Earnings call transcript: Russel Metals Q4 2024 misses EPS forecast

Russel Metals reported its Q4 2024 earnings, revealing an EPS of $0.47, which fell short of the expected $0.6282. Revenue also missed forecasts, coming in at $1.04 billion against an anticipated $1.08 billion. Following the announcement, the stock saw a decline of 1.32%, closing at $41.52. According to InvestingPro analysis, the company maintains a strong financial health score of 2.9 (GOOD), with liquid assets exceeding short-term obligations. The company attributed the revenue decline to seasonal factors and noted ongoing modernization efforts and acquisitions as part of its growth strategy.

Key Takeaways

• Q4 2024 EPS of $0.47 missed forecasts by 25%.
• Revenue declined by 5% compared to the previous quarter.
• Stock fell by 1.32% following earnings release.
• Focus on value-added and specialty metals is increasing.
• Recent acquisitions and capital investments total over $300 million.

Company Performance

Russel Metals experienced a challenging fourth quarter, with revenues dropping 5% from the third quarter due to seasonal trends. Despite this, the company maintained a stable EBITDA margin of 6%. Over the past year, Russel Metals has focused on expanding its value-added product offerings and completing significant acquisitions to bolster its U.S. platform, which is expected to contribute significantly to future revenues.

Financial Highlights

• Revenue: $1.04 billion, down 5% from Q3 2024.
• Earnings per share: $0.47, missing forecast by 25%.
• EBITDA: $61 million, reflecting a flat margin.
• Full-year cash flow from operations: $344 million.
• Return on invested capital: 15% for 2024.

Earnings vs. Forecast

The company’s EPS of $0.47 was significantly below the forecast of $0.6282, marking a 25% miss. Revenue also fell short of expectations, coming in at $1.04 billion compared to the projected $1.08 billion. This performance contrasts with the company’s historical trend of meeting or exceeding market expectations in previous quarters.

Market Reaction

Following the earnings announcement, Russel Metals’ stock price dropped by 1.32%, closing at $41.52. InvestingPro data indicates the stock generally trades with low price volatility and is currently trading below its Fair Value, suggesting potential upside opportunity. The company has maintained dividend payments for 25 consecutive years, currently offering a 4.05% yield. This decline positions the stock closer to its 52-week low of $35.20, reflecting investor disappointment with the earnings miss and revenue shortfall. The stock’s movement is in line with broader market trends, where similar sector stocks have also faced pressure.

Outlook & Guidance

Looking ahead, Russel Metals anticipates that Q1 2025 performance will fall between Q3 and Q4 2024 levels, with stable demand and potential for margin expansion. The company’s strong financial position is evidenced by its healthy current ratio of 3.13 and moderate debt levels, as reported by InvestingPro. The company aims to increase the contribution of value-added products to its revenue base, targeting 50% in the coming years. Future guidance remains optimistic, with expectations for growth in both EPS and revenue in FY2025 and FY2026. InvestingPro subscribers have access to 10 additional key insights about Russel Metals, including detailed valuation metrics and growth forecasts.

Executive Commentary

Martin Tarasky, CFO, emphasized the company’s strategic growth and adaptability, stating, "2024 was a year of growth with purpose, focus, and discipline." CEO John Reed highlighted the company’s resilience, noting, "We are well equipped to adapt regardless of market conditions," and expressed confidence in demand stability, saying, "Demand is very solid."

Risks and Challenges

• Seasonal revenue fluctuations pose ongoing challenges.
• Potential impacts from U.S. tariff discussions could affect pricing.
• Supply chain constraints may limit inventory availability.
• Volatility in carbon sheet and plate prices could pressure margins.
• Continued capital investments increase financial risk.

Q&A

During the earnings call, analysts inquired about the potential impacts of U.S. tariffs and the company’s ability to manage supply chain challenges. Executives responded by highlighting early positive demand signals in North America and their flexible business model, which allows for adaptation to market changes.

Full transcript - Russel Metals Inc . (TSX:RUS) Q4 2024:

Conference Operator: Good morning, ladies and gentlemen, and welcome to our twenty twenty four Year End and Fourth Quarter Results for Russell Metals. Today’s call will be hosted by Mr. Martin Trasky, 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.

I will now turn the meeting over to Mr. Martin Taraschi. Please go ahead, sir.

Martin Tarasky, Executive Vice President and Chief Financial Officer, Russell Metals Inc.: Great. Thank you, operator, and good morning to everybody on this lovely snowy day here in Toronto. I plan on providing an overview of the Q4 twenty twenty four and the full year 2024 results. And if you want to follow along, I’ll be using the PowerPoint slides that are as a reference that are on our website and just go into the Investor Relations section and it’s located in the Conference Call submenu. If you go to page three, you can read our cautionary statements on forward looking information.

Let me start with a little perspective on 2024, which is outlined on page five. If we look back on the year as a whole, I’ll characterize it a year of growth with purpose, focus and discipline. And I think both John and I are very proud to say that the Russell team really delivered on that front. And more importantly, we’re just getting started as there is a lot more work to be done. We look very different today than a number of years ago and we will continue to evolve in the years ahead.

So, if we look at a few items on this page, item one, the starting point is strong cash flow generation. And in spite of the steel price volatility and general economic uncertainty that occurred during much of 2024, we generated $344,000,000 of cash flow from operations, including $103,000,000 from working capital. The countercyclical nature of our business allows us to capture cash flow when markets turn down. The second row of the diagram summarizes our growth initiatives. Firstly, on the left, increased capital investments.

We were very active on the investing front in 2024. Internally, we invested CapEx of $90,000,000 and externally, we completed two very important acquisitions for a little over $300,000,000 When we combined the M and A initiatives and CapEx, this was by far and away the largest year in Russell’s history for investing activities. The investing opportunities continue to grow and our multiyear CapEx pipeline of potential projects is over $200,000,000 We’re also remaining active in looking at M and A opportunities. Capital deploy group. As a result of the investments that I just mentioned over the past year, our capital grew from $1,300,000,000 at the end of twenty twenty three to $1,600,000,000 at the end of twenty twenty four.

It is with a purpose. We generated a solid return on invested capital. Our return on invested capital was 15% in 2024 despite the market challenges and it averaged 24% over the past three years. Return on invested capital is the most important metric in our pay for performance culture and has resulted in a history of industry leading returns. And the last box in that row is the growth was very focused.

It was a growth in strategic ways. Our Service Center segment now represents 67% of our revenues for 2024 versus only 53% in 2019. We grew our U. S. Platform, which is now 39% of revenues and will be higher in 2025 and beyond.

We grew our value added processing and grew in specialty metals such as stainless and aluminum, which was 9% in 2024 and should be greater than 10% in 2025. The last row of the diagram illustrates the results of our capital investments, returning capital to shareholders. Our frame of reference is that if we are able to successfully grow our business, it presents opportunities to grow the return of capital to our shareholders. In 2024, we returned $131,000,000 via share buybacks and $98,000,000 through dividends for a total of $229,000,000 of capital returned to shareholders. Just like 2024, investments were the largest in Russell’s history, so too was the amount of capital that was returned to shareholders.

With a record year in which $650,000,000 was deployed for investments in returning capital to shareholders, and we are still able to retain a very strong balance sheet. We also cleaned out all of our legacy debt structure and now have no long term debt, have an investment grade bank deal and ended the year with a net cash position of $32,000,000 and $580,000,000 of liquidity. Let’s turn to market conditions on Page six. Starting with prices of sheet and plate in the top graph. We saw carbon sheet and plate prices exhibit downward pressure during 2024, but they did stabilize in the latter part of the year and have recently exhibited some increases.

The recent price increases are a function of an improving outlook and some is likely related to the impact of the potential U. S. Tariffs and the potential retaliatory tariffs. Let me talk about tariffs for a moment. And obviously, it’s a bit of a moving target, but we do not have any material direct impact from tariffs as we’re generally a cost through business and the impacts are more on steel producers, in particular those who export cross border.

By contrast, we generally sell our products to local customers. The indirect impacts relate to steel prices, supply chain disruptions, currency movements in the business activity for some of our customers who may export finished equipment. There are some industries like automotive that are integrated in their cross border supply chains and expect that industry to face some challenges, but we do not serve that industry. The key thing from a Russell perspective is that we have a very flexible business model with an ability to flex to whatever circumstances may unfold. And if we look back to the introduction of the Section two thirty two tariffs in 2018, that was actually a positive for North American steel prices and that was good for Russell.

On the bottom chart, we’ve added a new piece and this is the first time we’ve shown aluminum and stainless prices as those are now a more meaningful part of our product mix. As I mentioned earlier, they’re around 10% of our 2024 revenues. And as you can see from the chart, these products don’t exhibit as much volatility as carbon plate and sheet, as aluminum and stainless have very different supply and demand dynamics. The two charts on the right supply chain inventories in both Canada and The U. S.

Remain modest. On Page seven, there’s a snapshot of our historical results. If we look across the various charts going from the top left, revenues were down in Q4 ’5 percent versus Q3 due to some seasonal dynamic. EBITDA was $61,000,000 which was down from Q3. EBITDA margin was flat at 6% and earnings per share was $0.47 per share.

Our Q4 annualized return on invested capital came in at 10%, which is pretty good considering the significant increase in capital for acquisitions during the latter part of 2024 at a time where there is generally a seasonally down Q4. As mentioned earlier, our capital structure is in really good shape and we have a net cash position of $32,000,000 Going to Page eight, we have more detailed snapshot of our financial results. Starting at the top from an income statement perspective, I covered several of the high level items on the previous page, but a few other items to note. Revenues of $1,000,000,000 was down to seasonality compared to Q3. We did have an offset from the full quarter impact of the Samuels acquisition, it closed in August and so we only had a partial quarter in Q3 and a full quarter in Q4.

And then in Q4, we had a pickup from the Tampa Bay acquisition that closed in early December. So when we look into 2025, we will benefit from a full quarter of the Tampa Bay acquisition as well as a more normal run rate from the Samuels acquisition as we get out of the seasonal Q4 period. Gross margins and EBITDA margins were generally flat on a quarter over quarter basis. And looking at the line items below EBITDA, there was an increase in D and A as well as interest expense, both a result of the two acquisitions that were done in the latter part of 2024. And our Q4 results were impacted by a few items of note.

Samehill integration continues with some non recurring costs of $1,000,000 in the quarter. The integration process is continuing to unfold with efficiency gains expected to materialize in the latter part of 2025 once we’re onto the same systems. In addition, we are continuing to actively explore location rationalization opportunities. Mark to mark on stock based comp was $2,000,000 expense versus $5,000,000 in Q3. There are also a couple of small non cash related write offs of $1,000,000 referred to related to deferred financing costs and that increased our interest expense by a little bit and 1,000,000 related to the write down of some legacy equipment, which impacted our operating costs by a little bit.

From a cash flow perspective, as we always talk about the countercyclical nature of the business, Q4, we generated $54,000,000 from working capital. There was 113,000,000 decrease in accounts receivable, a $42,000,000 decrease in inventory, of which some was offset by $96,000,000 increase in accounts payable. We closed the Tampa Bay acquisition in December for $75,000,000 which is lower than the announced value of $79,500,000 due to a favorable adjustment related to working capital at closing. Share buybacks were $14,000,000 before tax and the cumulative share buybacks since August of ’twenty two have been a little over 10% of our shares outstanding for $240,000,000 or an average of $36.97 per share. Our quarterly dividend was increased in May of this year to $0.42 per share and we remain at that level for the current quarter.

This $0.42 per share level will be payable in mid March. Our CapEx of $21,000,000 brings the 2024 total to $90,000,000 and I expect our 2025 CapEx to be comparable level to the 2024 level as our multiyear pipeline is greater than 200,000,000 and we’re continuing to green light a series of projects that keep coming to the table, particularly related to value added and additional modernization opportunities. From a balance sheet perspective, we remain in a net cash position even after funding the Tampa Bay acquisition with a net cash balance at the end of the year of $32,000,000 As I mentioned earlier, we have in 2024, we cleaned out all of our legacy term debt and in the quarter we redeemed our last series of high yield notes and we no longer have any term debt outstanding. The FX movements towards the end of the quarter were meaningful and it did have a positive impact of $69,000,000 in the OCI shareholders’ equity amount. And lastly, our book value per share grew again and it was over $29 per share at the end of the year.

If we go to page nine, there’s a reconciliation of our EBITDA variance between Q3 and Q4. In looking at service centers, the volumes were up a bit compared with Q3, while there was an increase in margin dollars, but a comparable increase in operating costs was translated into a $1,000,000 increase in EBITDA for service centers for Q4 versus Q3. Energy field stores were down $4,000,000 due to some seasonality, while steel distributors were down $4,000,000 due to market conditions. In the other bucket, there was a favorable impact from lower mark to market on stock based compensation. On Page 10, we have our segmented P and L results.

Service centers, revenue was up versus Q3 due to the Samuel and Tampa Bay acquisitions that I mentioned earlier, and I’ll go through more detailed metrics on the service centers on the next page. Energy field stores were continuing to see solid performance. Q3 revenues were down, as I mentioned, some seasonality, but margins were up. As a result, overall EBITDA was down a little bit. Distributors revenues were down due to market conditions and some cautious buying activity by our groups amidst the market volatility, but margins did improve.

Overall, EBITDA was down for that segment versus Q3. On Page 11, we have a deeper dive on the metrics for our service center business. The top right graph is tons shipped. If you look at Q4 twenty twenty four, the top right hand data point, volumes were up 6% versus Q3, reflecting the Samuel and Tampa Bay acquisition contributions. They were down 1% on a same store basis volumes were due to the seasonality, but this 1% decline in Q4 is less than we typically see in Q4s, which reflects some solid ongoing market activity.

On the bottom left graph, we have the revenue and cost of goods sold per ton. Revenue per ton are price realizations and cost of goods sold decreased by similar amounts in the quarter, leading to flat profit per ton on the bottom right hand graph. On a same store basis, however, and there is noise continuing because of the acquisitions that occurred in both Q3 and Q4, but on a same store basis, gross margin per ton was up slightly. On Page 12, we have illustrated our inventory turns. This chart shows the turns by quarter for each segment, energy in red, service centers in green, steel distributors in yellow.

In addition, the black line is the average for the entire company. Overall, our inventory turns came down in Q4 to 3.6, which is consistent with what typically happens towards the end of the year. By sector, our service centers remained strong at four point zero, which was similar to Q3. Energy fuel stores was 2.8, which was down from Q3, but consistent with Q4s of the past few years. And lastly, steel distributors decreased from three to 3.1 from 3.6.

On Page 13, we have the impact of inventory turns on dollars. Our total inventory was down slightly compared to the September, and if we exclude the increase from Tampa Bay, which was about CAD14 million, our same store inventories would be down 2% compared to the end of Q3. On Page 14, we have the overall impact of capital utilization and returns. As I said earlier, twenty twenty four acquisitions and CapEx resulted in growing our capital deployed to over $1,600,000,000 and this is in spite of pulling out $400,000,000 from the OCTG line pipe business over the ’twenty one to ’twenty ’twenty three period. So $1,600,000,000 of capital deployed, it’s up from where it has been for the last couple of years as we continue with our growth focus.

On a return basis, our third year average return on invested capital was 24%. And if we look back over the last few years, we continue to achieve industry leading returns and at levels that are greater than our cycle average target of 15%. On Page 15, I have an update of our capital structure. And as I said earlier, there are a number of changes during 2024. In May and then in October, we redeemed the legacy high yield notes.

In July, we closed the revamped bank deal. Our bank group has recognized the significant evolution in our credit profile, and we now have a more traditional investment grade type bank structure that has no borrowing based formulas unsecured and is flexible financial covenants. And with these changes, we now have a very clean slate going forward with significant flexibility. In terms of the year over year change in cash, we deployed $90,000,000 for acquisitions, $329,000,000 for acquisitions, $230,000,000 was returned to shareholders via dividends and share buybacks for total capital outlay of about $650,000,000 Given our strong operating cash flow in 2024 and the strong starting balance sheet at the beginning of 2024, our net cash position only came down by about $300,000,000 and we remain in a slight net cash position. Lastly, as I mentioned earlier, our equity base per share continues to grow in spite of share buybacks and dividends over the past year, and we’ve grown our book value per share that is now $1.87 per share higher than at this time last year.

Page 16, just a quick summary of our capital allocation priorities on a go forward basis. Given our strong balance sheet, we continued this multi pronged approach. Investment opportunities I mentioned earlier, our average target return is greater than 15% over the cycle. And as already discussed, we’ve delivered well above that target. The ongoing opportunities are continuing to identify the value added projects and there are a lot on the go.

Facility modernizations, we’ve mostly completed the five projects that have begun over the last couple of years other than a few refinements of some equipment coming into certain of those locations and we have more projects on the drawing board. In terms of acquisitions, as I said a couple of times, we closed the Tampa Bay acquisition. It was closed on December 4 and we’re continuing to explore other potential opportunities. Returning capital to shareholders, as said earlier, we have adopted a fairly flexible approach and it included both dividends, including the dividend increase in May, as well as fluidity on the NCIB approach. If we go to page 17, I want to provide a context for our reinvestment program.

In 2024, we invested $90,000,000 in CapEx, which is a level higher than in the past. And as we’re continuing to identify more opportunities, I expect that we will remain in the plus or minus $25,000,000 per quarter zone over the next while as additional discretionary projects come to fruition. On Page 18, you see our acquisition history over the past few years and the history is a combination of both small and medium sized transaction with a fair number over the last few years being in the more medium sized category, in particular three of them in the past five years. Going forward, I expect to see opportunities that are both the small tuck ins like Alliance was in 2023, Sanborn in 2020, but I also expect to see some medium sized transaction like Boyd in 2021, Samuel in Tampa Bay in 2024. On Page 19, there’s a deeper dive on the returning capital to shareholders, top left graph.

We have our longer term dividend profile with just announced $0.42 per share for this past quarter, and we’ll continue to regularly revisit the appropriate dividend level to take into account our capital structure and our earnings profile as was done when we lifted the dividend in both May 2023 and May of twenty twenty four. On the bottom left chart, we show our NCIB activity by quarter since it was put in place in August of twenty twenty two. As I said a couple of times and I said many times in the past, we don’t have a fixed hardwired approach to the program. We view it as an opportunistic way to buy back shares, and we’ve been more aggressive at certain price points than others. That being said, we did buy 330,000 shares in the quarter for around $14,000,000 On the bottom right chart, you see the impact of the NCIB.

It has been a gradual reduction of our share count over the past two years and has resulted in a greater than 10% reduction in our shares outstanding. On the top right chart, the aggregation of dividends and NCIB over the past couple of years illustrates more balanced approach that has recently been more weighted to share buybacks over dividends. And over the past twelve months, we have acquired 131,000,000 of our shares, and the current run rate for dividends is around $96,000,000 The other item to note is that with the reduction in our share count, it has allowed us to maintain a similar quarterly outflow for total dividends even as we increase the per share dividend in both 2023 and 2024. On Page 20 of the summary of our capital reallocation aggregated over the past five years, on the left chart, you see that we’ve generated a total of about $2,000,000,000 through $1,600,000,000 of cash from operations and $400,000,000 through asset sales. And on the right chart, we have a pretty balanced approach when we look at the three primary buckets to capital allocations.

In blue is $724,000,000 being returned to shareholders through a combination of both share buybacks and dividends. In orange, we’ve invested $770,000,000 in both acquisitions and internal CapEx. And in green, we have the $528,000,000 of debt reduction cap build. So again, from our perspective, when it comes to capital allocation, we’ve tried to take a fairly balanced approach to the various opportunities. Lastly, and in closing, if we look beyond 2024 and into 2025, there are a few key observations.

One, steel prices have very recently moved higher. As said earlier, some of this relates to tariffs and some relates to demand dynamics. That being said, we are well equipped to adapt regardless of market conditions. Two, we completed a lot of initiatives in 2024, which positions us really well for 2025, but also the multiple years ahead, and these initiatives should lead to further growth in a number of ways. Firstly, as I mentioned earlier, our U.

S. Expansion is continuing relative to our Canadian platform. I would expect that our U. S. Business should exceed 50% of our revenue base within a few years.

Two, the types of growth are on value added and specialty products as part of our overall portfolio. Some of this growth will be through market share gains and some is through the impact of acquisitions that we’ve seen this year, as an example, with Tampa Bay and Samuels. These initiatives will provide for margin expansion and a continuing migration to more stable baseline of cash flows. And I expect that we’ll get to 50% of our revenue base having a value added element within a few years, and I expect over 10% of our revenues will be specialty products like stainless steel and aluminum in 2025 alone. So in closing on behalf of John and other members of management team, I would just like to express our appreciation to everyone within the Russell family for their contributions.

In particular, 2024 had a lot on the go and we saw a lot of people step up and provide significant leadership, work effort, commitment and teamwork as we made a series of inroads. So, operator, that concludes my introductory remarks. If you’d now like to open the line up for any questions, please.

Conference Operator: Thank you, sir. You. First, we will hear from James McGarrigle at RBC Capital Markets. Please go ahead.

James McGarrigle, Analyst, RBC Capital Markets: Hey, thanks for having me on and congrats on a good quarter there and a pretty tough backdrop. But Marty, you kind of gave us some color on tariffs in your prepared remarks. And it seems like U. S. Business should benefit from higher prices, but the impact to the Canadian business is likely going to be a bit more nuanced.

That said, would you expect pricing to hold up in Canada in the event of tariffs given that we’re a net exporter of steel to The U. S? And any early indications that we’re seeing any impact on volumes, maybe some project referrals, just given some of the uncertainty caused by recent announcements? Any color you can provide there?

Martin Tarasky, Executive Vice President and Chief Financial Officer, Russell Metals Inc.: Yes. So James, let me just give a context to this. And first off, I appreciate your introductory comments. Thank you. The tariff question, it’s a real moving target.

And as we kind of look back over the last two weeks, one week has looked very different than the next week in terms of what is being announced and what is being contemplated. Nothing has actually happened yet. So the best data point that we can point to now is what happened back in 2018. And I think it’s fair to say that there’s a lot of noise in the periods leading up to tariffs with lots of stuff happening in terms of supply chains moving around and activity. I think it’s premature for people to be talking about projects that are canceled, projects that are being accelerated, projects that are being moved, because this is really evolving in real time.

But if we look back to 2018, probably the single biggest takeaway is it did lift steel prices and to a certain degree aluminum prices as well in the near term. How that then shakes out is a function of all the other iterations that will happen in trade issues. And back in 2018, it wasn’t a single data point, it evolved over 2018 from announcements to retaliatory tariffs to them coming off to coming on, different rules for different countries. So just to qualify around all this, it is a bit of a moving target. That being said, John, what are you seeing in terms of the near term?

John Reed, President and Chief Executive Officer, Russell Metals Inc.: James, thank you for the question. There’s a couple of things to look at on this. The markets are moving. When I talk about the markets of steel price markets on plates, we’re moving up prior to tariff announcements. However, coil was moving up, scrap on a localized domestic North American market and on the world market are all moving up.

Demand is very solid, so those things were very good. So we’re seeing the increases. In addition, if you add tariffs on top of that, you’ll see further increases. We assume there’ll be retaliatory tariffs from both Canada and Mexico. So that will further increase the pricing on both sides of the border.

Still pricing historically has always set off of The U. S. Base currency adjusted. We think that will continue in the near term. I think the bigger challenge that we have to look at from a Canadian perspective is how Canada reacts to the rest of the world.

And does Canada become a dumping ground for things that would have traditionally went to The U. S. Because of the 25% tariff? Are they going to put tariffs on the rest of the world? I think they’ll have to.

But initially, we see this as just a pass through for us on both sides of the border, keeping in mind that our average order size is very small, dollars 3,500 to $4,000 So our customer base predominantly stays in country on each side.

James McGarrigle, Analyst, RBC Capital Markets: Jason, thanks for that color there. And then looking at the commentary on the outlook, you’d like some near term opportunity in The U. S. That seems a lot more positive compared to your outlook commentary last quarter. So given like the recent ramp we’ve seen in pricing, the Tampa Bay acquisition is now closed, some opportunity potentially left in Samuel.

Can you just give us some color on how we should be thinking about sequential earnings trends into Q1? And after that, I can turn the line over. Thank you.

Martin Tarasky, Executive Vice President and Chief Financial Officer, Russell Metals Inc.: So let me deal with the very end of what you asked, James, and then John can put some color on it. I expect Q1 to be better than Q4. It’s a bit of a moving target right now in terms of the tariff impact and what that does to steel prices and all that. So I kind of park that aside. But generally our Q1s are better than Q4s in particular and that’s from a volume perspective.

And also we did see stabilization of pricing and having a little bit of inching up. So there should be some positive migration in Q1 versus Q4, but it’s probably not a step function change, it’s continuing migration. And so if you look at Q3 for us and Q4, I would suspect right now that Q1 is probably looking somewhere in between Q3 and Q4.

John Reed, President and Chief Executive Officer, Russell Metals Inc.: Yes. James, again from the outlook side, we’ve been pleasantly surprised in Canada and in The U. S. That demand has come out early on in the quarter better than anticipated. And so we see that continuing going forward.

Again, as capacity utilization in mills is continuing to inch up, lead times are inching out, which again adds further price stability or potential for price increases that are out there. There have been some large pipe jobs that have went into the hot rolled coil mills that have actually extended those mills well into third quarter for any spot tons. So that’s firm enough pricing as well. Rig counts, if you look at Canada specifically, they’re up 7% as of this morning compared to this time last year. So we’re seeing very positive opportunities on our energy field store businesses.

We’re continuing to gain share in our U. S. And its growth. The U. S.

Market is down in energy. But again, oil is above $70 a barrel right now. Natural gas is over $3.5 Those are two very strong numbers for continuation in that market. So as Marty mentioned in his comments, we feel very good demand is very solid. We think it’s going forward and then we’ll have to sift through the noise and the continuous changes of the tariff announcements here to see what this really means in the coming days.

James McGarrigle, Analyst, RBC Capital Markets: Thanks, James. Thank you.

Conference Operator: Thank you. And at this time, Mr. Taravski, we have no other questions registered. Sir, please proceed.

Martin Tarasky, Executive Vice President and Chief Financial Officer, Russell Metals Inc.: Great. Thank you, operator. Thank you, everyone, for joining our call. And if you have any additional questions, please feel free to reach out. Otherwise, we look forward to staying in touch during the balance of the quarter.

Have a good day, everyone.

Conference Operator: Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your line.

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