TORONTO, ONTARIO today announced earnings of $0.40 per share for
the fourth quarter of 2007 and $1.77 per share for the year ended
December 31, 2007. Fourth quarter 2006 earnings were $0.49 per
share and the fiscal 2006 earnings were $2.65 per share.
Net earnings for the fourth quarter 2007 were $25.3 million,
including a $1.6 million gain from discontinued operations.
Earnings are down 22.5% from $30.6 million in the same period of
2006. Net earnings for the year were $111.2 million, a decrease of
30% from fiscal 2006 net earnings of $158.7 million.
The fourth quarter results reflect a slight improvement in
demand from the prior year in our metals service center segment;
however, steel prices and margins remained under pressure.
Announced steel mill price increases in the first quarter of 2008
are expected to increase both selling prices and margins. Fourth
quarter 2007 same store revenues, excluding JMS, were down 4%
compared to the fourth quarter of 2006. Demand for our products in
the manufacturing sector of Ontario and Quebec was up over the
fourth quarter of 2006 and the third quarter of 2007. Demand in the
B.C. region, however, was negatively impacted by weakness in the
forestry sector in the last half of 2007.
The energy tubular products segment had a strong year lead by
our Comco Pipe operation, which had a record year. The strong
performance of this operation, which is a leading service provider
in the oil sands of northern Alberta, has helped to offset the
decline in volume of our other Western Canadian operations that
distribute pipe primarily to those of our customers who are
involved in drilling for gas. Lower active drilling rigs and excess
pipe availability has reduced volumes and margins. Our U.S. energy
tubular operations continue to have strong shipments of line pipe.
Revenues in the fourth quarter of 2007 increased 3% compared to the
fourth quarter of 2006.
Bud Siegel, President and CEO, stated, "Cash generated from
operating activities was $111 million for the fourth quarter of
2007 demonstrating our ability to free up cash from working capital
when earnings decline. Our fourth quarter free cash flow was $33
million and was used to pay our industry leading dividend of $28
million. The additional $78 million of working capital freed up in
the fourth quarter funded an increase in our cash position to $182
million."
Mr. Siegel continued, "We are happy with the progress of the
integration of JMS Metal Services with Russel Metals. These
operations, now known as JMS Russel Metals, made an accretive
contribution in the quarter. As the JMS units do not overlap with
any of our other operating units there is no rationalization of
operations needed. The operations will be transitioned to our
metals service centers central computer systems in the first half
of 2008."
The Board of Directors approved a quarterly dividend of $0.45
per common share payable March 15, 2008 to shareholders of record
as of March 3, 2008. In addition the Board approved a normal course
issuer bid for up to six million of our outstanding common
shares.
The Company will be holding an Investor Conference Call on
Tuesday, February 19, 2008 at 10:00 a.m. ET to review its fourth
quarter results for 2007. The dial-in telephone numbers for the
call are 416-340-8010 (Toronto and International callers) and
1-866-540-8136 (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 416-695-5800 (Toronto
and International callers) and 1-800-408-3053 (U.S. and Canada)
until midnight, Tuesday, February 26, 2008. You will be required to
enter pass code 3247709 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
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 Industries, 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: there will be steady demand in the manufacturing,
resource and construction segments of the Canadian economy, oil and
gas prices will not change materially, there will be continued
consolidation of steel producers, the recent stability in the price
of steel will continue, and the Canadian dollar will maintain
recent gains while not appreciating significantly. 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.
RUSSEL METALS INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
At December 31 (millions) 2007 2006
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ASSETS
Current
Cash and cash equivalents $ 181.8 $ 209.9
Accounts receivable 341.8 329.0
Inventories 572.6 664.0
Prepaid expenses and other assets 8.5 7.4
Income taxes 3.9 2.1
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1,108.6 1,212.4
Property, Plant and Equipment 227.9 189.5
Deferred Financing Charges 0.3 6.8
Future Income Tax Assets 1.0 0.4
Other Assets 12.1 3.9
Goodwill and Intangibles 53.4 9.2
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$ 1,403.3 $ 1,422.2
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 294.2 $ 283.9
Income taxes payable 2.8 15.0
Current portion long-term debt 0.9 -
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297.9 298.9
Other Accrued Liabilities - 15.4
Derivatives 39.5 -
Long-Term Debt 174.9 203.9
Pensions and Benefits 1.4 2.6
Future Income Tax Liabilities 5.8 6.8
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519.5 527.6
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Shareholders' Equity 883.8 894.6
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$ 1,403.3 $ 1,422.2
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RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Quarters Ended Years Ended
December 31, December 31,
(millions, except per share data) 2007 2006 2007 2006
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Revenues $ 598.4 $ 593.2 $ 2,559.2 $ 2,692.1
Cost of sales and operating expenses 560.8 544.6 2,379.9 2,443.1
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Earnings before the following 37.6 48.6 179.3 249.0
Other expense (income) 0.9 - 2.5 (1.2)
Interest expense, net 2.2 1.4 7.1 6.7
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Earnings before income taxes 34.5 47.2 169.7 243.5
Provision for income taxes (10.8) (16.6) (60.1) (84.8)
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Earnings from continuing operations 23.7 30.6 109.6 158.7
Income from discontinued operations 1.6 - 1.6 -
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Net earnings for the period $ 25.3 $ 30.6 $ 111.2 $ 158.7
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Basic earnings per common share
- continuing operations $ 0.38 $ 0.49 $ 1.74 $ 2.65
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Basic earnings per common share $ 0.40 $ 0.49 $ 1.77 $ 2.65
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Diluted earnings per common share
- continuing operations $ 0.37 $ 0.49 $ 1.73 $ 2.63
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Diluted earnings per common share $ 0.40 $ 0.49 $ 1.76 $ 2.63
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RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Quarters Ended Years Ended
December 31, December 31,
(millions) 2007 2006 2007 2006
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Retained earnings, beginning of
the period,
as previously reported $ 414.7 $ 405.4 $ 411.1 $ 341.8
Transitional adjustment - financial
instruments - - (0.5) -
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Retained earnings, beginning of the
period, as restated 414.7 405.4 410.6 341.8
Net earnings for the period 25.3 30.6 111.2 158.7
Dividends on common shares (28.3) (24.9) (110.1) (89.4)
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Retained earnings, end of
the period $ 411.7 $ 411.1 $ 411.7 $ 411.1
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RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Quarter Ended Year Ended
December 31 December 31
(millions) 2007 2007
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Net earnings for the period $ 25.3 $ 111.2
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Other comprehensive loss
Unrealized foreign exchange losses on
translating financial statements of
self sustaining foreign operation
(U.S. subsidiaries) (3.4) (34.5)
Gains on items designated as net
investment hedges (1.6) 9.1
Gains on items designated as cash
flow hedges 4.6 7.6
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Other comprehensive loss (0.4) (17.8)
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Comprehensive income $ 24.9 $ 93.4
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RUSSEL METALS INC.
CONSOLIDATED CASH FLOW STATEMENTS
(UNAUDITED)
Quarters ended Years ended
December 31, December 31,
(millions) 2007 2006 2007 2006
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Operating activities
Earnings from continuing operations $ 23.7 $ 30.6 $ 109.6 $ 158.7
Depreciation and amortization 5.6 5.1 20.4 20.0
Future income taxes 1.8 1.6 4.2 3.9
Gain on sale of fixed assets and
assets held for sale 0.1 0.1 (0.5) (1.3)
Stock-based compensation 0.4 0.8 4.8 3.4
Pension expense (funding) (0.1) (0.7) (1.3) (6.2)
Other 1.2 - 3.2 -
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Cash from operating activities before
working capital 32.7 37.5 140.4 178.5
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Changes in non-cash working
capital items
Accounts receivable 63.9 84.3 (5.0) 30.3
Inventories 16.7 (33.4) 89.1 (188.2)
Accounts payable and
accrued liabilities 5.0 (79.6) 4.7 (30.9)
Current income taxes (5.6) (0.4) (17.6) 9.2
Other (1.7) (3.2) (0.9) (0.4)
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Change in non-cash working capital 78.3 (32.3) 70.3 (180.0)
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Cash from (used in)
operating activities 111.0 5.2 210.7 (1.5)
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Financing activities
Decrease in bank borrowing - (0.5) - (2.1)
Issue of common shares - 0.1 10.9 277.9
Dividends common shares (28.3) (24.9) (110.1) (89.4)
Deferred financing (0.2) (0.1) (0.2) (1.1)
Repayment of long-term debt (0.3) - (0.3) -
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Cash from (used in)
financing activities (28.8) (25.4) (99.7) 185.3
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Investing activities
Purchase of fixed assets (3.6) (6.0) (16.6) (27.6)
Proceeds on sale of fixed assets 0.1 0.1 1.5 1.7
Purchase of business - - (109.0) -
Proceeds from assets held for sale - - - 6.2
Reclassification of cash
equivalents to other assets - - (11.0) -
Other 1.2 3.6 1.6 (0.9)
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Cash used in investing activities (2.3) (2.3) (133.5) (20.6)
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Effect of exchange rates on cash (1.7) 1.3 (5.6) (0.4)
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(Decrease) increase in cash and
cash equivalents 78.2 (21.2) (28.1) 162.8
Cash and cash equivalents,
beginning of the period 103.6 231.1 209.9 47.1
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Cash and cash equivalents, end
of the period $ 181.8 $ 209.9 $ 181.8 $ 209.9
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Contacts: Russel Metals Inc. Marion E. Britton, C.A. Vice
President and Chief Financial Officer (905) 819-7407 Email:
info@russelmetals.com Website: www.russelmetals.com
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