|
Russel Metals
Inc. (TSX:RUS) today announced first quarter 2012 earnings of $33 million, or
$0.55 per share on revenues of $803 million. These results matched the
earnings of $33 million or $0.55 per share on revenues of $658 million in the
same quarter last year and are above the fourth quarter 2011 earnings of
$0.47 per share.
Revenues in our metals service center segment increased 18% to $428 million
in the first quarter of 2012 compared to the 2011 first quarter on stronger
demand levels. Our gross margins improved from the 2011 fourth quarter and
operating profit as a percentage of revenues improved to 7.5% in the 2012
first quarter from 5.7% in the fourth quarter last year.
Brian R. Hedges, President and CEO, commented "Operating profit for the
first quarter in our metals service center segment was generated by strong
demand levels unlike the comparable first quarter of 2011, which experienced
inventory holding gains. The growth in the first quarter reflects a continued
healthy recovery in the industrial segment of the North American economy. In
Canada, the western provinces were buoyed by high oil prices, which led to a
stronger recovery in the west compared to the eastern provinces."
Revenues in our energy tubular products segment for the first quarter of 2012
increased 23% to $275 million compared to the 2011 first quarter. Increased
volume as a result of large linepipe orders
improved the operating profits to $19 million. These large orders have lower
gross margin percentages and consequently our operating profits as a
percentage of revenues declined to 6.9% from 7.9% reported in the first
quarter of 2011. The second quarter is historically the weakest quarter for
this segment as spring breakup impacts Canadian shipments.
Strong demand was also experienced in our steel distributors segment, which
had a 42% increase in 2012 first quarter revenues to $99 million from the
2011 first quarter. Operating profits for the first quarter of 2012 increased
by $1 million to $10 million from the 2011 first quarter.
Mr. Hedges further commented, "Both of our operations in this segment
positioned themselves well during the fourth quarter of 2011 which generated
strong operating profits of 9.8% in the first quarter of 2012. This is a
strong performance in a market experiencing tighter gross profit margins due
to softening domestic steel prices."
During April 2012, the market for Canadian denominated high yield bonds
strengthened due to a shortage of issuers and we were able to take advantage
of this window to strengthen our capital structure. We issued $300 million of
Canadian dollar ten year senior notes at a 6% interest rate.
Marion E. Britton, Vice President and Chief Financial Officer stated,
"We are extremely pleased with our capital structure and the timing
could not have been better as the number of acquisition opportunities in the
marketplace has escalated in 2012. Our recently announced purchase of Siemens
Laserworks allows us to increase our plate processing
capabilities by acquiring a leading laser facility in the prairie
region."
The Board of Directors approved an increase of 17% in our quarterly dividend
to $0.35 per common share payable June 15, 2012 to shareholders of record as
of May 30, 2012.
The Company will be holding an Investor Conference Call on Friday, May 4,
2012 at 9:00 a.m. ET to review its 2012 first 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, May 18, 2012. You will be required to enter pass code 5331872 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, 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 will remain 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 at similar levels with what we experienced during the
first quarter 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.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended March 31 (in millions of Canadian dollars, except per share 2012 2011 data) ---------------------------------------------------------------------------- Revenues $ 802.9 $ 657.7 Cost of materials 659.0 519.3 Employee expenses 57.9 54.6 Other operating expenses 32.9 29.6 ---------------------------------------------------------------------------- Earnings before interest, finance and provision for 53.1 54.2 income taxes Interest expense 6.7 7.1 Interest income (0.4) (0.6) Other finance expense 0.4 0.4 ---------------------------------------------------------------------------- Earnings before provision for income taxes 46.4 47.3 Provision for income taxes 13.3 14.3 ---------------------------------------------------------------------------- Net earnings for the period $ 33.1 $ 33.0 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Basic earnings per common share $ 0.55 $ 0.55 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Diluted earnings per common share $ 0.53 $ 0.53 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended March 31 (in millions of Canadian dollars) 2012 2011 ---------------------------------------------------------------------------- Net earnings for the period $ 33.1 $ 33.0 ---------------------------------------------------------------------------- Other comprehensive income (loss), net of tax Unrealized foreign exchange losses on translation (6.7) (8.0) of foreign operations Unrealized gains on items designated as net 2.1 3.3 investment hedges Losses on derivatives designated as cash flow 0.3 0.3 hedges transferred to net earnings in the current period Actuarial losses on pension and similar obligations (2.2) - ---------------------------------------------------------------------------- Other comprehensive loss (6.5) (4.4) ---------------------------------------------------------------------------- Total comprehensive income $ 26.6 $ 28.6 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- March 31 December 31 (in millions of Canadian dollars) 2012 2011 ---------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents $ 160.3 $ 270.7 Accounts receivable 451.6 382.4 Inventories 692.1 645.6 Prepaid expenses 4.4 4.6 Income taxes receivable 1.4 0.5 ---------------------------------------------------------------------------- 1,309.8 1,303.8 Property, Plant and Equipment 206.9 201.3 Deferred Income Tax Assets 5.0 5.3 Other Assets 3.1 3.3 Goodwill and Intangibles 24.3 24.7 ---------------------------------------------------------------------------- $ 1,549.1 $ 1,538.4 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities $ 374.7 $ 362.8 Income taxes payable 4.6 17.4 Current portion long-term debt 1.3 1.3 ---------------------------------------------------------------------------- 380.6 381.5 Long-Term Debt 294.6 296.5 Pensions and Benefits 36.1 33.3 Deferred Income Tax Liabilities 0.6 0.4 Provisions 5.3 5.4 Other Non-Current Liabilities 2.9 1.9 ---------------------------------------------------------------------------- 720.1 719.0 ---------------------------------------------------------------------------- Shareholders' Equity Common shares 486.0 485.4 Retained earnings 321.8 306.7 Contributed surplus 16.1 15.7 Accumulated other comprehensive loss (23.6) (17.1) Equity component of convertible debenture 28.7 28.7 ---------------------------------------------------------------------------- 829.0 819.4 ---------------------------------------------------------------------------- $ 1,549.1 $ 1,538.4 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOW (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended March 31 (in millions of Canadian dollars) 2012 2011 ---------------------------------------------------------------------------- Operating activities Net earnings for the period $ 33.1 $ 33.0 Depreciation and amortization 5.7 6.0 Deferred income taxes 0.6 (0.5) Gain on sale of property, plant and equipment - (0.1) Stock-based compensation 0.5 0.9 Difference between pension expense and amount (0.2) (0.6) funded Debt accretion, amortization and other 1.4 1.3 ---------------------------------------------------------------------------- Cash from operating activities before non-cash 41.1 40.0 working capital ---------------------------------------------------------------------------- Changes in non-cash working capital items Accounts receivable (71.0) (81.5) Inventories (49.7) (8.2) Accounts payable and accrued liabilities 13.5 35.3 Income tax receivable/payable (11.5) (3.3) Other 0.1 (2.0) ---------------------------------------------------------------------------- Change in non-cash working capital (118.6) (59.7) ---------------------------------------------------------------------------- Cash used in operating activities (77.5) (19.7) ---------------------------------------------------------------------------- Financing activities Issue of common shares 0.5 0.9 Dividends on common shares (18.0) (16.5) Repayment of long-term debt (0.3) (0.3) ---------------------------------------------------------------------------- Cash used in financing activities (17.8) (15.9) ---------------------------------------------------------------------------- Investing activities Purchase of property, plant and equipment (11.9) (4.4) Proceeds on sale of property, plant and equipment - 0.7 ---------------------------------------------------------------------------- Cash used in investing activities (11.9) (3.7) ---------------------------------------------------------------------------- Effect of exchange rates on cash and cash (3.2) 1.7 equivalents ---------------------------------------------------------------------------- Decrease in cash and cash equivalents (110.4) (37.6) Cash and cash equivalents, beginning of the period 270.7 323.7 ---------------------------------------------------------------------------- Cash and cash equivalents, end of the period $ 160.3 $ 286.1 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Supplemental cash flow information: Income taxes paid $ 26.4 $ 18.3 Interest paid (net) $ 5.0 $ 12.2 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) --------------------------------------------------------------------------- --------------------------------------------------------------------------- (in millions of Common Retained Contri- Accumulated Equity Total Canadian Shares Earnings buted Other Component dollars) Surplus Comprehensive of Loss Convertible Debentures Balance, December $485.4 $ 306.7 $15.7 $ (17.1) $ 28.7 $819.4 31, 2011 Payment of - (18.0) - - - (18.0) dividends Net earnings for - 33.1 - - - 33.1 the period Other - - - (6.5) - (6.5) comprehensive loss for the period Recognition of - 0.4 - - 0.4 stock-based compensation Stock options 0.6 - - - - 0.6 exercised ---------------------------------------------------------------------------- Balance, March $486.0 $ 321.8 $ 16.1 $ (23.6) $ 28.7 $829.0 31, 2012 --------------------------------------------------------------------------- --------------------------------------------------------------------------- (in millions of Common Retained Contri- Accumulated Equity Total Canadian Shares Earnings buted Other Component dollars) Surplus Comprehensive of Loss Convertible Debentures ---------------------------------------------------------------------------- Balance, December $483.7 $ 257.5 $ 13.9 $ (11.0)$ 28.7 $772.8 31, 2010 Payment of - (16.5) - - - (16.5) dividends Net earnings for - 33.0 - - - 33.0 the period Other - - - (4.4) - (4.4) comprehensive loss for the period Recognition of - - 0.7 - - 0.7 stock-based compensation Stock options 1.2 - - - - 1.2 exercised ---------------------------------------------------------------------------- Balance, March $484.9 $ 274.0 $ 14.6$ (15.4)$ 28.7 $786.8 31, 2011 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
|