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TORONTO, ONTARIO--(Marketwire -
Nov. 3, 2011) - Russel Metals Inc. (TSX:RUS) today announced third quarter
2011 earnings of $26 million, or $0.43 per share on revenues of $705 million.
Our comparative third quarter 2010 results were earnings of $8 million or
$0.14 per share on revenues of $583 million. Net earnings for the nine months
ended September 30, 2011 more than doubled to $90 million, or $1.50 per share
on revenues of $2.0 billion compared to net earnings of $42 million or $0.71
per share on revenues of $1.6 billion for the same period in 2010.
Brian R. Hedges, President and CEO, stated "Currently, demand is holding
up and our profitability is healthy. Gross margin pressure due to lower steel
prices will continue but at manageable levels, which is consistent with what
our industry experiences over the cycle. We have less visibility on where the
market is trending than usual, so we continue to keep inventory levels lean
and cautiously evaluate growth opportunities."
Revenues in our metals service centers increased 24% to $390 million for the
third quarter of 2011 compared to the third quarter of 2010. Operating
profits in our metals service centers of $24 million significantly exceeded
our 2010 operating profits of $14 million. Operating profits improved due to
stronger demand and higher steel prices compared to the same period in 2010.
Revenues in the energy tubular product segment increased 19% to $223 million
for the third quarter of 2011 compared to the 2010 third quarter. Increased
volumes at all operations reflect drilling activity in both Canada and the
U.S. above levels experienced in the third quarter of 2010. The segment
reported operating profits of $15 million for the third quarter of 2011, 5%
greater than the 2010 third quarter.
Our steel distributor segment had a 19% increase in revenues for the third
quarter of 2011 to $90 million. Operating profits increased 59% to $8
million, for the third quarter of 2011 over the 2010 third quarter, a result
of stronger margins due to rising prices and volume increases.
The Board of Directors approved a quarterly dividend of $0.30 per common
share payable December 15, 2011 to shareholders of record as of November 29,
2011.
The Company will be holding an Investor Conference Call on Friday November 4,
2011 at 9:00 a.m. ET to review its third quarter 2011 results. The dial-in
telephone numbers for the call are 416-340-8530 (Toronto and International
callers) and 1-877-240-9772 (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,
Friday November 18, 2011. You will be required to enter pass code 5650285 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 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, Norton Metals, Pioneer Pipe, Russel Metals
Specialty Products, Russel Metals Williams Bahcall, 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 have stabilized and these
conditions will continue to slowly improve 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 the third quarter of 2011. 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.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended Nine months ended September 30 September 30 (in millions of Canadian dollars, except per share data) 2011 2010 2011 2010 ---------------------------------------------------------------------------- Revenues $ 705.4 $ 582.5 $ 1,981.7 $ 1,615.9 Cost of materials 578.0 476.0 1,582.2 1,305.3 Employee expenses 49.6 45.6 152.6 132.4 Other operating expenses 32.9 30.9 95.7 87.2 ---------------------------------------------------------------------------- Earnings before the following 44.9 30.0 151.2 91.0 Interest expense 6.7 7.9 20.7 22.1 Interest income (0.4) (0.5) (1.5) (1.1) Finance expense convertible debentures - 8.2 - 9.3 Other finance expense (income), net 0.4 - 1.7 (1.5) ---------------------------------------------------------------------------- Earnings before income taxes 38.2 14.4 130.3 62.2 Provision for income taxes (12.5) (6.2) (40.5) (20.1) ---------------------------------------------------------------------------- Net earnings for the period $ 25.7 $ 8.2 $ 89.8 $ 42.1 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Basic earnings per common share $ 0.43 $ 0.14 $ 1.50 $ 0.71 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Diluted earnings per common share $ 0.43 $ 0.14 $ 1.46 $ 0.71 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended Nine months ended September 30 September 30 (in millions of Canadian dollars) 2011 2010 2011 2010 ---------------------------------------------------------------------------- Net earnings for the period $ 25.7 $ 8.2 $ 89.8 $ 42.1 ---------------------------------------------------------------------------- Other comprehensive income (loss) Unrealized foreign exchange gains (losses) on translation of foreign operations 27.3 (10.2) 16.9 (5.4) Unrealized (losses) gains on items designated as net investment hedges (9.4) 4.4 (5.1) 3.6 Unrealized losses on items designated as cash flow hedges - - - (2.5) Gains (losses) on derivatives designated as cash flow hedges transferred to net income in the period 0.2 0.3 0.8 (0.1) ---------------------------------------------------------------------------- Other comprehensive income (loss) 18.1 (5.5) 12.6 (4.4) ---------------------------------------------------------------------------- Total comprehensive income $ 43.8 $ 2.7 $ 102.4 $ 37.7 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- September 30 December 31 (in millions of Canadian dollars) 2011 2010 ---------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents $ 223.9 $ 323.7 Accounts receivable 396.4 301.4 Inventories 652.8 544.1 Prepaid expenses 3.9 3.0 Income taxes receivable 1.8 2.8 ---------------------------------------------------------------------------- 1,278.8 1,175.0 Property, Plant and Equipment 202.7 205.2 Deferred Income Tax Assets 4.8 7.1 Pensions and Benefits 0.7 0.7 Other Assets 3.4 3.8 Goodwill and Intangibles 25.2 24.9 ---------------------------------------------------------------------------- $ 1,515.6 $ 1,416.7 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities $ 341.1 $ 272.8 Income taxes payable 15.2 14.4 Current portion long-term debt 1.3 1.2 ---------------------------------------------------------------------------- 357.6 288.4 Long-Term Debt 302.0 318.5 Pensions and Benefits 16.7 17.9 Provision 5.4 5.6 Deferred Income Tax Liabilities 4.6 7.0 Other Non-Current Liabilities 2.1 6.5 ---------------------------------------------------------------------------- 688.4 643.9 ---------------------------------------------------------------------------- Shareholders' Equity Common shares 485.3 483.7 Retained earnings 296.3 257.5 Contributed surplus 15.3 13.9 Accumulated other comprehensive income (loss) 1.6 (11.0) Equity component of convertible debenture 28.7 28.7 ---------------------------------------------------------------------------- 827.2 772.8 ---------------------------------------------------------------------------- $ 1,515.6 $ 1,416.7 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOW (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended Nine months ended September 30 September 30 (in millions of Canadian dollars) 2011 2010 2011 2010 ---------------------------------------------------------------------------- Operating activities Net earnings for the period $ 25.7 $ 8.2 $ 89.8 $ 42.1 Depreciation and amortization 5.8 6.3 17.7 18.9 Deferred income taxes 1.3 0.3 0.1 2.1 Loss (gain) on investment and sale of property, plant and equipment 0.1 1.4 - (0.1) Stock-based compensation 0.3 0.4 1.6 1.1 Loss on derivatives - 8.6 - 10.0 Difference between pension expense and amount funded (0.3) (0.1) (1.3) (0.3) Debt accretion, amortization and other 1.5 1.3 4.9 2.8 ---------------------------------------------------------------------------- Cash from operating activities before non-cash working capital 34.4 26.4 112.8 76.6 ---------------------------------------------------------------------------- Changes in non-cash working capital items Accounts receivable (41.9) (37.7) (90.3) (98.5) Inventories (5.6) (12.3) (99.5) (31.0) Accounts payable and accrued liabilities 28.7 33.5 55.5 49.2 Current income taxes receivable/ payable 4.8 54.7 3.8 58.3 Other 1.6 1.1 (0.9) 0.9 ---------------------------------------------------------------------------- Change in non-cash working capital (12.4) 39.3 (131.4) (21.1) ---------------------------------------------------------------------------- Cash from (used in) operating activities 22.0 65.7 (18.6) 55.5 ---------------------------------------------------------------------------- Financing activities Issue of common shares 0.1 0.1 1.3 0.1 Dividends on common shares (18.0) (15.0) (51.0) (44.8) Repayment of long-term debt (8.8) (0.3) (25.9) (8.8) Deferred financing - - (0.5) (0.7) Swap termination - - - (35.2) ---------------------------------------------------------------------------- Cash used in financing activities (26.7) (15.2) (76.1) (89.4) ---------------------------------------------------------------------------- Investing activities Purchase of property, plant and equipment (3.3) (4.7) (12.9) (8.1) Proceeds on sale of property, plant and equipment - 0.2 0.7 0.5 Proceeds on sale of investment - - - 6.0 ---------------------------------------------------------------------------- Cash used in investing activities (3.3) (4.5) (12.2) (1.6) ---------------------------------------------------------------------------- Effect of exchange rates on cash and cash equivalents 7.2 (12.0) 7.1 (6.3) ---------------------------------------------------------------------------- (Decrease) increase in cash and cash equivalents (0.8) 34.0 (99.8) (41.8) Cash and cash equivalents, beginning of the period 224.7 283.8 323.7 359.6 ---------------------------------------------------------------------------- Cash and cash equivalents, end of the period $ 223.9 $ 317.8 $ 223.9 $ 317.8 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Supplemental cash flow information: Income taxes paid $ 6.7 $ 39.4 $ 37.9 $ 34.4 Interest paid $ 12.3 $ 12.7 $ 25.0 $ 26.2 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Equity Component Accumulated (in millions of Other of Canadian Common Contributed Retained Convertible Comprehensive dollars) Shares Surplus Earnings Debentures Income Total ---------------------------------------------------------------------------- Balance, January 1, 2011 $483.7 $ 13.9 $ 257.5 $ 28.7 $ (11.0) $772.8 Payment of dividends - - (51.0) - - (51.0) Net earnings for the period - - 89.8 - - 89.8 Other comprehensive income for the period - - - - 12.6 12.6 Recognition of stock- based compensation - 1.4 - - - 1.4 Stock options exercised 1.6 - - - - 1.6 ---------------------------------------------------------------------------- Balance, September 30, 2011 $485.3 $ 15.3 $ 296.3 $ 28.7 $ 1.6 $827.2 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Equity Component Accumulated (in millions of Other of Canadian Common Contributed Retained Convertible Comprehensive dollars) Shares Surplus Earnings Debentures Income Total ---------------------------------------------------------------------------- Balance, January 1, 2010 $478.9 $ 13.2 $ 259.9 $ - $ (1.1) $750.9 Payment of dividends - - (44.8) - - (44.8) Net earnings for the period - - 42.1 - - 42.1 Other comprehensive income for the period - - - - (4.4) (4.4) Recognition of stock- based compensation 0.2 1.0 - - - 1.2 --------------------------------------------------------------------------- Balance, September 30, 2010 $479.1 $ 14.2 $ 257.2 $ - $ (5.5) $745.0 --------------------------------------------------------------------------- ---------------------------------------------------------------------------
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