Russel's profits fall on-year in Q1, but it's still sizing up US service center buys

Russel Metals’ earnings slipped in the first quarter, but the company is still eyeing service center acquisitions in the US.

Regarding future buy opportunities, the company said, “We are continuing to evaluate additional acquisition opportunities with the focus on expanding our metals service center platform in the US,” the Mississauga, Ontario-based distributor said in a statement Tuesday.

At the same time, Russel noted that 44% of its Q1’25 revenue was generated in the US vs. 39% in 2024 and 30% in 2019.

Q1’25 financials

Russel logged net earnings of Canadian $43.0 million (USD$31.2 million) in the first quarter, down 14% from $49.7 million a year earlier. Net sales fell 11% to CAD$1.17 billion (USD$851.0 million) in the same comparison.

However, the company’s profits were up sequentially, reflecting “a seasonal improvement in demand, particularly for our metals service centers and steel distributors segments, and strong sequential increases in gross margin, EBITDA, and net earnings,”

Compared to the fourth quarter, net income was up 59%, and revenue rose ~17% from CAD$1.0 billion.

Russel attributed the revenue bump to “the seasonal rebound in business activity, higher steel prices, and a full quarter from both the Tampa Bay and Samuel acquisitions.”

In 2024, Russel acquired Tampa Bay Steel, and two US service center locations in the CAD$167-million deal with Samuel, Son & Co.

Still, the company said Q1’25 market conditions were impacted by President Trump’s imposition of 25% tariffs on steel and aluminum that went into effect in March.

“These tariffs led to a significant increase in metal prices,” Russel said, noting that on March 31 the price for steel plate and sheet increased by 43% and 37%, respectively, vs. the price on Dec. 31.

Looking ahead

Russel said steel prices appear to have stabilized over the past month, “but future steel price changes will be impacted by further changes” in tariffs.

“Our recent shipment levels have benefited from some element of customer buying in anticipation of the imposed tariffs, a strong seasonal recovery, and market share gains,” the company said.

However, Russell advised that, “Our near-term activity could be impacted by international trade policies and North American industrial activity.”

Over the medium term, though, the company expects to benefit from “further rebuilding of the US industrial manufacturing base.”

Russel also said it is positioned “to gain market share through our ongoing investments in value-added equipment, facility modernizations, and through acquisitions.”