TORONTO, May 1, 2018 /PRNewswire/ - Russel Metals Inc.
(RUS - TSX) announces financial results for the first quarter ended
March 31, 2018.
|
|
|
Three Months
Ended
March 31,
|
|
2018
|
|
2017
|
|
|
|
|
Revenues
|
$
|
931
|
|
$
|
804
|
|
|
|
|
EBIT
1
|
$
|
61
|
|
$
|
48
|
|
|
|
|
Net Income
|
$
|
38
|
|
$
|
30
|
|
|
|
|
Earnings per
Share
|
$
|
0.62
|
|
$
|
0.48
|
|
|
|
|
Free Cash Flow
1
|
$
|
60
|
|
$
|
51
|
|
|
|
|
Dividends paid per
common share
|
$
|
0.38
|
|
$
|
0.38
|
|
|
|
|
All amounts are
reported in millions of Canadian dollars except per share
figures,
which are in Canadian dollars
|
|
1 EBIT and
Free Cash Flow are non-GAAP measures. EBIT represents earnings
before interest, finance expense and taxes. Free cash flow
represents cash from
operating activities before change in working capital less capital
expenditures.
|
For the 2018 first quarter, we reported net income of
$38 million or $0.62 per share on increased revenues of
$931 million compared to net income
of $30 million or $0.48 per share in the first quarter of
2017. Higher steel prices and volumes led to higher gross
margin dollars. This growth, along with our operating
efficiencies, led to improved operating profits in all of our
segments.
First quarter revenues in our metals service centers increased
18% to $455 million compared to the
same period in 2017 as same store tons shipped were approximately
7% higher. The average selling price improved 8% over first
quarter 2017 and 5% over 2017 fourth quarter due to steel price
increases and continued growth in value-added processing.
Gross margins were 22.1% compared to 22.4% in the same quarter last
year. Operating profits in this segment increased by
$7 million to $29 million from $22
million and, as a percentage of revenues, increased to 6.3%
compared to 5.6% in the first quarter of 2017.
First quarter 2018 revenues in our energy products segment
increased 13% to $382 million
compared to $339 million in the 2017
first quarter due to increased valves and fittings revenues at our
North American field stores, increased line pipe activity and
improved pipe prices. Drilling activity in Canada was slightly lower than the 2017 first
quarter which impacted our Canadian downhole operations.
Gross margins were 19.3% compared to 17.3% for the 2017 first
quarter due to rising prices and product mix. Operating
profits as a percentage of revenues were 8.5% compared to 7.0% in
first quarter 2017. Segment operating profits of $32 million improved substantially compared to
$24 million in the same quarter last
year.
Revenues in our steel distributors segment increased by 21% to
$94 million in the 2018 first quarter
compared to first quarter of 2017 reflecting higher North American
steel prices and stronger demand in the Canadian operation.
Gross margins were 21.6% in the first quarter of 2018 and 2017.
Segment operating profits increased to $11 million from $8
million in 2017 as operating profits as a percentage of
revenues rose to 11.4% compared to 10.8% in the first quarter of
2017.
Mr. John G. Reid, President and
COO, commented, "Steel prices continued to improve throughout the
quarter benefiting our metals service centers and steel
distributors which also enjoyed improved demand. Details of
the 232 trade actions in the U.S. are coming into focus around
exemptions and quota announcements that to date have improved the
overall mill utilization rates and pricing. We continue to
expand our geographic footprint and systematically invest in our
value-added processing capabilities."
Mr. Reid continued, "Our energy products operations benefited
from the pricing recovery, improved demand and better industry-wide
inventory management. U.S. line pipe projects have been
particularly robust as well as continued growth in our
field store operations. The extent of the duration of the
seasonal road closures could impact certain of our Canadian energy
products operations. Entering the second quarter, we remain
encouraged with current demand and pricing levels."
The Board of Directors approved a quarterly dividend of
$0.38 per common share payable
June 15, 2018 to shareholders of
record as of May 28, 2018.
The Company will be holding an Investor Conference Call on
Wednesday, May 2, 2018 at
9:00 a.m. ET to review its 2018 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 16, 2018. You will be
required to enter pass code 245814 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, Color Steels, Comco Pipe and Supply,
DuBose Steel, 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 future
capital expenditures, our outlook, the availability of future
financing and our ability to pay dividends. Forward-looking
statements relate to 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
unexpected loss of key individuals; decentralized operating
structure; the availability of future acquisitions and their
integration; 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;
legislation on carbon emissions; workplace health and safety laws
and regulations; significant changes in laws and governmental
regulations; fluctuation of our common share price; 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 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 under the heading "Risk Management and
Risks Affecting Our Business" in our most recent Annual Information
Form and as 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)
|
2018
|
2017
|
Revenues
|
$
|
931.3
|
$
|
803.5
|
Cost of materials
(Note 5)
|
|
736.7
|
|
641.2
|
Employee expenses
(Note 14)
|
|
77.9
|
|
66.6
|
Other operating
expenses (Note 14)
|
|
52.8
|
|
47.8
|
Asset impairment
(Note 6)
|
|
3.3
|
|
-
|
Earnings before
interest, finance expense and provision for income
taxes
|
|
60.6
|
|
47.9
|
Interest expense
(Note 15)
|
|
6.7
|
|
5.0
|
Other finance expense
(Note 15)
|
|
1.2
|
|
-
|
Earnings before
provision for income taxes
|
|
52.7
|
|
42.9
|
Provision for income
taxes (Note 16)
|
|
14.2
|
|
13.3
|
Net earnings for
the period
|
$
|
38.5
|
$
|
29.6
|
Basic earnings per
common share (Note 13)
|
$
|
0.62
|
$
|
0.48
|
Diluted earnings
per common share (Note 13)
|
$
|
0.62
|
$
|
0.48
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (UNAUDITED)
|
|
Quarters ended March
31
|
(in millions of
Canadian dollars)
|
2018
|
2017
|
Net earnings for
the period
|
$
|
38.5
|
$
|
29.6
|
Other comprehensive
income
|
Items that may be
reclassified to earnings
|
|
Unrealized foreign
exchange gains (losses) on translation
|
|
|
|
|
|
|
of foreign
operations
|
|
13.2
|
|
(4.4)
|
Items that may not
be reclassified to earnings
|
|
Actuarial gains on
pension and similar obligations,
|
|
|
|
net of taxes of $0.8
million (2017: $0.7 million)
|
|
2.1
|
|
2.0
|
Other comprehensive
income (loss)
|
|
15.3
|
|
(2.4)
|
Total
comprehensive income
|
$
|
53.8
|
$
|
27.2
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
|
|
March
31
|
December
31
|
(in millions of
Canadian dollars)
|
2018
|
2017
|
ASSETS
|
|
|
|
|
Current
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
136.0
|
$
|
125.8
|
|
Accounts
receivable
|
|
548.7
|
|
446.2
|
|
Inventories (Note
5)
|
|
870.4
|
|
819.9
|
|
Prepaid
expenses
|
|
19.6
|
|
17.2
|
|
Income
taxes
|
|
2.1
|
|
4.5
|
|
|
1,576.8
|
|
1,413.6
|
|
|
|
|
|
Property, Plant
and Equipment (Note 6)
|
|
248.9
|
|
246.8
|
Deferred Income
Tax Assets
|
|
4.6
|
|
4.7
|
Financial and
Other Assets
|
|
4.5
|
|
3.5
|
Goodwill and
Intangibles (Note 7)
|
|
89.4
|
|
90.5
|
|
$
|
1,924.2
|
$
|
1,759.1
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
|
|
|
|
|
|
Bank indebtedness
(Note 8)
|
$
|
115.9
|
$
|
207.7
|
|
Accounts payable and
accrued liabilities
|
|
467.5
|
|
365.7
|
|
Income taxes
payable
|
|
1.7
|
|
21.6
|
|
Current portion
long-term debt (Note 9)
|
|
0.1
|
|
0.1
|
|
|
585.2
|
|
595.1
|
|
|
Long-Term Debt
(Note 9)
|
|
442.6
|
|
296.5
|
Pensions and
Benefits (Note 10)
|
|
8.8
|
|
12.0
|
Deferred Income
Tax Liabilities
|
|
18.7
|
|
17.7
|
Provisions and
Other Non-Current Liabilities (Note 17)
|
|
9.7
|
|
11.0
|
|
|
1,065.0
|
|
932.3
|
Shareholders'
Equity (Note 11)
|
|
|
|
|
|
Common
shares
|
|
539.0
|
|
536.6
|
|
Retained
earnings
|
|
207.5
|
|
190.5
|
|
Contributed
surplus
|
|
15.8
|
|
16.0
|
|
Accumulated other
comprehensive
income
|
|
96.9
|
|
83.7
|
Total
Shareholders' Equity
|
|
859.2
|
|
826.8
|
Total Liabilities
and Shareholders' Equity
|
$
|
1,924.2
|
$
|
1,759.1
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
|
|
Quarters ended March
31
|
(in millions of
Canadian dollars)
|
2018
|
2017
|
|
|
|
|
|
Operating
activities
|
|
|
|
|
|
Net earnings for the
period
|
$
|
38.5
|
$
|
29.6
|
|
Depreciation and
amortization
|
|
8.4
|
|
8.5
|
|
Provision for income
taxes
|
|
14.2
|
|
13.3
|
|
Interest
expense
|
|
6.7
|
|
5.0
|
|
Loss (gain) on
disposal of property, plant and equipment
|
|
3.2
|
|
(0.1)
|
|
Share-based
compensation
|
|
0.1
|
|
0.2
|
|
Difference between
pension expense and amount funded
|
|
(0.2)
|
|
-
|
|
Debt accretion,
amortization and other
|
|
0.2
|
|
0.2
|
|
Change in fair value
of contingent consideration
|
|
1.2
|
|
-
|
|
Interest
paid
|
|
(1.3)
|
|
(0.4)
|
Cash from operating
activities before non-cash working capital
|
|
71.0
|
|
56.3
|
Changes in non-cash
working capital items
|
|
|
|
|
|
Accounts
receivable
|
|
(99.4)
|
|
(107.6)
|
|
Inventories
|
|
(44.3)
|
|
(14.3)
|
|
Accounts payable and
accrued liabilities
|
|
96.3
|
|
42.8
|
|
Other
|
|
(2.4)
|
|
(3.3)
|
Change in non-cash
working capital
|
|
(49.8)
|
|
(82.4)
|
|
Income taxes (paid)
refund, net
|
|
(31.2)
|
|
0.7
|
Cash used in
operating activities
|
|
(10.0)
|
|
(25.4)
|
Financing
activities
|
|
|
|
|
|
(Decrease) increase
in bank indebtedness
|
|
(91.9)
|
|
43.5
|
|
Issue of common
shares
|
|
2.0
|
|
1.1
|
|
Dividends on common
shares
|
|
(23.6)
|
|
(23.5)
|
|
Issuance of long-term
debt
|
|
146.0
|
|
-
|
|
Deferred financing
costs
|
|
(1.1)
|
|
-
|
Cash from
financing activities
|
|
31.4
|
|
21.1
|
Investing
activities
|
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(10.9)
|
|
(5.6)
|
|
Proceeds on sale of
property, plant and equipment
|
|
0.3
|
|
0.2
|
|
Payment of contingent
consideration
|
|
(4.5)
|
|
-
|
Cash used in
investing activities
|
|
(15.1)
|
|
(5.4)
|
Effect of exchange
rates on cash and cash equivalents
|
|
3.9
|
|
(3.3)
|
Increase
(decrease) in cash and cash equivalents
|
|
10.2
|
|
(13.0)
|
Cash and cash
equivalents, beginning of the period
|
|
125.8
|
|
181.8
|
Cash and cash
equivalents, end of the period
|
$
|
136.0
|
$
|
168.8
|
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, 2018
|
$
|
536.6
|
$
|
190.5
|
$
|
16.0
|
$
|
83.7
|
$
|
826.8
|
Payment of
dividends
|
|
-
|
|
(23.6)
|
|
-
|
|
-
|
|
(23.6)
|
Net earnings for the
period
|
|
-
|
|
38.5
|
|
-
|
|
-
|
|
38.5
|
Other comprehensive
income for the period
|
|
-
|
|
-
|
|
-
|
|
15.3
|
|
15.3
|
Recognition of
share-based compensation
|
|
-
|
|
-
|
|
0.1
|
|
-
|
|
0.1
|
Share options
exercised
|
|
2.4
|
|
-
|
|
(0.3)
|
|
-
|
|
2.1
|
Transfer of net
actuarial gains on defined benefit plans
|
|
-
|
|
2.1
|
|
-
|
|
(2.1)
|
|
-
|
Balance, March 31,
2018
|
$
|
539.0
|
$
|
207.5
|
$
|
15.8
|
$
|
96.9
|
$
|
859.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Other
|
|
|
Common
|
Retained
|
Contributed
|
Comprehensive
|
|
(in
millions of Canadian dollars)
|
Shares
|
Earnings
|
Surplus
|
Income
|
Total
|
Balance, January
1, 2017
|
$
|
532.4
|
$
|
161.9
|
$
|
15.9
|
$
|
115.1
|
$
|
825.3
|
Payment of
dividends
|
-
|
(23.5)
|
-
|
-
|
(23.5)
|
Net earnings for the
period
|
-
|
29.6
|
-
|
-
|
29.6
|
Other comprehensive
loss for the period
|
-
|
-
|
-
|
(2.4)
|
(2.4)
|
Recognition of
share-based compensation
|
-
|
-
|
0.2
|
-
|
0.2
|
Share options
exercised
|
1.2
|
-
|
(0.1)
|
-
|
1.1
|
Transfer of net
actuarial gains on defined benefit plans
|
-
|
2.0
|
-
|
(2.0)
|
-
|
Balance, March 31,
2017
|
$
|
533.6
|
$
|
170.0
|
$
|
16.0
|
$
|
110.7
|
$
|
830.3
|
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content:http://www.prnewswire.com/news-releases/russel-metals-announces-strong-2018-first-quarter-results-300640508.html
SOURCE Russel Metals Inc.