Q2 2026 Russel Metals Inc Earnings Call

August 7, 2026

Speaker #1: Good morning, ladies and gentlemen, and welcome to the 2026 second quarter results for Russell Metals. Today's call will be hosted by Mr. Martin Juravsky, Executive Vice President and Chief Financial Officer, and Mr. John Reed, President and Chief Executive Officer of Russell Metals, Inc. Today's presentation will be followed by a question-and-answer period.

Operator 1: Good morning, ladies and gentlemen, welcome to the 2026 Q2 results for Russel Metals. Today's call will be hosted by Mr. Martin Juravsky, Executive Vice President and Chief Financial Officer, Mr. John Reid, President and Chief Executive Officer of Russel Metals Inc. Today's presentation will be followed by a question and answer period. At that time, if you have a question, please press star one on your telephone keypad. I'll now turn the meeting over to Mr. Martin Juravsky. Please go ahead, Mr. Juravsky. Thank you.

Operator: Good morning, ladies and gentlemen, welcome to the 2026 Q2 results for Russel Metals. Today's call will be hosted by Mr. Martin Juravsky, Executive Vice President and Chief Financial Officer, Mr. John Reid, President and Chief Executive Officer of Russel Metals Inc. Today's presentation will be followed by a question and answer period. At that time, if you have a question, please press star one on your telephone keypad. I'll now turn the meeting over to Mr. Martin Juravsky. Please go ahead, Mr. Juravsky. Thank you.

Speaker #1: At that time, if you have a question, please press star 1 on your telephone keypad. I will now turn the meeting over to Mr. Martin Juravsky.

Speaker #1: Please go ahead, Mr. Juravsky. Thank you.

Speaker #2: Great. Thank you, operator. Good morning, everyone. I plan on providing an overview of the Q2 2026 results. If you want to follow along, I'll be using the slides that are on our website.

Martin Juravsky: Great. Thank you, operator. Good morning, everyone. I plan on providing an overview of the Q2 2026 results. If you want to follow along, I'll be using the slides that are on our website. You can just go to the investor relations section, and it's located in the conference call sub-menu. You can click on the link that is in the investor conference call paragraph in our press release from yesterday. If you go to page three, you can read our cautionary statement on forward-looking information. To begin, I think that Q2 provides an indication of how the portfolio changes over the last few years has resulted in a meaningfully reconfigured business with a superior earnings generation profile. Since 2024, we deployed almost CAD 700 million for acquisition and CapEx and sold CAD 90 million of non-core assets.

Speaker #2: You can just go to the investor relations section and it's located in the conference call submenu. Or you can click on the link that is in the investor conference call paragraph in our press release from yesterday.

Speaker #2: If you go to page 3, you can read our cautionary statement on forward-looking information. To begin, I think that Q2 provides an indication of how the portfolio change over the last few years has resulted in a meaningfully reconfigured business with a superior earnings generation profile.

Speaker #2: Since 2024, we deployed almost 700 million dollars for acquisition and CapEx. And sold 90 million dollars of non-core assets. These changes were aimed at growing the business, enhancing our return on capital, and improving our earnings profile over the cycle.

Martin Juravsky: These changes were aimed at growing the business, enhancing our return on capital, and improving our earnings profile over the cycle. The Q2 results illustrate a new frame of reference for our earnings power when our business portfolio is combined with a favorable market environment. If we look specifically at Q2, the market conditions were strong and broad-based. We had record shipment volumes in combination with pricing and margins that are at levels that haven't been seen for a few years. The improvement in market conditions began to be quite noticeable towards the end of Q1, and they continued that improving trend on a month-over-month basis through Q2.

Speaker #2: The Q2 results illustrate a new frame of reference for our earnings power when our business portfolio is combined with a favorable market environment. If we look specifically at Q2, the market conditions were strong and broad-based.

Speaker #2: We had record shipment volumes in combination with pricing and margins that are levels that haven't been seen for a few years. The improvement in marketing conditions began to be quite noticeable towards the end of Q1, and they continued that improving trend on a month-over-month basis through Q2.

Speaker #2: The margins and activity levels that we experienced at the end of Q2 have continued into the early part of Q3, notwithstanding that there is typically a seasonal pullback in volumes in and around the July-August holidays in both Canada and the US.

Martin Juravsky: The margins and activity levels that we experienced at the end of Q2 have continued into the early part of Q3, notwithstanding that there is typically a seasonal pullback in volumes in and around the July, August holidays in both Canada and the US. Let's go to page five for a little bit of a snapshot of the quarter. In Q2, we set another record for consolidated revenues and shipments from our steel service center segment. This was the result of three things. One, progress on the Kloeckner acquisition, a seasonal pickup in volume, and three, strength in most of the markets we serve. On the last point related to market conditions, we saw 130 basis point improvement in our overall gross margin for Q2 as compared to Q1. The Kloeckner business generated about CAD 16 million of EBITDA in Q1, which was double what it generated in Q1.

Speaker #2: So, let's go to page 5 for a little bit of a snapshot of the quarter. In Q2, we set another record for consolidated revenues and shipments from our steel service center segment.

Speaker #2: This was the result of three things. One, progress on the clock in our acquisition, a seasonal pickup in volume, and three, strength in most of the markets we serve.

Speaker #2: On the last point related to market conditions, we saw a 130-basis-point improvement in our overall gross margin for Q2 as compared to Q1.

Speaker #2: The clock in our business generated about $60 million of EBITDA in Q2, which was double what it generated in Q1. Excuse me, $16 million in Q1, which was double what it generated in Q1.

Martin Juravsky: Excuse me, it's CAD 16 in Q2, which was double what it generated in Q1. I think this illustrates how much upside there can be from that operation when good market conditions are combined with changes to operating practices. We entered into an agreement to sell our Color Steels division in Ontario. This business generated about CAD 70 million worth of revenue in 2025 and had a book value of around CAD 35 million, and we should recognize a small gain on the sale when it closes in H2 of 2026. We also sold CAD 4 million of real estate in Q2 on top of the Delta property that we sold in Q1. These are further refinements to our portfolio as we are focused on where we can optimize our capital deployment.

Speaker #2: I think this illustrates how much upside there can be from that operation when good market conditions are combined with changes to operating practices. We entered into an agreement to sell our color steels division in Ontario.

Speaker #2: This business generated about 70 million dollars' worth of revenue in 2025 and had a book value of around 35 million dollars. And we should recognize a small gain on the sale when it closes in the second half of 2026.

Speaker #2: We also sold 4 million of real estate in Q2 on top of the Delta property that we sold in Q1. These are further refinements to our portfolio as we are focused on where we can optimize our capital deployment.

Speaker #2: In the case of color steels, it was a standalone niche business, a unit for us in Ontario, that had a focus on residential construction, which is not a priority for Russell.

Martin Juravsky: In the case of Color Steels, it was a standalone niche business unit for us in Ontario that had a focus on residential construction, which is not a priority for Russel. On the middle row of the diagram, our Q2 2026 CapEx was CAD 18 million, which was similar to Q1. We have recently approved a couple of modernization projects, expect that the CapEx to pick up in late 2026 and into 2027 as more of these types of projects are advanced. Capital deployment is around CAD 1.9 billion. Our capital grew from CAD 1.3 billion at the end of 2023 to CAD 1.6 billion at the end of 2024, and as I said, is now standing around CAD 1.9 billion. Generated strong return on invested capital. Our return on invested capital was 24% annualized in the quarter and 23% annualized if we look year-to-date 2026.

Speaker #2: On the middle row of the diagram, our 2026 or Q2 2026 CapEx was 18 million dollars, which was similar to Q1. We have recently approved a couple of modernization projects.

Speaker #2: So I expect that the CapEx to pick up in late 2026 and into 2027 as more of these types of projects are advanced. Capital deployment is around 1.9 billion dollars.

Speaker #2: Our capital grew from 1.3 at the end of 2023 to 1.6 billion at the end of 2024. And as I said, it's now standing around 1.9 billion dollars.

Speaker #2: Generated strong return on invested capital. Our return on invested capital was 24 percent annualized in the quarter and 23 percent annualized if we look year to date 2026.

Speaker #2: Once again, our returns are industry-leading when compared to publicly traded comparables. We grew our US business. Our US business currently represents about 54 percent of revenues and 61 percent Q2.

Martin Juravsky: Once again, our returns are industry leading when compared to publicly traded comparables. We grew our US business. Our US business currently represents about 54% of revenues and 61% of operating profits for Q2. The market conditions in the US are currently stronger than in Canada, which has resulted in the higher relative profitability for our US versus our Canadian operations. That being said, our Canadian business is making up some ground, and we see a positive outlook on both sides of the border. On the last row of the diagram, returning capital to shareholders. We have always had a flexible approach on this sub-piece. In Q2, we returned CAD 24 million via dividends but did not undertake share buybacks. However, since the NCIB was put in place back in 2022, we've acquired a total of 8.7 million shares at CAD 38.13 for a total of CAD 333 million.

Speaker #2: The market conditions in the US are currently stronger than in Canada, which has resulted in the higher relative profitability for our US versus our Canadian operations.

Speaker #2: That being said, our Canadian business is making up some ground, and we see a positive outlook on both sides of the border. On the last row of the diagram, returning capital to shareholders.

Speaker #2: We have always had a flexible approach on this subpiece. In Q2, we returned 24 million dollars via dividends, but did not undertake share buybacks.

Speaker #2: However, since the NCIB was put in place back in 2022, we have acquired a total of 8.7 million shares at $38.13 for a total of $333 million.

Speaker #2: Comparing our average buy-in price of $38.13 to the prevailing market price, the cumulative NCIB activity to date was done at an attractive discount to the prevailing market price.

Martin Juravsky: Comparing our average buy-in price of CAD 38.13 to the prevailing market price, the cumulative NCIB activity to date was done at attractive discounts to the prevailing market price. In the bottom right box of the page, maintaining strong capital structure is critical as we do operate in a cyclical industry. As a result, our liquidity is strong. We have a lot of flexibility. Bank covenants, no financial covenants in our term debt, and our maturities are 2030 for both our term debt as well as our bank debt. If we go to market conditions on page six, summary market conditions remain pretty strong right now. We saw carbon, sheet, and plate prices exhibit steady increases over the last nine or so months. Hot-rolled coil and plate prices in the US were up in Q2 versus Q1 and are currently prevailing higher than the Q2 averages.

Speaker #2: In the bottom right box of the page, maintaining a strong capital structure is critical as we do operate in a cyclical industry. As a result, our liquidity is strong and we have a lot of flexibility.

Speaker #2: Bank covenants, no financial covenants in our term debt, and our maturities are 20-30 for both our term debt as well as our bank debt.

Speaker #2: If we go to market conditions on page 6, summary market conditions remain pretty strong right now. We saw carbon sheet and plate prices exhibit steady increases over the last nine or so months.

Speaker #2: Hot-rolled coil and plate prices in the US were up in Q2 versus Q1, and are currently prevailing higher than the Q2 averages. Overall demand is good and supply chain inventory is limited as shown on the two right-hand charts.

Martin Juravsky: Overall demand is good, and supply chain inventory is limited, as shown on the two right-hand charts. Mill operating rates are tracking near 80%, which is a pretty healthy level. This suggests continued optimism. The bottom chart shows the recent pullback in aluminum prices, as that market has come off a bit from its record highs, but prices remain at near record levels. If we stand back and look at the prevailing environment and compare it to periods of the past when metal prices were robust, such as 2021, this environment seems to be driven by other and perhaps more fundamental factors. In 2021, the market was driven by global supply chain disruptions, temporary government stimulus, and a near zero interest rate environment. It was, by definition, short-lived. The recent movement in metal prices and margins seem to be underpinned by healthy and broad-based demand in combination with managed supply.

Speaker #2: Mill operating rates are tracking near 80 percent, which is pretty healthy level. This suggests continued optimism. The bottom chart shows the recent pullback in aluminum prices as that market has come off a bit from its record highs, but prices remain at near record levels.

Speaker #2: If we stand back and look at the prevailing environment and compare it to periods of the past when metal prices were robust, such as 2021, this environment seems to be driven by other and perhaps more fundamental factors.

Speaker #2: In 2021, the market was driven by global supply chain disruptions, temporary government stimulus, and a near zero interest rate environment. It was by definition short-lived.

Speaker #2: The recent movement in metal prices and margins seems to be underpinned by healthy and broad-based demand in combination with managed supply. On page 7, you see a summary of our trend EBITDA.

Martin Juravsky: On page seven, you see a summary of our trend EBITDA. We've talked a lot in the past about changing our EBITDA profile to raise the cycle floor, raise the cycle ceiling, and as a result, raise the cycle average. In addition, we have focused on reducing the volatility through the cycle. These charts present those elements, and it shows EBITDA on a trailing 12-month basis at the various points in time. The takeaways are the chart on the right, the 2023-2026 period, looks a lot better versus the left chart, which is the 2017 to 2019 period. Our average EBITDA is prevailing higher, and the peaks to trough are less volatile. Also on the right chart, our trailing 12-month trends continue to improve. Our LTM EBITDA is over CAD 400 million, and the improvement in LTM results should continue into Q3, as Q3 2026 should be better than Q3 2025.

Speaker #2: We've talked a lot in the past about changing our EBITDA profile to raise the cycle floor raise the cycle ceiling in as a result raise the cycle average.

Speaker #2: In addition, we have focused on reducing volatility through the cycle. These charts present those elements and show EBITDA on a trailing 12-month basis at various points in time.

Speaker #2: The takeaways are the chart on the right, the 2023 to 2026 period, looks a lot better versus the left chart, which is the 2017 to 2020 19 period.

Speaker #2: Our average EBITDA is prevailing higher, and the peaks to trough are less volatile. Also, on the right chart, our trailing 12-month trends continue to improve.

Speaker #2: Our LTM EBITDA is over 400 million dollars, and the improvement in LTM results should continue into Q3 as Q3 2026 should be better than Q3 2025.

Speaker #2: On page 8, we have a view of our working capital trends on the bottom chart in comparison to EBITDA trends on the top. If I can focus you on the far right side of the bottom chart, in Q2 we used cash for working capital purposes due to pickup in business activity.

Martin Juravsky: On page eight, we have a view of our working capital trends on the bottom chart in comparison to EBITDA trends on the top. If I can focus you on the far right side of the bottom chart. In Q2, we used cash for working capital purposes due to a pickup in business activity. That being said, the CAD 48 million for working capital was not very large when compared to up cycles in previous times. Our business changes have translated into less volatility, not just in earnings, but also in working capital needs. On page nine, we have a snapshot of historical results. If we look across the various charts, starting with the top left, revenues were a quarterly record at CAD 1.7 billion. EBITDA was up due to favorable conditions that I previously mentioned. We have also shown adjusted EBITDA in the far right chart.

Speaker #2: That being said, the 48 million dollars for working capital was not very large when compared to up cycles in previous times. Our business changes have translated into less volatility, not just in earnings, but also in working capital needs.

Speaker #2: On page 9, we have a snapshot of historical results. And if we look across the various charts starting with the top left, revenues were a quarterly record at 1.7 billion.

Speaker #2: EBITDA was up due to favorable conditions that I previously mentioned. We've also shown adjusted EBITDA in the far right chart. This chart excludes the mark-to-market on stock-based compensation and the Q1 gain on the Delta sale.

Martin Juravsky: This chart excludes the mark to market on stock-based compensation and the Q1 gain on the Delta sale. This adjusted EBITDA chart makes it easier to do an apples-to-apples comparison when looking at short-term trends. The adjusted EBITDA of CAD 154 million for Q2 is a big lift from the CAD 93 million in Q1, as well as other recent quarters. The bottom left chart, EPS, was CAD 1.43 in Q2, which was higher than Q1, even though Q1 benefited from the gain on the Delta sale. The middle table shows the adjusted EPS for that apples-to-apples comparison. On an adjusted EPS basis, the Q2 earnings per share was CAD 1.63 per share, which was about double the Q1 level. The bottom right chart shows our return on invested capital.

Speaker #2: This adjusted EBITDA chart makes it easier to do an apples-to-apples comparison when looking at short-term trends. The adjusted EBITDA of $154 million for Q2 is a big lift from the $93 million in Q1, as well as other recent quarters.

Speaker #2: The bottom left chart, EPS, was a dollar 43 in Q2, which was higher than Q1, even though Q1 benefited from the gain on the delta sale.

Speaker #2: The middle table shows the adjusted EPS for that apples-to-apples comparison, and on adjusted EPS basis, the Q2 earnings per share was a dollar 63 per share, which was about double the Q1 level.

Speaker #2: The bottom right chart shows our return on invested capital. This uses the results as they are without any adjustments, and our return on invested capital for 2026 has been strong above our cycle target and industry leading.

Martin Juravsky: This uses the results as they are without any adjustments, our return on invested capital for 2026 has been strong, above our cycle target, and industry-leading. On page 10, we show the reconciliation of the unadjusted to the adjusted results. As I said earlier, the adjustments are to put the quarterly results on a comparative basis that is more equivalent and easier to see the operational trends. There are only two adjustments that we are making for purposes of comparability. One is the mark to market on stock-based comp, which in Q2 was CAD 15 million pre-tax, CAD 11 million after tax, which equated to CAD 0.20 per share. Two, the Q1 gain on the Delta sale, as it was a material item, that is nice to have it, but it is non-recurring.

Speaker #2: On page 10, we show the reconciliation of the adjusted to the unadjusted to the adjusted results, and as I said earlier, the adjustments are to put the quarterly results on a comparative basis that is more equivalent and easier to see the operational trends.

Speaker #2: And there's only two adjustments that we are making for purposes of comparability. One is the mark-to-market on stock-based comp, which in Q2 was 15 million dollars pre-tax, 11 million after tax, which equated to 20 cents per share, and two, the Q1 gain on the delta sale, as it was a material item that is nice to have it, but it is non-recurring.

Speaker #2: On this page, the equivalent comparisons are in the gray area, and that highlights and illustrates the large step-up in our Q2 results from an adjusted EBITDA adjusted net earnings and an adjusted EPS perspective.

Martin Juravsky: On this page, the equivalent comparisons are in the gray area, that highlights and illustrates the large step-up in our Q2 results from an adjusted EBITDA, adjusted net earnings, and an adjusted EPS perspective. Going to more detailed financials on page 11. From an income statement perspective, some of the items I have already discussed, but starting at the top. Revenues were up 17% in Q1 and up 37% versus Q1 and up 37% versus Q2 of last year. I will talk more about volumes later, but it was another record shipping quarter on top of the record shipment levels that were achieved in Q1. Our gross margin percent was up versus Q2. The margin profile of the former Kloeckner branches still lags that of our comparable operations but had a strong bottom-line contribution.

Speaker #2: Going to more detailed financials on page 11. From an income statement perspective, some of the items have already discussed, but starting at the top, revenues were up 17 percent in Q1 and up 37 percent versus Q1 and up 37 percent versus Q2 of last year.

Speaker #2: And I'll talk more about volumes later, but it was another record shipping quarter on top of the record shipment levels that were achieved in Q1.

Speaker #2: Our gross margin percent was up versus Q2. The margin profile of the former Klockner branches still lags that of our comparable operations, but had a strong bottom line contribution.

Speaker #2: If we look at the cumulative contribution for the first six months, relative to the 128 million dollar purchase price, it has equated to an over 30 percent annualized return on invested capitals so far.

Martin Juravsky: If we look at the cumulative contribution for H1 relative to the CAD 128 million purchase price, it has equated to an over 30% annualized return on invested capital so far. Timing's been very good. The mark-to-market on stock-based comp was a CAD 50 million expense, as I mentioned earlier, in Q2 versus a CAD 5 million expense in Q1. We pulled those out of the adjusted results for purposes of easier comparison. Cash flow, I mentioned earlier in Q2, we used CAD 48 million of cash for working capital due to increase in business activity. Share buybacks, cumulative share buybacks since August 2022, about 14% of our shares outstanding was picked up for CAD 333 million at an average cost of CAD 38.13. There wasn't any meaningful activity in Q2.

Speaker #2: Timing's been very good. The mark-to-market on stock-based comp was a 15 million expense, as I mentioned earlier in Q2 versus a 5 million dollar expense in Q1.

Speaker #2: And we've pulled those out of the adjusted results for purposes of easier comparison. Cash flow, I mentioned earlier in Q2, we used 48 million of cash for working capital, due to the increase in business activity.

Speaker #2: Share buybacks, cumulative share buybacks since August 2022, about 14 percent of our shares outstanding was picked up for 333 million dollars at an average cost of $38.13.

Speaker #2: There wasn't any meaningful activity in Q2. Our quarterly dividend was raised in June to $0.44 per share for the quarter, and we have just declared the same quarterly dividend of $0.44 per share that will be paid in September.

Martin Juravsky: Our quarterly dividend was raised in June to CAD 0.44 per share for the quarter, and we've just declared the same quarterly dividend of CAD 0.44 per share that will be paid in September. Our CapEx of CAD 18 million in Q2 was similar to Q1. Balance sheet perspective, we remain in a strong position with only CAD 144 million of net debt, we have a fair amount of flexibility and dry powder. The FX rate did move by about CAD 0.03 in the quarter, which had a positive impact on our OCI account. Our book value continues to grow and is up CAD 1.47 from 31 March and is up about 10% from this time last year. On page 12, we show our adjusted EBITDA and the variance analysis between Q1 and Q2. In looking at the service centers, the volumes were up 6% versus Q1.

Speaker #2: Our capex of 18 million in Q2 was similar to Q1. Balance sheet perspective, we remain in a strong position with only 144 million of net debt, so we have a fair amount of flexibility and dry powder.

Speaker #2: The FX rate did move by about 3 cents in the quarter, which had a positive impact on our OCI account. And our book value continues to grow and is up a dollar 47 from March 31st and is up about 10 percent from this time last year.

Speaker #2: On page 12, we show our adjusted EBITDA and the variance analysis between the Q1 and Q2. In looking at the service centers, the volumes were up 6 percent versus Q1.

Speaker #2: As I said earlier, we just had another record. This translated to a $13 million EBITDA pickup. The margins picked up by around 130 basis points, or $70 per ton, which equates to $37 million.

Martin Juravsky: As I said earlier, just hit another record. This translated to a CAD 13 million EBITDA pickup. The margins picked up by around 130 basis points or CAD 70 per ton, which equates to that CAD 37 million. Costs were up by CAD 12 million due to higher delivery costs and incentive compensation that is tied to financial performance. Energy field stores were up CAD 5 million, which is a continuation of their favorable recent trend. Steel distributors were up CAD 10 million as they benefited from the favorable market conditions. In the other bucket, corporate expenses were flat to down a little bit, and there was a seasonal pickup in our Thunder Bay terminal operations. On page 13, we have our segmented P&L information for service centers. I'll go through this in more detail on the next page. It was a very big improvement over Q1. Energy field stores, the revenues were up.

Speaker #2: Costs were up by $12 million due to higher delivery costs and incentive compensation that is tied to financial performance. Energy fuel stores were up $5 million, which is a continuation of their favorable recent trend.

Speaker #2: Steel distributors were up 10 million dollars as they benefited from the favorable market conditions. And in the other bucket, corporate expenses were flat to down a little bit, and there was a seasonal pickup in our Thunder Bay terminal operations.

Martin Juravsky: In the other bucket, corporate expenses were flat to down a little bit, and there was a seasonal pickup in our Thunder Bay terminal operations. On page 13, we have our segmented P&L information for service centers. I'll go through this in more detail on the next page. It was a very big improvement over Q1. Energy field stores, the revenues were up.

Speaker #2: On page 13, we have our segmented P&L information for service centers I'll go through this in more detail on the next page. It was a very big improvement over Q1.

Speaker #2: Energy fuel stores, the revenues were up. Gross margin percentages were down a little bit due to Prodimux, but we're still very good. The operating profit in Q2, 26, was the highest quarterly level in around three years.

Martin Juravsky: Gross margin percentages were down a little bit due to product mix, but were still very good. The operating profit in Q2 2026 was the highest quarterly level in around three years. Distributors revenues, gross margins, EBIT were all up in Q2 versus Q1. On page 14, we have a deeper dive into the metrics for the service center business. The top right graph is tons shipped. Q2 was a record quarter and was the first time that we have broken through the 500,000 tons per quarter level. The results were up 6% over Q1, and even if we exclude the Kloeckner contributions, same store tonnage was up 6% versus Q2 of 2025, which reflects the strong and favorable demand environment where we're operating. Price realizations per ton were up 9% versus Q1, and that translated into a nice margin pickup that is shown in the bottom right graph.

Speaker #2: Distributors' revenues, gross margins, EBIT were all up in Q2 versus Q1. On page 14, have a deeper dive into the metrics for the service center business.

Speaker #2: The top right graph is tons shipped. Q2 was a record quarter, and was the first time that we have broken through the 500,000 tons per quarter level.

Speaker #2: The results were up 6 percent over Q1, and even if we exclude the Klockner contributions, same-store tonnage was up 6 percent versus Q2 of 2025, which reflects the strong and favorable demand environment where we're operating.

Speaker #2: Price realizations per ton were up 9 percent versus Q1, and that translated into a nice margin pickup that is shown in the bottom right graph.

Speaker #2: Our gross margin per ton was 529 dollars per ton, which was a 71 dollar per ton pickup versus Q1, and was the highest level since 2023.

Martin Juravsky: Our gross margin per ton was CAD 529 per ton, which was a CAD 71 per ton pickup versus Q1 and was the highest level since 2023. This is in spite of the lower margin profile from the former Kloeckner branches. That being said, we are seeing the early stage of relative margin pickup from the Kloeckner branches, with more relative upside on the come. On page 15, we've illustrated our inventory turns. Overall, our inventory turns improved to 4.4 in Q2 versus 4.2 in Q1. Inventories are tight as business activity is strong. Page 16, we've illustrated our inventory dollars. Total inventory was up about CAD 100 million since 31 March, which was driven by higher cost per ton for the Metals Service Centers, while total tonnage was relatively flat. Page 17, update on our capital structure.

Speaker #2: This is in spite of the lower margin profile from the former Klockner branches. That being said, we are seeing the early stage of relative margin pickup from the Klockner branches, with more relative upside on the come.

Speaker #2: On page 5, excuse me, 5, 15, we have illustrated our inventory turns. Overall, our inventory turns improved to 4.4 in Q2 from 4 excuse me, improved to 4.4 in Q2 versus 4.2 in Q1.

Speaker #2: Inventories are tight as business activity is strong. On page 16, we have illustrated our inventory dollars. Total inventory was up about $100 million since March 31st, which was driven by a higher cost per ton for the service centers, while total tonnage was relatively flat.

Speaker #2: Page 17, update on our capital structure. Our liquidity is pretty good, very strong and gives a significant flexibility. We're investment-grade rated by both S&P and DBRS, and since last quarter, our net debt was reduced by about 26 million dollars, and our liquidity is over 500 million dollars, which gives us plenty of dry powder when we find capital deployment opportunities that make sense.

Martin Juravsky: Our liquidity is pretty good, very strong and gives us significant flexibility. We're investment grade rated by both S&P and DBRS, and since last quarter, our net debt was reduced by about CAD 26 million, and our liquidity is over CAD 500 million, which gives us plenty of dry powder when we find capital deployment opportunities that make sense. We recently completed a normal course extension of our bank lines and have pushed them from 2029 to 2030. Page 18 has our capital allocation priorities. Left part of the page, our investment approach. Seek average returns of greater than 15% over the cycle, and that's been consistently achieved. On the facility modernization front, we have two new projects that were recently approved. One is in Western Canada and one is in the US South at a former Kloeckner branch. They are each for around CAD 10 million each and have solid return profiles.

Speaker #2: We recently completed a normal course extension of our bank lines, and have pushed them from 2029 to 2030. Page 18 has our capital allocation priorities.

Speaker #2: Left part of the page are investment approach. Seek average returns of greater than 15 percent over the cycle, and that's been consistently achieved. On the facility modernization front, we have two new projects that were recently approved.

Speaker #2: One is in Western Canada, and one is in the US South at a former Klockner branch. They are each for around 10 million dollars each and have solid return profiles.

Speaker #2: These are both examples of opportunities that emerged either directly or indirectly from recent acquisitions. On the acquisition front, we have been active for the last few years, and we continue to look at opportunities that could complement our existing businesses.

Martin Juravsky: These are both examples of opportunities that emerged either directly or indirectly from recent acquisitions. On the acquisition front, we have been active for the last few years, we continue to look at opportunities that could complement our existing businesses. On the right part of the page, we have shown our approach to returning capital to shareholders. Here we have that flexible approach that I mentioned earlier, I have more details on the next page. Page 19. Deeper dive on returning capital to shareholders. Left chart, we have our longer-term dividend profile, with the recent dividend increase to CAD 0.44 back in June and the CAD 0.44 per share that has just been declared, that will be paid out in September.

Speaker #2: On the right part of the page, we have shown our approach to returning capital to shareholders. Here we have that flexible approach that I mentioned earlier, and I have more details on the next page.

Speaker #2: Page 19, deeper dive on returning capital to shareholders. Left chart, we have our longer-term dividend profile, and with the recent dividend increase to 44 cents back in June, and the 44 cents per share that has just been declared that will be paid out in September.

Speaker #2: The dividend increase that was done in June represents the fourth increase in four years, and in total represented a 16 percent cumulative increase since the early 2023 dividend level.

Martin Juravsky: The dividend increase that was done in June represents the fourth increase in four years, in total represented a 16% cumulative increase since the early 2023 dividend level. Bottom left chart, we show our NCIB activity since we put in place in 2022, we view it as opportunistic. As I said earlier, our cumulative NCIB since 2022 has been a 14% reduction in our share count. Average cost was CAD 38.13 per share for a total of CAD 333 million. On the top right chart, the aggregation of dividends versus NCIB over the last few years show the cumulative impacts and is again worth noting on that chart, that even though our dividend per share has increased by meaningful amounts, our total dividend outlay has remained at around CAD 24 million per quarter as a result of the reduction in the share count, which is shown on the bottom right-hand chart.

Speaker #2: Bottom left chart, we show our NCOB activity since we put in place in 2022, and we view it as opportunistic as I said earlier, our cumulative NCIB since 2022 has been a 14 percent reduction in our share count, average cost was $38.13 per share for a total of 333 million dollars.

Speaker #2: On the top right chart, the aggregation of dividends versus NCIB over the last few years, show the cumulative impacts and is again worth noting on that chart that even though our dividend per share has increased by a meaningful amount, our total dividend outlay has remained at around 24 million dollars per quarter as a result of the reduction in the share count, which is shown on the bottom right-hand chart.

Martin Juravsky: On the top right chart, the aggregation of dividends versus NCIB over the last few years show the cumulative impacts and is again worth noting on that chart, that even though our dividend per share has increased by meaningful amounts, our total dividend outlay has remained at around CAD 24 million per quarter as a result of the reduction in the share count, which is shown on the bottom right-hand chart.

Speaker #2: So on closing and on behalf of John and other members of the management team, I would again like to really express our thanks to everyone within the Russell Group for their contributions.

Martin Juravsky: On closing, on behalf of John and other members of the management team, I would again like to really express our thanks to everyone within the Russel group for their contributions. This has really been a nice start to 2026, and we look forward to more opportunities on the come. Operator, that concludes my intro remarks, and you can now open the line for questions.

Speaker #2: This is a really been a nice start to 2026, and we look forward to more opportunities on the come. Operator that concludes my intro remarks, and you can now open the line for questions.

Operator 1: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you do have a question, please press star followed by one on your touch tone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by two. If you're on a speakerphone, please lift your handset before pressing any keys. One moment for your first question. Your first question comes from James McGarragle with RBC Capital Markets. Please go ahead.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you do have a question, please press star followed by one on your touch tone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by two. If you're on a speakerphone, please lift your handset before pressing any keys. One moment for your first question. Your first question comes from James McGarragle with RBC Capital Markets. Please go ahead.

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you do have a question, please press star, followed by one.

Speaker #1: On your touch-tone phone. You will hear a prompt that your hand has been raised. If you wish to decline from the polling process, please press star followed by two, and if you're on a speakerphone, please lift your handset before pressing any keys.

Speaker #1: One moment for your first question. Your first question comes from James McGarrigal, with RBC Capital Markets. Please go ahead.

Speaker #2: Hey, good morning, and congrats on the strong quarter there.

James McGarragle: Hey, good morning and congrats on the strong quarter there.

Speaker #3: Great. Thanks, James.

Martin Juravsky: Great. Thanks, James.

Speaker #2: Yeah, so just on the margin guide, you know, margins seem to be holding up early in the quarter—potentially some upside to your guidance.

James McGarragle: Yeah. Just on the margin guide. The margins seem to be holding up early in the quarter, potentially some upside to your guidance. Can you just let us know what you're assuming in terms of pricing and volumes that are underlying that, the implied decline in margin versus what you're seeing early in Q3?

Speaker #2: So can you just let us know what you're assuming in terms of pricing and volumes that are underlying that, you know, the implied decline in margin versus what you're seeing early in Q3?

Speaker #3: Well, a couple of things. When I was talking about some of the margin upside related to Klockner, some of that will take time to unfold, and I think I need to separate that from the broader market conditions and how they are.

Martin Juravsky: Well, a couple things. When I was talking about some of the margin upside related to Kloeckner, some of that will take time to unfold, and I think I need to separate that from just broader market conditions and how they are. Think of the Kloeckner piece as we're making some gains, and that's really beneficial given the market we're in. Some of the gains we're going to see in terms of margin improvement on a relative basis, that's going to take a little while to fully unfold, and some of it relates to the CapEx, for example, that we just approved for one facility that relates to the Kloeckner business. I separate that from the broader market conditions.

Speaker #3: So think of the Klockner pieces. We're making some gains, and that's really beneficial given the market we're in, but some of the gains we're going to see in terms of margin improvement on a relative basis, that's going to take a little while to fully unfold, and some of it relates to the capex, for example, that we just approved for one facility that relates to the Klockner business.

Speaker #3: So I separate that from the broader market conditions. The simple version is that kind of the margins that we are seeing for July are very similar to the margins that we are seeing in June, and the June margins were better than our Q2 average.

Martin Juravsky: The simple version is that kind of the margins that we are seeing for July are very similar to the margins that we are seeing in June, and the June margins were better than our Q2 average.

Speaker #2: Okay. I appreciate that color. And then on volumes, it seems like all the read-throughs we're hearing from the freight transports, you know, point to sequential uptick in Q3.

James McGarragle: Okay. Appreciate that color. On volumes, it seems like all the read-throughs we're hearing from the freight transports point to sequential uptick in Q3. I know your US business is a bigger piece of the pie now. How should we be thinking about those two positive drivers versus the typical slowdown in seasonality when we think about modeling margins for Q3, or sorry, modeling volumes for Q3?

Speaker #2: I know your US business is a bigger piece of the pie now. So how should we be thinking about those two positive drivers versus, you know, the typical slowdown in seasonality when we think about modeling margins for Q3 or sorry, modeling volumes for Q3?

Speaker #4: Yeah, James, interestingly enough, and Marty alluded to it in his opening comments that the typical summer slowdown you see with people being out for school, the holidays in July and August, we just really haven't seen.

John Reid: James, interestingly enough, and Marty alluded to it in his opening comments, that the typical summer slowdown you see with people being out for school, the holidays in July and August, we just really haven't seen. There's obviously the construction holiday that goes on in Quebec that was there in late July, but we just did not see much of a slowdown in demand at all. Steel mills are running at 81% capacity right now, keeping in mind that 85% is basically full capacity due to the cannibalistic nature of a steel mill. We think demand will be very solid and robust through Q3 and into Q4. We're seeing extended lead times from the mill manufacturers that are out there, and across every segment that we have, we've seen an uptick.

Speaker #4: There's obviously the construction holiday that goes on in Quebec that was there in late July, but we just did not see much of a slowdown in demand at all.

Speaker #4: Steel mills are running at 81 percent capacity right now, keeping in mind that 85 percent is basically full capacity due to the cannibalistic nature of a steel mill.

Speaker #4: So we think demand will be very solid and robust through Q3, and into Q4, we're seeing extended lead times from the mill manufacturers that are out there, and across every segment that we have, we've seen an uptick.

Speaker #2: And just a quick follow-up before I turn the line over. On that 6 percent same-store volume growth in Q2, what percentage of that was share gain versus what percentage was just the overall strength in the service center market?

James McGarragle: Just a quick follow-up before I turn the line over. On that 6% same store volume growth in Q2, what percentage of that was share gain versus what percentage was just the overall strength in the service center market? I'll turn the line over after that. Thank you.

Speaker #2: And I'll turn the line over after that. Thank you.

Speaker #3: You know, it's hard to it's a good question, James, that it's hard to break down that precisely, but it's a little bit of both, for sure.

Martin Juravsky: It's a good question, James, that it's hard to break down that precisely, but it's a little bit of both for sure. There is momentum that we are seeing within our areas, and in strong markets we can do a variety of things, pick up volume because demand is greater, and also be targeted in picking up market share because we do have product. One of the things that I think it's fair to characterize in the market we're in right now, because inventory supply chains are relatively light. Those with product do pretty well from a customer perspective, and we have good access to supply given our scale. I think that has helped us both with the broader market as well as penetration on the market share.

Speaker #3: There is momentum that we are seeing within our areas, and in strong markets, we can do a variety of things, pick up volume because demand is greater, and also be targeted in picking up market share because we do have product.

Speaker #3: And one of the things that is, I think it's fair to characterize in the market we're in right now, because inventory supply chains are relatively light, those with product do pretty well from a customer perspective, and we have good access to supply given our scale.

Speaker #3: And so I think that is helped us both with the broader market as well as penetration on the market share.

Speaker #2: Thank you.

James McGarragle: Thank you.

Speaker #3: Great. Thanks, James.

Martin Juravsky: Great. Thanks, James.

Speaker #1: Next question comes from Frederick Baskine with Raymond James. Please go ahead.

Operator 1: Next question comes from Frederic Bastien with Raymond James. Please go ahead.

Operator: Next question comes from Frederic Bastien with Raymond James. Please go ahead.

Speaker #5: Good morning. I just wanted to build on that last question and answer. Historically, guys, you've spoken about having relatively limited visibility into future market conditions.

Frederic Bastien: Good morning. I just wanted to build on that last question and answer. Historically, guys, you've spoken about having relatively limited visibility into future market conditions. Now, listening to your commentary this morning, it sounds as though that visibility has improved. Is that a fair characterization, and if so, what's driving that increased confidence?

Speaker #5: Now, listening to your commentary this morning, it sounds as though that visibility has improved. Is that a fair characterization? And if so, what's driving the increased confidence?

Speaker #4: You know, Fred, great point, and it is a fair characterization. And so, when we're talking with our customers, we're seeing extended lead times that are going out now, further than they typically have historically. So now, historically, we were 30 to 45 days.

John Reid: Fred, great point, and it is a fair characterization. When we're talking with our customers, we're seeing extended lead times that are going out now further than they typically have historically. Historically, we were 30 to 45 days. We're now seeing that 90 to 120. We're also seeing mill lead times extend further than they have historically, some going out well into next year. It's creating an environment of project planning where customers are coming to us to make sure they have product. As Marty said earlier, product supply can be tight right now in the industry. We do have access to product compared to some others, and so that's helping us. People are securing their needs, and making commitments with open-ended pricing right now.

Speaker #4: We're now seeing that 90 to 120. We're also seeing mill lead times extend further than they have historically, some going out well into next year.

Speaker #4: And so, it's creating an environment of project planning where customers are coming to us to make sure they have product. As Marty said earlier, product supply can be tight right now in the industry.

Speaker #4: We do have access to product compared to some others, and so that's helping us so people are securing their needs and making commitments with open-ended pricing right now.

Speaker #5: Okay, that's super helpful. Now, how does that translate into the competitive landscape? Obviously, it's probably evolved a lot from a year ago, when prices weren't as healthy as they are today.

Frederic Bastien: Okay. That's super helpful. How does that translate into the competitive landscape? Obviously, it's probably evolved a lot from a year ago when prices weren't as healthy as they are today. Are you seeing any meaningful changes in the behavior around bidding appetite for volume? The one that probably most people are interested in is acquisition activity.

Speaker #5: Are you seeing any meaningful changes in the behavior around bidding, appetite for volume, or, you know, the one that probably most people are interested in is acquisition activity?

Speaker #4: Yeah, so I think from a bidding perspective, I think the market's being extremely responsible on pricing right now due to the availability of product.

John Reid: Yes. I think from a bidding perspective, I think the market's been extremely responsible on pricing right now due to the availability of product. There are some holes that we're seeing in competitors' inventories that are out there, so it's giving us natural advantages, just due to the fact we have the product. I think there will be some M&A activity probably in the back half of the year, early next year, where we'll continue looking at opportunities and just stay disciplined in our approach.

Speaker #4: There are some holes that we're seeing in competitors' inventories that are out there, so it's giving us natural advantages, just due to the fact we have the product. I think there will be some M&A activity probably in the back half of the year, early next year, where we'll continue looking at opportunities and just stay disciplined in our approach.

Speaker #5: Okay, thanks. I'll turn it over. Great quarter.

Frederic Bastien: Okay. Thanks. I'll turn it over. Great quarter.

Speaker #2: Thanks, Fred.

Martin Juravsky: Thanks, Fred.

Speaker #1: Next question comes from Michael Tubholm with TD Cowan. Please go ahead.

Operator 1: Next question comes from Michael Tupholme with TD Cowen. Please go ahead.

Operator: Next question comes from Michael Tupholme with TD Cowen. Please go ahead.

Speaker #2: Thank you. Good morning.

Michael Tupholme: Thank you. Good morning.

Speaker #3: Hey, Mike.

Martin Juravsky: Hey, Mike.

Speaker #2: Morning. So it sounds like the demand environment is, you know, very robust, really, across most areas. But I wanted to kind of get your take, if you can sort of dig into that a little bit.

Michael Tupholme: Morning. It sounds like the demand environment is very robust really across most areas, but wanted to kind of get your take, if you can sort of dig into that a little bit. You did mention that the US, you have been seeing a little bit stronger market conditions in the US and Canada, but then mentioned that Canada's kind of been picking up lately. maybe you could expand on that, and then just in terms of where that pickup in Canada has been coming from and from an end market perspective. Again, not sure if this is just really strong across all end markets or if there are certain ones that are really driving the strength. I'd be curious for any thoughts on that.

Speaker #2: I mean, you did mention that the US, you're seeing a little bit you have been seeing a little bit stronger market conditions in the US and Canada, but then mentioned that Canada is kind of been picking up lately.

Speaker #2: So, maybe you could expand on that, and then, just in terms of where that pickup in Canada has been coming from and, from an end-market perspective.

Speaker #2: Again, not sure if this is just really strong across all end markets or if there are certain ones that are really driving the strength, but I'd be curious for any thoughts on that.

Speaker #4: Yeah, thanks, Mike. And early on in the year, you're exactly right, the US was extremely busy, Canada was languishing a little bit and started picking up steam, but really starting in May and going forward into June, July, and now into August, we've seen Canada start to really pick up.

John Reid: Yeah. Thanks, Mike. Early on in the year, you're exactly right. The US was extremely busy. Canada was languishing a little bit and started picking up steam. Really starting in May and going forward into June, July, and now into August, we've seen Canada start to really pick up. The drivers that we're seeing on that is predominantly across all end markets in the US, and we've mentioned ag before as being a laggard. It is starting to pick up. It's starting from well in both countries. Obviously, seeing the projects that are going on in the US and in Canada, whether it's LNG, whether it has to do with data centers that are being built. Western Canada is extremely busy right now for us on multiple projects that are either being pushed by the government or private industry.

Speaker #4: The drivers that we're seeing on that is predominantly across all end markets in the US, and we've mentioned ag before, it's being a laggard.

Speaker #4: It is starting to pick up. It's starting from as well in both countries. Obviously, seeing the projects that are going on in the US and in Canada whether it's LNG, whether it has to do with data centers that are being built, Western Canada is extremely busy right now for us on multiple projects that are either being pushed by the government or private industry.

Speaker #4: And so we're really starting to see all tides rise right now, which is a nice place for us to be in. When you look at demand even the rig counts in both countries are up year over year.

John Reid: We're really starting to see all tides rise right now, which is a nice place for us to be in. When you look at demand, even the rig counts in both countries are up year-over-year. Again, it's very good for our energy business. It's very good for our service center business right now.

Speaker #4: So again, it's very good for our energy business, it's very good for our service center business right now.

Speaker #2: That's helpful. Thank you, John. Just to follow on that, the comment there about data centers, not surprising to hear that that's one of the areas of strength, but are you able to provide a little bit of color on what that represents as a percentage or proportion of demand right now for Russell relative to where that would have been even six months ago?

Michael Tupholme: That's helpful. Thank you, John. Just to follow on that, the comment there about data centers, not surprising to hear that that's one of the areas of strength. Are you able to provide a little bit of color on what that represents as a percentage or proportion of demand right now for Russel relative to where that would've been even 6 months ago? Just to provide some context, trying to understand sort of how material this is for you guys right now.

Speaker #2: Just to provide some context, John understands how material this is for you guys right now.

Speaker #4: Yeah, and it's a little difficult to quantify because we sell it through so many different avenues, and what I mean by that, we're doing racking that goes into data centers, and some areas we're doing the structural components of the steel.

John Reid: Yeah. It's a little difficult to quantify because we sell it through so many different avenues. What I mean by that, we're doing racking that goes into data centers in some areas. Some areas, we're doing the structural components, the steel. Some we're providing into the electrical power grids or the LNG power grids that are going in. It touches a lot of different areas with a lot of tentacles that go out. I would say it's probably around 8% to 10% of an impact overall right now throughout our service centers and our energy field stores.

Speaker #4: Some we're providing into the electrical power grids that are or the LNG power grids that are going in. So it touches a lot of different areas with a lot of tentacles that go out, but I would say it's probably around 8 to 10 percent of an impact overall right now throughout our service centers and our energy fuel stores.

Speaker #2: Okay, that's helpful. Thank you. Just in terms of the gross margins, so it sort of sounded like in the outlook commentary that you were looking for Q3 margins to actually moderate a little bit in service centers, but then on the conference call, I'm not sure that that's sort of exactly what I heard.

Michael Tupholme: Okay. That's helpful. Thank you. Just in terms of the gross margin, it sort of sounded like in the outlook commentary that you were looking for Q3 margins to actually moderate a little bit in service centers. On the conference call, I'm not sure that that's sort of exactly what I heard. The demand environment's strong, obviously, as you just talked about. We've not seen any indication that prices are rolling over. Is the right way to think about service centers margins for Q3, that there could be some further upside, or how do we think about that?

Speaker #2: So I mean, the demand environment's strong, obviously, as you just talked about the I mean, prices have you know, we've not seen any indication that prices are rolling over.

Speaker #2: So is the right way to think about service centers margins for Q3 that there could be some further upside, or how do we think about that?

Speaker #3: Yeah, look, I would temper that a little bit, Mike. And part of it is what we've said in our narrative is we expect Q3 to be similar to the first half.

Martin Juravsky: Yeah. I would temper that a little bit, Michael, and part of it is what we've said in our narrative is we expect Q3 to be similar to the H1. We have visibility on July, and as John was talking about earlier, things looking pretty good for August and September as well. There is a point in time where product prices have gone up, and at some point there is a catch-up on the costs that come into the system as well. As long as prices keep moving up, that's favorable for us in terms of the margin side of it.

Speaker #3: Now, we have visibility on July and, as John was talking about earlier, things look pretty good for August and September as well. But there is a point in time where product prices have gone up, and at some point, there is a catch-up on the costs that come into the system as well.

Speaker #3: So as long as prices keep moving up, that's favorable for us in terms of the margin side of it. But at some point, if prices start to go sideways and maintain even at a high level, there is a little bit of catch-up related to the cost side of it because of the lag effect of inventory coming in, and then inventory, how it finds its way into our cost of goods sold.

Martin Juravsky: At some point, if prices start to go sideways and maintain even at a high level, there is a little bit of catch-up related to the cost side of it because of the lag effect of inventory coming in, and then inventory, how it finds its way into our cost of goods sold. The visibility I have right now kind of goes back to what we said in the narrative, which is margins should be somewhere in the zone of what we saw for Q3, of what we saw for the H1 of this year, but we've started Q3 in pretty good shape.

Speaker #3: So the visitability I have right now, it kind of goes back to what we said in the narrative, which is margins should be somewhere in the zone of what we saw for Q3 of what we saw for the first half of this year, but we've started Q3 in pretty good shape.

Speaker #2: Okay, that makes sense. And then if I look at the improvement in service center gross margins Q2 versus Q1, obviously, there's the, you know, the market dynamics that you've just talked about.

Michael Tupholme: Okay, that makes sense. If I look at the improvement in service center gross margins, Q2 versus Q1, obviously there's the market dynamics that you've just talked about. Was there some improvement there that came from Kloeckner, and can we actually quantify that? Like if I look at 20.9% in the Q1 going to 22.2%, is there a percentage of that or a portion of that that's Kloeckner that you can call out?

Speaker #2: Did the improvement was there some improvement there that came from Klockner and can we actually quantify that? Like, if I look at 20.9 percent in the first quarter going to 22.2, like, is there a percentage of that or a portion of that that's Klockner that you can call out?

Speaker #3: Yeah, I mean, the way to characterize it is there was because market conditions improved, obviously, that was the biggest driver in Q2 within that, Klockner had a very meaningful difference in margins versus the rest of our US service center business in January and February and March, but as we got into April and May and June, some of that relative margin differential started to shrink.

Martin Juravsky: Yeah. The way to characterize it is, because market conditions improved, obviously that was the biggest driver in Q2 versus Q1. Embedded within that, Kloeckner had a very meaningful difference in margins versus the rest of our US service center business in January, February, and March. As we got into April, May, and June, some of that relative margin differential started to shrink. There is still a noticeable margin difference between it, and we're at the early stage of some of those improvements. I would say overall, though, that we're at the very early stage of having that margin improvement within the Kloeckner branches on a relative basis translate to the overall margin improvement that you see. Said a shorter way, Mike, if you look at Q2 versus Q1, most of that improvement was the improvement in the broader market environment.

Speaker #3: There is still a noticeable margin difference between it, and we're at the early stage of some of those improvements. But I would say overall, though, that we're at the very early stage of having that margin improvement within Klockner—the Klockner branches, on a relative basis, translates to the overall margin improvement that you see.

Speaker #3: So instead of a shorter way, Mike, if you look at Q2 versus Q1, most of that improvement was the improvement in the broader market environment, a little bit of it was from the relative improvement in the margin profile at Klockner.

Martin Juravsky: A little bit of it was from the relative improvement in the margin profile at Kloeckner. It benefited from improving market conditions and benefited a little bit from relative margin improvement.

Speaker #3: It benefited from improving market conditions, and benefited a little bit from relative margin improvements.

Speaker #2: All right, that makes sense. I will leave it there and get back into Q. Thank you.

Michael Tupholme: All right. That makes sense. I will leave it there and get back. Thank you.

Speaker #3: Thanks, Mike.

Martin Juravsky: Thanks, Mike.

Speaker #1: Your next question comes from Arian Arora with BMO Capital Markets. Please go ahead.

Operator 1: Your next question comes from Aryan Arora with BMO Capital Markets. Please go ahead.

Operator: Your next question comes from Aryan Arora with BMO Capital Markets. Please go ahead.

Speaker #5: Hey, good morning. You guys were a bit short on M&A earlier. Can you provide an update on the pipeline? Have your expectations started to move higher, given the positive sector fundamentals as of late?

Aryan Arora: Hey, good morning. You guys touched on M&A earlier. Can you provide an update on the pipeline? Have seller expectations started to move higher given the positive sector fundamentals as of late?

Speaker #3: Well, it's hard to talk about the market on the M&A side of it too broadly because we deal with one-offs, and we know the one-offs we deal with, and if we look back at the history of the last number of acquisitions that we've done, each one looked very, very different.

Martin Juravsky: Well, it's hard to talk about the market on the M&A side of it too broadly because we deal with one-offs, and we know the one-offs we deal with. If we look back at the history of the last number of acquisitions that we've done, each one looked very different. It's hard to really characterize vendor expectations broadly. All I know is we kind of stick to our knitting and stick to our criteria, and sometimes that lines up with vendors and sometimes it doesn't. We don't really get too hung up on thinking through what market conditions are broadly and what vendor expectations are, because it's hard to quantify. We just look at the one-offs that we look at, and if we can see alignment, terrific, and if we can't, for whatever reason, sometimes it's vendor expectations and sometimes it's other reasons in due diligence.

Speaker #3: So it's hard to really characterize vendor expectations broadly. All I know is we kind of stick to our knitting and stick to our criteria, and sometimes that lines up with vendors and sometimes it doesn't.

Speaker #3: So, we don't really get too hung up on thinking through what market conditions are broadly and what vendor expectations are, because it's hard to quantify.

Speaker #3: We just look at the one-offs that we look at, and if we can see alignment, terrific, and if we can't, for whatever reason, sometimes it's vendor expectations and sometimes it's other reasons.

Speaker #3: In due diligence, that being said, and I kind of go back to when we look at our acquisition history, and if you look at 2022 and 2023, where activity was really robust, earnings were really robust, we didn't really do any acquisitions in those two years, and we looked at a lot of acquisitions.

Martin Juravsky: That being said, I kind of go back to when we look at our acquisition history. If you look at 2022 and 2023, where activity was really robust, earnings were really robust, we didn't really do any acquisitions in those two years, and we looked at a lot of acquisitions. We just didn't find anything that lined up with our criteria, valuation or otherwise, whereas we were more active in 2024 and 2025. It's hard to handicap what 2026 and 2027 is going to look like from a vendor expectation perspective.

Speaker #3: We just didn't find anything that lined up with our criteria. Valuation or otherwise, whereas we were more active in 2024 and 2025. It's hard to handicap what 2026 and 2027 is going to look like from a vendor expectation perspective.

Speaker #5: Yeah, that makes sense. And there's like kind of diving deeper into capital allocation. You know, given the balance sheet flexibility and limited kind of buyback activity we've seen in Q2, should we interpret the current capital allocation by slating more towards reinvestment, maybe M&A, versus repurchases at today's valuation?

Aryan Arora: Yeah, that makes sense. Just kind of diving deeper into capital allocation, given the balance sheet flexibility and limited kind of buyback activity we've seen in Q2, should we interpret the current capital allocation bias leaning more towards reinvestment, maybe M&A versus repurchases at today's valuation?

Martin Juravsky: Look at those buckets independently because it's not a case of we have a allocation and we have to figure out how to split it among different pieces of the pie. We've got a lot of capital structure flexibility, if there is a variety of things that make sense, we can pursue a variety of things. If fewer things make sense, we can pursue fewer things and maintain that capital structure flexibility and optionality. We kind of look at those each independently, whether it's dividends, whether it's share buybacks, whether it's acquisitions, whether it's internal investments, because we have a lot of flexibility to do whatever out of those things in the menu makes sense.

Speaker #3: Look at those buckets independently because it's not a case of we have a allocation and we have to figure out how to split it among different pieces of the pie.

Speaker #3: We've got a lot of capital structure flexibility, so if there are a variety of things that make sense, we can pursue a variety of things.

Speaker #3: If fewer things make sense, we can pursue fewer things, and maintain that capital structure flexibility and optionality. So we kind of look at those each independently, whether it's dividends, whether it's share buybacks, whether it's acquisitions, whether it's internal investments, because we have a lot of flexibility to do whatever, out of those things on the menu, makes sense.

Speaker #5: Perfect. Thanks so much, Marty.

Aryan Arora: Perfect. Thanks so much, Marty.

Speaker #3: Great, thank you.

Martin Juravsky: Great. Thank you.

Speaker #1: Next question comes from Ian Gillies with Stiefel. Please go ahead.

Operator 1: Next question comes from Ian Gillies with Stifel. Please go ahead.

Operator: Next question comes from Ian Gillies with Stifel. Please go ahead.

Speaker #5: Morning, everyone.

Ian Gillies: Morning, everyone.

Speaker #3: Hey, Ian.

Michael Tupholme: Hey, Ian.

Michael Tupholme: Morning.

Speaker #5: Morning.

Speaker #3: I just wanted to come in gross margins in the middle service center from a bit of a different angle. If you look historically, it's kind of bounced between 20 and 22 percent.

Ian Gillies: I just wanted to come at gross margins in the Metals Service Centers from a bit of a different angle. If you look historically, it's kind of bounced between 20% and 22%. You've rolled a bunch of acquisitions in over the last number of years. You're working on a number of value-added gives at the facilities. Is there any reason to think that band is going to be higher moving forward through the cycle than it has been previously?

Speaker #3: You've rolled a bunch of acquisitions in over the last number of years. You're working on a number of value-added items at the facilities. Is there any reason to think that band is going to be higher moving forward through the cycle than it has been previously?

Speaker #4: Yeah, the short answer is yes. It should be. And you know, it's interesting back to a question that was said or asked earlier about Klockner.

Martin Juravsky: Yeah. The short answer is yes, it should be. It's interesting, back to a question that was asked earlier about Kloeckner. Kloeckner is very additive from a bottom-line perspective, as we said from day one, it was margin dilutive. That provides upside. There's no reason to think that when we look at Q2, for example, with a 22.2% gross margin out of the Metals Service Centers, that would've been higher in percentage terms, if not for the Kloeckner business. As initiatives are done over time to compress the differential between their margins and our other equivalent operations on an apples-to-apples basis, that 22.2% should be higher. That will take some time, that is part of the focus that our people are dealing with right now. It is where we're very targeted with our investments, our internal initiatives, is moving up the value chain.

Speaker #4: Klockner was, is very additive from a bottom line perspective, but as we said from day one, it was margin dilutive. That provides upside. And so there's no reason to think that when we look at Q2, for example, with a 22.2 percent gross margin out of the service centers, that would have been higher in percentage terms if not for the Klockner business.

Speaker #4: So, as initiatives are done over time to compress the differential between their margins and our other equivalent operations, on an apples-to-apples basis, that 22.2 percent should be higher.

Speaker #4: That will take some time, and that will be that is part of the focus that our people are dealing with right now, but it is where we're very targeted with our investments, our internal initiatives, is moving up the value chain, that should achieve some relative margin improvement over a course of time.

Martin Juravsky: That should achieve some relative margin improvement over the course of time. The long answer is yes. The short answer is yes, there should be some margin improvement.

Speaker #4: So, the long answer is yes; the short answer is yes—there should be some margin improvement.

Speaker #3: I suspect I know what the answer is, but would you be willing to provide what you think a new band may be moving forward?

Ian Gillies: I suspect I know what the answer is. Would you be willing to provide what you think a new band may be moving forward?

Speaker #4: Well, why don't you give us the answer then, Ian, if you know? Yeah, no. But other than—let me put it to you this way.

Martin Juravsky: Well, why don't you give us the answer then, Ian, if you know what the. Yeah. No. Let me put you this way, I'll just use going back to the Kloeckner branches as an example. The Kloeckner branches in totality represented, depending upon point in time, 15% to 20% incremental revenues for us. It was a meaningful portion of revenues, it came at a probably a 30 to 400 basis point differential in gross margins. You do that math just on the Kloeckner piece alone, let alone what we're doing in other parts of the business in adding value added equipment. There's no reason to think that on a consolidated margin basis, there shouldn't be one 200 basis points improvement on a consolidated basis over time once those initiatives are completed.

Speaker #4: And I'll just use going back to the Klockner branch as an example. So the Klockner branches in totality represented, you know, depending upon point in time, 15 to 20 percent incremental revenues for us.

Speaker #4: So it was a meaningful portion of revenues, but it came at a probably a 30 to 400 basis point differential in gross margins. So you kind of do that math just on the Klockner piece alone, let alone what we're doing in other parts of the business in adding value-added equipment.

Speaker #4: There's no reason to think that on a consolidated margin basis, there shouldn't be, you know, 1, 200 basis points improvement on a consolidated basis over time once those initiatives are completed.

Ian Gillies: Understood. Are you able to provide any updates on where you think you're at in terms of value-added sales as a percentage of total in MSC and where you want to get to? That metric has been moving around just because of the acquisitions.

Speaker #3: Understood. And are you able to provide any update on where you think you’re at in terms of value-added sales as a percentage of total in MSC, and where you want to get to?

Speaker #3: Is that metric has been moving around just because of the acquisitions?

Speaker #2: Yeah, and again, it moves around, obviously, Marty touched on it with Klockner very modest value-add, if any, on that side of the business. So excluding Klockner, we've crossed the 30 percent barrier now.

John Reid: Yeah. Again, it moves around, obviously. Marty touched on it with Kloeckner, very modest value add, if any, on that side of the business. Excluding Kloeckner, we've crossed the 30% barrier now. We do not include coil processing in that. We don't buy a coil to sell a coil. We buy it as a processed product, we don't include it. Some others do. When you look at the value add, it's north of 30 now. We feel like we can get that to 50% in the next five years, including Kloeckner.

Speaker #2: We do not include coal processing in that. So we don't buy a coal to sell it, you know, sell a coil. We buy it as a processed product.

Speaker #2: So, we don't include it. Some others do. But when you look at the value-add, it's north of 30% now. And we feel like we can get that to 50% in the next five years.

Speaker #2: Including Klockner.

Speaker #3: Understood. That's helpful. And then last one for me. On energy products, there was obviously a very nice step-up in revenue. Oil has been volatile.

Ian Gillies: Understood. That's helpful. Then last one for me. On energy products, there was obviously a very nice step up in revenue. Oil's been volatile. Can you maybe talk a little bit about the repeatability of that performance and how you're thinking about that business, I guess, moving ahead?

Speaker #3: Can you maybe talk a little bit about the repeatability of that performance and how you're thinking about that business, I guess, moving ahead?

Speaker #2: Yeah, and again, thank you. It was a nice performance by the teams, both in the US and Canada. I think it is very repeatable.

John Reid: Yeah. Again, thank you. It was a nice performance by the teams, both in the US and Canada. I think it is very repeatable. I think those markets are busy. Again, big demand on natural gas right now due to data centers and the energy supply that's out there. Obviously, you read the same publications on what's going on in Canada with the LNG projects, everything that's going on in Western Canada there. The US is also extremely busy in that area with what's going on in the instability, I guess, in the Middle East is pushing even more demand in the US to bring stuff at home from abroad. We think there's a lot of legs left to run.

Speaker #2: I think those markets are busy again. There’s big demand for natural gas right now due to data centers and the overall energy supply that’s out there.

Speaker #2: And so obviously, you read the same publications on what's going on in Canada with the LNG projects, everything that's going on in Western Canada there.

Speaker #2: The US is also extremely busy in that area. With what's going on and the instability, I guess, in the Middle East, that is pushing even more demand in the US to bring stuff at home from abroad.

Speaker #2: So we think there's a lot of legs left to run.

Speaker #3: Understood. That's helpful. Thanks very much. I'll turn it back over.

Ian Gillies: That's helpful. Thanks very much. I'll turn it back over.

Speaker #4: Thanks, Ian.

Martin Juravsky: Thanks, Ian.

Speaker #1: Next question comes from Maxim Savchuk with National Bank of Canada. Please go ahead.

Operator 1: Next question comes from Maxim Sytchev with National Bank of Canada. Please go ahead.

Operator: Next question comes from Maxim Sytchev with National Bank of Canada. Please go ahead.

Speaker #5: Hi, good morning, gentlemen, and an impressive quarter. The first question I had, if I may—so EAS right now is 54 percent of revenue, 61 percent of segment operating profit.

Maxim Sytchev: Hi, good morning, gentlemen. An impressive quarter. The first question I had, if I may. US right now is 64% of revenue, 61% of segment operating profit. I guess on a perspective basis, do you think that sort of gap will persist, or how should we think about it in terms of, is it US are performing or is it Canada kind of lagging? How should we think about that? Thank you.

Speaker #5: And I guess, on a prospective basis, do you think that sort of gap will persist, or how should we think about it in terms of—like, is it the US outperforming, or is it kind of lagging?

Speaker #5: How should we think about that? Thank you.

Speaker #4: It's both. So let's start from a revenue perspective. Part of this is just the migration of our business over the course of time, and the incremental acquisitions, with Klockner being the most notable one.

Martin Juravsky: It's both. Let's start with from a revenue perspective. Part of this is just a migration of our business over the course of time and the incremental acquisitions with Kloeckner being the most notable one, push us through the 50% threshold. I don't see a scenario where our Canadian business would be greater than 50%. The north of 50% that the US currently represents is probably only gonna migrate up, but it's not because we're shrinking Canada. It's just because the US part of it is growing both organically and inorganically. In terms of relative profitability, yeah, there was more coming from the US than from Canada, and it was a case of the US being super strong and Canada lagging, but that's part of the broader economy that we saw in Canada versus the US too, with Canadian GDP lagging the US.

Speaker #4: Push us through the 50 percent threshold. So I don't see a scenario where Canada can our Canadian business would be greater than 50 percent.

Speaker #4: So the north of 50 percent that the U.S. currently represents is probably only going to migrate up, but it's not because we're shrinking Canada.

Speaker #4: It's just because the US part of it is growing both organically and inorganically. In terms of relative profitability, yeah, there was more coming from the US than from Canada, and it was a case of the US being super, super strong and Canada lagging, but that's part of the broader economy that we saw in Canada versus the US too, with Canadian GDP lagging the US.

Speaker #4: But as John said earlier, we're starting to see some of that improvement. So I would suspect that over the course of time, I couldn't put a timeline on it, but over the course of time, there should be better symmetry between revenue contributions and profitability contributions from our operations on either side of the border.

Martin Juravsky: As John said earlier, we're starting to see some of that improvement. I would suspect that over the course of time, I couldn't put a timeline on it. Over the course of time, there should be better symmetry between revenue contributions and profitability contributions from our operations on either side of the border.

Maxim Sytchev: Yeah. Okay. No, that's good to hear. Then to your point around organic growth and volumes, kind of 6%. Correct me if I'm wrong, this seems to be a significant acceleration versus what we would've seen historically. How should we think about it, I guess, on a prospective basis? Can we build that level of organic growth in the back half and keep it there? If you don't mind helping us there, that'd be great.

Speaker #5: Okay, no, that's great to hear. And then to your point around organic growth and volumes—kind of 6 percent—I mean, correct me if I'm wrong, this seems to be a significant acceleration versus what we would have seen historically.

Speaker #5: And how should we think about it, I guess, on a perspective basis? I mean, can we build that level of organic growth in the back half and keep it there?

Speaker #5: How, if you don't mind helping us there, that would be great.

Speaker #4: Yeah, the 6 percent organic growth in Q2 of this year versus Q2 of last year was, I think, very reflective that the economy is doing well.

Martin Juravsky: Yeah. The 6% organic growth, Q2 of this year versus Q2 of last year, it was, I think, very reflective of the economy is doing well. As I sort of said earlier, we are picking up market share because of our profile that we have. In a tight market, there are some interesting opportunities to do that. I'd hate to put a percentage attached to it, but we've been talking for some time about gaining market share in combination with an improving market. There should be some of that relative improvement Q3 of this year, Q3 of last year, Q4 of this year versus Q4 of last year as well, on both the market conditions in combination with the market share improvement, plus our market share gains. I'd hate to put a percentage attached to it, though, because we don't really drive the business that way.

Speaker #4: And as I sort of said earlier, we are picking up market share. Because of our profile that we have, and in a tight market, there are some interesting opportunities to do that.

Speaker #4: So, you know, I'd hate to put a percentage attached to it, but we've been talking for some time about gaining market share in combination with an improving market.

Speaker #4: So, there should be some of that relative improvement in Q3—Q3 of this year versus Q3 of last year—and Q4 of this year versus Q4 of last year as well, both from the market conditions in combination with our market share improvement plus our market share gains.

Speaker #4: I'd hate to put a percentage attached to it, though, because we don't really drive the business that way. It really is about being opportunistic.

Martin Juravsky: It really is about being opportunistic. For us, the headline on revenue is good. What we really care about is the bottom line, the margin profile, the return profile, and we couldn't be happier with how our folks have performed, not just gaining market share, not just gaining top line, but how that's translated all the way through. That is really where our focus is. Our gains that we're seeing on the margin side of it are more compelling to us than when we think about just shipment volumes alone.

Speaker #4: And for us, you know, the headline on revenue is good. What we really, really care about is the bottom line, the margin profile, the return profile.

Speaker #4: And we couldn't be happier with how our folks have performed, not just gaining market share, not just gaining top line, but how that's translated all the way through.

Speaker #4: That is really where our focus is, and the gains that we're seeing on the margin side are more compelling to us than just thinking about shipment volumes alone.

Speaker #2: Yeah, Max, just to add on to that, if you think about the value-add component, and you think about the modernizations, both are designed to allow us to take on new market share.

John Reid: Yeah. Max.

Maxim Sytchev: Yeah.

John Reid: Just to add onto that, if you think about the value add component and you think about the modernizations, both are designed to allow us to take on new market share. Again, it's a stepped approach. As Marty was saying, I'd hate to put a percentage on it. Both of those are allowing us to capture share and in conjunction, the markets have gotten busier.

Speaker #2: Again, it's a stepped approach. As Marty was saying, you know, I'd hate to put a percentage on it, but both of those are allowing us to capture share. And then, in conjunction, the markets have gotten busier.

Speaker #5: Yeah, yeah, makes sense. Thank you so much. And then, sorry, Marty, one thing that you mentioned, I think it was in relation to aluminum products, pricing weakening a little bit there.

Maxim Sytchev: Yeah. Makes sense. Thank you so much. Then, sorry, Martin, one thing that you mentioned, I think it was in relation to aluminum products pricing weakening a little bit there. Do you mind providing a bit of color in terms of what's happening there?

Speaker #5: Do you mind providing a bit of cover in terms of what's happening there?

Speaker #2: Yeah, so the LME pricing is rolled over. Aluminum pricing is coming down really close to an all-time high. And so it's come down at a modest rate.

John Reid: Yeah. The LME pricing has rolled over. aluminum pricing is coming down, really close to an all-time high, it's come down at a modest rate. Not a big concern for us. It's less than 4% of our overall business, something we were growing in. We watch it closely. We turn our inventory faster than the industry, we're able to unwind that quickly on that position. That's the only category that we stock that we've actually seen inventory pricing plateau and start to roll over.

Speaker #2: It's not a big concern for us. It's less than 4 percent of our overall business. And it's something we were growing in; we watch it closely.

Speaker #2: We turn our inventory faster than the industry. So we're able to unwind that quickly on that position. But we've seen that's the only category that we stock that we've actually seen inventory pricing plateau and start to roll over.

Speaker #5: Okay. Okay, that's great, Carla. Thank you so much as always.

Maxim Sytchev: Okay. That's a great call. Thank you so much, as always.

Speaker #4: Thanks, Max.

Martin Juravsky: Thanks, Max.

Speaker #1: Ladies and gentlemen, as a reminder, if you do have a question, please press star followed by one. Your next question is a follow-up from Michael Tepholm with TD Cowen.

Operator 1: Ladies and gentlemen, as a reminder, if you do have a question, please press star followed by one. Your next question is a follow-up from Michael Tupholme with TD Cowen. Please go ahead.

Operator: Ladies and gentlemen, as a reminder, if you do have a question, please press star followed by one. Your next question is a follow-up from Michael Tupholme with TD Cowen. Please go ahead.

Speaker #1: Please go ahead.

Speaker #3: Thanks. Maybe just picking up on that last line of questioning there. Aluminum, the 4 percent, John, that's as a percentage of service centers, just to be clear, right?

Michael Tupholme: Thanks. Maybe just picking up on that last line of questioning there. Aluminum, the 4%, John, that's as a percentage of service centers, just to be clear, right?

John Reid: That's correct.

Speaker #2: That's correct. That's correct.

Michael Tupholme: Okay. Then in terms of pricing, in terms of steel pricing, everything you said earlier would suggest that the market continues to be tight and demand is strong. How do you think about pricing for hot-rolled coil and plate from here? At some point, do you think there's a risk of increased imports notwithstanding existing tariffs?

Speaker #3: Okay. And then in terms of pricing, in terms of steel pricing, I mean, everything you said earlier would suggest that the market continues to, you know, to be tight and demand is strong.

Speaker #3: How do you think about pricing for your hot-rolled coil and plate from here? And at some point, do you think there's a risk of increased imports, notwithstanding existing tariffs?

Speaker #2: Yeah, so to give you a little bit of background or color on what's going on in the market now, on hot-rolled coil specifically—for 10 consecutive weeks now, Canada has had an increase, which is a nice change early in the year.

John Reid: Yeah. To give you a little bit of background or color of what's going on in the market now on hot-rolled coil specifically. For 10 consecutive weeks now, Canada has had an increase, which is a nice change. Early in the year, they were lagging. We talked about the separation, where it became disjointed from the US pricing, where it was typically US pricing, currency adjusted. It is approaching the US equivalent now. It has been playing catch up really May, June, and July. It's moving quickly, which is the function of demand. The mills are relatively full. They're extending their lead times. The US mills are relatively full. Your other commentary around plate, talking about demand.

Speaker #2: They were lagging. We talked about the separation where it became disjointed from the U.S. pricing, where it was typically U.S. pricing, currency adjusted. It is approaching the U.S. equivalent now.

Speaker #2: So it has been playing catch-up, really, May, June, and July. So it's moving quickly, which is a function of demand. The mills are relatively full.

Speaker #2: They're extending their lead times. The US mills are relatively full. Your other commentary around plate talked about demand—lead times are long on that compared to historical lead times.

John Reid: Lead times are long on that compared to historical lead times. You have 3 plate mills that are taking planned maintenance shutdowns during the months of August and September. That'll further restrict supply. We think there's room on pricing as the mills are full, going through Q3 and into Q4. Where that impacts the imports is a little different on a country-by-country basis. Canada has now put up some quotas. That's limiting the imports. The US obviously has a much stricter tariff. It's greatly limiting imports. We think there will be imports to fill the void on lead times. I don't think it'll have a material impact on the overall market because the mills are currently full. It's just a matter of trying to pull lead times back down.

Speaker #2: And you have three plate mills that are taking planned maintenance shutdowns during the months of August and September, so that'll further restrict supply. We think there's room on pricing as the mills are full.

Speaker #2: Going through the third quarter and into the fourth quarter, where that impacts the imports is a little different on a country-by-country basis. Canada has now put up some quotas, and so that's limiting the imports.

Speaker #2: The US obviously has a much stricter tariff that is greatly limiting imports. So we think there will be imports to fill the void on lead times.

Speaker #2: But I don't think it'll have a material impact on the overall market because the mills are currently full. It's just a matter of trying to pull lead times back down.

Speaker #3: Yeah, that's all very helpful, thank you. And then just one last one here: you mentioned that you've approved two modernization projects for $10 million each, one in Canada and one in the US.

Michael Tupholme: Yeah. That's all very helpful. Thank you. Just one last one here. You mentioned that you've approved 2 modernization projects for CAD 10 million each, one in Canada, one in the US. What is the right way to think about CapEx for the year, I guess, H2? Where does that put you for the year? Also 2027, how should we think about CapEx for the year?

Speaker #3: What is the right way to think about CapEx for the year? I guess, you know, in the back half, and where does that put you for the year?

Speaker #3: And then also for 2027, how should we think about CapEx for the year?

Speaker #4: That's a good question. The exact timing is a little bit tricky, because we think about things more from an evergreen list perspective and consider where things are.

Martin Juravsky: It's a good question. The exact timing is a little bit tricky because we think about things more from an evergreen list perspective and where things are. It's a pipeline that is probably 24 months out in totality. The exact timing is hard to be precise on other than to say, on average, it should be about CAD 100 million per year, on average, and CAD 25 million-ish per quarter. Some quarters are going to be a little higher, some quarters are going to be a little bit lower. For Q1 and Q2, we were a little bit lower as some of those projects hadn't really kicked in yet. I suspect it'll move up a little bit in H2 of this year and then into H1 of 2027.

Speaker #4: And it's a pipeline that is probably 24 months out in totality. The exact timing is hard to be precise on, other than to say that on average, it should be about $100 million per year.

Speaker #4: On average, around $25 million per quarter—some quarters are going to be a little higher, some quarters are going to be a little bit lower.

Speaker #4: And for Q1 and Q2, we were a little bit lower, as some of those projects hadn't really kicked in yet. I suspect it'll move up a little bit in the back half of this year, and then into the front half of 2027.

Speaker #4: So we should still be averaging that $100 million per year if we look at it on a multi-year basis. But by definition, we've been less than that for the first half of this year, but we should start seeing some of that pick up later this year, early next year.

Martin Juravsky: We should still be averaging that CAD 100 million per year if we look out on a multi-year basis. By definition, we've been less than that for H1 of this year. We should start seeing some of that pick up later this year, early next year.

Speaker #3: Okay, thanks for that.

Michael Tupholme: Okay, thanks for that.

Speaker #4: Thanks, Mike.

Martin Juravsky: Thanks, Mike.

Speaker #1: All right, no further questions at this time. I will now turn the call back to Mr. Jaroski for any closing remarks.

Operator 1: There are no further questions at this time. I would now turn the call back to Mr. Juravsky for any closing remarks.

Operator: There are no further questions at this time. I would now turn the call back to Mr. Juravsky for any closing remarks.

Speaker #4: Great, thank you, Operator. And thanks to everybody for joining the call and for all the questions. If you have any follow-up questions, please feel free to reach out.

Martin Juravsky: Great. Thank you, operator. Thanks everybody for joining the call and all the questions. If you have any follow-up questions, please feel free to reach out. Otherwise, we look forward to staying in touch during the balance of the quarter.

Speaker #4: Otherwise, we look forward to staying in touch during the balance of the quarter.

Speaker #1: Ladies and gentlemen, this does conclude your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day, everyone.

Operator 1: Ladies and gentlemen, this does conclude your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day, everyone.

Operator: Ladies and gentlemen, this does conclude your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day, everyone.

Q2 2026 Russel Metals Inc Earnings Call

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