RUS: Highlights from the RBC Canadian Industrials Conference

Research evidence excerpt

RUS: Highlights from the RBC Canadian Industrials Conference

mproved through February and March - our view is that

the volume strength we saw toward the end of the quarter continues into Q2 given positive commentary from the other industrial

companies presenting at our conference. Management also reaffirmed the Kloeckner three-phase integration plan, noting they

remain in the early stages of Phase 1. A notable change highlighted was the rollout of variable compensation tied to return on net

assets rather than volume, which combined with constructive market conditions is driving higher conviction on price increases.

Looking ahead, we continue to see Kloeckner as an idiosyncratic driver of growth during the remainder of the year.

Capital allocation

Dry powder preserved for M&A with discipline on returns. Management reaffirmed the ~$100MM annual capex run-rate, noting

Q1 capex came in below run-rate with a pickup expected in H2/26 as project approvals ramp. On FCF deployment, management

expressed comfort maintaining dry powder for M&A optionality, with high conviction in future acquisition opportunities given the

fragmented nature of the steel distribution industry — consistent with our view that tuck-in M&A remains a credible and value-

additive complement to organic growth. The 200 bps margin improvement target was described as a moving baseline rather than

a fixed endpoint, a framing we view as constructive. On real estate, the Samuel acquisition monetization program ($36MM in net

proceeds) was characterized as opportunistic and situational, with any future asset sales expected to be selective.

All values in CAD unless otherwise noted. Priced as of prior trading day's market close, EST (unless otherwise noted).