TORONTO, Nov. 7, 2013 /CNW/ - Russel Metals Inc. (TSX: RUS) today announced third quarter 2013 earnings of $19 million, or $0.31 per share on revenues of $797 million.  These results compare to earnings of $23 million or $0.37 per share on revenues of $713 million in the same quarter last year and the second quarter 2013 earnings of $0.33 per share.  The 2013 third quarter results include a pre-tax impairment charge of $5 million relating to our Thunder Bay Terminals operation and pre-tax income due to a reduction in the projected earnout payment associated with the Apex Distribution acquisition of $4 million.

Revenues in our metals service center segment slipped 4% to $367 million in the third quarter of 2013 compared to the 2012 third quarter due to lower pricing.  Demand at the metals service centers increased by 6% over the 2012 third quarter.  Gross margins at our metals service centers in the 2013 third quarter were $1 million lower than the same quarter last year reflecting lower steel prices.  The 2013 third quarter metals service center operating profits were $20 million compared to $23 million in the 2012 third quarter.

Revenues in our energy products segment for the third quarter of 2013 increased 42% or $104 million to $353 million compared to the 2012 third quarter, primarily due to the acquisition of Apex Distribution. On a same store basis, our energy products segment revenues were up 10%.  Operating profit was consistent with the 2012 third quarter as the strong results from Apex Distribution were offset by inventory charges at our other energy products operations.  Since 2009, there have been changes in the energy industry caused by significant increases in horizontal drilling and developments in fracking.  Conventional vertical drilling activity has remained low due to low natural gas prices.  Our operations have done a good job of shifting their traditional product mix used in conventional vertical wells to the higher grades of pipe and high strength couplings associated with the increased horizontal drilling.  The market for conventional gas drilling pipe products remains depressed and consequently our energy products segment sold slow moving inventory at a loss of $2 million and also recorded increased inventory reserves of $6 million.

Revenues in our steel distributors segment decreased by 6% to $74 million in the 2013 third quarter compared to the 2012 third quarter due to lower demand and pricing levels.  Operating profits for the third quarter of 2013 decreased to $5 million from $6 million for the 2012 third quarter.  The continued low steel pricing environment in North America has made our customers reluctant to take inventory positions.  Our steel distributors segment has correspondingly reduced their activity until there is evidence of sustained upward movement in pricing.

In the third quarter, we recorded an asset impairment charge of $5 million relating to our Thunder Bay Terminals operation due to revenue declines from lower coal and potash shipments in 2013.  We do not foresee any meaningful improvements in the future operating results at that operation.  Also in the third quarter, we recorded finance income related to a reduction of the expected earnout payment associated with the Apex Distribution acquisition of $4 million.  Softer results in 2013 and a delay in the closing of an anticipated acquisition reduced the fair value of this contingent liability.  For the 2013 year to date, this reduction in the anticipated earnout payment was offset by the imputed interest charge on the earnout.

Brian R. Hedges, President and CEO, commented "The business environment continues to be uneven, challenging and the future direction uncertain.  The steel market is showing a modest recovery in terms of volumes shipped but the steel mills continue to run at suboptimal levels.  The energy activity in the U.S. is down from last year based on rig counts however the number of wells remains at healthy levels.  Growth in North American tube mill capacity, which will come on stream over the next two years for both line pipe and OCTG, will lead to an oversupply of product based on current activity."

Mr. Hedges further commented, "Our 2013 results have been enhanced by the Apex Distribution acquisition in late 2012.  In the 2013 third quarter, we completed two small acquisitions adding four field stores to the Apex Distribution network.  We expect to complete a more substantial acquisition to add to the Apex Distribution operations in the next couple of months."

The Board of Directors approved a quarterly dividend of $0.35 per common share payable December 16, 2013 to shareholders of record as of November 27, 2013.

The Company will be holding an Investor Conference Call on Friday November 8, 2013 at 10:00 a.m. ET to review its 2013 third quarter results.  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, Friday November 22, 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, 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, M�gantic M�tal, M�taux Russel, M�taux Russel Produits Sp�cialis�s, 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.

Cautionary Statement on Forward-Looking Information

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 remains at current levels 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 stable and at similar levels with what we experienced at the end of the 2013 third quarter.  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.

SOURCE: Russel Metals Inc.