TORONTO, May 3, 2022 /CNW/ - Russel Metals Inc. (RUS: TSX)
announces financial results for three months ended March 31, 2022.
Record Revenues of $1,339 Million
and EBITDA1 of $153 Million
Strong Capital Structure with Liquidity1 of $457 Million
|
Three Months
Ended
|
|
Mar 31 2022
|
Dec 31 2021
|
Mar 31 2021
|
Revenues
|
$
1,339
|
$
1,147
|
$
885
|
EBITDA
1
|
153
|
162
|
129
|
Net earnings
|
99
|
102
|
81
|
Earnings per
share
|
1.56
|
1.62
|
1.29
|
Dividends paid per
common share
|
0.38
|
0.38
|
0.38
|
All amounts are
reported in millions of Canadian dollars except per share figures,
which are in Canadian dollars.
|
Non-GAAP Measures and Ratios
We use a number of measures that are not prescribed by
International Financial Reporting Standards ("IFRS" or "GAAP") and
as such may not be comparable to similar measures presented by
other companies. We believe these measures are commonly employed to
measure performance in our industry and are used by analysts,
investors, lenders and other interested parties to evaluate
financial performance and our ability to incur and service debt to
support our business activities. These non-GAAP measures include
EBITDA, Adjusted EBITDA and Liquidity and are defined below. Refer
to Non-GAAP Measures and Ratios and Adjusted Non-GAAP Measures on
page 2 of our Management Discussion and Analysis.
EBIT - represents net earnings before interest and income
taxes.
Adjusted EBIT - represents net earnings before asset
impairment, interest and, income taxes.
EBITDA - represents net earnings before interest, income
taxes, depreciation and amortization.
Adjusted EBITDA - we adjust our EBITDA to remove the impact
of long-lived asset impairment, to calculate the Adjusted
EBITDA.
Adjusted Net Earnings - we adjust our reported net earnings
to remove long-lived asset impairment, net of income taxes, to
calculate adjusted net earnings.
Adjusted Net Earnings Per Share - we adjust our reported net
earnings to remove the impact of long-lived asset impairment, net
of income taxes, to calculate the adjusted net earnings per
share.
Liquidity - represents cash on hand less bank indebtedness
plus excess availability under our bank credit facility.
The following table shows the reconciliation of net earnings in
accordance with GAAP to Adjusted EBITDA for 2022 and 2021:
|
Three Months Ended
March 31
|
(millions)
|
2022
|
2021
|
Net earnings
|
$
98.7
|
$
80.6
|
Provision for income
taxes
|
31.9
|
27.5
|
Interest and finance
expense
|
6.7
|
6.4
|
EBIT
1
|
137.3
|
114.5
|
Depreciation and
amortization
|
15.8
|
14.5
|
EBITDA
1
|
$
153.1
|
$
129.0
|
________________________
|
1 Defined in
Non-GAAP Measures and Ratios
|
Our basic earnings per share of $1.56 for the quarter ended March 31, 2022, was higher than the $1.29 per share recorded in the first quarter of
2021 and lower than the $1.62
reported in the fourth quarter of 2021. Revenues of $1,339 million were a record and higher than the
$885 million experienced in the first
quarter of 2021 and the $1,147
million in the fourth quarter of 2021. Our gross margins
were 21.7% for the first quarter of 2022, which were higher than
historical averages but lower than the 28.8% in the same quarter of
2021 and 26.1% in the fourth quarter of 2021. Steel market
conditions rebounded significantly late in the 2022 first quarter
and resulted in both revenues and margins for the last month of the
quarter being higher than the average for the quarter. Our Adjusted
EBITDA, which equaled EBITDA, for the quarter was $153 million compared to Adjusted EBITDA of
$129 million in the same quarter of
2021 and $164 million in the fourth
quarter of 2021.
Each of our business segments generated strong operating results
in the first quarter of 2022. Metals service centers had a
quarter-over-quarter increase in tons shipped of 13% on a same
store basis and 19% after taking into account a full quarter
contribution from the acquisition of Boyd Metals ("Boyd"). This was
accomplished in spite of weather and COVID related challenges that
impacted shipping activities in the early part of the quarter. The
steel distributors segment benefited from supply chain disruptions
that continued to affect steel availability and our business was
able to serve strong customer demand. In our energy products
segment, the improved prices and activity in both Canada and the U.S. allowed our business to
generate higher quarter-over-quarter revenues as it benefited from
the continued recovery of the energy industry.
Market Conditions
Steel prices moderated through the early part of the 2022 first
quarter but rebounded significantly during March 2022, due to reduced inventory in the
supply chain, further global supply chain disruptions caused by the
Russian invasion of Ukraine and
strong demand. In the energy sector, operating conditions continued
to improve in conjunction with the increased activity in the oil
and gas sector.
Liquidity and Capital Structure Improvements
During the 2022 first quarter, we generated $43 million of cash from operating activities and
ended the quarter with total available liquidity of $457 million.
Business Optimization
On March 31, 2022, we divested
Apex Western Fiberglass Inc. ("AWF"), which was a part of our
energy segment, for cash consideration of $10 million. There was no gain or loss on sale as
cash proceeds equaled the net book value. We completed the
sale to further refine our business portfolio and enhance our
return on capital over the cycle, since AWF's returns did not meet
our criteria.
Declaration of Quarterly Dividends
The Board of Directors approved a quarterly dividend of
$0.38 per common share payable
June 15, 2022, to shareholders of
record as of May 27, 2022. We will
continue our practice of prudently reviewing our dividend and
ensure that it is supported by a strong balance sheet and cash
flows.
Outlook
Demand remains strong for our metals service centers segment.
Over the past year, steel prices and our margin dollars have
remained above historic levels, and we expect both to remain above
historical levels over the near term. New projects in the oil and
gas sector and a short spring breakup should result in gradually
improving demand in our energy products segment over the
near-to-medium term.
Investor Conference Call
The Company will be holding an Investor Conference Call on
Wednesday, May 4, 2022, at
9:00 a.m. ET to review its 2022 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, 2022. You will be
required to enter pass code 934317# to access the call.
Additional supplemental financial information is available in
our investor conference call package located on our website at
www.russelmetals.com.
About Russel Metals Inc.
Russel Metals is one of the largest metals distribution
companies in North America with a
growing focus on value-added processing. It carries on business in
three segments: metals service centers, energy products and steel
distributors. Its network of metals service centers carries an
extensive line of metal products in a wide range of sizes, shapes
and specifications, including carbon hot rolled and cold finished
steel, pipe and tubular products, stainless steel, aluminum and
other non-ferrous specialty metals. Its energy products operations
carry a specialized product line focused on the needs of energy
industry customers. Its steel distributors operations act as master
distributors selling steel in large volumes to other steel service
centers and large equipment manufacturers mainly on an "as is"
basis.
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;
capital budgets in the energy industry; pandemics and epidemics;
climate change; product claims; significant competition; sources of
metals supply; manufacturers selling directly; material
substitution; credit risk; currency exchange risk; restrictive debt
covenants; asset impairments; the unexpected loss of key
individuals; decentralized operating structure; future
acquisitions; the failure of our key computer-based systems, labour
interruptions; laws and governmental regulations; litigious
environment; environmental liabilities; carbon emissions; health
and safety laws and regulations; and common share risks.
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)
|
Three Months Ended
March 31
|
(in millions of
Canadian dollars, except per share data)
|
2022
|
2021
|
Revenues
|
$
|
1,338.6
|
$
|
885.4
|
Cost of
materials
|
|
1,048.3
|
|
630.3
|
Employee
expenses
|
|
101.0
|
|
84.6
|
Other operating
expenses
|
|
58.0
|
|
56.0
|
Share of (earnings)
from joint venture
|
|
(6.0)
|
|
-
|
Earnings before
interest and provision for income taxes
|
|
137.3
|
|
114.5
|
Interest
expense
|
|
6.7
|
|
6.4
|
Earnings before
provision for income taxes
|
|
130.6
|
|
108.1
|
Provision for income
taxes
|
|
31.9
|
|
27.5
|
Net earnings for the
period
|
$
|
98.7
|
$
|
80.6
|
Basic earnings per
common share
|
$
|
1.56
|
$
|
1.29
|
Diluted earnings per
common share
|
$
|
1.56
|
$
|
1.29
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
Three Months Ended
March 31
|
(in millions of
Canadian dollars)
|
2022
|
2021
|
Net earnings for the
period
|
$
|
98.7
|
$
|
80.6
|
Other comprehensive
income
|
|
|
|
|
Items that may be
reclassified to earnings
|
|
|
|
|
Unrealized foreign
exchange losses on translation of foreign operations
|
|
(10.0)
|
|
(6.4)
|
Items that may not
be reclassified to earnings
|
|
|
|
|
Actuarial gains on
pension and similar obligations, net of taxes
|
|
8.8
|
|
16.5
|
Other comprehensive
(loss) income
|
|
(1.2)
|
|
10.1
|
Total comprehensive
income
|
$
|
97.5
|
$
|
90.7
|
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
(in millions of
Canadian dollars)
|
March 31
2022
|
December 31
2021
|
ASSETS
|
|
|
|
|
Current
|
|
|
|
|
Cash and cash
equivalents
|
$
|
146.2
|
$
|
133.1
|
Accounts
receivable
|
|
663.0
|
|
554.1
|
Inventories
|
|
894.0
|
|
986.0
|
Prepaid and
other
|
|
30.9
|
|
30.3
|
Income taxes
receivable
|
|
8.2
|
|
16.1
|
|
|
1,742.3
|
|
1,719.6
|
Property, Plant and
Equipment
|
|
299.6
|
|
302.4
|
Right-of-Use
Assets
|
|
92.4
|
|
86.7
|
Investment in Joint
Venture
|
|
43.6
|
|
37.6
|
Deferred Income Tax
Assets
|
|
1.3
|
|
1.5
|
Pension and
Benefits
|
|
41.2
|
|
29.5
|
Financial and Other
Assets
|
|
4.9
|
|
5.0
|
Goodwill and
Intangibles
|
|
128.4
|
|
132.2
|
|
$
|
2,353.7
|
$
|
2,314.5
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
570.4
|
$
|
557.7
|
Short-term lease
obligations
|
|
14.4
|
|
15.8
|
Income taxes
payable
|
|
7.8
|
|
66.7
|
Total
|
|
592.6
|
|
640.2
|
Long-Term
Debt
|
|
295.1
|
|
294.8
|
Pensions and
Benefits
|
|
3.1
|
|
3.4
|
Deferred Income Tax
Liabilities
|
|
22.6
|
|
19.6
|
Long-term Lease
Obligations
|
|
99.3
|
|
93.7
|
Provisions and Other
Non-Current Liabilities
|
|
18.8
|
|
14.5
|
|
|
1,031.5
|
|
1,066.2
|
Shareholders'
Equity
|
|
|
|
|
Common
shares
|
|
571.4
|
|
571.0
|
Retained
earnings
|
|
658.7
|
|
575.2
|
Contributed
surplus
|
|
12.1
|
|
12.1
|
Accumulated other
comprehensive income
|
|
80.0
|
|
90.0
|
Total Shareholders'
Equity
|
|
1,322.2
|
|
1,248.3
|
Total Liabilities
and Shareholders' Equity
|
$
|
2,353.7
|
$
|
2,314.5
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
|
Three Months Ended
March 31
|
(in millions of
Canadian dollars)
|
2022
|
2021
|
Operating
activities
|
|
|
|
|
Net earnings for the
period
|
$
|
98.7
|
$
|
80.6
|
Depreciation and
amortization
|
|
15.8
|
|
14.5
|
Provision for income
taxes
|
|
31.9
|
|
27.5
|
Interest
expense
|
|
6.7
|
|
6.4
|
Gain on disposal of
property, plant and equipment
|
|
(0.2)
|
|
(0.2)
|
Share of (earnings)
from joint venture
|
|
(6.0)
|
|
-
|
Share-based
compensation
|
|
0.1
|
|
-
|
Difference between
pension expense and amount funded
|
|
-
|
|
0.3
|
Debt accretion,
amortization and other
|
|
0.3
|
|
0.3
|
Interest paid,
including interest on lease obligations
|
|
(6.4)
|
|
(6.3)
|
Cash from operating
activities before non-cash working capital
|
|
140.9
|
|
123.1
|
Changes in
non-cash working capital items
|
|
|
|
|
Accounts
receivable
|
|
(115.0)
|
|
(127.7)
|
Inventories
|
|
81.3
|
|
(10.8)
|
Accounts payable and
accrued liabilities
|
|
18.9
|
|
124.6
|
Other
|
|
(0.6)
|
|
(2.7)
|
Change in non-cash
working capital
|
|
(15.4)
|
|
(16.6)
|
Income taxes paid,
net
|
|
(82.9)
|
|
(10.5)
|
Cash from operating
activities
|
|
42.6
|
|
96.0
|
Financing
activities
|
|
|
|
|
Issue of common
shares
|
|
0.3
|
|
-
|
Dividends on common
shares
|
|
(24.0)
|
|
(23.7)
|
Deferred
financing
|
|
(0.1)
|
|
-
|
Lease
obligations
|
|
(5.6)
|
|
(3.9)
|
Cash used in
financing activities
|
|
(29.4)
|
|
(27.6)
|
Investing
activities
|
|
|
|
|
Purchase of property,
plant and equipment
|
|
(8.2)
|
|
(5.9)
|
Proceeds on sale of
property, plant and equipment
|
|
0.5
|
|
0.4
|
Sale of
business
|
|
9.7
|
|
-
|
Cash from (used in)
investing activities
|
|
2.0
|
|
(5.5)
|
Effect of exchange
rates on cash and cash equivalents
|
|
(2.1)
|
|
3.1
|
Increase in cash and
cash equivalents
|
|
13.1
|
|
66.0
|
Cash and cash
equivalents, beginning of the period
|
|
133.1
|
|
26.3
|
Cash and cash
equivalents, end of the period
|
$
|
146.2
|
$
|
92.3
|
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
(in millions of
Canadian dollars)
|
Common
Shares
|
Retained
Earnings
|
Contributed
Surplus
|
Accumulated
Other
Comprehensive
Income
|
Total
|
Balance, January 1,
2022
|
$
|
571.0
|
$
|
575.2
|
$
|
12.1
|
$
|
90.0
|
$
|
1,248.3
|
Payment of
dividends
|
|
-
|
|
(24.0)
|
|
-
|
|
-
|
|
(24.0)
|
Net earnings for the
period
|
|
-
|
|
98.7
|
|
-
|
|
-
|
|
98.7
|
Other comprehensive
loss for the period
|
|
-
|
|
-
|
|
-
|
|
(1.2)
|
|
(1.2)
|
Recognition of
share-based compensation
|
|
-
|
|
-
|
|
0.1
|
|
-
|
|
0.1
|
Share options
exercised
|
|
0.4
|
|
-
|
|
(0.1)
|
|
-
|
|
0.3
|
Transfer of net
actuarial gains on defined benefit plans
|
|
-
|
|
8.8
|
|
-
|
|
(8.8)
|
|
-
|
Balance, March 31,
2022
|
$
|
571.4
|
$
|
658.7
|
$
|
12.1
|
$
|
80.0
|
$
|
1,322.2
|
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
(in millions of
Canadian dollars)
|
Common
Shares
|
Retained
Earnings
|
Contributed
Surplus
|
Accumulated
Other
Comprehensive
Income
|
Total
|
Balance, January 1,
2021
|
$
|
546.2
|
$
|
212.5
|
$
|
15.7
|
$
|
90.3
|
$
|
864.7
|
Payment of
dividends
|
|
-
|
|
(23.7)
|
|
-
|
|
-
|
|
(23.7)
|
Net earnings for the
period
|
|
-
|
|
80.6
|
|
-
|
|
-
|
|
80.6
|
Other comprehensive
income for the period
|
|
-
|
|
-
|
|
-
|
|
10.1
|
|
10.1
|
Transfer of net
actuarial gains on defined benefit plans
|
|
-
|
|
16.5
|
|
-
|
|
(16.5)
|
|
-
|
Balance, March 31,
2021
|
$
|
546.2
|
$
|
285.9
|
$
|
15.7
|
$
|
83.9
|
$
|
931.7
|
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SOURCE Russel Metals Inc.