Russel Metals’ Earnings Call Highlights Growth and Challenges

Russel Metals ((TSE:RUS)) has held its Q3 earnings call. Read on for the main highlights of the call.

Russel Metals’ recent earnings call painted a picture of a company in robust financial health, despite facing some operational challenges. The sentiment was largely positive, with highlights including revenue and EBITDA growth, improved returns on invested capital, and enhanced shareholder returns. However, the company also acknowledged hurdles such as a slight revenue decline in Q3, tariff costs, and increased operating expenses due to restructuring efforts. Nonetheless, improvements in liquidity and credit ratings, alongside strategic expansion in the U.S., position Russel Metals favorably for future growth.

Revenue and EBITDA Growth

Russel Metals reported a commendable 10% increase in revenues and a 13% rise in EBITDA for the first nine months of 2025 compared to the same period in 2024. This growth underscores the company’s effective strategies and operational efficiency, reflecting positively on its financial health.

Return on Invested Capital

The company achieved a 16% annualized return on invested capital for the year-to-date in 2025, surpassing their target of over 15% and outperforming three U.S. peers. This achievement highlights Russel Metals’ successful capital management and strategic investments.

Capital Structure and Liquidity

Russel Metals boasts strong liquidity, with flexible bank covenants and no financial covenants in term debt. The company’s credit rating was upgraded to BBB- by S&P, marking them as investment-grade and enhancing their financial stability.

Shareholder Returns

In Q3, Russel Metals returned $38 million to shareholders through share buybacks and dividends, reducing shares outstanding by over 13% since August 2022. This demonstrates the company’s commitment to delivering value to its shareholders.

U.S. Platform Expansion

The U.S. platform now accounts for 44% of year-to-date revenues, up from 30% in 2019, and is expected to exceed 50% with the Kloeckner acquisition. This expansion signifies Russel Metals’ strategic focus on growing its presence in the U.S. market.

Q3 Revenue Decline

Revenues in Q3 were down 3% from Q2 2025, attributed to seasonal factors and a $4 million one-time charge for the closure of the Delta, BC facility. This decline highlights some of the operational challenges the company is navigating.

Tariff Costs

The company incurred a $2 million tariff cost due to changes in Canadian government tariff rules, impacting materials in transit. This reflects the external challenges affecting Russel Metals’ operations.

Operating Costs and Restructuring

Higher operating costs were reported in Q3 due to the Delta closure and equipment relocations in Western Canada, affecting near-term operations. These restructuring efforts are part of the company’s strategy to optimize its operations.

Forward-Looking Guidance

Russel Metals outlined significant financial metrics and strategic initiatives for the future. They anticipate a 10% increase in revenues and a 100 basis point improvement in gross margins for the first nine months of 2025 compared to 2024. With a capital expenditure of $15 million in Q3 and total capital deployment expected to reach $1.9 billion post the Kloeckner acquisition, the company is poised for continued growth. Despite market volatility and seasonal slowdowns, Russel Metals expects stable shipment levels and typical seasonal volume declines in Q4.

In summary, Russel Metals’ earnings call conveyed a positive outlook, with strong financial performance and strategic initiatives positioning the company for future success. While challenges such as revenue decline and tariff costs were noted, the company’s robust liquidity, credit rating upgrade, and U.S. expansion efforts underscore its resilience and growth potential.