TORONTO, Feb. 7, 2019 /PRNewswire/ - Russel Metals Inc.
(RUS - TSX) announces continued solid financial results for the
2018 fourth quarter and for the year ended December 31, 2018.
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Three Months
Ended
December 31,
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|
Year Ended
December 31
|
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2018
|
|
2017
|
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2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
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Revenues
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$
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1,115
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$
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825
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$
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4,165
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$
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3,296
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|
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|
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|
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EBIT
1
|
$
|
71
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$
|
47
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$
|
331
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$
|
206
|
|
|
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|
|
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Net Income
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$
|
46
|
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$
|
28
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$
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219
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$
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124
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Earnings per
Share
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$
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0.74
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$
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0.45
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$
|
3.53
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$
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2.00
|
|
|
|
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|
|
|
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Free Cash Flow
1
|
$
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61
|
|
$
|
30
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$
|
300
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$
|
180
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|
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Dividends paid per
common share
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$
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0.38
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$
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0.38
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$
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1.52
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$
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1.52
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|
|
|
|
|
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Return on
Equity
|
|
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22%
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15%
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All amounts are
reported in millions of Canadian dollars except per share figures,
which are in Canadian dollars
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1 EBIT, Free Cash Flow and Return on
Equity 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. Return
on
equity represents net income divided by shareholders' equity at
period end.
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For the year ended December 31,
2018, we reported stellar results in all three of our
operating segments. Net income of $219
million or $3.53 per share on
revenues of $4.2 billion was almost
$100 million higher than the
comparable 2017 net income of $124
million or $2.00 per share on
revenue of $3.3 billion. Net
income for the 2018 fourth quarter was $46
million or $0.74 per share on
revenues of $1.1 billion. These
results compare to the net income of $28
million or $0.45 per share in
the 2017 fourth quarter.
Revenues in our metals service centers increased 25% to
$524 million for the quarter compared
to the same period in 2017 due to increased price per ton.
Steel price increases and continued growth in value-added
processing resulted in a 28% improvement in the average
selling price over the fourth quarter of 2017. Gross margins
were 20.9% compared to 19.3% in the fourth quarter of 2017.
Operating profits of $28 million were
80% higher than the $16 million
reported in the same quarter in 2017.
Revenues in our energy products segment increased 44% to
$432 million compared to $300 million in the 2017 fourth quarter.
Revenues increased primarily due to U.S. line pipe projects and
higher oil field service store activity. Gross margin as a
percentage of revenues was 17.8% consistent with the 2018 third
quarter and compared to 21.3% in the same quarter last year due to
lower margins on the large U.S. line pipe projects. This
segment had operating profits of $33
million compared to $28
million in the same quarter last year.
Revenues in our steel distributors segment increased by 50% to
$157 million compared to $104 million in the 2017 fourth quarter due to
higher steel prices and stronger demand. Gross margins as a
percentage of revenues were 13.3% compared to 14.9% due to product
mix. Operating profits were $11
million compared to $8 million
in the 2017 fourth quarter.
Mr. John G. Reid, President and
CEO, commented, "We are extremely pleased with the excellent
results in 2018 and would like to commend all our operations for
their tremendous execution during the fourth quarter and throughout
the year. Our strong earnings were a result of their ability
to utilize local market knowledge to react quickly to the changing
environment. In addition, growth in both our value-added
processing and our U.S. energy field stores and our distributor's
ability to source product through international trade expertise
greatly contributed to our outstanding year."
Mr. Reid continued, "Although steel prices are still at healthy
levels to date in 2019, they are experiencing some downward pricing
pressure. Specifically, flat rolled prices are lower as scrap
prices have fallen and import spreads offer attractive
opportunities as quotas reset. Plate continues to be the
strongest North American product due to strong demand levels.
The energy market is seeing a modest pull-back in capital spending
due to reduced oil prices. For the first quarter, we expect
stable demand with pressure on steel prices."
The Board of Directors approved a quarterly dividend of
$0.38 per common share payable
March 15, 2019 to shareholders of
record as of February 27, 2019.
The Company will be holding an Investor Conference Call on
Friday, February 8, 2019 at
9:00 a.m. ET to review its 2018
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 22, 2019. You will be
required to enter pass code 140202# 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, Acier
Wirth, Alberta Industrial Metals, Apex Distribution, Apex Monarch,
Apex Remington, Apex Valve Services, Apex Western Fiberglass, Arrow
Steel Processors, B&T Steel, Baldwin International, Color
Steels, Comco Pipe and Supply, Couleur Aciers, DuBose Steel, Fedmet Tubulars, JMS Russel
Metals, Leroux Steel, Mégantic
Métal, Métaux Russel, Métaux Russel Produits Spécialisés, Milspec,
Norton Metals, Pemco Steel, 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.
CONSOLIDATED
STATEMENTS OF EARNINGS
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|
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|
Quarters
ended
|
Years
ended
|
|
December
31
|
December
31
|
(in millions of
Canadian dollars, except per share data)
|
2018
|
2017
|
2018
|
2017
|
|
Revenues
|
$
|
1,115.4
|
$
|
825.1
|
$
|
4,165.0
|
$
|
3,296.0
|
Cost of
materials
|
905.2
|
662.2
|
3,280.4
|
2,632.7
|
Employee
expenses
|
80.1
|
70.6
|
335.1
|
274.9
|
Other operating
expenses
|
58.7
|
45.4
|
215.3
|
182.0
|
Asset
impairment
|
-
|
-
|
3.3
|
-
|
Earnings before
interest, finance expense
|
|
and provision for
income taxes
|
71.4
|
46.9
|
330.9
|
206.4
|
Interest
expense
|
8.4
|
6.9
|
31.6
|
23.9
|
Other finance
expense
|
-
|
0.3
|
1.2
|
3.3
|
Earnings before
provision for income taxes
|
63.0
|
39.7
|
298.1
|
179.2
|
Provision for income
taxes
|
16.8
|
11.7
|
79.1
|
55.4
|
Net earnings for
the period
|
$
|
46.2
|
$
|
28.0
|
$
|
219.0
|
$
|
123.8
|
Basic earnings per
common share
|
$
|
0.74
|
$
|
0.45
|
$
|
3.53
|
$
|
2.00
|
Diluted earnings
per common share
|
$
|
0.74
|
$
|
0.45
|
$
|
3.52
|
$
|
2.00
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
Quarters
ended
|
Years
ended
|
|
December
31
|
December
31
|
(in millions of
Canadian dollars)
|
2018
|
2017
|
2018
|
2017
|
Net earnings for
the period
|
$
|
46.2
|
$
|
28.0
|
$
|
219.0
|
$
|
123.8
|
Other comprehensive
income
|
|
Items that may be
reclassified to earnings
|
|
Unrealized foreign
exchange gains (losses) on
|
|
translation of foreign
operations
|
29.7
|
2.4
|
44.8
|
(31.4)
|
Items that may not
be reclassified to earnings
|
|
Actuarial gains
(losses) on pension and similar
|
|
obligations, net of
taxes
|
(6.1)
|
(2.7)
|
3.4
|
(1.3)
|
Other comprehensive
income (loss)
|
23.6
|
(0.3)
|
48.2
|
(32.7)
|
Total
comprehensive income
|
$
|
69.8
|
$
|
27.7
|
$
|
267.2
|
$
|
91.1
|
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
|
|
December
31
|
December
31
|
(in millions of
Canadian dollars)
|
2018
|
2017
|
ASSETS
|
|
Current
|
|
Cash and cash
equivalents
|
$
|
124.3
|
$
|
125.8
|
Accounts
receivable
|
567.5
|
446.2
|
Inventories
|
1,052.5
|
819.9
|
Prepaids and
other
|
14.1
|
17.2
|
Income taxes
receivable
|
5.2
|
4.5
|
|
1,763.6
|
1,413.6
|
|
|
Property, Plant
and Equipment
|
268.9
|
246.8
|
Deferred Income
Tax Assets
|
4.2
|
4.7
|
Financial and
Other Assets
|
4.4
|
3.5
|
Goodwill and
Intangibles
|
86.2
|
90.5
|
|
$
|
2,127.3
|
$
|
1,759.1
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
Current
|
|
Bank
indebtedness
|
$
|
128.5
|
$
|
207.7
|
Accounts payable and
accrued liabilities
|
494.7
|
365.7
|
Income taxes
payable
|
21.5
|
21.6
|
Current portion
long-term debt
|
-
|
0.1
|
|
644.7
|
595.1
|
|
|
Long-Term
Debt
|
443.6
|
296.5
|
Pensions and
Benefits
|
5.8
|
12.0
|
Deferred Income
Tax Liabilities
|
20.1
|
17.7
|
Provisions and
Other Non-Current Liabilities
|
8.2
|
11.0
|
|
1,122.4
|
932.3
|
Shareholders'
Equity
|
|
Common
shares
|
542.1
|
536.6
|
Retained
earnings
|
318.6
|
190.5
|
Contributed
surplus
|
15.7
|
16.0
|
Accumulated other
comprehensive income
|
128.5
|
83.7
|
Total
Shareholders' Equity
|
1,004.9
|
826.8
|
Total Liabilities
and Shareholders' Equity
|
$
|
2,127.3
|
$
|
1,759.1
|
|
CONSOLIDATED
STATEMENTS OF CASHFLOW
|
|
Quarters
ended
|
Years
ended
|
|
December
31
|
December
31
|
(in
millions of Canadian dollars)
|
2018
|
2017
|
2018
|
2017
|
Operating
activities
|
|
Net earnings for the
period
|
$
|
46.2
|
$
|
28.0
|
$
|
219.0
|
$
|
123.8
|
Depreciation and
amortization
|
9.6
|
8.7
|
35.7
|
34.2
|
Provision for income
taxes
|
16.8
|
11.7
|
79.1
|
55.4
|
Interest
expense
|
8.4
|
6.9
|
31.6
|
23.9
|
Loss (gain) on sale of
property, plant and equipment
|
(0.1)
|
(1.0)
|
2.8
|
(1.9)
|
Share-based
compensation
|
0.1
|
0.2
|
0.5
|
0.7
|
Difference between
pension expense and
|
|
amount
funded
|
(0.3)
|
(0.7)
|
(1.6)
|
(0.7)
|
Debt accretion,
amortization and other
|
0.2
|
0.2
|
1.0
|
0.7
|
Change in fair value
of contingent consideration
|
-
|
0.3
|
1.2
|
3.3
|
Interest
paid
|
(10.2)
|
(11.1)
|
(27.9)
|
(23.3)
|
Cash from operating
activities
|
|
before
non-cash working capital
|
70.7
|
43.2
|
341.4
|
216.1
|
Changes in non-cash
working capital items
|
|
Accounts
receivable
|
99.5
|
65.9
|
(101.0)
|
(86.2)
|
Inventories
|
(8.4)
|
(43.3)
|
(195.5)
|
(208.0)
|
Accounts payable and
accrued liabilities
|
(36.0)
|
(73.0)
|
117.7
|
52.1
|
Other
|
(0.8)
|
(0.4)
|
3.2
|
(8.6)
|
Change in non-cash
working capital
|
54.3
|
(50.8)
|
(175.6)
|
(250.7)
|
Income tax paid,
net
|
(13.7)
|
(4.7)
|
(77.9)
|
(33.8)
|
Cash from (used
in) operating activities
|
111.3
|
(12.3)
|
87.9
|
(68.4)
|
Financing
activities
|
|
Decrease (increase) in
bank borrowings
|
(38.6)
|
23.1
|
(79.3)
|
172.8
|
Issue of common
shares
|
0.3
|
2.5
|
4.7
|
3.6
|
Dividends on common
shares
|
(23.6)
|
(23.5)
|
(94.3)
|
(93.9)
|
Issuance of long-term
debt
|
-
|
-
|
146.0
|
-
|
Repayment of long-term
debt
|
-
|
-
|
-
|
(0.1)
|
Deferred financing
costs
|
-
|
-
|
(1.1)
|
-
|
Cash (used in)
from financing activities
|
(61.9)
|
2.1
|
(24.0)
|
82.4
|
Investing
activities
|
|
Purchase of property,
plant and equipment
|
(10.1)
|
(13.5)
|
(41.3)
|
(35.7)
|
Proceeds on sale of
property, plant and equipment
|
1.0
|
2.0
|
2.4
|
3.7
|
Purchase of
business
|
-
|
-
|
(36.8)
|
(25.6)
|
Payment of contingent
consideration
|
-
|
-
|
(4.5)
|
-
|
Cash used in
investing activities
|
(9.1)
|
(11.5)
|
(80.2)
|
(57.6)
|
Effect of exchange
rates on cash
|
|
and cash
equivalents
|
10.7
|
1.7
|
14.8
|
(12.4)
|
Increase
(decrease) in cash and cash equivalents
|
51.0
|
(20.0)
|
(1.5)
|
(56.0)
|
Cash and cash
equivalents, beginning of the period
|
73.3
|
145.8
|
125.8
|
181.8
|
Cash and cash
equivalents, end of the year
|
$
|
124.3
|
$
|
125.8
|
$
|
124.3
|
$
|
125.8
|
|
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
|
|
|
|
|
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
|
-
|
(94.3)
|
-
|
-
|
(94.3)
|
Net income for the
year
|
-
|
219.0
|
-
|
-
|
219.0
|
Other comprehensive
income for the year
|
-
|
-
|
-
|
48.2
|
48.2
|
Recognition of
share-based compensation
|
-
|
-
|
0.5
|
-
|
0.5
|
Share options
exercised
|
5.5
|
-
|
(0.8)
|
-
|
4.7
|
Transfer of net
actuarial gains on defined benefit plans
|
-
|
3.4
|
-
|
(3.4)
|
-
|
Balance, December
31, 2018
|
$
|
542.1
|
$
|
318.6
|
$
|
15.7
|
$
|
128.5
|
$
|
1,004.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
-
|
(93.9)
|
-
|
-
|
(93.9)
|
Net income for the
year
|
-
|
123.8
|
-
|
-
|
123.8
|
Other comprehensive
loss for the year
|
-
|
-
|
-
|
(32.7)
|
(32.7)
|
Recognition of
share-based compensation
|
-
|
-
|
0.7
|
-
|
0.7
|
Share options
exercised
|
4.2
|
-
|
(0.6)
|
-
|
3.6
|
Transfer of net
actuarial losses on defined benefit plans
|
-
|
(1.3)
|
-
|
1.3
|
-
|
Balance, December
31, 2017
|
$
|
536.6
|
$
|
190.5
|
$
|
16.0
|
$
|
83.7
|
$
|
826.8
|
View original
content:http://www.prnewswire.com/news-releases/russel-metals-announces-2018-annual-and-fourth-quarter-results-300792048.html
SOURCE Russel Metals Inc.