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Russel Metals Inc. (TSX:RUS) today announced fourth
quarter 2012 earnings of $20 million, or $0.34 per share on revenues of $766
million. These results compare with our 2011 fourth quarter earnings per
share of $0.47 on revenues of $712 million.
Our fourth quarter earnings include the operating income of Apex Distribution
which contributed $6 million in operating income from the date of its
acquisition on November 8, 2012. This positive contribution to our energy
products segment earnings was muted by the inventory write-downs of $4
million taken in the period by certain of our other energy operations due to
price declines in pipe products. The operating earnings for the segment
improved to $18 million in the quarter from $17 million in the fourth quarter
of 2011.
Operating profits in the fourth quarter of 2012 for our metals service
centers were $17 million down from $21 million in the fourth quarter of 2011.
Results were impacted by an industry-wide drop in volumes in November and
December beyond expected seasonality. Gross margins improved slightly in the
2012 fourth quarter as a result of steel mills attempting to raise prices. In
September 2012, the unionized employees at our Boucherville, Quebec operation
took strike action and this work stoppage was resolved on February 7, 2013.
The strike has reduced our operating income by approximately $2 million in
the quarter.
Our steel distributor segment fourth quarter operating profits decreased to
$7 million from $11 million in the fourth quarter of 2011 due to soft demand
and tightening margins. Gross margins improved slightly to 13.2% from 13.0%
in the 2012 third quarter consistent with our metals service center
operations.
Net earnings for the fourth quarter were also negatively impacted by $2
million due to non-cash charges, including the amortization of intangibles,
and transaction costs related to the Apex Distribution acquisition.
For the year, our earnings were $99 million or $1.64 per share on revenues of
$3.0 billion versus 2011 earnings of $118 million or $1.97 per share on
revenues of $2.7 billion.
Brian R. Hedges, President and CEO, said: "2012 was an exciting year as
we made three acquisitions, highlighted by the purchase of Apex Distribution.
Through these acquisitions we believe that we have strengthened the Company's
ability to generate earnings over the cycle and we are well positioned to
reap the benefits in 2013 and beyond. During the fourth quarter we
experienced a weakness in demand in all segments; however, our metals service
centers outperformed the industry shipment volumes reported by the Metals
Service Center Institute. The stabilization of gross margins in the fourth
quarter and the recent upward price movement by the mills should lead to
higher margins in 2013. We look forward to the expected materialization of a
full year's benefits relating to the acquisitions we made in 2012."
The Board of Directors approved a quarterly dividend of $0.35 per common
share payable March 15, 2013 to shareholders of record as of February 28,
2013.
The Company will be holding an Investor Conference Call on Wednesday February
13, 2013 at 10:00 a.m. ET to review its fourth quarter and annual results for
2012. The dial-in telephone numbers for the call are 416-340-2216 (Toronto
and International callers) and 1-866-226-1792 (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 905-694-9451 (Toronto and
International callers) and 1-800-408-3053 (U.S. and Canada) until midnight,
Wednesday February 27, 2013. You will be required to enter pass code 7908038
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 metals distribution segments: metals
service centers, energy products and steel distributors, under various names
including Russel Metals, A.J. Forsyth, Acier Leroux, Acier Loubier, Acier
Richler, Alberta Industrial Metals, Apex Distribution, Apex Remington, 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,
Norton Metals, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals
Williams Bahcall, Siemens Laserworks, Spartan Energy Tubulars, 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 are stable and these conditions
will continue in the foreseeable future; and oil and gas prices, the price of
steel and the value of the Canadian dollar relative to the U.S. dollar will
be at similar levels with what we experienced at the end of 2012. 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 and does not intend
to update any forward-looking statement other than required by law.
CONSOLIDATED STATEMENTS OF EARNINGS ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended Years ended December 31 December 31 (in millions of Canadian dollars, 2012 2011 2012 2011 except per share data) ---------------------------------------------------------------------------- Revenues $ 765.9 $ 711.6 $ 3,000.1 $ 2,693.3 Cost of materials 640.1 585.8 2,476.8 2,168.0 Employee expenses 55.6 49.7 215.3 202.3 Other operating expenses 33.8 29.8 131.8 125.5 ---------------------------------------------------------------------------- Earnings before interest, finance and income taxes 36.4 46.3 176.2 197.5 Interest expense 9.1 6.8 34.2 27.5 Interest income (0.2) (0.5) (1.7) (2.0) Other finance expense 0.8 0.9 5.6 2.6 ---------------------------------------------------------------------------- Earnings before income taxes 26.7 39.1 138.1 169.4 Provision for income taxes 6.3 10.6 39.3 51.1 ---------------------------------------------------------------------------- Net earnings for the period $ 20.4 $ 28.5 $ 98.8 $ 118.3 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Basic earnings per common share $ 0.34 $ 0.47 $ 1.64 $ 1.97 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Diluted earnings per common share $ 0.34 $ 0.46 $ 1.64 $ 1.92 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended Years ended December 31 December 31 (in millions of Canadian dollars) 2012 2011 2012 2011 ---------------------------------------------------------------------------- Net earnings for the period $ 20.4 $ 28.5 $ 98.8 $ 118.3 ---------------------------------------------------------------------------- Other comprehensive income (loss) net of tax Unrealized foreign exchange (losses) gains on translation of foreign operations 4.1 (7.8) (8.5) 9.1 Unrealized (losses) gains on items designated as net investment hedges - 2.6 (0.9) (2.5) Losses on derivatives designated as cash flow hedges transferred to net earnings during the year - 0.3 2.3 1.1 Actuarial (losses) gains on pension and similar obligations 3.1 (13.8) (6.0) (13.8) ---------------------------------------------------------------------------- Other comprehensive income (loss) 7.2 (18.7) (13.1) (6.1) ---------------------------------------------------------------------------- Total comprehensive income $ 27.6 $ 9.8 $ 85.7 $ 112.2 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- December 31 December 31 (in millions of Canadian dollars) 2012 2011 ---------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents $ 115.1 $ 270.7 Accounts receivable 456.2 382.4 Inventories 764.0 645.6 Prepaid expenses 7.1 4.6 Income taxes receivable 7.7 0.5 ---------------------------------------------------------------------------- 1,350.1 1,303.8 Property, Plant and Equipment 241.8 201.3 Deferred Income Tax Assets 4.6 5.3 Other Assets 6.5 3.3 Goodwill and Intangibles 192.1 24.7 ---------------------------------------------------------------------------- $ 1,795.1 $ 1,538.4 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Bank indebtedness $ 14.3 $ - Accounts payable and accrued liabilities 396.5 362.8 Income taxes payable - 17.4 Current portion long-term debt 2.2 1.3 ---------------------------------------------------------------------------- 413.0 381.5 Long-Term Debt 453.6 296.5 Pensions and Benefits 38.7 33.3 Deferred Income Tax Liabilities 20.5 0.4 Provisions and Other Non-Current Liabilities 39.9 7.3 ---------------------------------------------------------------------------- 965.7 719.0 ---------------------------------------------------------------------------- Shareholders' Equity Common shares 487.9 485.4 Retained earnings 324.3 306.7 Contributed surplus 17.3 15.7 Accumulated other comprehensive loss (30.2) (17.1) Equity component of convertible debenture 28.7 28.7 ---------------------------------------------------------------------------- Total Shareholders' Equity Attributable to Equity Holders 828.0 819.4 Non-controlling interest 1.4 - ---------------------------------------------------------------------------- Total Shareholders' Equity 829.4 819.4 ---------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $ 1,795.1 $ 1,538.4 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASHFLOW ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended Years ended December 31 December 31 (in millions of Canadian dollars) 2012 2011 2012 2011 ---------------------------------------------------------------------------- Operating activities Net earnings for the period $ 20.4 $ 28.5 $ 98.8 $ 118.3 Depreciation and amortization 7.4 5.8 25.5 23.5 Deferred income taxes 0.3 (0.3) 1.3 (0.2) (Gain) loss on sale of property, plant and equipment (1.2) 0.1 (1.2) 0.1 Stock-based compensation 0.6 0.5 2.1 2.1 Difference between pension expense and amount funded (1.4) (1.3) (3.1) (2.6) Debt accretion, amortization and other 1.7 1.5 9.7 6.4 ---------------------------------------------------------------------------- Cash from operating activities before non-cash working capital 27.8 34.8 133.1 147.6 ---------------------------------------------------------------------------- Changes in non-cash working capital items Accounts receivable 46.8 11.7 25.4 (78.6) Inventories 48.4 2.0 (28.5) (97.5) Accounts payable and accrued liabilities (17.4) 23.5 (34.3) 79.0 Income taxes receivable/ payable 0.1 3.4 (19.6) 7.2 Other (0.6) (0.6) (0.1) (1.5) ---------------------------------------------------------------------------- Change in non-cash working capital 77.3 40.0 (57.1) (91.4) ---------------------------------------------------------------------------- Cash from operating activities 105.1 74.8 76.0 56.2 ---------------------------------------------------------------------------- Financing activities Increase in bank borrowings 14.6 - 14.6 - Issue of common shares 0.6 0.1 2.0 1.4 Dividends on common shares (21.1) (18.1) (81.2) (69.1) Issuance of long-term debt - - 300.0 - Repayment of long-term debt (0.3) (3.4) (142.4) (29.3) Deferred financing - (0.1) (7.0) (0.6) ---------------------------------------------------------------------------- Cash from (used in) financing activities (6.2) (21.5) 86.0 (97.6) ---------------------------------------------------------------------------- Investing activities Purchase of property, plant and equipment (7.3) (5.2) (33.7) (18.1) Proceeds on sale of property, plant and equipment 1.8 0.1 1.8 0.8 Purchase of business (226.4) - (281.3) - ---------------------------------------------------------------------------- Cash used in investing activities (231.9) (5.1) (313.2) (17.3) ---------------------------------------------------------------------------- Effect of exchange rates on cash and cash equivalents 1.0 (1.4) (4.4) 5.7 ---------------------------------------------------------------------------- Increase (Decrease) in cash and cash equivalents (132.0) 46.8 (155.6) (53.0) Cash and cash equivalents, beginning of the period 247.1 223.9 270.7 323.7 ---------------------------------------------------------------------------- Cash and cash equivalents, end of the year $ 115.1 $ 270.7 $ 115.1 $ 270.7 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Supplemental cash flow information: Income taxes paid $ 5.6 $ 7.9 $ 60.0 $ 45.8 Interest paid (net) $ 16.1 $ 0.5 $ 31.2 $ 25.5 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (in millions of Canadian Common Retained Contributed Accumulated dollars) Shares Earnings Surplus Other Comprehensive Loss ---------------------------------------------------------------------------- Balance, January 1, 2012 $ 485.4 $ 306.7 $ 15.7 $ (17.1) Acquired during the year - - - - Payment of dividends - (81.2) - - Net earnings for the year - 98.8 - - Other comprehensive loss for the year - - - (13.1) Recognition of stock- based compensation - - 1.6 - Stock options exercised 2.5 - - - ---------------------------------------------------------------------------- Balance, December 31, 2012 $ 487.9 $ 324.3 $ 17.3 $ (30.2) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Balance, January 1, 2011 $ 483.7 $ 257.5 $ 13.9 $ (11.0) Payment of dividends - (69.1) - - Net earnings for the year - 118.3 - - Other comprehensive loss for the year - - - (6.1) Recognition of stock- based compensation - - 1.8 - Stock options exercised 1.7 - - - ---------------------------------------------------------------------------- Balance, December 31, 2011 $ 485.4 $ 306.7 $ 15.7 $ (17.1) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ------------------------------------------------------------------ ------------------------------------------------------------------ (in millions of Canadian Equity Non Controlling Total dollars) Component of Interest Convertible Debentures ------------------------------------------------------------------ Balance, January 1, 2012$ 28.7 $ - $ 819.4 Acquired during the year - 1.4 1.4 Payment of dividends - - (81.2) Net earnings for the year - - 98.8 Other comprehensive loss for the year - - (13.1) Recognition of stock- based compensation - - 1.6 Stock options exercised - - 2.5 ------------------------------------------------------------------ Balance, December 31, 2012 $ 28.7 $ 1.4 $ 829.4 ------------------------------------------------------------------ ------------------------------------------------------------------ Balance, January 1, 2011$ 28.7 $ - $ 772.8 Payment of dividends - - (69.1) Net earnings for the year - - 118.3 Other comprehensive loss for the year - - (6.1) Recognition of stock- based compensation - - 1.8 Stock options exercised - - 1.7 ------------------------------------------------------------------ Balance, December 31, 2011 $ 28.7 $ - $ 819.4 ------------------------------------------------------------------ ------------------------------------------------------------------
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