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Russel
Metals Inc. (TSX:RUS) today announced improved
second quarter 2011 earnings of $31 million, or $0.52 per share on revenues
of $619 million. Our comparative second quarter 2010 results were
earnings of $25 million or $0.41 per share on revenues of $507 million.
Net earnings for the six months ended June 30, 2011 improved by 89% to
$64 million, or $1.07 per share on revenues of $1.3 billion compared to
net earnings of $34 million or $0.57 per share on revenues of $1.0
billion for the same period in 2010.
Brian R. Hedges, President and CEO, stated, "In light of some
softness in steel pricing, we are very pleased with the second quarter
results. Margins in the quarter held up very well in the metals service
centers and steel distributors. Results in our energy segment were
lower than expected due to the extremely wet conditions in Western
Canada, which restricted drilling activities. We expect this segment to
have a pick up in the third quarter."
Revenues in our metals service centers increased 24% to $388 million
for the second quarter of 2011 compared to the second quarter of 2010.
Operating profits in our metals service centers of $33 million
significantly exceeded our 2010 operating profits of $19 million.
Operating profits were down slightly from the 2011 first quarter,
however, due to declining steel prices and lower margins.
Revenues in the energy tubular product segment increased 12% to $145
million for the second quarter of 2011 compared to the 2010 second
quarter. This segment reported operating profits of $11 million for the
second quarter of 2011, equalling those of
2010. An unusually wet spring in the Canadian oil country delayed the
start of the spring drilling season adversely affecting our operations
servicing this sector. Our other operating units in this segment
experienced improved volumes.
Our steel distributor segment had a 35% increase in revenues for the
second quarter of 2011 to $83 million. Operating profits increased 55%
to $10 million, for the second quarter of 2011 over the 2010 second
quarter, a result of stronger margins due to rising prices and volume
increases.
"During the quarter, we renewed and extended our syndicated bank
facility to 2014 at favourable rates. The
extension of our bank facility to a three-year term, positions us to
continue to capitalize on growth opportunities during that
period," commented Marion Britton, Vice President and CFO.
The Board of Directors approved a 9% increase in our quarterly dividend
to $0.30 per common share payable September 15, 2011 to shareholders of
record as of August 29, 2011.
The Company will be holding an Investor Conference Call on Thursday August
4, 2011 at 9:00 a.m. ET to review its second 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, Thursday August 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 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 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 second 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 Six months ended June 30 June 30 (in millions of Canadian dollars, except per share data) 2011 2010 2011 2010 ---------------------------------------------------------------------------- Revenues $ 618.6 $ 506.6 $1,276.3 $1,033.4 Cost of materials 484.9 398.7 1,004.2 829.3 Employee expenses 48.4 43.9 103.0 86.8 Other operating expenses 33.2 28.9 62.8 56.3 ---------------------------------------------------------------------------- Earnings before the following 52.1 35.1 106.3 61.0 Interest expense 6.9 7.0 14.0 14.2 Interest income (0.5) (0.3) (1.1) (0.6) Finance expense (income) convertible - (5.8) - 1.1 Other finance expense (income), net 0.9 - 1.3 (1.5) ---------------------------------------------------------------------------- Earnings before income taxes 44.8 34.2 92.1 47.8 Provision for income taxes (13.7) (9.4) (28.0) (13.9) ---------------------------------------------------------------------------- Net earnings for the period $ 31.1 $ 24.8 $ 64.1 $ 33.9 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Basic earnings per common share $ 0.52 $ 0.41 $ 1.07 $ 0.57 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Diluted earnings per common share $ 0.50 $ 0.41 $ 1.03 $ 0.57 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended Six months ended June 30 June 30 (in millions of Canadian dollars) 2011 2010 2011 2010 ---------------------------------------------------------------------------- Net earnings for the period $ 31.1 $ 24.8 $ 64.1 $ 33.9 ---------------------------------------------------------------------------- Other comprehensive income (loss) Unrealized foreign exchange (losses) gains on translation of foreign operations (2.4) 15.0 (10.4) 4.8 Unrealized gains (losses) on items designated as net investment hedges 1.0 (6.4) 4.3 (0.8) 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 0.3 0.3 0.6 (0.4) ---------------------------------------------------------------------------- Other comprehensive (loss) income (1.1) 8.9 (5.5) 1.1 ---------------------------------------------------------------------------- Total comprehensive income $ 30.0 $ 33.7 $ 58.6 $ 35.0 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- June 30 December 31 (in millions of Canadian dollars) 2011 2010 ---------------------------------------------------------------------------- ASSETS Current Cash and cash equivalents $ 224.7 $ 323.7 Accounts receivable 347.7 301.4 Inventories 632.4 544.1 Prepaid expenses 5.4 3.0 Income taxes receivable 0.8 2.8 ---------------------------------------------------------------------------- 1,211.0 1,175.0 Property, Plant and Equipment 201.7 205.2 Deferred Income Tax Assets 7.4 7.1 Pensions and Benefits 0.7 0.7 Other Assets 3.9 3.8 Goodwill and Intangibles 24.1 24.9 ---------------------------------------------------------------------------- $ 1,448.8 $ 1,416.7 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Accounts payable and accrued liabilities $ 306.0 $ 272.8 Income taxes payable 12.4 14.4 Current portion long-term debt 1.2 1.2 ---------------------------------------------------------------------------- 319.6 288.4 Long-Term Debt 298.7 318.5 Pensions and Benefits 17.0 17.9 Provision 5.4 5.6 Deferred Income Tax Liabilities 5.0 7.0 Other Non-Current Liabilities 2.1 6.5 ---------------------------------------------------------------------------- 647.8 643.9 ---------------------------------------------------------------------------- Shareholders' Equity Common shares 485.2 483.7 Retained earnings 288.6 257.5 Contributed surplus 15.0 13.9 Accumulated other comprehensive (loss) income (16.5) (11.0) Equity component of convertible debenture 28.7 28.7 ---------------------------------------------------------------------------- 801.0 772.8 ---------------------------------------------------------------------------- $ 1,448.8 $ 1,416.7 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOW (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Quarters ended Six months ended June 30 June 30 (in millions of Canadian dollars) 2011 2010 2011 2010 ---------------------------------------------------------------------------- Operating activities Net earnings for the period $ 31.1 $ 24.8 $ 64.1 $ 33.9 Depreciation and amortization 5.9 6.3 11.9 12.6 Deferred income taxes (0.7) - (1.2) 1.8 Gain on investment and sale of property, and equipment - - (0.1) (1.5) Stock-based compensation 0.4 0.5 1.3 0.7 (Gain) loss on derivatives - (5.5) - 1.4 Difference between pension expense and amount funded (0.4) (0.2) (1.0) (0.2) Debt accretion, amortization and other 2.1 0.8 3.4 1.5 ---------------------------------------------------------------------------- Cash from operating activities before non-cash working capital 38.4 26.7 78.4 50.2 ---------------------------------------------------------------------------- Changes in non-cash working capital items Accounts receivable 33.1 14.9 (48.4) (60.8) Inventories (85.1) (65.4) (93.3) (18.7) Accounts payable and accrued liabilities (9.1) 6.7 26.2 15.7 Current income taxes receivable/ payable 2.3 3.6 (1.0) 3.6 Other (0.5) (0.7) (2.5) (0.2) ---------------------------------------------------------------------------- Change in non-cash working capital (59.3) (40.9) (119.0) (60.4) ---------------------------------------------------------------------------- Cash used in operating activities (20.9) (14.2) (40.6) (10.2) ---------------------------------------------------------------------------- Financing activities Issue of common shares 0.3 - 1.2 - Dividends on common shares (16.5) (14.9) (33.0) (29.8) Repayment of long-term debt (16.8) (8.1) (17.1) (8.5) Deferred financing (0.5) (0.7) (0.5) (0.7) Swap termination - - - (35.2) ---------------------------------------------------------------------------- Cash used in financing activities (33.5) (23.7) (49.4) (74.2) ---------------------------------------------------------------------------- Investing activities Purchase of property, plant and equipment (5.2) (2.1) (9.6) (3.4) Proceeds on sale of property, plant and equipment - 0.3 0.7 0.3 Proceeds on sale of investment - 6.0 - 6.0 ---------------------------------------------------------------------------- Cash (used in) from investing activities (5.2) 4.2 (8.9) 2.9 ---------------------------------------------------------------------------- Effect of exchange rates on cash and cash equivalents (1.8) 6.4 (0.1) 5.7 ---------------------------------------------------------------------------- Decrease in cash and cash equivalents (61.4) (27.3) (99.0) (75.8) Cash and cash equivalents, beginning of the period 286.1 311.1 323.7 359.6 ---------------------------------------------------------------------------- Cash and cash equivalents, end of the period $ 224.7 $ 283.8 $ 224.7 $ 283.8 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Supplemental cash flow information: Income taxes paid $ 12.9 $ 2.3 $ 31.2 $ 5.0 Interest paid $ 0.5 $ 0.7 $ 12.7 $ 13.5 CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Common Contributed Retained (in millions of Canadian dollars) Shares Surplus Earnings ---------------------------------------------------------------------------- Balance, January 1, 2011 $ 483.7 $ 13.9 $ 257.5 Payment of dividends - - (33.0) Net earnings for the period - - 64.1 Other comprehensive income for the period - - - Recognition of stock-based compensation - 1.1 - Stock options exercised 1.5 - - ---------------------------------------------------------------------------- Balance, June 30, 2011 $ 485.2 $ 15.0 $ 288.6 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Equity Component Accumulated Other of Convertible Comprehensive (in millions of Canadian dollars) Debentures Income Total ---------------------------------------------------------------------------- Balance, January 1, 2011 $ 28.7 $ (11.0) $772.8 Payment of dividends - - (33.0) Net earnings for the period - - 64.1 Other comprehensive income for the period - (5.5) (5.5) Recognition of stock-based compensation - - 1.1 Stock options exercised - - 1.5 ---------------------------------------------------------------------------- Balance, June 30, 2011 $ 28.7 $ (16.5) $801.0 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Common Contributed Retained (in millions of Canadian dollars) Shares Surplus Earnings ---------------------------------------------------------------------------- Balance, January 1, 2010 $ 478.9 $ 13.2 $ 259.9 Payment of dividends - - (29.8) Net earnings for the period - - 33.9 Other comprehensive income for the period - - - Recognition of stock-based compensation - 0.8 - ---------------------------------------------------------------------------- Balance, June 30, 2010 $ 478.9 $ 14.0 $ 264.0 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Equity Component Accumulated Other of Convertible Comprehensive (in millions of Canadian dollars) Debentures Income Total ---------------------------------------------------------------------------- Balance, January 1, 2010 $ - $ (1.1) $750.9 Payment of dividends - - (29.8) Net earnings for the period - - 33.9 Other comprehensive income for the period - 1.1 1.1 Recognition of stock-based compensation - - 0.8 ---------------------------------------------------------------------------- Balance, June 30, 2010 $ - $ - $756.9 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
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