TORONTO, Feb. 9, 2023
/CNW/ - Russel Metals Inc. (TSX: RUS) announces financial results
for the fourth quarter and the year ended December 31, 2022.
Record Annual Revenues of $5.1
Billion in 2022 and $1.1
Billion in Q4
2022
EBITDA1 of $579 Million in 2022 and $97 Million in Q4 2022
Generated
$146 Million of Cash from Working
Capital1 in Q4 2022
Advancing Capital Investment
Growth Initiatives
Repurchased $28 Million of Shares in 2022; Declared a
Dividend of $0.38 per
Share
Strong Capital Structure with Liquidity1 of
$743 Million
|
Three Months
Ended
|
Year Ended
|
|
Dec 31
2022
|
Dec 31
2021
|
Sep 30
2022
|
Dec 31
2022
|
Dec 31
2021
|
Revenues
|
$ 1,100
|
$ 1,147
|
$ 1,270
|
$ 5,071
|
$ 4,209
|
EBITDA1
|
97
|
162
|
140
|
579
|
664
|
Net Income
|
58
|
102
|
91
|
372
|
432
|
Earnings per
share
|
0.93
|
1.62
|
1.45
|
5.91
|
6.90
|
Cash from working
capital1
|
146
|
(136)
|
(41)
|
18
|
(258)
|
Dividends paid per
common share
|
0.38
|
0.38
|
0.38
|
1.52
|
1.52
|
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 and
Liquidity and are defined below. Refer to Non-GAAP Measures
and Ratios on page 2 of our Management Discussion and Analysis.
EBIT - represents net earnings before interest and income
taxes.
EBITDA - represents net earnings before interest, income taxes,
depreciation and amortization.
Liquidity - represents cash on hand less bank indebtedness plus
excess availability under our bank credit facility.
Cash from working capital – represents the change in non-cash
working capital
The following table shows the reconciliation of net earnings in
accordance with GAAP to EBITDA for 2022 and 2021:
|
Three Months
Ended
December 31
|
Year Ended
December 31
|
(millions)
|
2022
|
2021
|
2022
|
2021
|
Net
earnings
|
$ 57.9
|
$ 102.2
|
$ 371.9
|
$ 432.2
|
Provision for income
taxes
|
16.1
|
38.3
|
115.6
|
147.9
|
Interest and finance
expense
|
5.4
|
6.6
|
25.3
|
26.0
|
EBIT
1
|
79.4
|
147.1
|
512.8
|
606.1
|
Depreciation and
amortization
|
18.0
|
14.6
|
66.1
|
57.9
|
EBITDA
1
|
$ 97.4
|
$ 161.7
|
$ 578.9
|
$ 664.0
|
1 Defined in
Non-GAAP Measures and Ratios
|
Our net earnings for the year ended December
31, 2022, were $372 million or
$5.91 per share compared to net
earnings of $432 million or
$6.90 per share for 2021.
Revenues for the year ended December 31,
2022, were $5.1 billion
compared to $4.2 billion in
2021. EBITDA was $579 million
compared to $664 million in 2021.
In the 2022 fourth quarter, our revenues, EBITDA and net
earnings per share were $1.1 billion,
$97 million and $0.93 per share, respectively. Revenues
during the quarter were lower than the 2021 fourth quarter due to
the moderation of steel prices from the unusually high levels that
were realized in the metals service centers and steel distributors
segments in 2021 and early 2022. This decline was partially
offset by continued improvement in our energy field stores
business.
Our 2022 fourth quarter results illustrated the resiliency and
reduced volatility that we can achieve across our portfolio over a
cycle. In the quarter, we dealt with changes in market
conditions, including the seasonal factors that are typical in the
fourth quarter, and generated a consolidated gross margin of 20%
and return on capital of 20%. In addition, we proactively
managed inventories and generated $146
million of cash flow from working capital in the 2022 fourth
quarter.
During the 2022 fourth quarter, EBITDA was negatively impacted
by an increase in inventory provisions of $3
million, a non-cash charge of $2
million related to mark-to-market on share-based
compensation and a $1 million
accounting charge related to the annuitization of a significant
portion of our defined benefit pension plan.
Market Conditions
Steel prices were volatile
throughout 2022 but were higher than the long-term historical
averages. In our metals service centers and steel
distributors segments, customer demand remained active across most
of our regions and end markets. Our energy field stores
benefited from a rebound in the energy sector as the average
Canadian rig counts were 175 in 2022 compared to 132 in 2021 and
the average U.S. rig counts were 723 in 2022 compared to 478 in
2021.
Capital Investment Growth Initiatives
Our approach to
capital investment growth initiatives includes: (i) value-added
equipment projects; (ii) facility modernizations; and (iii)
targeted acquisitions.
We have planned approximately $30
million per year of discretionary investments related to
value-added equipment projects. The investment approach has
been underway for several years and we expect to continue for
several more years as we identify new opportunities. In 2022,
we spent $42 million on capital
expenditures including a flat laser in Arkansas and a tube laser in Quebec which are both operational. We
also advanced our equipment projects for additional tube lasers in
Saskatchewan and Arkansas, flat lasers in Alberta, Alabama and Arkansas, beam lines in North Carolina and Alberta, a slitter in Arkansas, a plasma table in Ohio and a press brake in British Columbia.
In terms of facility modernizations, we have planned
$50-70 million of investments in the
coming years for projects focused on modernizing, consolidating and
expanding our operations in certain locations. These projects
will provide opportunities for growth, improve material handling
efficiencies, improve health and safety practices, and in certain
instances result in the monetization of redundant real estate at
legacy locations. Over the past several months, we have
approved projects at our Saskatoon,
Saskatchewan and Joplin,
Missouri locations. We are continuing to advance
projects at other locations in both Canada and the U.S.
On acquisitions, the pipeline of potential opportunities remains
active, and we continue to focus on opportunities that could fit
our economic and operational criteria.
Returning Capital to Shareholders
We have adopted a
more balanced approach to returning excess capital to shareholders
through: (i) our ongoing dividend; and (ii) share buy backs.
In the third quarter we initiated a normal course issuer bid to
purchase for cancellation up to 3.2 million of our common shares
over 12 months, representing 5% of our issued and outstanding
shares. In the last half of 2022 we purchased and cancelled
1.0 million shares for total consideration of $28 million.
In 2022, we paid dividends of $96
million or $1.52 per common
share. In addition, we declared a dividend of $0.38 per share, payable on March 15, 2023, to shareholders of record at the
close of business on February 28,
2023.
Liquidity and Capital Structure
During 2022, we
generated $360 million of cash from
operating activities and ended the year with total available
liquidity of $743 million.
Outlook
Steel prices began to stabilize late in the
2022 fourth quarter and we have experienced modest price increases
for certain key products in early 2023. We expect a
continuation of this favourable trend over the near term as a
result of modest inventory in the supply chain and a seasonal
rebound in demand. In terms of demand, we experienced a
normal seasonal slowdown in the 2022 fourth quarter, but expect to
benefit from a rebound over the near term as both the metals
service centers and energy field stores have favourable and
broad-based customer activity levels.
Investor Conference Call
The Company will be holding
an Investor Conference Call on Friday,
February 10, 2023, at 9:00 a.m.
ET to review its 2022 fourth 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, Friday, February 24, 2023. You will be
required to enter pass code 449021# 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. It carries on business in three
segments: metals service centers, energy field stores 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
field stores 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
|
Three Months Ended
December 31
|
Years Ended
December 31
|
(in millions of
Canadian dollars, except per share data)
|
2022
|
2021
|
2022
|
2021
|
Revenues
|
$ 1,099.8
|
$ 1,146.8
|
$ 5,070.6
|
$ 4,208.5
|
Cost of
materials
|
881.6
|
847.6
|
3,944.0
|
2,996.1
|
Employee
expenses
|
88.8
|
95.4
|
402.5
|
376.0
|
Other operating
expenses
|
60.4
|
57.4
|
242.3
|
233.8
|
Earnings from joint venture
|
(10.4)
|
(3.3)
|
(31.0)
|
(6.1)
|
Impairment of
goodwill and long-lived assets
|
-
|
2.6
|
-
|
2.6
|
Earnings before interest and provision for income
taxes
|
79.4
|
147.1
|
512.8
|
606.1
|
Interest
expense
|
5.4
|
6.6
|
25.3
|
26.0
|
Earnings before provision for income
taxes
|
74.0
|
140.5
|
487.5
|
580.1
|
Provision for income
taxes
|
16.1
|
38.3
|
115.6
|
147.9
|
Net earnings for the
period
|
$ 57.9
|
$ 102.2
|
$ 371.9
|
$ 432.2
|
Basic earnings per common share
|
$ 0.93
|
$ 1.62
|
$ 5.91
|
$ 6.90
|
Diluted earnings per common
share
|
$ 0.93
|
$ 1.62
|
$ 5.91
|
$ 6.89
|
Condensed Consolidated Statements of Comprehensive
Income
|
Three Months
Ended
December 31
|
Years Ended
December 31
|
(in millions of
Canadian dollars)
|
2022
|
2021
|
2022
|
2021
|
Net earnings for the period
|
$ 57.9
|
$ 102.2
|
$ 371.9
|
$ 432.2
|
Other comprehensive
(loss) income
|
|
|
|
|
Items that may be reclassified to
earnings
|
|
|
|
|
Unrealized foreign exchange gains
(losses) on
|
|
|
|
|
translation of foreign
operations
|
(10.7)
|
(3.0)
|
50.1
|
(0.3)
|
Items that may not be reclassified to earnings
|
|
|
|
|
Actuarial gains on pension and
similar
|
|
|
|
|
obligations net of
taxes
|
2.8
|
4.0
|
12.0
|
25.9
|
Other comprehensive
(loss) income
|
(7.9)
|
1.0
|
62.1
|
25.6
|
Total comprehensive income
|
$ 50.0
|
$ 103.2
|
$ 434.0
|
$ 457.8
|
Condensed Consolidated Statements of Financial
Position
(in millions of
Canadian dollars)
|
December 31
2022
|
December 31
2021
|
ASSETS
|
|
|
Current
|
|
|
Cash and cash
equivalents
|
$ 363.0
|
$ 133.1
|
Accounts receivable
|
497.9
|
554.1
|
Inventories
|
956.5
|
986.0
|
Prepaid and other
|
35.8
|
30.3
|
Income taxes receivable
|
16.3
|
16.1
|
|
1,869.5
|
1,719.6
|
Property, Plant and Equipment
|
313.8
|
302.4
|
Right-of-Use Assets
|
102.7
|
86.7
|
Investment in Joint Venture
|
46.6
|
37.6
|
Deferred Income Tax Assets
|
1.2
|
1.5
|
Pension and Benefits
|
42.0
|
29.5
|
Financial and Other Assets
|
4.6
|
5.0
|
Goodwill and Intangibles
|
126.5
|
132.2
|
|
$ 2,506.9
|
$ 2,314.5
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
Current
|
|
|
Accounts payable and accrued
liabilities
|
$ 482.0
|
$ 557.7
|
Short-term lease
obligations
|
14.7
|
15.8
|
Income taxes payable
|
4.8
|
66.7
|
|
501.5
|
640.2
|
Long-Term Debt
|
296.0
|
294.8
|
Pensions and Benefits
|
1.5
|
3.4
|
Deferred Income Tax Liabilities
|
18.4
|
19.6
|
Long-term Lease Obligations
|
112.2
|
93.7
|
Provisions and Other Non-Current
Liabilities
|
18.0
|
14.5
|
|
947.6
|
1,066.2
|
Shareholders' Equity
|
|
|
Common shares
|
562.4
|
571.0
|
Retained earnings
|
844.6
|
575.2
|
Contributed surplus
|
12.2
|
12.1
|
Accumulated other comprehensive
income
|
140.1
|
90.0
|
Total Shareholders' Equity
|
1,559.3
|
1,248.3
|
Total Liabilities and Shareholders'
Equity
|
$ 2,506.9
|
$ 2,314.5
|
Condensed Consolidated Statements of Cash Flow
|
Three Months
Ended
December 31
|
Years Ended
December 31
|
(in millions of
Canadian dollars)
|
2022
|
2021
|
2022
|
2021
|
Operating activities
|
|
|
|
|
Net
earnings for the period
|
$ 57.9
|
$ 102.2
|
$ 371.9
|
$ 432.2
|
Depreciation and
amortization
|
18.0
|
14.6
|
66.1
|
57.9
|
Provision for income
taxes
|
16.1
|
38.3
|
115.6
|
147.9
|
Interest expense
|
5.4
|
6.6
|
25.3
|
26.0
|
Impairment of goodwill and
long-lived assets
|
-
|
2.6
|
-
|
2.6
|
(Gain) loss on sale of property,
plant and equipment
|
(0.1)
|
0.2
|
(2.8)
|
0.5
|
Earnings from joint
venture
|
(10.4)
|
(3.3)
|
(31.0)
|
(6.1)
|
Share-based compensation
|
0.1
|
-
|
0.2
|
0.2
|
Difference between pension expense
and
|
|
|
|
|
amount
funded
|
1.7
|
0.4
|
1.9
|
1.0
|
Debt accretion, amortization and
other
|
0.2
|
0.3
|
1.1
|
1.1
|
Interest paid, including interest
on lease obligations
|
(5.0)
|
(6.1)
|
(24.0)
|
(24.8)
|
Cash from operating
activities before
|
|
|
|
|
non-cash working capital
|
83.9
|
155.8
|
524.3
|
638.5
|
Changes in non-cash working capital
items
|
|
|
|
|
Accounts receivable
|
167.0
|
45.3
|
62.4
|
(160.8)
|
Inventories
|
88.2
|
(144.0)
|
45.0
|
(337.6)
|
Accounts payable and accrued
liabilities
|
(109.5)
|
(27.4)
|
(83.8)
|
253.9
|
Other
|
0.1
|
(10.3)
|
(5.5)
|
(13.3)
|
Change in non-cash
working capital
|
145.8
|
(136.4)
|
18.1
|
(257.8)
|
Income tax paid, net
|
(22.9)
|
(26.4)
|
(182.5)
|
(76.2)
|
Cash from operating activities
|
206.8
|
(7.0)
|
359.9
|
304.5
|
Financing activities
|
|
|
|
|
Issue of common shares
|
-
|
3.7
|
0.3
|
21.0
|
Repurchase of common
shares
|
(11.6)
|
-
|
(27.9)
|
-
|
Dividends on common
shares
|
(23.7)
|
(24.0)
|
(95.6)
|
(95.4)
|
Deferred financing
|
-
|
(0.9)
|
(0.2)
|
(0.9)
|
Lease obligations
|
(4.6)
|
(6.5)
|
(15.7)
|
(18.2)
|
Cash used in financing
activities
|
(39.9)
|
(27.7)
|
(139.1)
|
(93.5)
|
Investing activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
(15.3)
|
(8.5)
|
(41.5)
|
(28.8)
|
Proceeds on sale of property, plant
and equipment
|
0.1
|
0.2
|
3.2
|
1.1
|
Dividends received from joint
venture
|
7.7
|
-
|
22.1
|
-
|
Sale of business
|
-
|
-
|
9.7
|
77.1
|
Purchase of business
|
-
|
(156.6)
|
-
|
(156.6)
|
Cash used in investing
activities
|
(7.5)
|
(164.9)
|
(6.5)
|
(107.2)
|
Effect of exchange rates on
cash
|
|
|
|
|
and cash
equivalents
|
(0.5)
|
(4.1)
|
15.6
|
3.0
|
Increase (decrease)
in cash and cash equivalents
|
158.9
|
(203.7)
|
229.9
|
106.8
|
Cash and cash
equivalents, beginning of the period
|
204.1
|
336.8
|
133.1
|
26.3
|
Cash and cash equivalents, end of the
year
|
$ 363.0
|
$ 133.1
|
$ 363.0
|
$ 133.1
|
Condensed Consolidated Statements of Changes in
Equity
(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
|
-
|
(95.6)
|
-
|
-
|
(95.6)
|
Net earnings for the
year
|
-
|
371.9
|
-
|
-
|
371.9
|
Other comprehensive
income for the year
|
-
|
-
|
-
|
62.1
|
62.1
|
Recognition of
share-based compensation
|
-
|
-
|
0.2
|
-
|
0.2
|
Share options
exercised
|
0.4
|
-
|
(0.1)
|
-
|
0.3
|
Shares
repurchased
|
(9.0)
|
(18.9)
|
-
|
-
|
(27.9)
|
Transfer of net
actuarial gains on defined benefit plans
|
-
|
12.0
|
-
|
(12.0)
|
-
|
Balance, December 31, 2022
|
$ 562.4
|
$ 844.6
|
$ 12.2
|
$ 140.1
|
$ 1,559.3
|
(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
|
-
|
(95.4)
|
-
|
-
|
(95.4)
|
Net earnings for the
year
|
-
|
432.2
|
-
|
-
|
432.2
|
Other comprehensive
income for the year
|
-
|
-
|
-
|
25.6
|
25.6
|
Recognition of
share-based compensation
|
-
|
-
|
0.2
|
-
|
0.2
|
Share options
exercised
|
24.8
|
-
|
(3.8)
|
-
|
21.0
|
Transfer of net
actuarial gains on defined benefit plans
|
-
|
25.9
|
-
|
(25.9)
|
-
|
Balance, December 31, 2021
|
$ 571.0
|
$ 575.2
|
$ 12.1
|
$ 90.0
|
$ 1,248.3
|
View original
content:https://www.prnewswire.com/news-releases/russel-metals-announces-2022-annual--fourth-quarter-results-301743427.html
SOURCE Russel Metals Inc.