Good morning, ladies and gentlemen. Welcome to the Third Quarter 2021 Results Conference Call for Russel Metals. Today's call will be hosted by Martin Juravsky, Executive Vice President and Chief Financial Officer; and John Reid, President and Chief Executive Officer of Russel Metals Inc. Today's presentation will be followed by a question-and-answer period. [Operator Instructions] I would now like to turn the meeting over to Martin Juravsky. Please go ahead, sir.

Great, thanks operator. Good morning everyone. I plan on providing an overview of the Q3 results, in addition providing some additional details on yesterday's acquisition announcement related to Boyd Metals. If you want to follow along, I'll be using the PowerPoint slides that are on our website and just go to the investor relations conference call section. If you go to page three, you can read our cautionary statement on forward-looking information. So if begin, let's go to page five and just to give a context and a bit of an overview. The results for the quarter were exceptionally strong and built on the back of a really strong Q2. Our initiatives over the last 12 to 15 months have positioned us to benefit from the prevailing market, as well as create new opportunities going forward. In particular, when we reflect on what we outlined is our game plan around 12 to 15 months ago, we were pretty proud to have delivered a series of actions that align with that game plan. So to put a little context around market conditions, the market has been and continues to be very good. Even though there was more inventory in the supply chain than there was three to six months ago, we are continuing to see a good supply and demand balance. In addition, our price realizations continue to increase through the quarter, and overall company-wide, our margins were comparable in Q3 versus Q2 at a very high level. Favorable market conditions are continuing into Q4. Demand is good. And the number of months inventory in the supply chain remains below the historical average. Therefore, we continue to remain optimistic on the overall business conditions. In terms of our portfolio transformation is a bit of a reminder, the objectives behind the portfolio changes were to both enhance returns and reduce risk. We've accomplished a sizable transformation in little over a year. The initiatives focused on reducing capital in the energy part of our business, but at the same time, scoping out opportunities to redeploy that capital in higher and better uses. And this past quarter we saw those initiatives come together quite nicely. A few key items to highlight. Point one. The OCTG line pipe monetization, it's effectively done, with both $300 million of capital permanently removed. As reminder that part of our business had low margins, low returns, tied up a lot of capital and was volatile. In hindsight, our timing was quite fortunate as we were able to profitably exit the business, as the window opened with the improving market conditions. In July closed the sale of our Canadian OCTG line pipe business. The transaction repatriated little over $100 million of cash in the quarter, and we still have some upside participation in the ongoing business, but it's structured to be off balance sheet to Russel. Our orderly liquidation of the U.S. OCTG line pipe inventories is also mostly complete. Item two. Capital reinvestment in value-added projects is a multi-year process for us. We're seeing very good results from the recent initiatives, and we'll be adding a series of new projects in the quarters and years ahead. In terms of M&A, we've been very active in looking at a lot of acquisition opportunities, but we remained extremely disciplined as we reviewed those opportunities. That being said, we couldn't be more pleased with how the Boyd Metals acquisition has come together. It's a business that fits exceptionally well. I'll talk about that in more detail a little later on. Free cash flow and capital structure. With $188 million of cash from operating activities in Q3 and liquidity of over $600 million, we are in very good shape to continue evaluating capital redeployment opportunities. If we go to our financial results on page six. From an income statement perspective, the continuing strong results were across our business segments. Revenues of over $1.1 billion was the highest level in over two years, and EBITDA and EPS were all time records. Again, gross margins maintained at a very high level and were comparable to Q2, around 30%. And there were a few items of note in the quarter that I just want to highlight. As we close the sale of the Canadian OCTG line pipe business, we are no longer consolidating the results, but we did pick up our 50% share of their net income, which is around $3 million for the quarter. In addition, stock-based comp had a mark-to-market P&L benefit of $3 million in Q3 due to the decrease of our share price in Q3. From a cash flow perspective, we used $63 million due to an increase in working capital. This was a build within the service centers and steel distributor segment, and was somewhat offset by the continued downsizing of our energy working capital. The business condition improvements that led to an increase in AR. Inventory was somewhat offset by an increase in accounts payable. In addition, part of the accounting for the Canadian OCTG line pipe sale is a line item that you see that's called sale of business, and we have that as $77 million. That's $77 million plus the $32 million of the accounts receivable that we retained and collected in the quarter is how we realize total cash proceeds of approximately $109 million. CapEx of $8 million continues to be relatively modest. But I do believe that we'll nudge up in 2022, as we undertake additional discretionary CapEx projects. From a balance sheet perspective, the strong cash flow has led to a reduction in net debt by a further $161 million in the quarter. And we ended the quarter in a net cash position. Our liquidity is north of $600 million and our credit metrics are incredibly strong. Lastly, we have declared a quarterly dividend of $0.38 a share. If we go to page seven, I'll talk through our segmented P&L information. Let's start with the Service Centers. The Service Centers did exceptionally well again. Revenues were up $33 million or 5% versus Q2. Gross margins remained above 30%, and we delivered $132 million of operating profits. These results are indicative of strong markets and really strong execution by our business groups. We did experience 12% lower volume in the quarter due to the seasonal dynamics in the summer months and during July in particular. However, the volume decline was more than offset by a 19% increase in our average sale prices in Q3. And that's on the back of a 19% increase in average sale prices between Q1 and Q2. And this translated into continuing strong margins. Even though margin percentage was down slightly from Q2, our margin in dollars per ton was in fact up. I accept -- I expect some margin moderation in Q4 because of the higher costs of inventory that roll into cost of goods sold. As I mentioned earlier, demand is strong, but we typically do see some decline in operating days as we get into the holiday period towards the end of Q4. In Energy, we are seeing positive market sentiment that is at the early stage of translating into financial results. Our revenues came down due to the sale of our OCTG line pipe business, but revenues within our Field Store segment was in fact up 12% on the quarter versus Q2. Also our margins in the Energy business were over 20% as the segment is now being driven by the higher margin Field Store business. Distributors had another exceptionally strong quarter from a revenue, margin and bottom line perspective. Looking forward the backlog in business remains good for Q4. If we go to page eight, this will give us a little bit more context around the portfolio transformation. And this chart shows our inventories over the past six quarters to provide our frame of reference for how we've transformed the portfolio. If you look at the current total inventory position of $787 million is in fact actually lower today than it was in June of 2020, despite significantly higher steel prices. We've pulled over $300 million out of the energy part as you can see in the red bar, at the same time as the business activity in Service Centers, which is the green bar and Steel Distributors in the yellow bar picked up. The result is that Energy today only represents around 17% of our September 30th inventory versus 55% in June of 2020. This realignment has resulted in more effective and efficient capital utilization, as we put our capital into higher and better uses. We go to page nine. You can see the overall impact on capital utilization and returns. When we benchmark ourselves against our competitors, we have generated the top quartile returns over cycle, with our overall goal being a 15% EBIT return. As you can see in the red line, 2021 has been well above that target. So the first three quarters of 2021, we generated return on capital of 40%, 57%, and in the most recent Q3, 64%. Those numbers are exceptionally strong on both an absolute as well as relative basis compared to our competitors. A big part of this performance is a result of our portfolio transformation, as the average capital invested a few years ago was around $1.4 billion, and it's now closer to $1.1 billion. So in summary, we had record earnings with less capital being deployed. Going forward, we are focused on opportunities to redeploy that capital, but we will remain disciplined with respect to opportunities that meet our financial and our operational criteria. In fact, we have looked at a tremendous number of opportunities of potential acquisitions over the past six to nine months. And in many ways, the benefit of seeing so much deal flow is that we could remain very selective as we compare and contrast a wide range of opportunities. This brings us to the Boyd Metals acquisition. If you go to page 11, I'll give a little bit of a context around the transaction. So, as a starting point, Boyd Metals is an opportunity has been on our radar screen for some time, and it is truly a hand in glove fit for us. In terms of a few transaction highlights, the purchase price is US$110 million subject to adjustment for changes in the final working capital melt. The $110 million of value includes all of the business, which includes everything from working capital, land buildings, et cetera. As we reviewed the Boyd business, we were really impressed with their financial track record, their culture and their people. With last 12 months, revenues and EBITDA of $244 million and $39 million, respectively, their results are comparable to our own margins in the region. From a valuation standpoint, this implies a multiple of around three-times LTM EBITDA and over cycle we see the business is generating very good returns and being accretive to our earnings. As discussed earlier, we have lots of capital structure flexibility due to the monetization of our OCTG line pipe business. So this transaction is financed with cash on hand or drawings under our existing bank lines. We expect the deal to close in the fourth quarter. If we go to page 12, we have an overview of the Boyd business. And starting with the map on the top left-hand part of the page, Boyd has five locations with its main center being in Fort Smith, Arkansas, which is on the western edge of Arkansas. In addition, it is four other service centers that are all located within a freight logical distance of Fort Smith. And they thereby operate in a bit of a hub and spoke approach. This is a very similar approach to how Russel operates. Moving to the right, they have a range of value-added processing equipment across their system, which is also a big focus within our operations and a key part of our ongoing CapEx program. Moving down the page to the chart on the bottom right on product mix, they're about 75% carbon-based, but they also about 25% of their product mix as non-ferrous. We like this diversification. And it's a very good balance between both carbon and the non-ferrous part of the business. If we go to the bottom left chart, their customer base is very diversified across industry segments, as they focus on small order sizes and non-contractual business, again, a very similar business philosophy in terms of how Russel operates. If you go to page 13, you can see a map of our operations in the region as compared to Boyd's with Boyd's located -- locations in yellow and Russel's locations in green. The geographic footprint is very complimentary and extends the boundaries of our existing service territories. As I said earlier, Boyd has a very similar culture to us, and we are really quite impressed by their management team and their staffing and their employee level. Because of the alignments and similar operating philosophies between the two businesses, we expect there are going to be some new opportunities across the two platforms relating to sharing inventories, value-added processing, procurements and the like, and we are really excited to get started. In closing, on behalf of John and other members of the management team, I'd like to express our appreciation to everyone within the Russel family. And we really look forward to welcoming the Boyd group to our extended family. After a very challenging 2020, we've been able to demonstrate significant momentum through the first nine months of 2021. And we really look forward to advancing the business of the balance of this year and beyond. Operator that concludes my introductory remarks. If you would now like to open the line for questions, John and I are available.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Michael Doumet, Scotiabank. Michael, please go ahead.

Hey. Good morning guys.

Hey, Michael.

Good morning.

I mean, nice quarter first off and congratulations on the deal. I understand the deal hasn't closed yet, but it is possible maybe that you can buy some disclosures, as the earnings history of the company, and maybe some of the synergy opportunities. Maybe correct me if I'm wrong, but I believe you do kind of target up pre-tax RONA of 15%, just how we should think about the numbers going forward.

Yeah. Hey Michael, it's Marty. You hit the nail on the head, which is we do target a pre-tax RONA of 15%, and we've disclosed the LTM numbers in both revenue and EBITDA. We obviously haven't gone back to the beginning of time in terms of public disclosure. But if you want to use those metrics, what I can say is that over a cycle, their results, without even taking into account synergies, would allow us to meet our objectives over a cycle of that 15% RONA. In terms of synergies, we don't put numbers on the table. And frankly, we think -- as I said earlier, there are opportunities, but we actually don't formally come up with a synergy number and we don't view it that way. We think there's going to be opportunities for the Boyd business and our business to work together cooperatively and find opportunities. But we don't go to the point of actually trying to put a hard wired number to it.

That's great. No, that's helpful disclosure. Thanks, Marty. And then, in the outlook you talked about -- I think you quoted a modest retreated margins in Q4. And if I look at consensus as a group, we have EBITDA down 60% sequentially. So I imagine, we're going to have to make our adjustments, and I know you don't comment specifically on consensus, but any way you can help us with additional parameters there. I know there's still two months in the quarter, but do you expect margins normalize a little bit more quickly in Q4, or maybe at the same pace as Q3 versus Q2? Just any comments like that would be helpful.

Why don't I make one common, then I'll turn it over to John. So, the reference to consensus, please do me a favor and take all of the consensus numbers with a grain of salt, we saw consensus shift massively just within the last quarter for Q3. So, as it relates to what consensus is for Q4 and what consensus is for next year, it's frankly all over the map. So with that context around -- John, do you want put a little bit of context around market conditions?

Sure, Martin. The market conditions, again for demand, are very good right now. And again, very solid. When you look out there across the end markets, end users that we use, we also use the purchasing manager index. Both of them coincide nicely that lead to increasing demand. If you look at architectural billing index, those are leading to increasing demand in construction. We're seeing that from our customer base as well, oil and gas, rig counts continue to improve, volume [ph] markets doing very well. Automotive is showing signs of bringing back on production. We use more flat roll. Although, we're not into automotive, it does help use up anybody that will flat roll. We have seen the inventory positions improve in service centers, still though they're above -- returns are both historical norms. So we're not back. That metal capacity continues to run in the 84% to 85% range, which is basically at capacity. I'm seeing a little bit of softening in flat roll, frankly -- probably overshot the mark just a little bit. It's just rebalancing, and getting back in line. If you look at the inverted curve with plate for the last year, you can tell that plated falling behind flat roll. That's now come up almost to a neutral point, but it'll probably push on past that. So, we feel pretty good about what we're seeing demand wise, going forward into Q4 and even into Q1 from what we're hearing from our end user customers. And regards to pricing and margin with it, there could be a little bit of pressure along the way, but again, I don't see any reason to drive anything either direction and a big change right now.

That's great guys. Thank you.

Thanks, Michael.

Thank you. Your next question comes from Michael Tupholme, TD Securities. Michael, please go ahead.

Okay. Thanks. Good morning.

Good morning, Mike.

Good morning.

Maybe just to start somewhat high level, you've now completed the exits of your OCTG business apart from the fact that you still have an interest in the JV. I'm wondering in terms of your strategic priorities over the next 24 months now that, that transformation, the energy business is complete, how should we be thinking about the focus going forward?

Yeah. So the focus -- again, we're sitting in a lot of liquidity. We'll continue to look at opportunities out there in M&A. There are -- as Marty mentioned, the pipeline has been pretty active. We'll continue to grow our value-added process into our Service Centers. Continue to ramp up that initiative. It's had tremendous traction so far, and we just see that building now we've gotten better and better as we start these ups. We really have it almost franchise now to roll it out. So, we continue to see that going on as well. So, those will be the two big things that we're looking at going forward. But again, I think the M&A pipeline continued to remain active over the next 12 to 24 months.

Okay. That's helpful. Thanks, John. I guess -- and just to follow on that. So, it certainly sounds like your capital allocation priorities haven't really changed, but at the same time, as you pointed out, you've got considerable flexibility in net cash position. obviously you will use some of that cash for the Boyd acquisition, but are there certain capital allocation priorities that maybe have historically been further down on the list that -- there simply wasn't the capacity or flexibility to address, but perhaps now you're in a position to also address those concurrent with the focus on M&A and value-add?

Yes, I think so. We've never really been capital constrained. We've always had a very solid balance sheet. We've just continued to improve it over the last 12 months. So that even offers us more flexibility now. So, I don't think we were ever really constrained in the past. We'll continue to be very disciplined on how we manage working capital and look at capital allocation is -- it's a key to our business being again in distribution or in a cyclical industry, but I don't think there'll be any fundamental changes there. It's just -- I think there's more opportunities to come.

Okay. And then on the acquisitions side, I mean, I know it's difficult to comment. It sounds like you've certainly looked at a lot of opportunities and -- but I'm wondering is -- the Boyd transaction, is that somewhat representative of what we should expect with respect to potential future transactions, or is that oversimplifying things?

I think, in terms of size and scale, I mean, Boyd was a nice fit for us. Geographically, it was a great fit for us. But again, we don't have a specific model we're looking for. It's nice to be able to add on to your existing footprint or to bolt-on something. We would look at standalones as well. But the big thing about Boyd, that was very attractive us, the culture lined up very, very closely with our culture, tremendous people. And it's a business that they plug and play. They've got their management team, they standalone. They manage their business very well -- well then a great and nicely, but we see them continuing to run this business in our decentralized culture going forward.

Okay. That's helpful. Thank you. And then perhaps for Marty, so I know the transaction with Marubeni closed early in the quarter, so that's really not -- we're not seeing any sort of contribution really an Energy Product segment in the quarter. It's in the equity pickup line. But when we look at the energy products business in the quarter, you were still selling down some of you OCTG inventory. Can you give me a sense for what that business would have looked like sort of on more of a run rate basis in terms? How it's going to look going forward? What this quarter would have been as far as the Field Store's contribution?

Yeah. Well -- so I guess, Mike, if you look at it -- the vast majority of it in the quarter was from Field Stores, because -- you're right. The joint venture closed in the quarter and closed the front end of the quarter. So, we literally had a few days where the -- operating triumph before it got sold into the joint venture, and then the wind down of the U.S. OCTG line pipe business was also occurring in the quarter, but it wasn't a huge number for the quarter. Bear with me for one second. If you look at -- yeah. So on a top line basis, it was about $30 million of revenue related to line pipe OCTG for the quarter.

Okay. That's helpful. I've got a couple more, but I'll get back in the queue and turn it over for now.

Okay. Thanks Mike.

Thank you. Your next question comes from Frederic Bastien, Raymond James. Frederic, please go ahead.

Good morning guys and good quarter.

Thanks Fred.

I have a few on Boyd, specifically John, that business is right in your backyard, so to speak. So, just curious how familiar you are with the business. And if you could share how long you guys have been kind of talking to each other?

So none of the principals at Boyd posting my career and we actually early on when we were starting the two different companies prior to becoming -- as we got bigger, we actually shared concepts on how to run the business, values and principles. So, very familiar with them as they started their growth as we grew through it. So, again, very strong company, Tom Kennon that ran the company, came from AFCO [ph] Metals and had a lot of experience in the steel business and was kind enough to share his experience when I was getting started. So, again, very solid group. Very well run in the marketplace, very well respected in the marketplace. Again, tremendous amount of depth coming through. Brian Newman has been there with him for a long time. And so those two will continue to run the business there on a daily basis. So very familiar with them, Frederic, very good operators in the business. Again, it couldn't align more closely corporate and Russel culturally. And so I think it's just, as Marty said, really, hand in glove fit for us.

Okay. And just, I know you can't comment for them, but I mean, do you know if the Biden administration's proposal to increase the capital gains tax may have created a bit of urgency for them to transact?

I don't know if it was urgency. We've been in discussions for probably over two years on and off, then you can really get postponed with COVID. I think they were thinking about it. They have senior partners own involved in the business and has been since day one, but he's of retirement age and maybe a little beyond retirement age, Tom's getting close, probably working another year or two years. And so I think it was more of a timing of the principles that on the large majority of the company were looking for an exit strategy and looking for the proper partner to move forward with their business. Now, I'm sure it benefited to have the tax and they get it done by the end of the year. I'm sure that was obviously a consideration for them. And then, we tried to structure it that way, but I don't think that was the determining factor.

Okay. And then just wondering, I mean, this business seems to be running well. I mean, obviously, runs well on its own. Doesn't feel like you're going to spend a lot of effort or management time on the integration of that business versus what you might've done in some other acquisitions that Russel has done. So, would you then consider another deal of this size if it in your lap in the next few weeks, few months, because you certainly have the capacity to absorb it.

Yeah. In some ways for -- the short answer is yes. And it -- we like the Boyd business from all kinds of perspectives, including the fact that it's really, really well run and doesn't require an awful lot of oversight. So, to me, that is a perfect fit and allows us to not only let them do what they do really well, but also continue to look at other opportunities.

Great. I guess just one last question. You comment, or you mentioned that the margins are similar to those of Russel Metals in the region, but how do they compare to those of the Service Center segment overall?

Very similar. There's some opportunity for them -- for it to continue to push forward with their value-added. And they just -- they've got a strong amount of value-added in their business now, but they have an opportunity to push forward to maybe to leverage off of what we've done currently, where they can either use the value-added processing in a totally new mechanism, or they can put in their own equipment. And again, that'll be their call on how they want to spend that capital, but those opportunities are there excluding some of the high end where we've got extreme margins in value-added processing, it's almost an identical match.

Okay. Thank you both.

Great. Thanks Fred.

Thank you. Your next question comes from Alexander Jackson, RBC Capital Markets. Alexander, please go ahead.

Yeah. Hey, guys. Congrats on the quarter and thanks for taking my question. You've kind of touched on already. But in terms of capital allocation, with the business changing, I'm curious, does that dividend increase come into play kind of in the near-term?

The way we look at it right now is, we've always viewed the various capital allocation alternatives as being under consideration. But in terms of -- Boyd as an example, we think that's just a really great opportunity to put capital to work. We continue to be -- as John said earlier, we continue to be actively looking at the M&A landscape. So, for us to actually have in capital structure flexibility to look at adding value to the business, whether internally through additional investments, CapEx investments, or whether they're external through acquisitions that meet our criteria, that's where our focus is for the near-term.

Got it. That's helpful. Thanks guys.

Great. Thanks Alex.

Thank you. [Operator Instructions] Your next question comes from Anoop Prihar, GMP. Anoop, please go ahead.

Good morning guys. John, I just wanted to ask you sort of a big picture industry question in terms of your interpretation of the trade deal, that was announced earlier on this week with EU. I mean, on the one hand, you want to have more product entering in the U.S., but at the same time, it seems they set those quotas to be in line with what the EU is historically sent into the U.S. So I'm just curious to know what impact, if any, do you think that's going to have on your business as you look forward to next year?

No, thanks Anoop. And it's really interesting if you look historically, it was about 5 million tons that they allowed in from the -- coming in from the EU. And now with the trades that we're going to go down to about 3.4 million tons. You look at North American production, that's running at 100 million range, talking about a 3% to 4% increase product coming in. It's going to be predominantly in coded flat roll material to cause a little back-up into hot roll, but it's predominantly going to be galvanize cold roll prepaying. What's interesting when you read into the document, there's 54 different quotas included in that for carbon. I think there's another 16 for aluminum. And those quotas are managed individually as well as the importers in managed individually. So, it really takes a sophisticated person to import that and are still the distribution group is obviously being there 30-plus years, very experienced. I think it's really going to provide opportunities for experienced importers that have strong balance sheets to really be the importers of choice here versus maybe some of the smaller players that don't have the balance sheet and don't have the sophistication to manage those 54 different carbon variations with individualized quotas. So, overall, I think that I think the impact's going to be fairly muted on both sides.

Great. Well, that's helpful. Thank you. I didn't realize it was going to be such a complicated endeavor.

Yeah. No, well, it's -- I don't count on the government to solve my problems and I count on them to create them. So there you go.

All right. Thanks a lot.

Thanks Anoop.

Thank you. Your next question comes from Michael Tupholme, TD Securities. Michael, please go ahead.

Thank you. Maybe just to follow on there, apart from the agreement between the U.S. and the EU, can you speak more generally about what's happening with respect to imports? You did mention that, that inventory and the supply chain is increased, and I'm not sure that's directly related, or exclusively related to imports, but if you can comment on what you are seeing in the -- with respect to imports, that'd be helpful.

There's been no material change on inbound imports. You may see some product specifics. I think the catch-up has just been mills have been playing catch up because its supply chain was so -- just cleaned out during the COVID. We dropped our inventory. The manufacturers, the mills didn't produce any inventory. The end users cleaned up their inventory, their work in progress. So, I think it's taken a long amount of time to rebuild the inventory and we're starting to catch up some there. Demand took off faster than anticipated. So I think we were behind. So, I don't see a lot of import impact right now, but again, with the 232 still in place for other countries or quota systems, it still is very limited to what's coming into the country. So, I'm not seeing a big impact. And I think the mills approach has been very disciplined in North America and kudos to them. I think they've worked very hard certainly to get to this point. But when there is something that comes in, I think they view that as a one-off in that area, don't react to it versus in the past where you had a lot more tonnage coming in available that they had to react to maintain share. So, I just don't see a whole lot of change and the imports coming in, driving pricing direction from the domestic mills, I think the domestic mills actually have the driver seat on that right now.

Okay. That's helpful. And then I'm not sure if this is related to that or not, but your Steel Distributors segment, obviously extremely strong performance this quarter. And if we just look year-over-year, the revenues in that segment were up a lot more than the Service Centers revenues were up. And I'm just wondering, is there a dynamic here where you had ordered some material from offshore and that was sort of on its way and coming in, but it was ordered some time ago at lower prices or, is that what's I play there? And I guess, maybe more importantly, how do we think about that business going forward?

Yeah. So, it's a good question. And again, we had -- we did have some holding gains opportunities that came as the 232 came into play and we came out of COVID and keeping in mind that there are certain products that just aren't made in Canada. So, you're dealing with heavy plates -- those items will naturally always import. Again, predominantly those margins came from our U.S. operations where we had inventory in stock. At the time we see -- as the price started to move up, they actually held inventory waiting in anticipation of further increases. And now as they continued forward, again, just due to the imports coming in, all the problems with logistics and shipping, there are any very good inventory position compared to a lot of our distributor or trading competitors. And service center industry again, being very lean on inventory versus the mills being able to produce gave us some really opportunities to kind of flex our muscle there, if you will. So, I think longer term, you'll see their margin scope normalized back to a more reasonable level, but again, in this environment right now, I think they'll still continue for the next two or three quarters to have strong margins by comparison.

Okay. That's great. Thanks, John. And beyond the margins though, I should have just also wondering, just about the top line. Like, is that something we should expect to moderate again, because of -- was there any sort of a timing impact there, or is this sort of run rate type level for the next little while?

That's -- two things. Part of it was time and again, especially with Canada -- again with the restrictions, people couldn't get things in. So we had the opportunity. Part of it's just the cost of steel has moved up. So, the tonnage may not have moved up as much. Just the cost of steel being three to four times, but it was a year and a half ago. So -- but there were some opportunities specifically in Canada where we were able to participate selling new to Russel Metals or to our competition where their product was not available. And so, we really were able to maximize that opportunity at our Canadian operations. Going forward, I don't see big changes there. As again, we're dealing plate and being -- primarily, they're not produced in Canada, so I don't see big changes to the tonnage volume or to see where the pricing goes for.

Okay. In Service Centers, the volume is down 12% quarter-over-quarter. I think you said in the release that a driver to that with seasonality. But I don’t know, like is that essentially the vast majority is, is just a seasonal thing. And similarly, I think you indicated potentially some further decline into the fourth quarter, is that also just seasonality?

The fourth quarter will be seasonality, for sure. Early in second quarter, we saw some seasonality and we really saw the construction shutdown in Quebec, was in full effect. I think people were tired working through COVID and so that two-week shutdown -- they really shutdown for two weeks. Historically, we would get people kind of shutdown, maybe linger on with some projects, but it really shutdown. So, that's one of our largest service center operations. We saw the impact, and then we saw the bounce back come back later into Q3. So, as far as we're concerned, we're not seeing any demand issues that are out there that we're concerned about or market share issues that we're concerned about. So, again, I think it was seasonality, coupled with a strong construction shutdown in Quebec.

Okay. Thanks. And then, just lastly, the equity pickup you saw this quarter from the JV $2.8 million, is that a number that would sort of be representative of what we should be thinking about in future quarters, Marty?

Well, it was an extremely strong quarter coming out of the gate. And there is -- it was -- just piggybacking on the last conversation about seasonality, there's also a very high seasonality attached to that business. So, this is a high quarter season for that business. So, it's a pretty robust level. We were very pleased with it, but this -- what I would expect is that the average over an entire year type level, especially there are -- when you get into spring break-up period, you get some debt -- a down quarter later on in the year. So, this is a robust level. Let's put it that way.

Okay. Great. All right. Thanks for the time.

Thanks Mike.

Thank you. There are no further questions at this time. Please proceed.

Great. Thanks operator. We'll again -- look, appreciate everybody for joining our call. Much appreciate all the questions and if you have any questions -- additional questions, please feel free to reach out. Otherwise, we look forward to staying in touch over the course of the quarter. Have a good day, everyone.

Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Thanks operator.