TORONTO, May 3, 2016 /PRNewswire/ - Russel Metals Inc.
(RUS - TSX) today announced financial results for first quarter
ended March 31, 2016.
|
|
|
Three Months
Ended
March 31,
|
|
2016
|
|
2015
|
|
|
|
|
Revenues
|
$
|
662
|
|
$
|
904
|
|
|
|
|
EBIT
1
|
$
|
17
|
|
$
|
37
|
|
|
|
|
Net Income
|
$
|
8
|
|
$
|
19
|
|
|
|
|
Earnings per
Share
|
$
|
0.13
|
|
$
|
0.30
|
|
|
|
|
Free Cash
Flow
|
$
|
22
|
|
$
|
30
|
|
|
|
|
Dividends paid
2
|
$
|
0.38
|
|
$
|
0.38
|
|
|
All amounts are
reported in millions of Canadian dollars except per share and
dividend figures, which are in Canadian dollars
|
|
1 EBIT and
Free Cash Flow are Non GAAP measures. EBIT represents
earnings before interest and taxes. Free cash flow
represents cash from operating activities
before change in working capital less capital
expenditures.
2
Dividends paid per common share during the period.
|
For the 2016 first quarter, we reported net income of
$8 million or $0.13 per share on revenues of $0.7 billion. Our Eastern Canadian metals
service centers and our steel distributor operations had improved
results throughout the first quarter driven by steel price
increases initiated by steel mills in the quarter. The energy
sector revenues continued to reflect low oil and natural gas
prices, which adversely affected both our energy products and
Alberta service center
operations.
Revenues of $341 million in our
metals service centers segment were 15% lower than the 2015 first
quarter due to lower selling prices and weaker demand, primarily in
Western Canada. Tons shipped at our metals service centers
decreased by 5% and selling prices were 11% lower compared to the
2015 first quarter. Economic uncertainty caused by the severe
fall in oil prices has spilled over into supporting industries,
primarily impacting our Western Canadian operations. Gross
margins improved to 20.7% compared to 20.0% for the first quarter
of 2015 and 19.0% for the fourth quarter of 2015. The 2016
first quarter metals service center operating profits were
$10 million compared to $15 million in the same quarter last year.
First quarter 2016 revenues in our energy products segment
decreased 35% to $248 million
compared to $385 million in the 2015
first quarter due to lower drilling activity and fewer projects
caused by the weaker oil and natural gas prices. Operating
costs have been reduced $8 million or
19% from the 2015 first quarter as management actively reduced
costs. This segment had operating profits of $7 million compared to $21
million in the same quarter last year.
Revenues in our steel distributors segment decreased by 39% to
$73 million in the 2016 first quarter
compared to $119 million in the 2015
first quarter reflecting lower steel prices and demand than at this
time last year. Gross margins, however, were 20.6% compared
to 12.0% as steel prices started to recover from the fourth quarter
2015 lows. Operating profits were $7
million compared to $6 million
in the same quarter last year.
Mr. Brian R. Hedges, CEO,
commented "While we are not completely out of the woods yet, it was
encouraging to see the results of our service centers and steel
distributors start to improve as steel prices rose in the 2016
first quarter. Energy remains a challenge as rig counts in
Canada and the U.S. are at record
low levels and have yet to find a bottom. We have, however,
remained profitable in our energy products segment due to the cost
and net asset reduction actions taken."
Mr. Hedges continued, "Our operating income improved in each
month since the start of the year and we believe the second quarter
results will be better in the service centers and steel
distributors if, as expected, steel prices hold in the second
quarter. Our results are expected to be down slightly from
the first quarter in the energy products segment due to low demand
levels and normal slowdown due to spring breakup."
The Board of Directors approved a quarterly dividend of
$0.38 per common share payable
June 15, 2016 to shareholders of
record as of May 24, 2016.
The Company will be holding an Investor Conference Call on
Wednesday, May 4, 2016 at
9:00 a.m. ET to review its 2016 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 18, 2016. You will be
required to enter pass code 498389 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, Apex Western
Fiberglass, 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 Processing, Russel Metals Specialty Products,
Russel Metals Williams Bahcall, 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 volatility in metal prices;
volatility in oil and natural gas prices; cyclicality of the metals
industry and the industries that purchase our products; decreased
capital and other expenditures in the energy industry; product
claims from customers; significant competition that could reduce
our market share; the interruption in sources of metals supply;
manufacturers selling directly to our customer base; material
substitution; credit risk of our customers; lack of credit
availability; change in our credit ratings; currency exchange risk;
restrictive debt covenants; non-cash asset impairments; the loss of
key individuals; decentralized operating structure; the integration
of future acquisitions; the failure of our key computer-based
systems, including our enterprise resource and planning systems;
failure to renegotiate any of our collective agreements and work
stoppages; litigious business environment; environmental
liabilities; environmental concerns or changes in government
regulations; proposed legislative changes on carbon emissions;
changes in government regulations relating to workplace safety and
worker health; fluctuation of our common share price; common share
dilution; and variability of dividends.
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 should not be unduly relied upon.
These statements speak only as of the date of this press release,
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, under the heading "Risk" in our most
recent MD&A, under the heading "Risk Management and Risks
Affecting Our Business" in our most recent Annual Information Form
and as are otherwise disclosed in our filings with securities
regulatory authorities which are available on SEDAR at
www.sedar.com.
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)
|
2016
|
2015
|
Revenues
|
$
|
662.1
|
$
|
903.9
|
Cost of
materials
|
535.3
|
746.5
|
Employee
expenses
|
64.7
|
71.9
|
Other operating
expenses
|
45.5
|
48.9
|
Earnings before
interest, finance expense and provision for income
taxes
|
16.6
|
36.6
|
Interest
expense
|
5.4
|
9.5
|
Other finance
expense
|
-
|
0.6
|
Earnings before
provision for income taxes
|
11.2
|
26.5
|
Provision for income
taxes
|
3.4
|
8.0
|
Net earnings for
the period
|
$
|
7.8
|
$
|
18.5
|
Basic earnings per
common share
|
$
|
0.13
|
$
|
0.30
|
Diluted earnings
per common share
|
$
|
0.13
|
$
|
0.30
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
|
|
|
|
Quarters ended March
31
|
(in millions of
Canadian dollars)
|
2016
|
2015
|
Net earnings for
the period
|
$
|
7.8
|
$
|
18.5
|
Other comprehensive
income
|
|
|
Items that may be
reclassified to earnings
|
|
|
|
Unrealized foreign
exchange (losses) gains on translation of foreign
operations
|
(31.7)
|
40.7
|
Items that may not
be reclassified to earnings
|
|
|
|
Actuarial losses on
pension and similar obligations, net of taxes
|
(2.9)
|
(4.7)
|
Other comprehensive
income (loss)
|
(34.6)
|
36.0
|
Total
comprehensive income (loss)
|
$
|
(26.8)
|
$
|
54.5
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
|
|
|
|
|
March
31
|
December
31
|
(in millions of
Canadian dollars)
|
2016
|
2015
|
ASSETS
|
|
Current
|
|
|
Cash and cash
equivalents
|
$
|
140.7
|
$
|
143.4
|
|
Accounts
receivable
|
329.6
|
333.5
|
|
Inventories
|
678.3
|
712.5
|
|
Prepaid
expenses
|
10.7
|
10.7
|
|
Income taxes
receivable
|
15.0
|
24.2
|
|
1,174.3
|
1,224.3
|
|
|
Property, Plant
and Equipment
|
255.0
|
267.8
|
Deferred Income
Tax Assets
|
16.3
|
15.8
|
Financial and
Other Assets
|
6.8
|
7.1
|
Goodwill and
Intangibles
|
89.4
|
92.0
|
|
$
|
1,541.8
|
$
|
1,607.0
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
Current
|
|
|
Bank
indebtedness
|
$
|
76.3
|
$
|
94.2
|
|
Accounts payable and
accrued liabilities
|
301.8
|
303.1
|
|
Income taxes
payable
|
-
|
0.4
|
|
Current portion
long-term debt
|
0.5
|
0.5
|
|
378.6
|
398.2
|
|
|
Long-Term
Debt
|
295.4
|
295.2
|
Pensions and
Benefits
|
25.1
|
21.7
|
Deferred Income
Tax Liabilities
|
13.8
|
14.2
|
Provisions and
Other Non-Current Liabilities
|
10.0
|
8.8
|
|
722.9
|
738.1
|
Shareholders'
Equity
|
|
|
Common
shares
|
531.7
|
531.7
|
|
Retained
earnings
|
173.6
|
192.1
|
|
Contributed
surplus
|
15.4
|
15.2
|
|
Accumulated other
comprehensive income
|
98.2
|
129.9
|
Total
Shareholders' Equity
|
818.9
|
868.9
|
Total Liabilities
and Shareholders' Equity
|
$
|
1,541.8
|
$
|
1,607.0
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
|
|
|
|
Quarters ended March
31
|
(in millions of
Canadian dollars)
|
2016
|
2015
|
Operating
activities
|
|
|
Net earnings for the
period
|
$
|
7.8
|
$
|
18.5
|
|
Depreciation and
amortization
|
8.9
|
8.7
|
|
Provision for income
taxes
|
3.4
|
8.0
|
|
Interest
expense
|
5.4
|
9.5
|
|
(Gain) loss on sale
of property, plant and equipment
|
(0.3)
|
0.1
|
|
Share-based
compensation
|
0.2
|
0.3
|
|
Difference between
pension expense and amount funded
|
(0.4)
|
(0.6)
|
|
Debt accretion,
amortization and other
|
0.2
|
1.4
|
|
Interest paid,
net
|
(0.7)
|
(8.7)
|
|
Change in fair value
of contingent consideration
|
-
|
0.6
|
Cash from operating
activities before non-cash working capital
|
24.5
|
37.8
|
Changes in non-cash
working capital items
|
|
|
Accounts
receivable
|
(0.7)
|
79.6
|
|
Inventories
|
21.4
|
(12.7)
|
|
Accounts payable and
accrued liabilities
|
(1.0)
|
(85.5)
|
|
Other
|
(0.1)
|
1.0
|
Change in non-cash
working capital
|
19.6
|
(17.6)
|
|
Income taxes refund
(paid), net
|
4.9
|
(25.4)
|
Cash from (used
in) operating activities
|
49.0
|
(5.2)
|
Financing
activities
|
|
|
(Decrease) increase
in bank indebtedness
|
(17.9)
|
7.7
|
|
Issue of common
shares
|
-
|
0.4
|
|
Dividends on common
shares
|
(23.4)
|
(23.4)
|
|
Issuance of long-term
debt
|
0.2
|
-
|
|
Repayment of
long-term debt
|
(0.2)
|
(0.1)
|
Cash used in
financing activities
|
(41.3)
|
(15.4)
|
Investing
activities
|
|
|
Purchase of property,
plant and equipment
|
(3.0)
|
(8.2)
|
|
Proceeds on sale of
property, plant and equipment
|
4.7
|
0.4
|
|
Payment of contingent
consideration
|
(0.1)
|
(17.5)
|
Cash from (used
in) investing activities
|
1.6
|
(25.3)
|
Effect of exchange
rates on cash and cash equivalents
|
(12.0)
|
8.4
|
Decrease in cash
and cash equivalents
|
(2.7)
|
(37.5)
|
Cash and cash
equivalents, beginning of the period
|
143.4
|
53.4
|
Cash and cash
equivalents, end of the period
|
$
|
140.7
|
$
|
15.9
|
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Other
|
|
|
Common
|
Retained
|
Contributed
|
Comprehensive
|
|
(in millions of
Canadian dollars)
|
Shares
|
Earnings
|
Surplus
|
Income
|
Total
|
Balance, January
1, 2016
|
$
|
531.7
|
$
|
192.1
|
$
|
15.2
|
$
|
129.9
|
$
|
868.9
|
Payment of
dividends
|
-
|
(23.4)
|
-
|
-
|
(23.4)
|
Net earnings for the
period
|
-
|
7.8
|
-
|
-
|
7.8
|
Other comprehensive
loss
|
|
|
for the
period
|
-
|
-
|
-
|
(34.6)
|
(34.6)
|
Recognition of
share-based
|
|
|
compensation
|
-
|
-
|
0.2
|
-
|
0.2
|
Transfer of net
actuarial losses
|
|
|
on defined benefit
plans
|
-
|
(2.9)
|
-
|
2.9
|
-
|
Balance, March 31,
2016
|
$
|
531.7
|
$
|
173.6
|
$
|
15.4
|
$
|
98.2
|
$
|
818.9
|
|
|
|
|
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
|
SOURCE Russel Metals Inc.