TORONTO, Aug. 9, 2018 /CNW/ - Russel Metals Inc. (RUS
- TSX) announces financial results for the second quarter ended
June 30, 2018.
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Three Months
Ended June 30,
|
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Six Months
Ended June 30,
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2018
|
|
2017
|
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2018
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|
2017
|
|
|
|
|
|
|
|
|
|
|
|
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Revenues
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$
|
978
|
|
$
|
817
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|
$
|
1,910
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|
$
|
1,620
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT
1
|
$
|
97
|
|
$
|
54
|
|
$
|
158
|
|
$
|
102
|
|
|
|
|
|
|
|
|
|
|
|
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Net Income
|
$
|
66
|
|
$
|
33
|
|
$
|
105
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$
|
62
|
|
|
|
|
|
|
|
|
|
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|
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Earnings per
Share
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$
|
1.07
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$
|
0.52
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$
|
1.69
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|
$
|
1.00
|
|
|
|
|
|
|
|
|
|
|
|
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Free Cash Flow
1
|
$
|
87
|
|
$
|
44
|
|
$
|
147
|
|
$
|
95
|
|
|
|
|
|
|
|
|
|
|
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Dividends paid per
common share
|
$
|
0.38
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$
|
0.38
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$
|
0.76
|
|
$
|
0.76
|
|
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 and taxes. Free cash flow
represents cash from operating activities before change in working
capital less capital expenditures.
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For the 2018 second quarter, we report net income of
$66 million or $1.07 per share on revenues of $978 million compared to net income of
$33 million or $0.52 per share in the second quarter of
2017. Significant increases in selling prices at all of our
operations have resulted in margin improvements including inventory
holding gains in the quarter. Robust economic activity led to
increased volumes.
Revenues in our metals service centers increased 35% to
$562 million for the quarter compared
to the same period in 2017. Same store tons shipped in the
second quarter of 2018 were approximately 9% higher than the second
quarter of 2017. The average selling price improved 17% over
second quarter 2017 reflecting mill price increases and continued
growth in value-added processing. Gross margins were 25.5%
compared to 21.6% in the second quarter of 2017. Operating
profits of $57 million were more than
double the $24 million reported in
the same quarter in 2017 due to stronger demand and selling
prices.
Revenues in our energy products segment increased 8% to
$320 million compared to $296 million in the 2017 second quarter.
Revenue increases were due to higher field store activity and large
U.S. line pipe projects. Gross margins were 20.9%
compared to 18.7% for the 2017 second quarter. This segment
had operating profits of $28 million
compared to $22 million in the same
quarter last year.
Revenues in our steel distributors segment decreased by 9% to
$92 million compared to $101 million in the 2017 second quarter due to
lower volumes as trade concerns resulted in cautious buying by our
customers in this segment. Gross margins were 26.8% compared
to 19.0% due to stronger selling prices. Operating profits
were $15 million compared to
$10 million in the 2017 second
quarter.
Our revenues for the six months ended June 30, 2018 were $1.9
billion up 18% from $1.6
billion for the same period in 2017 due to higher selling
prices and volume increases at most of our operations. Our
2018 year to date earnings of $105
million or $1.69 per share
compared to $62 million or
$1.00 per share for the same period
in 2017.
Mr. John G. Reid, President and
CEO, commented, "All of our businesses performed extremely well in
the second quarter by adapting to the changing business
environment. The continued uncertainty around steel tariffs
and trade disruptions has resulted in the realignment of North
American supply channels which our team has navigated exceptionally
well."
Mr. Reid continued, "Our strong balance sheet has allowed us to
continue to grow both organically through value-added processing
initiatives and by acquisition. We acquired the assets of
DuBose Steel during the second
quarter and we are pleased that it was immediately accretive to
earnings. We continue to review other acquisition
opportunities and remain opportunistic."
The Board of Directors approved a quarterly dividend of
$0.38 per common share payable
September 14, 2018 to shareholders of
record as of August 27, 2018.
The Company will be holding an Investor Conference Call on
Friday, August 10, 2018 at
9:00 a.m. ET to review its 2018
second 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, August 24, 2018. You will be
required to enter pass code 334426 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)
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Quarters ended June
30
|
Six months ended June
30
|
(in millions of
Canadian dollars, except per share data)
|
2018
|
2017
|
2018
|
2017
|
|
Revenues
|
$
|
978.2
|
$
|
816.5
|
$
|
1,909.5
|
$
|
1,620.0
|
Cost of
materials
|
739.3
|
648.3
|
1,476.0
|
1,289.5
|
Employee
expenses
|
85.3
|
69.1
|
163.2
|
135.7
|
Other operating
expenses
|
56.3
|
45.0
|
109.1
|
92.8
|
Asset
impairment
|
-
|
-
|
3.3
|
-
|
|
Earnings before
interest, finance expense and
|
|
|
provision for
income
taxes
|
97.3
|
54.1
|
157.9
|
102.0
|
Interest
expense
|
7.9
|
5.6
|
14.6
|
10.6
|
Other finance
expense
|
-
|
1.0
|
1.2
|
1.0
|
|
Earnings before
provision for income taxes
|
89.4
|
47.5
|
142.1
|
90.4
|
Provision for income
taxes
|
23.3
|
15.0
|
37.5
|
28.3
|
|
Net earnings for
the period
|
$
|
66.1
|
$
|
32.5
|
$
|
104.6
|
$
|
62.1
|
|
Basic earnings per
common share
|
$
|
1.07
|
$
|
0.52
|
$
|
1.69
|
$
|
1.00
|
|
Diluted earnings
per common share
|
$
|
1.06
|
$
|
0.52
|
$
|
1.68
|
$
|
1.00
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(LOSS)
(UNAUDITED)
|
|
|
|
|
Quarters ended June
30
|
Six months ended June
30
|
(in millions of
Canadian dollars)
|
2018
|
2017
|
2018
|
2017
|
|
Net earnings for
the period
|
$
|
66.1
|
$
|
32.5
|
$
|
104.6
|
$
|
62.1
|
|
Other comprehensive
income (loss)
|
Items that may be
reclassified to earnings
|
|
Unrealized foreign
exchange gains (losses) on
|
|
|
|
translation of
foreign operations
|
11.2
|
(11.6)
|
24.4
|
(16.0)
|
Items that may not
be reclassified to earnings
|
|
|
Actuarial gains
(losses) on pension and similar
|
|
|
|
obligations net of
taxes
|
3.1
|
(8.0)
|
5.2
|
(6.0)
|
|
Other comprehensive
income (loss)
|
14.3
|
(19.6)
|
29.6
|
(22.0)
|
|
Total
comprehensive income
|
$
|
80.4
|
$
|
12.9
|
$
|
134.2
|
$
|
40.1
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
|
|
|
|
|
June
30
|
December
31
|
(in millions of
Canadian dollars)
|
2018
|
2017
|
|
ASSETS
|
|
Current
|
|
|
Cash and cash
equivalents
|
$
|
117.2
|
$
|
125.8
|
|
Accounts
receivable
|
556.6
|
446.2
|
|
Inventories
|
1,009.1
|
819.9
|
|
Prepaid
expenses
|
14.2
|
17.2
|
|
Income
taxes
|
1.3
|
4.5
|
|
1,698.4
|
1,413.6
|
|
|
Property, Plant
and Equipment
|
261.8
|
246.8
|
Deferred Income
Tax Assets
|
4.5
|
4.7
|
Financial and
Other Assets
|
4.5
|
3.5
|
Goodwill and
Intangibles
|
88.6
|
90.5
|
|
$
|
2,057.8
|
$
|
1,759.1
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
Current
|
|
|
Bank
indebtedness
|
$
|
132.4
|
$
|
207.7
|
|
Accounts payable and
accrued liabilities
|
521.2
|
365.7
|
|
Income taxes
payable
|
10.2
|
21.6
|
|
Current portion
long-term debt
|
-
|
0.1
|
|
663.8
|
595.1
|
|
|
Long-Term
Debt
|
443.0
|
296.5
|
Pensions and
Benefits
|
4.2
|
12.0
|
Deferred Income
Tax Liabilities
|
18.8
|
17.7
|
Provisions and
Other Non-Current Liabilities
|
9.7
|
11.0
|
|
1,139.5
|
932.3
|
Shareholders'
Equity
|
|
|
Common
shares
|
541.5
|
536.6
|
|
Retained
earnings
|
253.2
|
190.5
|
|
Contributed
surplus
|
15.5
|
16.0
|
|
Accumulated other
comprehensive income
|
108.1
|
83.7
|
Total
Shareholders' Equity
|
918.3
|
826.8
|
|
Total Liabilities
and Shareholders' Equity
|
$
|
2,057.8
|
$
|
1,759.1
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
|
|
|
|
|
Quarters ended June
30
|
Six months ended June
30
|
(in millions of
Canadian dollars)
|
2018
|
2017
|
2018
|
2017
|
|
Operating
activities
|
|
|
Net earnings for the
period
|
$
|
66.1
|
$
|
32.5
|
$
|
104.6
|
$
|
62.1
|
|
Depreciation and
amortization
|
8.7
|
8.5
|
17.1
|
17.0
|
|
Provision for income
taxes
|
23.3
|
15.0
|
37.5
|
28.3
|
|
Interest
expense
|
7.9
|
5.6
|
14.6
|
10.6
|
|
(Gain) loss on sale
of property, plant and equipment
|
(0.2)
|
(0.1)
|
3.0
|
(0.2)
|
|
Share-based
compensation
|
0.1
|
0.1
|
0.2
|
0.3
|
|
Difference between
pension expense and
|
|
|
|
amount
funded
|
(0.6)
|
-
|
(0.8)
|
-
|
|
Debt accretion,
amortization and other
|
0.3
|
0.1
|
0.5
|
0.3
|
|
Change in fair value
of contingent consideration
|
-
|
1.0
|
1.2
|
1.0
|
|
Interest
paid
|
(10.1)
|
(10.0)
|
(11.4)
|
(10.4)
|
Cash from operating
activities before
|
|
|
non-cash working
capital
|
95.5
|
52.7
|
166.5
|
109.0
|
Changes in non-cash
working capital items
|
|
|
Accounts
receivable
|
5.7
|
25.2
|
(93.7)
|
(82.4)
|
|
Inventories
|
(117.7)
|
(91.5)
|
(162.0)
|
(105.8)
|
|
Accounts payable and
accrued liabilities
|
53.4
|
19.1
|
149.7
|
61.9
|
|
Other
|
5.5
|
(1.0)
|
3.1
|
(4.3)
|
Change in non-cash
working capital
|
(53.1)
|
(48.2)
|
(102.9)
|
(130.6)
|
|
Income tax paid,
net
|
(14.9)
|
(22.1)
|
(46.1)
|
(21.4)
|
Cash from (used
in) operating activities
|
27.5
|
(17.6)
|
17.5
|
(43.0)
|
Financing
activities
|
|
Increase (decrease)
in bank indebtedness
|
16.6
|
48.2
|
(75.3)
|
91.7
|
|
Issue of common
shares
|
2.2
|
-
|
4.2
|
1.1
|
|
Dividends on common
shares
|
(23.5)
|
(23.5)
|
(47.1)
|
(47.0)
|
|
Issuance of long-term
debt
|
-
|
-
|
146.0
|
-
|
|
Deferred financing
costs
|
-
|
-
|
(1.1)
|
-
|
Cash (used in)
from financing activities
|
(4.7)
|
24.7
|
26.7
|
45.8
|
Investing
activities
|
|
|
Purchase of property,
plant and equipment
|
(8.6)
|
(8.7)
|
(19.5)
|
(14.3)
|
|
Proceeds on sale of
property, plant and equipment
|
0.6
|
0.4
|
0.9
|
0.6
|
|
Payment of contingent
consideration
|
-
|
-
|
(4.5)
|
-
|
|
Purchase of
business
|
(36.8)
|
-
|
(36.8)
|
-
|
Cash used in
investing activities
|
(44.8)
|
(8.3)
|
(59.9)
|
(13.7)
|
Effect of exchange
rates on cash
|
|
|
and cash
equivalents
|
3.2
|
(3.3)
|
7.1
|
(6.6)
|
|
Decrease in cash
and cash equivalents
|
(18.8)
|
(4.5)
|
(8.6)
|
(17.5)
|
Cash and cash
equivalents, beginning of the period
|
136.0
|
168.8
|
125.8
|
181.8
|
Cash and cash
equivalents, end of the period
|
$
|
117.2
|
$
|
164.3
|
$
|
117.2
|
$
|
164.3
|
|
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
|
-
|
(47.1)
|
-
|
-
|
(47.1)
|
Net earnings for the
period
|
-
|
104.6
|
-
|
-
|
104.6
|
Other comprehensive
income for the period
|
-
|
-
|
-
|
29.6
|
29.6
|
Recognition of
share-based compensation
|
-
|
-
|
0.2
|
-
|
0.2
|
Share options
exercised
|
4.9
|
-
|
(0.7)
|
-
|
4.2
|
Transfer of net
actuarial gains on defined benefit plans
|
-
|
5.2
|
-
|
(5.2)
|
-
|
Balance, June 30,
2018
|
$
|
541.5
|
$
|
253.2
|
$
|
15.5
|
$
|
108.1
|
$
|
918.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
-
|
(47.0)
|
-
|
-
|
(47.0)
|
Net earnings for the
period
|
-
|
62.1
|
-
|
-
|
62.1
|
Other comprehensive
loss for the period
|
-
|
-
|
-
|
(22.0)
|
(22.0)
|
Recognition of
share-based compensation
|
-
|
-
|
0.3
|
-
|
0.3
|
Share options
exercised
|
1.2
|
-
|
(0.1)
|
-
|
1.1
|
Transfer of net
actuarial losses on defined benefit plans
|
-
|
(6.0)
|
-
|
6.0
|
-
|
Balance, June 30,
2017
|
$
|
533.6
|
$
|
171.0
|
$
|
16.1
|
$
|
99.1
|
$
|
819.8
|
|
View original
content:http://www.prnewswire.com/news-releases/russel-metals-announces-best-quarterly-results-since-2008-300694948.html
SOURCE Russel Metals Inc.