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TORONTO,
ONTARIO--(Marketwire - Feb. 23, 2009) - Russel Metals Inc. (TSX:RUS)
today announced that its earnings for the year ended December 31, 2008
more than doubled to $3.67 per share compared to $1.77 per share in
2007. Earnings per share for the fourth quarter of 2008 were $0.48.
Earnings for the fourth quarter of 2007 were $0.40 per share.
Net earnings for the fourth quarter of 2008 were $29.0 million,
including a $35.7 million write-down of inventory to net realizable
value due to the dramatic decline in steel prices. This write-down
equated to $0.39 per share and without this write-down, earnings per
share would have been $0.87 for the quarter and $4.05 for the year. Notwithstanding
the inventory write-down, earnings were up 14.6% from $25.3 million in
the fourth quarter of 2007 and net earnings for the year were a record
$228.5 million, more than double 2007 net earnings of $111.2 million.
The Company experienced a decline in demand and steel pricing in the
fourth quarter in both our metals service centers and steel
distributors segment due to the general economic conditions impacting
both Canada and the United States.
The energy tubular products segment earnings for the fourth quarter of
2008 were $32.6 million, up from the fourth quarter of 2007 of $12.8
million, notwithstanding the unprecedented drop in oil and gas prices
late in the quarter.
Bud Siegel, President and CEO, stated, "We are proud of our record
earnings for 2008, however, that is history and we are now completely
focused on the current economy and how it impacts our customers and in
turn, Russel Metals. We are taking action to preserve capital and
position the Company to continue to be in a strong financial position
when the recovery occurs."
The Board of Directors approved a quarterly dividend of $0.25 per
common share payable March 16, 2009 to shareholders of record as of
March 4, 2009.
The decision to reduce the quarterly dividend payment to $0.25 per
share in the first quarter reflects the abrupt and severe drop in
demand experienced to date in 2009. The new annual dividend rate of
$1.00 represents a yield of 6.2% at last Friday's closing share price
of $16.14.
Brian Hedges, COO and Executive Vice-President stated, "We have
reduced the dividend due to the drastic and unprecedented decline in
our business levels. It continues to be our intention to reward our
shareholders at a level our earnings and cash flow justify. Our
shareholder base includes a large number of individual investors and
the Company is aware of how important the dividend is to these owners. We
have made this change with great reluctance."
The Company will be holding an Investor Conference Call on Tuesday,
February 24, 2009 at 9:00 a.m. ET to review its fourth quarter and year
end results for 2008. The dial-in telephone numbers for the call are
416-641-6130 (Toronto and International
callers) and 1-866-226-1793 (U.S.
and Canada).
Please dial in 10 minutes prior to the call to ensure that you get a
line.
A replay of the call will be available at 416-695-5800 (Toronto and International callers) and
1-800-408-3053 (U.S.
and Canada)
until midnight, Tuesday, March 3, 2009. You will be required to enter
pass code 3280534
in order to access the call.
Additional supplemental financial information is available in our investor
conference call package located on our website at www.russelmetals.com.
Russel Metals is one of the largest metals distribution companies in North America. It carries on business in three
distribution segments: metals service centers, energy tubular products
and steel distributors, under various names including Russel Metals,
A.J. Forsyth, Acier Leroux, Acier Loubier, Acier Richler, Arrow Steel
Processors, B&T Steel, Baldwin International, Comco Pipe and
Supply, Fedmet Tubulars, JMS Russel Metals, Leroux Steel, McCabe Steel,
Megantic Metal, Metaux Russel, Metaux Russel Produits Specialises,
Milspec Industries, Norton Metals, Pioneer Pipe, Russel Metals
Specialty Products, Russel Metals Williams Bahcall, Spartan Steel
Products, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and
York-Ennis.
Statements contained in this press release or on the related conference
call that relate to Russel Metals' beliefs or expectations as to
certain future events are not statements of historical fact and are
forward-looking statements. Russel Metals cautions readers that there
are important factors, risks and uncertainties, including but not
limited to economic, competitive and governmental factors affecting Russel
Metals' operations, markets, products, services and prices that could
cause its actual results, performance or achievements to be materially
different from those forecasted or anticipated in such forward-looking
statements.
The forward-looking statements in this document reflect management's
current beliefs and are based on information currently available to
management. The material assumptions applied in making the
forward-looking statements in this document include the following:
demand from the manufacturing, resource and construction segments of
the Canadian economy, oil and gas prices and the price of steel have
all been significantly negatively impacted by the economic conditions
and these conditions will impact these factors for the foreseeable
future. The value of the Canadian dollar relative to the U.S. dollar
will be consistent with what we experienced at the end of December
2008. Although the forward-looking statements contained in this
document are based upon what management believes to be reasonable
estimates and assumptions, Russel Metals cannot ensure that actual
results will not be materially different from those expressed or
implied by these forward-looking statements.
-------------------------------------------------------------------------- Consolidated Balance Sheets (unaudited) -------------------------------------------------------------------------- At December 31 (millions) 2008 2007 -------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents $ 44.9 $ 181.8 Accounts receivable 429.3 341.8 Inventories 925.1 572.6 Prepaid expenses and other assets 8.1 8.5 Income taxes 7.1 3.9 -------------------------------------------------------------------------- 1,414.5 1,108.6 Property, Plant and Equipment 249.9 227.9 Future Income Tax Assets 1.0 1.0 Pensions and Benefits 6.5 4.4 Other Assets 7.0 12.4 Goodwill and Intangibles 71.8 53.4 -------------------------------------------------------------------------- $ 1,750.7 $ 1,407.7 -------------------------------------------------------------------------- -------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Bank indebtedness $ 64.9 $ - Accounts payable and accrued liabilities 420.7 294.2 Income taxes payable 30.3 2.8 Current portion long-term debt 1.4 0.9 -------------------------------------------------------------------------- 517.3 297.9 Derivatives 22.1 39.5 Long-Term Debt 217.5 174.9 Pensions and Benefits 5.8 5.8 Future Income Tax Liabilities 7.9 5.8 -------------------------------------------------------------------------- 770.6 523.9 -------------------------------------------------------------------------- Shareholders' Equity Common shares 478.8 504.2 Retained earnings 467.0 411.7 Contributed surplus 9.4 6.2 Accumulated other comprehensive income (loss) 24.9 (38.3) -------------------------------------------------------------------------- 980.1 883.8 -------------------------------------------------------------------------- $ 1,750.7 $ 1,407.7 -------------------------------------------------------------------------- -------------------------------------------------------------------------- --------------------------------------------------------------------------- Consolidated Statements of Earnings (unaudited) --------------------------------------------------------------------------- Quarters Ended Years Ended December 31, December 31, (millions, except per share data) 2008 2007 2008 2007 --------------------------------------------------------------------------- Revenues $ 842.7 $ 598.4 $ 3,366.2 $ 2,559.2 Cost of sales and operating expenses 800.7 560.8 3,005.8 2,379.9 --------------------------------------------------------------------------- Earnings before the following 42.0 37.6 360.4 179.3 Other expense 0.4 0.9 5.2 2.5 Interest expense, net 3.9 2.2 10.6 7.1 --------------------------------------------------------------------------- Earnings before income taxes 37.7 34.5 344.6 169.7 Provision for income taxes 8.7 10.8 116.1 60.1 --------------------------------------------------------------------------- Earnings from continuing operations 29.0 23.7 228.5 109.6 Income from discontinued operations - 1.6 - 1.6 --------------------------------------------------------------------------- Net earnings $ 29.0 $ 25.3 $ 228.5 $ 111.2 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Basic earnings per common share --continuing operations $ 0.48 $ 0.38 $ 3.67 $ 1.74 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Basic earnings per common share $ 0.48 $ 0.40 $ 3.67 $ 1.77 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Diluted earnings per common share --continuing operations $ 0.48 $ 0.37 $ 3.65 $ 1.73 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Diluted earnings per common share $ 0.48 $ 0.40 $ 3.65 $ 1.76 --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Consolidated Statements of Retained Earnings (unaudited) --------------------------------------------------------------------------- Quarters Ended Years Ended December 31, December 31, (millions) 2008 2007 2008 2007 --------------------------------------------------------------------------- Retained earnings, beginning of the period, as previously reported $ 485.3 $ 414.7 $ 411.7 $ 411.1 Transitional adjustment - financial instruments - - - (0.5) --------------------------------------------------------------------------- Retained earnings, beginning of the period as restated 485.3 414.7 411.7 410.6 Net earnings for the period 29.0 25.3 228.5 111.2 Amount related to common shares purchased for cancellation (20.4) - (57.8) - Dividends on common shares (26.9) (28.3) (115.4) (110.1) --------------------------------------------------------------------------- Retained earnings, end of the period $ 467.0 $ 411.7 $ 467.0 $ 411.7 --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Consolidated Statements of Comprehensive Income (unaudited) --------------------------------------------------------------------------- Quarters Ended Years Ended December 31, December 31, (millions) 2008 2007 2008 2007 --------------------------------------------------------------------------- Net earnings $ 29.0 $ 25.3 $ 228.5 $ 111.2 --------------------------------------------------------------------------- Other comprehensive income (loss) Unrealized foreign exchange gains (losses) on translation of self sustaining foreign operations (U.S. subsidiaries) 58.3 (3.4) 82.6 (34.5) Unrealized (losses) gains on items designated as net investment hedges (8.1) (1.6) (12.0) 9.1 Unrealized (losses) gains on items designated as cash flow hedges (5.6) 4.6 (7.4) 7.6 --------------------------------------------------------------------------- Other comprehensive income (loss) 44.6 (0.4) 63.2 (17.8) --------------------------------------------------------------------------- Comprehensive income $ 73.6 $ 24.9 $ 291.7 $ 93.4 --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Consolidated Statements of Accumulated Other Comprehensive Income (Loss) (unaudited) --------------------------------------------------------------------------- Quarters Ended Years Ended December 31, December 31, (millions) 2008 2007 2008 2007 --------------------------------------------------------------------------- Accumulated net unrealized foreign currency translation gains and losses Balance, beginning of period $ (21.4) $ (42.3) $ (45.7) $ (11.2) Net unrealized gain (loss) on translation of self sustaining foreign operations 58.3 (3.4) 82.6 (34.5) --------------------------------------------------------------------------- Balance, end of the period 36.9 (45.7) 36.9 (45.7) --------------------------------------------------------------------------- Accumulated net unrealized loss on cash flow and net investment hedges Balance, beginning of period 1.7 4.4 7.4 - Transitional adjustment - - - (9.3) Unrealized (losses) gains on items designated as net investment hedges (8.1) (1.6) (12.0) 9.1 Unrealized (losses) gains on items designated as cash flow hedges (5.6) 4.6 (7.4) 7.6 --------------------------------------------------------------------------- Balance, end of the period (12.0) 7.4 (12.0) 7.4 --------------------------------------------------------------------------- Accumulated other comprehensive income (loss) $ 24.9 $ (38.3) $ 24.9 $ (38.3) --------------------------------------------------------------------------- --------------------------------------------------------------------------- --------------------------------------------------------------------------- Consolidated Statements of Cash Flow (unaudited) --------------------------------------------------------------------------- Quarters Ended Years Ended December 31, December 31, (millions) 2008 2007 2008 2007 --------------------------------------------------------------------------- Operating activities Net earnings from continuing operations $ 29.0 $ 23.7 $ 228.5 $ 109.6 Depreciation and amortization 6.1 5.6 23.4 20.4 Future income taxes (3.2) 1.8 (1.8) 4.2 Gain (loss) on sale of fixed assets 0.2 0.1 0.5 (0.5) Stock-based compensation 0.4 0.4 3.7 4.8 Pension expense (funding) (1.8) (0.1) (2.1) (1.3) Other 0.6 1.2 5.9 3.2 --------------------------------------------------------------------------- Cash from operating activities before non-cash working capital 31.3 32.7 258.1 140.4 --------------------------------------------------------------------------- Changes in non-cash working capital items Accounts receivable 129.9 63.9 (62.9) (5.0) Inventories (107.7) 16.7 (266.0) 89.1 Accounts payable and accrued liabilities (116.8) 5.0 99.6 4.7 Current income taxes (10.3) (5.6) 30.1 (17.6) Other (3.5) (1.7) (2.3) (0.9) --------------------------------------------------------------------------- Change in non-cash working capital (108.4) 78.3 (201.5) 70.3 --------------------------------------------------------------------------- Cash from operating activities (77.1) 111.0 56.6 210.7 --------------------------------------------------------------------------- Financing activities Increase in bank borrowing 57.6 - 64.9 - Issue of common shares 0.1 - 2.8 10.9 Purchase of common shares (37.7) - (86.4) - Dividends on common shares (26.9) (28.3) (115.4) (110.1) Deferred financing (0.1) (0.2) (0.1) (0.2) Repayment of long-term debt (1.6) (0.3) (2.3) (0.3) --------------------------------------------------------------------------- Cash used in financing activities (8.6) (28.8) (136.5) (99.7) --------------------------------------------------------------------------- Investing activities Purchase of fixed assets (8.1) (3.6) (22.2) (16.6) Proceeds on sale of fixed assets 0.1 0.1 0.2 1.5 Purchase of business (30.9) - (30.9) (109.0) Reclassification of cash equivalents to other assets - - - (11.0) Other (3.3) 1.2 (5.0) 1.6 --------------------------------------------------------------------------- Cash used in investing activities (42.2) (2.3) (57.9) (133.5) --------------------------------------------------------------------------- Effect of exchange rates on cash (0.8) (1.7) 0.9 (5.6) --------------------------------------------------------------------------- Decrease in cash and cash equivalents (128.7) 78.2 (136.9) (28.1) Cash and cash equivalents beginning of the period 173.6 103.6 181.8 209.9 --------------------------------------------------------------------------- Cash and cash equivalents, end of the period $ 44.9 $ 181.8 $ 44.9 $ 181.8 --------------------------------------------------------------------------- ---------------------------------------------------------------------------
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