Russel Metals TSE: RUS reported record third-quarter 2026 revenue and earnings as strong steel demand, higher margins and contributions from acquired Kloeckner branches lifted results across its operations.
Revenue exceeded CAD 1.8 billion, 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 rose to CAD 230 million from CAD 154 million in the prior quarter, while unadjusted EBITDA was CAD 200 million.
Earnings per share reached CAD 2.29, and adjusted earnings per share were CAD 2.67. Both were quarterly records, Juravsky said. Adjusted results excluded a CAD 37 million mark-to-market expense on stock-based compensation and a CAD 7 million pretax gain from the sale of Color Steels.
Margins and Canadian operations improve
Juravsky attributed the quarter’s performance to broad-based market strength, progress integrating Kloeckner and improved results at the company’s Canadian service centers. Overall gross margin increased 330 basis points from the second quarter.
Metal service center shipments rose 29% from a year earlier, including the effect of the Kloeckner acquisition, and 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 margin improvement contributed approximately CAD 85 million, more than offsetting a CAD 7 million impact from lower volumes.
President and Chief Executive Officer John Reid said demand was strong across the company’s markets, including data centers, infrastructure, government projects and manufacturing. He said Canadian activity began to pick up in late May and early June, narrowing a 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 represented 57% of third-quarter revenue, Juravsky said.
Kloeckner integration and portfolio changes
The former Kloeckner branches generated CAD 33 million of EBITDA in the third quarter, bringing their contribution for the first nine months of 2026 to CAD 57 million. Russel paid CAD 128 million for the operations, and Juravsky said their performance had produced an annualized return on capital of 42% so far.
On Oct. 1, the company moved the branches off a transition services agreement with Kloeckner and onto Russel’s back-office systems. Juravsky called the change a major integration milestone.
Russel also completed the sale of its Color Steels subsidiary for CAD 42 million. Juravsky said the Ontario business generated approximately CAD 70 million in revenue in 2025 and focused on residential construction, which is not a priority for Russel.
Outlook and capital allocation
Management said favorable market conditions continued into early October, although seasonal holidays are expected to reduce fourth-quarter shipping volumes. Juravsky estimated that operating days would be 5% to 7% lower than in the third quarter and said December demand can be difficult to predict as customers take additional time off.
Pricing and margins in early October remained strong, Juravsky said, while cautioning that conditions later in the quarter were still uncertain. He expects the fourth quarter of 2026 to be better than the same period in 2025.
Reid said tariffs affecting steel would likely remain in some form, but he did not know how arrangements between Canada and the United States would develop. He said he hoped the countries would work together on North American trade, while acknowledging that the outcome remained unclear.
Russel used approximately CAD 200 million for working capital during the third quarter. Juravsky said a significant portion was temporary, reflecting prepaid accounts payable to simplify the Kloeckner systems conversion. The company ended the quarter with CAD 214 million in net debt and CAD 418 million in liquidity.
Capital spending was CAD 26 million in the quarter, and Juravsky expects a similar average quarterly pace into 2027 as projects advance. Russel is also examining potential tuck-in acquisitions for its U.S. service center business, although he said none were close to completion.
The company paid CAD 24 million in dividends during the third quarter and made no share repurchases. It declared another quarterly dividend of CAD 0.44 per share, payable in December.
About Russel Metals (TSE:RUS)
Russel Metals is one of the largest metals distribution companies in North America with a growing focus on value-added processing. It carries on business in three segments: metals service centers, energy field stores and steel distributors. Its network of metals service centers carries an extensive line of metal products in a wide range of sizes, shapes and specifications, including carbon hot rolled and cold finished steel, pipe and tubular products, stainless steel, aluminum and other non-ferrous specialty metals.
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