Russel Metals Q3 revenue rises 56% as Kloeckner lifts profit

By Tom Whitfield

Russel Metals generated more than CAD 1.8 billion in third-quarter 2026 revenue, up 10% from the second quarter and 56% from a year earlier, Executive Vice President and Chief Financial Officer Martin Juravsky said on the company’s earnings call.

• Adjusted EBITDA reached CAD 230 million, compared with CAD 154 million in the second quarter; unadjusted EBITDA reached CAD 200 million.
• Earnings per share reached CAD 2.29 and adjusted earnings per share CAD 2.67. Juravsky said both set quarterly records.
• Overall gross margin increased 330 basis points from the second quarter.

Adjusted results excluded a CAD 37 million mark-to-market expense on stock-based compensation and a CAD 7 million pretax gain from the Color Steels sale. Juravsky attributed the underlying improvement to strong steel demand, higher margins, Kloeckner integration and better performance at Canadian service centers.

What drove the record quarter?

Metal service center shipments rose 29% from a year earlier, including the Kloeckner acquisition, and increased 7% on a same-store basis. Shipments fell approximately 3% from the second quarter because of seasonal factors, but price realizations per ton rose 13%.

Gross margin per ton in the service center business reached CAD 700, up CAD 171 from the second quarter. Juravsky said the gain contributed approximately CAD 85 million, more than offsetting CAD 7 million from lower volumes. The quarter therefore delivered higher pricing and year-on-year shipment growth despite a sequential volume decline.

Takeaway: Margin gains did more work than shipment growth.

Where did demand come from?

President and Chief Executive Officer John Reid said demand was strong in data centers, infrastructure, government projects and manufacturing. Canadian activity began to pick up in late May and early June, narrowing the performance gap with the United States.

“We are seeing it on a broad-based number of fronts,” Reid said, adding that Canadian manufacturing and agriculture were gaining traction. U.S. operations generated 57% of third-quarter revenue. The call did not provide Canadian revenue or profit figures, so the scale and profitability of that recovery remain unquantified.

Takeaway: Canadian demand improved, but management did not disclose enough data to test how much it moved earnings.

What has Kloeckner contributed?

The former Kloeckner branches generated CAD 33 million of EBITDA in the third quarter and CAD 57 million in the first nine months of 2026. Russel paid CAD 128 million for the operations. Juravsky said the branches had produced an annualized return on capital of 42% so far.

On Oct. 1, Russel moved the branches off a transition services agreement with Kloeckner and onto its own back-office systems. Juravsky called the change a major integration milestone. The 42% return rests on a partial-year contribution, however, and the operational test began only when the systems transfer completed.

Russel also completed the sale of Color Steels for CAD 42 million. The Ontario business generated approximately CAD 70 million in revenue in 2025 and focused on residential construction, which Russel does not consider a priority.

Takeaway: Kloeckner has delivered a high stated return, while the integration remains recent enough to limit certainty.

What does the fourth quarter require?

Management said favorable market conditions continued into early October, but seasonal holidays should reduce shipping volumes. Juravsky estimated operating days would fall 5% to 7% below the third quarter and said December demand remains difficult to predict because customers take additional time off.

Pricing and margins remained strong in early October, Juravsky said. He expects fourth-quarter 2026 performance to be better than the same period in 2025, while cautioning that conditions later in the quarter remained uncertain.

Reid said tariffs affecting steel would likely persist in some form. He did not specify which measures or rates might apply, and he said he did not know how arrangements between Canada and the United States would develop. He expressed hope that the two countries would work together on North American trade, but the outcome remained unclear.

Takeaway: Management expects a better fourth quarter, but neither trade policy nor December volume is settled.

How did Russel allocate capital?

Russel used approximately CAD 200 million for working capital during the third quarter. Juravsky said prepaid accounts payable for the Kloeckner systems conversion made a significant portion of that use temporary. The company ended the quarter with CAD 214 million in net debt and CAD 418 million in liquidity.

Capital spending totaled CAD 26 million. Juravsky expects a similar average quarterly pace into 2027 as projects advance. The company is also examining tuck-in acquisitions for its U.S. service center business, although none were close to completion.

Russel paid CAD 24 million in dividends during the quarter and made no share repurchases. It declared another quarterly dividend of CAD 0.44 per share, payable in December.

Takeaway: A significant portion of the working-capital outflow was temporary, but future acquisitions remain options rather than commitments.

What does Russel sell?

Russel Metals is one of North America’s largest metals distribution companies and has placed a growing focus on value-added processing. It operates through three segments:

• Metals service centers
• Energy field stores
• Steel distributors

Its service centers carry carbon hot-rolled and cold-finished steel, pipe and tubular products, stainless steel, aluminum and other non-ferrous specialty metals in varied sizes, shapes and specifications.

Russel enters the fourth quarter with record revenue, stronger margins and more integrated Kloeckner branches, but trade policy and December demand remain unresolved.