TORONTO, ONTARIO reported first quarter net earnings of $29
million or $0.46 per share. Consolidated revenues for the first
quarter of 2008 were $712 million, an increase from the first
quarter of 2007 revenues of $684 million and from $598 million
reported in the fourth quarter of 2007. Operating profits were $52
million for the first quarter of 2008 compared to $46 million for
the first quarter of 2007 and $38 million for the fourth quarter of
2007. Operating profits as a percentage of revenues improved in
both metals service centers and steel distributors, which reflects
the steel price increases announced by steel mills.
First quarter net earnings of $0.46 per share includes items
totalling $0.10 per share which were not experienced in the first
quarter of 2007. These items include $0.03 per share for
stock-based compensation expense and $0.04 per share to write down
our investment in asset-backed commercial paper to estimated fair
value. In addition, the translation of earnings from our U.S.
operations to Canadian dollars at lower exchange rates impacted
earnings by $0.03 per share. The comparable reported earnings per
share were $0.46 for the first quarter of 2007 and $0.38 for the
fourth quarter of 2007.
Bud Siegel, President and Chief Executive Officer, commented,
"Since January 2008 steel mills have increased the price of steel
consistently month over month. The cost of metallic inputs, energy
and transportation have all dramatically increased resulting in
steel pricing reaching all time highs in the second quarter of
2008. Our metals service centers had progressively higher operating
profits throughout the first quarter of 2008 as a result of
increased pricing and we anticipate margins to be significantly
higher during the second quarter of 2008 due to the on-going steel
price increases.
In addition, the energy tubular products segment had continued
strong volumes from sales to the oil sands of Northern Alberta and
oil and gas drilling activity in the U.S. Rockies, resulting in
higher operating profits despite tighter margins."
Revenues for our energy tubular products segment were up $35
million to $214 million for the first quarter of 2008 compared to
$179 million for the first quarter of 2007.
Operating profits for our metals service centers for the first
quarter of 2008 were $32 million, up $7 million from the first
quarter of 2007. The metals service centers results strengthened
from the first and fourth quarter of 2007 due to steel price
increases initiated in the first quarter of 2008. Steel price
increases improved margins and operating profits. Demand, excluding
JMS Russel Metals, was consistent with the first quarter of
2007.
Revenues for our steel distributors segment were down by $44
million to $96 million, impacted by both lower imports and lower
demand compared to the first quarter of 2007. The economics of
importing steel into North America have weakened due to strong
worldwide steel demand, higher steel prices outside of the region
and the weak U.S. dollar, and thus our steel distributors segment
reduced its activities accordingly. The decline in volumes was
offset by higher selling prices and gross margins as a percentage
of revenues resulting in operating profits declining only by $1
million to $11 million compared to $12 million in the first quarter
2007.
The Board of Directors approved a quarterly dividend of $0.45
per common share payable June 15, 2008 to shareholders of record as
of June 2, 2008.
The Company will be holding an Investor Conference Call on
Tuesday, May 13, 2008 at 9:00 a.m. ET to review its first quarter
results for 2008. The dial-in telephone numbers for the call are
416-641-6130 (Toronto and International callers) and 1-866-226-1793
(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, May 20, 2008. You will be required to
enter pass code 3256611 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: demand from the manufacturing, resource and construction
segments of the Canadian economy will be consistent with what we
experienced in the first quarter of 2008, oil and gas prices will
not change materially, the recent stability in the price of steel
will either remain constant or increase, 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)
March 31, December 31,
(millions) 2008 2007
----------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $ 199.6 $ 181.8
Accounts receivable 416.4 341.8
Inventories 566.5 572.6
Prepaid expenses and other assets 4.7 8.5
Income taxes 1.9 3.9
----------------------------------------------------------------------------
1,189.1 1,108.6
Property, Plant and Equipment 231.8 227.9
Deferred Financing Charges 0.2 0.3
Future Income Tax Assets 1.0 1.0
Other Assets 9.0 12.1
Goodwill and Intangibles 55.1 53.4
----------------------------------------------------------------------------
$ 1,486.2 $ 1,403.3
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 354.4 $ 294.2
Income taxes payable 7.1 2.8
Current portion long-term debt 1.1 0.9
----------------------------------------------------------------------------
362.6 297.9
Derivatives 36.0 39.5
Long-Term Debt 182.3 174.9
Pensions and Benefits 1.3 1.4
Future Income Tax Liabilities 6.4 5.8
----------------------------------------------------------------------------
588.6 519.5
----------------------------------------------------------------------------
Shareholders' Equity 897.6 883.8
----------------------------------------------------------------------------
$ 1,486.2 $ 1,403.3
----------------------------------------------------------------------------
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RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
Quarters ended March 31,
(millions, except per share data) 2008 2007
----------------------------------------------------------------------------
Revenues $ 712.3 $ 683.7
Cost of sales and operating expenses 660.2 637.7
----------------------------------------------------------------------------
Earnings before the following 52.1 46.0
Other expense (3.2) -
Interest expense, net (2.1) (1.8)
----------------------------------------------------------------------------
Earnings before income taxes 46.8 44.2
Provision for income taxes (17.6) (15.5)
----------------------------------------------------------------------------
Net earnings for the period $ 29.2 $ 28.7
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Basic earnings per common share $ 0.46 $ 0.46
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Diluted earnings per common share $ 0.46 $ 0.46
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RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)
Quarters ended March 31,
(millions) 2008 2007
----------------------------------------------------------------------------
Retained earnings, beginning of the period,
as previously reported $ 411.7 $ 411.1
Transitional adjustment - financial
instruments - (0.5)
----------------------------------------------------------------------------
Retained earnings, beginning of the period,
as restated 411.7 410.6
Net earnings for the period 29.2 28.7
Dividends on common shares (28.4) (25.0)
----------------------------------------------------------------------------
Retained earnings, end of the period $ 412.5 $ 414.3
----------------------------------------------------------------------------
----------------------------------------------------------------------------
RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
Quarters ended March 31,
(millions) 2008 2007
----------------------------------------------------------------------------
Net earnings for the period $ 29.2 $ 28.7
----------------------------------------------------------------------------
Other comprehensive income (loss)
Unrealized foreign exchange gains (losses)
on translating financial statements of
self sustaining foreign operations
(U.S. subsidiaries) 12.2 (2.3)
Gains and (losses) on items designated
as net investment hedges (net of tax of
$0.2 (2007: $0.1)) (2.1) 0.8
Gains and (losses) on derivatives
designated as cash flow hedges (net of
tax of $0.2 (2007: $0.4)) (0.5) 0.9
----------------------------------------------------------------------------
Other comprehensive income (loss) 9.6 (0.6)
----------------------------------------------------------------------------
Comprehensive income $ 38.8 $ 28.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS
(UNAUDITED)
Quarters ended March 31,
(millions) 2008 2007
----------------------------------------------------------------------------
Accumulated net unrealized foreign currency
translation gains (losses)
Balance, beginning of period $ (45.7) $ (11.2)
Net unrealized gain (loss) on translation
of net investment in foreign operations 12.2 (2.3)
----------------------------------------------------------------------------
Balance, end of period (33.5) (13.5)
----------------------------------------------------------------------------
Accumulated net unrealized loss on cash
flow and net investment hedges
Balance, beginning of period 7.4 -
Transitional adjustment - (9.3)
Unrealized gains (losses) on items
designated as net investment hedges
(net of tax of $0.2 (2007: $0.1)) (2.1) 0.8
Unrealized gains (losses) on items
designated as cash flow hedges
(net of tax of $0.2 (2007: $0.4)) (0.5) 0.9
----------------------------------------------------------------------------
Balance, end of period 4.8 (7.6)
----------------------------------------------------------------------------
Total accumulated other comprehensive loss $ (28.7) $ (21.1)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
RUSSEL METALS INC.
CONSOLIDATED CASH FLOW STATEMENTS
(UNAUDITED)
Quarters ended March 31,
(millions) 2008 2007
----------------------------------------------------------------------------
Operating activities
Earnings from continuing operations $ 29.2 $ 28.7
Depreciation and amortization 5.7 4.9
Future income taxes 0.1 0.4
Gain on sale of fixed assets - (0.7)
Stock-based compensation 2.5 0.8
Pension expense (funding) (0.1) (1.6)
Other 3.4 0.2
----------------------------------------------------------------------------
Cash from operating activities before
working capital 40.8 32.7
----------------------------------------------------------------------------
Changes in non-cash working capital items
Accounts receivable (71.3) (57.0)
Inventories 12.7 22.3
Accounts payable and accrued liabilities 55.7 33.0
Current income taxes 8.8 (8.6)
Other 1.1 0.9
----------------------------------------------------------------------------
Change in non-cash working capital 7.0 (9.4)
----------------------------------------------------------------------------
Cash from operating activities 47.8 23.3
----------------------------------------------------------------------------
Financing activities
Issue of common shares - options exercised 1.0 0.8
Dividends on common shares (28.4) (25.0)
Repayment of long-term debt (0.2) -
----------------------------------------------------------------------------
Cash used in financing activities (27.6) (24.2)
----------------------------------------------------------------------------
Investing activities
Purchase of fixed assets (4.3) (3.7)
Proceeds on sale of fixed assets - 1.3
Other 0.5 0.7
----------------------------------------------------------------------------
Cash used in investing activities (3.8) (1.7)
----------------------------------------------------------------------------
Effect of exchange rates on cash 1.4 (0.2)
----------------------------------------------------------------------------
Increase (decrease) in cash and cash
equivalents 17.8 (2.8)
Cash and cash equivalents, beginning of
the period 181.8 209.9
----------------------------------------------------------------------------
Cash and cash equivalents, end of the
period $ 199.6 $ 207.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Supplemental Cash flow information:
Income taxes paid $ 10.2 $ 23.3
Interest paid $ 7.5 $ 7.6
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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