND P LATE P RICING Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 #1 Heavy Melt (Chicago) Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 HR Sheet Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 HR Plate Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Source: American Metal Market Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19
Recommend
More recommend
