TORONTO, May 5, 2015 /PRNewswire/ - Russel Metals Inc.
(RUS - TSX) today announced financial results for first quarter of
2015.
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Three Months
Ended
March 31,
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2015
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2014
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Revenues
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$
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904
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$
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924
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EBIT
1
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$
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37
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$
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54
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Net Income
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$
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19
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$
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29
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Earnings per
Share
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$
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0.30
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$
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0.47
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Free Cash
Flow
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$
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21
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$
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38
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Dividends paid
2
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$
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0.38
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$
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0.35
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All amounts are
reported in millions of Canadian dollars except per share and
dividend figures,
which are in Canadian
dollars
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1 EBIT and
Free Cash Flow are Non GAAP measures. EBIT represents earnings
before interest
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and taxes. Free cash
flow represents cash from operating activities before change in
working
|
capital less capital
expenditures.
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2
Dividends paid per common share during the period.
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First quarter earnings were $19
million or $0.30 per share on
revenues of $0.9 billion. These
results compare to earnings of $29
million or $0.47 per share on
revenues of $0.9 billion in the same
quarter last year.
Revenues of $400 million in our
metals service center segment were slightly higher than the 2014
first quarter. Exchange rate gains on the translation of our
U.S. operations offset volume declines as tons shipped at our
metals service centers decreased by 3%. Gross margin dollars and
percentages at our metals service centers in the 2015 first quarter
were lower than the same quarter last year reflecting difficult
competitive conditions due to soft demand in Western Canada and declining steel prices.
Gross margin was 20.0% compared to 21.7% for the 2014 first
quarter. The 2015 first quarter metals service center
operating profits were $15 million
compared to $21 million in the 2014
first quarter.
First quarter 2015 revenues in our energy products segment
decreased 14% to $385 million
compared to the 2014 first quarter due to the dramatically lower
activity in the energy sector caused by oil price declines.
Operating profits decreased $12
million or 37% in the 2015 first quarter versus the same
quarter last year due to decreased volumes and pricing
pressure.
Revenues in our steel distributors segment increased by 36% to
$119 million in the 2015 first
quarter compared to the 2014 first quarter as product ordered in
2014 was delivered to customers. Operating profits were
consistent with the same period in 2014. We expect the high
inventory levels in this segment to decrease over the next
quarter.
Mr. Brian R. Hedges, President
and CEO, commented "Our disciplined business approach gives us the
flexibility to rationally adjust our operations in the face of a
drop in steel prices, rig counts and oilfield activity. The
depth of the change in the price of oil and steel was not foreseen
by the industry causing both energy and steel inventories to be
overstocked throughout the distribution channel. Based on
these economic conditions, our inventory position and operating
costs are being proactively managed to ensure that we minimize the
impact on the business and maximize our earnings."
Mr. Hedges continued, "Our clean balance sheet and flexible
operating cost structure support our dividend and will allow us to
take advantage of acquisition opportunities that will arise in this
challenging environment. We are prepared for a sustained
trough in commodity pricing and will be strongly positioned when
the inevitable recovery begins."
The Board of Directors approved a quarterly dividend of
$0.38 per common share payable
June 15, 2015 to shareholders of
record as of May 25, 2015.
Based on the share price at March 31,
2015 of $24.04 our annualized
dividend yield was 6.3%.
The Company will be holding an Investor Conference Call on
Wednesday May 6, 2015 at 9:00 a.m. ET to review its 2015 first quarter
results. The dial-in telephone numbers for the call are
416-764-8688 (Toronto and
International callers) and 1-888-390-0546 (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 416-764-8677
(Toronto and International
callers) and 1-888-390-0541 (U.S. and Canada) until midnight, Wednesday May 20, 2015. You will be
required to enter pass code 932136 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 Monarch, Apex Remington, Arrow Steel Processors,
B&T Steel, Baldwin International, Comco Pipe and Supply, Fedmet
Tubulars, JMS Russel Metals, Leroux
Steel, McCabe Steel, Mégantic
Métal, Métaux Russel, Métaux Russel Produits Spécialisés, 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
Certain statements contained in this press release constitute
forward-looking statements or information within the meaning of
applicable securities laws, including statements as to our outlook,
future events or our future performance. All statements,
other than statements of historical fact, are forward-looking
statements. Forward-looking statements are often, but not
always, identified by the use of words such as "seek",
"anticipate", "plan", "continue", "estimate", "expect", "may",
"will", "project", "predict", "potential", "targeting", "intend",
"could", "might", "should", "believe" and similar
expressions. Forward-looking statements are necessarily based
on estimates and assumptions that, while considered reasonable by
us, inherently involve known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements, including the factors described below.
We are subject to a number of risks and uncertainties which
could have a material adverse effect on our future profitability
and financial position, including the risks and uncertainties
listed below, which are important factors in our business and the
metals distribution industry. Such risks and uncertainties
include, but are not limited to: the current economic climate;
volatility in metal prices; volatility in oil and natural gas
prices; cyclicality of the metals industry and the industries that
purchase our products; lack of credit availability that may limit
the ability of our customers to obtain credit or expand their
businesses; significant competition that could reduce our market
share; any interruption in sources of metals supply; the
integration of future acquisitions, including successfully adapting
to a public company control environment and retaining key
acquisition management personnel; failure to renegotiate any of our
collective agreements and work stoppages; disruption in our
customer or suppliers' operations due to labour disruptions or the
existence of events or circumstances that cause a force majeure;
environmental liabilities; environmental concerns or changes in
government regulations in general, and those related to oil sands
production, shale fracking or oil distribution in particular;
changes in government regulations relating to workplace safety and
worker health; product claims from customers, currency exchange
risk, particularly between the Canadian and U.S. dollar; the
failure of our key computer-based systems, including our enterprise
resource and planning systems; the failure to implement new
technologies; cyber security breach; the loss of key individuals;
the inability to access affordable financing, capital or insurance;
interest rate risk; dilution; and change of control.
While we believe that the expectations reflected in our
forward-looking statements are reasonable, no assurance can be
given that these expectations will prove to be correct, and our
forward-looking statements included in this press release should
not be unduly relied upon. These statements speak only as of
the date of this press release and, except as required by law, we
do not assume any obligation to update our forward-looking
statements. Our actual results could differ materially from
those anticipated in our forward-looking statements including as a
result of the risk factors described above and under the heading
"Risk" in our MD&A and in our filings with securities
regulatory authorities which are available on SEDAR at
www.sedar.com. Specific reference is made to our most recent
Annual Information Form for a further discussion of some of the
factors underlying our forward-looking statements.
If you would like to unsubscribe from receiving Press
Releases, you may do so by emailing info@russelmetals.com; or by
calling our Investor Relations Line: 905-816-5178.
CONDENSED
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
|
|
Quarters ended March
31
|
(in millions of
Canadian dollars, except per share data)
|
2015
|
2014
|
|
|
|
Revenues
|
$
|
903.9
|
$
|
924.0
|
Cost of
materials
|
746.5
|
751.7
|
Employee
expenses
|
71.9
|
71.5
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Other operating
expenses
|
48.9
|
47.3
|
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|
|
Earnings before
interest, finance expense and provision for income
taxes
|
36.6
|
53.5
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Interest
expense
|
9.5
|
9.0
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Other finance
expense
|
0.6
|
1.8
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Earnings before
provision for income taxes
|
26.5
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42.7
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Provision for income
taxes
|
8.0
|
13.7
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|
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Net earnings for
the period
|
$
|
18.5
|
$
|
29.0
|
|
|
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|
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Basic earnings per
common share
|
$
|
0.30
|
$
|
0.47
|
|
|
|
|
|
Diluted earnings
per common share
|
$
|
0.30
|
$
|
0.46
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
|
Quarters ended March
31
|
(in millions of
Canadian dollars)
|
2015
|
2014
|
|
|
|
|
|
Net earnings for
the period
|
$
|
18.5
|
$
|
29.0
|
|
|
Other comprehensive
income
|
|
Items that may be
reclassified to earnings
|
|
|
Unrealized foreign
exchange gains on translation of foreign operations
|
40.7
|
14.5
|
Items that may not
be reclassified to earnings
|
|
|
Actuarial losses on
pension and similar obligations, net of taxes
|
(4.7)
|
(4.1)
|
|
|
|
Other comprehensive
income
|
36.0
|
10.4
|
|
|
|
Total
comprehensive income
|
$
|
54.5
|
$
|
39.4
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
|
|
|
|
March
31
|
December
31
|
(in millions of
Canadian dollars)
|
|
|
2015
|
2014
|
|
|
|
|
ASSETS
|
|
|
|
Current
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$
|
15.9
|
$
|
53.4
|
|
Accounts
receivable
|
|
|
499.9
|
569.3
|
|
Inventories
|
|
|
966.6
|
930.8
|
|
Prepaid
expenses
|
|
|
10.6
|
11.6
|
|
Income taxes
receivable
|
|
|
6.3
|
2.8
|
|
|
|
|
|
|
|
|
|
1,499.3
|
1,567.9
|
|
|
|
|
Property, Plant
and Equipment
|
|
|
255.5
|
249.8
|
Deferred Income
Tax Assets
|
|
|
6.7
|
4.9
|
Financial and
Other Assets
|
|
|
6.1
|
5.9
|
Goodwill and
Intangibles
|
|
|
214.2
|
214.3
|
|
|
|
|
|
|
|
|
$
|
1,981.8
|
$
|
2,042.8
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
|
|
|
|
|
Bank
indebtedness
|
|
|
$
|
32.1
|
$
|
24.2
|
|
Accounts payable and
accrued liabilities
|
|
|
415.0
|
500.4
|
|
Income taxes
payable
|
|
|
-
|
14.1
|
|
Current portion
long-term debt
|
|
|
0.5
|
0.5
|
|
|
|
|
|
|
|
|
|
447.6
|
539.2
|
|
|
|
|
Long-Term
Debt
|
|
|
461.8
|
460.5
|
Pensions and
Benefits
|
|
|
31.9
|
26.1
|
Deferred Income
Tax Liabilities
|
|
|
17.0
|
17.0
|
Provisions and
Other Non-Current Liabilities
|
|
|
26.7
|
35.0
|
|
|
|
|
|
|
|
|
985.0
|
1,077.8
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Common
shares
|
|
|
531.7
|
531.2
|
|
Retained
earnings
|
|
|
334.4
|
344.0
|
|
Contributed
surplus
|
|
|
14.3
|
14.1
|
|
Accumulated other
comprehensive income
|
|
|
87.8
|
47.1
|
|
Equity component of
convertible debentures
|
|
|
28.6
|
28.6
|
|
|
|
|
|
|
Total
Shareholders' Equity
|
|
|
996.8
|
965.0
|
|
|
|
|
|
|
|
Total Liabilities
and Shareholders' Equity
|
|
|
$
|
1,981.8
|
$
|
2,042.8
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
|
|
Quarters ended March
31
|
(in millions of
Canadian dollars)
|
2015
|
2014
|
|
|
Operating
activities
|
|
|
Net earnings for the
period
|
$
|
18.5
|
$
|
29.0
|
|
Depreciation and
amortization
|
8.7
|
8.6
|
|
Deferred income
taxes
|
(0.1)
|
0.8
|
|
Loss on sale of
property, plant and equipment
|
0.1
|
1.0
|
|
Share-based
compensation
|
0.3
|
0.4
|
|
Difference between
pension expense and amount funded
|
(0.6)
|
-
|
|
Debt accretion,
amortization and other
|
1.4
|
1.2
|
|
Change in fair value
of contingent consideration
|
0.6
|
1.8
|
|
|
|
|
Cash from operating
activities before non-cash working capital
|
28.9
|
42.8
|
|
|
Changes in non-cash
working capital items
|
|
|
Accounts
receivable
|
79.6
|
(89.9)
|
|
Inventories
|
(12.7)
|
1.2
|
|
Accounts payable and
accrued liabilities
|
(84.7)
|
47.9
|
|
Income tax
receivable/payable
|
(17.3)
|
9.6
|
|
Other
|
1.0
|
(3.2)
|
|
|
|
Change in non-cash
working capital
|
(34.1)
|
(34.4)
|
|
|
|
Cash (used in)
from operating activities
|
(5.2)
|
8.4
|
|
|
Financing
activities
|
|
|
Increase in bank
indebtedness
|
7.7
|
-
|
|
Issue of common
shares
|
0.4
|
1.7
|
|
Dividends on common
shares
|
(23.4)
|
(21.3)
|
|
Repayment of
long-term debt
|
(0.1)
|
(0.3)
|
|
|
|
Cash used in
financing activities
|
(15.4)
|
(19.9)
|
|
|
Investing
activities
|
|
|
Purchase of property,
plant and equipment
|
(8.2)
|
(4.9)
|
|
Proceeds on sale of
property, plant and equipment
|
0.4
|
0.2
|
|
Payment of contingent
consideration
|
(17.5)
|
(4.1)
|
|
|
|
Cash used in
investing activities
|
(25.3)
|
(8.8)
|
|
|
|
Effect of exchange
rates on cash and cash equivalents
|
8.4
|
(9.6)
|
|
|
|
Decrease in cash
and cash equivalents
|
(37.5)
|
(29.9)
|
Cash and cash
equivalents, beginning of the period
|
53.4
|
116.2
|
|
|
|
|
|
Cash and cash
equivalents, end of the period
|
$
|
15.9
|
$
|
86.3
|
|
|
|
|
|
Supplemental cash
flow information:
|
|
Income taxes
paid
|
$
|
25.4
|
$
|
3.3
|
Interest paid
(net)
|
$
|
8.7
|
$
|
8.1
|
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
Equity
|
|
|
|
|
|
Other
|
Component
|
|
Common
|
Retained
|
Contributed
|
Comprehensive
|
of
Convertible
|
(in millions of
Canadian dollars)
|
Shares
|
Earnings
|
Surplus
|
Income
|
Debentures
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January
1, 2015
|
$
|
531.2
|
$
|
344.0
|
$
|
14.1
|
$
|
47.1
|
$
|
28.6
|
$
|
965.0
|
Payment of
dividends
|
-
|
(23.4)
|
-
|
-
|
-
|
(23.4)
|
Net earnings for the
period
|
-
|
18.5
|
-
|
-
|
-
|
18.5
|
Other comprehensive
income
|
|
|
|
|
|
|
|
for the
period
|
-
|
-
|
-
|
36.0
|
-
|
36.0
|
Recognition of
share-based
|
|
|
|
|
|
|
|
compensation
|
-
|
-
|
0.3
|
-
|
-
|
0.3
|
Share options
exercised
|
0.5
|
-
|
(0.1)
|
-
|
-
|
0.4
|
Transfer of net
actuarial losses
|
|
|
|
|
|
|
|
on defined benefit
plans
|
-
|
(4.7)
|
-
|
4.7
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31,
2015
|
$
|
531.7
|
$
|
334.4
|
$
|
14.3
|
$
|
87.8
|
$
|
28.6
|
$
|
996.8
|
|
|
|
|
Accumulated
|
Equity
|
|
|
|
|
|
|
Other
|
Component
|
Non-
|
|
|
Common
|
Retained
|
Contributed
|
Comprehensive
|
of
Convertible
|
Controlling
|
|
(in millions of
Canadian dollars)
|
Shares
|
Earnings
|
Surplus
|
Income
|
Debentures
|
Interest
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, January
1, 2014
|
$
|
509.5
|
$
|
314.6
|
$
|
16.2
|
$
|
12.0
|
$
|
28.7
|
$
|
1.4
|
$
|
882.4
|
Payment of
dividends
|
-
|
(21.3)
|
-
|
-
|
-
|
-
|
(21.3)
|
Net earnings for the
period
|
-
|
29.0
|
-
|
-
|
-
|
-
|
29.0
|
Other comprehensive
income
|
|
|
for the
period
|
-
|
-
|
-
|
10.4
|
-
|
-
|
10.4
|
Recognition of
share-based
|
|
|
compensation
|
-
|
-
|
0.4
|
-
|
-
|
-
|
0.4
|
Share options
exercised
|
2.1
|
-
|
(0.4)
|
-
|
-
|
-
|
1.7
|
Transfer of net
actuarial losses
|
|
|
on defined benefit
plans
|
-
|
(4.1)
|
-
|
4.1
|
-
|
-
|
-
|
Change in
non-controlling interest
|
-
|
-
|
-
|
-
|
-
|
(0.1)
|
(0.1)
|
|
|
|
|
|
|
|
|
Balance, March 31,
2014
|
$
|
511.6
|
$
|
318.2
|
$
|
16.2
|
$
|
26.5
|
$
|
28.7
|
$
|
1.3
|
$
|
902.5
|
SOURCE Russel Metals Inc.