|
TORONTO,
ONTARIO--(Marketwire - Aug. 5, 2009) - Russel Metals Inc. (TSX:RUS)
today announced a second quarter loss of $0.41 per share. This includes
an inventory write-down of $0.59 per share. Excluding this write-down
and a gain on sale of a property of $4 million, adjusted earnings per
share was $0.10 for the quarter compared to $1.25 per share for the
second quarter of 2008.
The net loss for the second quarter was $25 million compared to net
earnings of $79 million for the second quarter of 2008. The 2009
results include a pretax inventory write-down of $56 million primarily
in the energy tubular products segment. In addition, the 2009 results
were impacted by volume declines in all three operating segments and
lower margins due to pricing pressure from declining mill prices and
excess inventory in the supply chain.
Metals service centers reported an operating profit of $2 million for
the quarter compared to an operating profit of $72 million for the
second quarter of 2008. Volumes were 40% lower in the second quarter of
2009 compared to 2008 and were consistent with the first quarter of
2009. A $2 million inventory write-down was taken in this segment. The
improvement in write-downs from the first quarter reflects that pricing
for most products stabilized in the second quarter of 2009.
Our energy tubular products segment reported a second quarter operating
loss of $49 million including an inventory write-down of $55 million. The
segment operating profit was $6 million before inventory write-downs
compared to an operating profit of $29 million for the second quarter
of 2008. Revenues declined 45% from the second quarter of 2008 due to
lower drilling activity driven by the low price of oil and natural gas.
Excess inventory in the industry has resulted in price pressures and
based on current activity, we have taken an inventory write-down.
Our steel distributors segment reported operating profits of $5 million
despite a revenue decline of 53% for the second quarter of 2009
compared to 2008. The segment operating profit was $26 million for the
second quarter of 2008.
Brian R. Hedges, President and CEO, stated, "I am encouraged by
the results of our metals service centers as they have reported an
operating profit for the quarter despite a 40% drop in demand from last
year. As previously stated, we are managing operations as if the volume
declines are permanent. Our managers are reacting to the challenging
market and continue to reduce expenses in line with current volumes.
In the third quarter of 2009, the steel mills have announced price
increases, which should result in margin improvements. Demand levels
remain unchanged and this needs to improve for us to achieve more
normalized profit levels."
Marion E. Britton, Vice President and CFO, stated "Operating expenses
are $40 million lower compared to the second quarter of 2008. Our
highly variable compensation model has been a significant factor in
reducing expenses in all segments."
The Board of Directors approved a quarterly dividend of $0.25 per
common share payable September 15, 2009 to shareholders of record as of
August 24, 2009.
The Company will be holding an Investor Conference Call on Thursday,
August 6, 2009 at 9:00 a.m. ET to review its second quarter results for
2009. 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, Thursday, August 20, 2009. You will be required to enter pass
code 3284122 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 the second
quarter of 2009. 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) --------------------------------------------------------------------- --------------------------------------------------------------------- June 30 December 31 (millions) 2009 2008 --------------------------------------------------------------------- ASSETS Current Cash and cash equivalents $ 113.7 $ 44.9 Accounts receivable 243.7 429.3 Inventories 644.1 925.1 Prepaid expenses and other assets 6.2 8.1 Income taxes 65.7 7.1 --------------------------------------------------------------------- 1,073.4 1,414.5 Property, Plant and Equipment 239.7 249.9 Future Income Tax Assets 1.0 1.0 Pensions and Benefits 6.9 6.5 Other Assets 8.5 7.0 Goodwill and Intangibles 68.4 71.8 --------------------------------------------------------------------- $ 1,397.9 $ 1,750.7 --------------------------------------------------------------------- --------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Bank indebtedness $ 44.3 $ 64.9 Accounts payable and accrued liabilities 245.5 420.7 Income taxes payable 2.4 30.3 Current portion long-term debt 1.4 1.4 --------------------------------------------------------------------- 293.6 517.3 Derivatives 21.1 22.1 Long-Term Debt 205.9 217.5 Pensions and Benefits 5.9 5.8 Future Income Tax Liabilities 11.8 7.9 --------------------------------------------------------------------- 538.3 770.6 --------------------------------------------------------------------- Shareholders' Equity Common shares 478.8 478.8 Retained earnings 357.6 467.0 Contributed surplus 10.3 9.4 Accumulated other comprehensive income 12.9 24.9 --------------------------------------------------------------------- 859.6 980.1 --------------------------------------------------------------------- $ 1,397.9 $ 1,750.7 --------------------------------------------------------------------- --------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (millions, except per Quarters ended June 30 Six months ended June 30 share data) 2009 2008 2009 2008 ---------------------------------------------------------------------------- Revenues $ 462.5 $ 856.3 $ 1,104.8 $ 1,568.6 Cost of sales and operating expenses 506.7 734.9 1,229.9 1,395.1 ---------------------------------------------------------------------------- (Loss) earnings before the following (44.2) 121.4 (125.1) 173.5 Other income (expense) 4.3 0.7 4.3 (2.5) Interest expense, net (4.4) (2.3) (9.2) (4.4) ---------------------------------------------------------------------------- (Loss) earnings before income taxes (44.3) 119.8 (130.0) 166.6 Recovery of (provision for) income taxes 19.7 (41.0) 50.4 (58.6) ---------------------------------------------------------------------------- Net (loss) earnings for the period $ (24.6) $ 78.8 $ (79.6) $ 108.0 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Basic (loss) earnings per common share $ (0.41) $ 1.25 $ (1.33) $ 1.71 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended June 30 Six months ended June 30 (millions) 2009 2008 2009 2008 ---------------------------------------------------------------------------- Retained earnings, beginning of the period $ 397.1 $ 412.5 $ 467.0 $ 411.7 Net (loss) earnings for the period (24.6) 78.8 (79.6) 108.0 Dividends on common shares (14.9) (28.5) (29.8) (56.9) ---------------------------------------------------------------------------- Retained earnings, end of the period $ 357.6 $ 462.8 $ 357.6 $ 462.8 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters Six months Ended June 30 Ended June 30 (millions) 2009 2008 2009 2008 ---------------------------------------------------------------------------- Net (loss) earnings for the period $ (24.6) $ 78.8 $ (79.6) $ 108.0 ---------------------------------------------------------------------------- Other comprehensive (loss) income Unrealized foreign exchange (losses) gains on translation of self- sustaining foreign operations (U.S. subsidiaries) (34.9) (2.6) (21.3) 9.6 Unrealized gains (losses) on items designated as net investment hedges 5.3 0.5 3.4 (1.6) Unrealized gains (losses) on items designated as cash flow hedges 1.3 (2.2) 0.5 (2.7) ---------------------------------------------------------------------------- Other comprehensive (loss) income (28.3) (4.3) (17.4) 5.3 ---------------------------------------------------------------------------- Comprehensive (loss) income $ (52.9) $ 74.5 $ (97.0) $ 113.3 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters Six months Ended June 30 Ended June 30 (millions) 2009 2008 2009 2008 ---------------------------------------------------------------------------- Accumulated net unrealized foreign currency translation gains and losses Balance, beginning of period $ 50.5 $ (33.5) $ 36.9 $ (45.7) Unrealized foreign exchange (losses) gains on translation of self-sustaining foreign operations (34.9) (2.6) (21.3) 9.6 ---------------------------------------------------------------------------- Balance, end of period 15.6 (36.1) 15.6 (36.1) ---------------------------------------------------------------------------- Accumulated net unrealized (loss) gain on cash flow and net investment hedges Balance, beginning of period (9.3) 4.8 (12.0) 7.4 Transitional adjustment (net of tax of $2.0) - - 5.4 - Unrealized gains (losses) on items designated as net investment hedges 5.3 0.5 3.4 (1.6) Unrealized gains (losses) on items designated as cash flow hedges 1.3 (2.2) 0.5 (2.7) ---------------------------------------------------------------------------- Balance, end of period (2.7) 3.1 (2.7) 3.1 ---------------------------------------------------------------------------- Accumulated other comprehensive income (loss) $ 12.9 $ (33.0) $ 12.9 $ (33.0) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONSOLIDATED CASH FLOW STATEMENTS (UNAUDITED) --------------------------------------------------------------------------- --------------------------------------------------------------------------- Quarters ended Six months June 30 ended June 30 (millions) 2009 2008 2009 2008 --------------------------------------------------------------------------- Operating activities Net (loss) earnings from continuing operations $ (24.6) $ 78.8 $ (79.6) $ 108.0 Depreciation and amortization 6.5 5.7 13.0 11.4 Future income taxes 1.9 1.2 4.0 1.3 (Gain) loss on sale of fixed assets (4.3) 0.1 (4.5) 0.1 Stock-based compensation 0.5 0.4 0.9 2.9 Pension expense (funding) (0.2) - (0.3) (0.1) Other 0.1 (0.7) 0.4 2.7 --------------------------------------------------------------------------- Cash (used in) from operating activities before non-cash working capital (20.1) 85.5 (66.1) 126.3 --------------------------------------------------------------------------- Changes in non-cash working capital items Accounts receivable 77.0 (62.4) 182.2 (133.7) Inventories - change in NRV reserve 56.2 - 150.7 - Inventories 99.1 (55.3) 114.1 (42.6) Accounts payable and accrued liabilities (115.4) 90.1 (172.2) 145.8 Current income taxes (16.2) 13.1 (84.9) 21.9 Other 0.8 (0.9) 1.9 0.2 --------------------------------------------------------------------------- Change in non-cash working capital 101.5 (15.4) 191.8 (8.4) --------------------------------------------------------------------------- Cash from operating activities 81.4 70.1 125.7 117.9 --------------------------------------------------------------------------- Financing activities Increase (decrease) in bank borrowing 7.0 - (17.9) - Issue of common shares - 1.5 - 2.5 Dividends on common shares (14.9) (28.5) (29.8) (56.9) Repayment of long-term debt (0.3) (0.2) (0.7) (0.4) Deferred financing (2.3) - (2.3) - --------------------------------------------------------------------------- Cash used in financing activities (10.5) (27.2) (50.7) (54.8) --------------------------------------------------------------------------- Investing activities Purchase of fixed assets (2.9) (6.1) (6.7) (10.4) Proceeds on sale of fixed assets 5.0 0.1 5.6 0.1 Other (6.0) (0.8) (4.8) (0.3) --------------------------------------------------------------------------- Cash used in investing activities (3.9) (6.8) (5.9) (10.6) --------------------------------------------------------------------------- Effect of exchange rate changes on cash and cash equivalents (0.4) (0.2) (0.3) 1.2 --------------------------------------------------------------------------- Increase in cash and cash equivalents 66.6 35.9 68.8 53.7 Cash and cash equivalents, beginning of the period 47.1 199.6 44.9 181.8 --------------------------------------------------------------------------- Cash and cash equivalents, end of the period $ 113.7 $ 235.5 $ 113.7 $ 235.5 --------------------------------------------------------------------------- ---------------------------------------------------------------------------
|