TORONTO, Nov. 4, 2020 /CNW/ - Russel Metals Inc. (RUS
- TSX) announces financial results for the three months ended
September 30, 2020.
Revenues of $615
Million and EBITDA of $47
Million
Liquidity of $521 Million and Net Debt to Invested Capital
26%
|
Three Months
Ended
|
Nine Months
Ended
|
|
Sep 30
2020
|
Sep 30
2019
|
Jun 30
2020
|
Sep 30
2020
|
Sep 30
2019
|
|
|
|
|
|
|
Revenues
|
$
|
615
|
$
|
869
|
$
|
588
|
$
|
2,018
|
$
|
2,839
|
EBITDA1
|
47
|
49
|
32
|
114
|
185
|
EBIT1
|
32
|
35
|
16
|
68
|
144
|
Net Income
|
18
|
18
|
5
|
33
|
83
|
Earnings per
share
|
0.29
|
0.29
|
0.07
|
0.54
|
1.34
|
Free Cash Flow per
share1
|
0.46
|
0.51
|
0.25
|
1.12
|
2.16
|
Cash from
Operations
|
81
|
65
|
116
|
265
|
109
|
Shareholders'
Equity
|
918
|
984
|
931
|
918
|
984
|
Dividends Paid per
common share
|
0.38
|
0.38
|
0.38
|
1.14
|
1.14
|
All amounts are
reported in millions of Canadian dollars except per share figures,
which are in Canadian dollars.
|
1
EBITDA, EBIT and Free Cash Flow per share are non-GAAP
measures. EBITDA represent earnings before interest, income
taxes and depreciation. EBIT represents earnings before
interest, and income taxes. Free cash flow per share
represents cash from operating activities before change in working
capital less capital expenditures divided by average shares
outstanding for the period. Our Management's Discussion and
Analysis includes additional information regarding these non-GAAP
measures, including a reconciliation to the most directly
comparable GAAP measures, under the headings "Non-GAAP Measures",
"EBIT and EBITDA", and "Free Cash Flow".
|
Our basic earnings per share of $0.29 for the quarter ended September 30, 2020, was equal to the third
quarter of 2019 and higher than the $0.07 reported in the 2020 second quarter.
Revenues of $615 million were lower
than the third quarter of 2019 and higher than the $588 million in the 2020 second quarter.
Our EBITDA for the quarter was $47
million compared to $32
million in the 2020 second quarter. For the nine
months ended September 30, 2020, our
basic earnings per share of $0.54
compared to $1.34 for the same period
in 2019.
During the 2020 third quarter, items of note that negatively
impacted EBITDA included a net increase in our inventory valuation
reserves of $2 million related to our
line pipe and OCTG operations and non-cash stock-based compensation
expense of $2 million due to our
improved share price.
Mr. John G. Reid, President and
CEO, commented, "I would like to acknowledge all of our employees
for their continued commitment and discipline to our safety
protocols as they work diligently to ensure the safety of their
families, colleagues, and business partners. The persistence
of the virus in the communities that we serve has prolonged the
2020 challenges and your efforts are truly inspiring."
Mr. Reid concluded, "Although business conditions remain
challenging, they are improving. Late in the 2020 third
quarter and early in the 2020 fourth quarter our metals service
centers and steel distributors experienced a modest increase in
demand and a rapid increase in coil and plate pricing. In our
energy products segment, we have seen rig counts improve slightly
and energy prices remain range bound. Results at the line
pipe/OCTG component of this segment reflect the depressed rig
counts, however, they made solid progress reducing their capital
employed primarily through inventory reductions and remain focused
on continuing to reduce their capital."
The Board of Directors approved a quarterly dividend of
$0.38 per common share payable
December 15, 2020 to shareholders of
record as of November 25, 2020.
We will continue our practice of prudently reviewing our dividend
and ensure that it is supported by a strong balance sheet and cash
flows.
Market Conditions
In the 2020 third quarter, market
conditions gradually improved from the deterioration in the 2020
second quarter. Our operations were deemed essential and
remained open in the 2020 second quarter with reduced
activity. At the end of the 2020 second quarter, many
jurisdictions in which we operate began to re-open their economies
leading to increased demand. As a result, our operations
generally realized higher operating volumes and activity as the
2020 third quarter progressed.
Business Optimization
During the 2020 third quarter
we completed the final step in our rationalization of our B.C.
region through the sale of the real estate related to our
Kelowna and Kitimat service centers. The closure of
these branches will reduce operating costs in the region while
still allowing us to provide continued service to our customers
through our other B.C. locations. The sale of these two
facilities resulted in proceeds of $10
million and a gain on sale of $6
million.
In our energy products segment, we reduced our line pipe/OCTG
inventory by $31 million, closed
three of our Elite Supply Partners locations and accelerated the
closure of two of our Pioneer Pipe third-party yards.
We continued to increase our value-added processing capability
in the 2020 third quarter with the commissioning of the
Trenton, Georgia tube laser and
bar storage facility at the end of the quarter.
Liquidity and Capital Structure Improvements
During
the 2020 third quarter, we generated $81
million of cash from operating activities and ended the
quarter with total liquidity of $521
million.
On September 29, 2020, we extended
our $450 million credit facility from
September 2021 to September
2023. In addition to the extension, the credit facility was
updated to provide additional borrowing base flexibility and other
improvements.
On October 1, 2020, we announced
the redemption of $150 million of our
6% senior unsecured notes due April 19,
2022 to be financed primarily by cash on hand with the
remainder financed through our credit facility. On
October 13, 2020, we announced that
we entered into an underwriting agreement to sell $150 million of 5.75% senior unsecured notes due
2025 and on October 27, 2020 the
notes were issued. Concurrent with this announcement, we
announced the conditional redemption of the remaining $150 million of our 6% senior unsecured notes due
April 19, 2022. The redemptions
of the $300 million of 6% senior
unsecured notes will be completed in November 2020. The
combination of these initiatives will reduce our interest expense
and extend our debt maturities.
The Company will be holding an Investor Conference Call on
Thursday, November 5, 2020 at
9:00 a.m. ET to review its 2020 third
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, Thursday, November 19, 2020. You will be
required to enter pass code 699176# 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 metals distribution 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)
|
|
|
|
|
Quarters
ended September 30
|
Nine months
ended September 30
|
|
(in millions of
Canadian dollars, except per share data)
|
2020
|
2019
|
2020
|
2019
|
Revenues
|
$
|
614.9
|
$
|
869.2
|
$
|
2,017.7
|
$
|
2,838.5
|
Cost of
materials
|
498.1
|
717.4
|
1,638.4
|
2,320.5
|
Employee
expenses
|
47.4
|
69.5
|
171.0
|
225.6
|
Other operating
expenses
|
37.2
|
47.4
|
136.4
|
148.4
|
Asset
impairment
|
-
|
-
|
3.7
|
-
|
Earnings before
interest and
|
|
|
|
|
provision for income
taxes
|
32.2
|
34.9
|
68.2
|
144.0
|
Interest
expense
|
9.1
|
10.0
|
27.7
|
31.0
|
Earnings before
provision for income taxes
|
23.1
|
24.9
|
40.5
|
113.0
|
Provision for income
taxes
|
4.9
|
6.8
|
7.2
|
29.8
|
Net earnings for
the period
|
$
|
18.2
|
$
|
18.1
|
$
|
33.3
|
$
|
83.2
|
Basic earnings per
common share
|
$
|
0.29
|
$
|
0.29
|
$
|
0.54
|
$
|
1.34
|
Diluted earnings
per common share
|
$
|
0.29
|
$
|
0.29
|
$
|
0.54
|
$
|
1.34
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
|
|
|
|
Quarters
ended September 30
|
Nine months
ended September 30
|
|
(in millions of
Canadian dollars)
|
2020
|
2019
|
2020
|
2019
|
Net earnings for
the period
|
$
|
18.2
|
$
|
18.1
|
$
|
33.3
|
$
|
83.2
|
Other comprehensive
(loss) income
|
|
|
|
|
Items that may be
reclassified to earnings
|
|
|
|
|
Unrealized foreign exchange
(losses) gains on
|
|
|
|
|
translation of foreign
operations
|
(12.0)
|
6.8
|
14.8
|
(17.2)
|
Items that may not
be reclassified to earnings
|
|
|
|
|
Actuarial (losses) gains on pension
and similar
|
|
|
|
|
obligations net of
taxes
|
3.8
|
0.7
|
(4.8)
|
(2.0)
|
Other comprehensive
(loss) income
|
(8.2)
|
7.5
|
10.0
|
(19.2)
|
Total comprehensive
income
|
$
|
10.0
|
$
|
25.6
|
$
|
43.3
|
$
|
64.0
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION (UNAUDITED)
|
|
|
September
30 2020
|
December
31 2019
|
(in millions of
Canadian dollars)
|
ASSETS
|
|
|
Current
|
|
|
Cash
and cash equivalents
|
$
|
121.5
|
$
|
16.0
|
Accounts receivable
|
346.6
|
458.1
|
Inventories
|
789.8
|
883.6
|
Prepaid and other
|
11.4
|
18.1
|
Income taxes receivable
|
16.7
|
18.9
|
|
1,286.0
|
1,394.7
|
|
|
|
Property, Plant and
Equipment
|
277.3
|
288.9
|
Right-of-Use
Assets
|
83.4
|
90.1
|
Deferred Income Tax
Assets
|
3.7
|
4.8
|
Pension and
Benefits
|
0.8
|
5.4
|
Financial and Other
Assets
|
4.9
|
4.0
|
Goodwill and
Intangibles
|
131.6
|
137.0
|
|
$
|
1,787.7
|
$
|
1,924.9
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
Current
|
|
|
Bank
indebtedness
|
$
|
-
|
$
|
62.1
|
Accounts payable and accrued
liabilities
|
271.3
|
326.4
|
Short-term lease
obligations
|
17.5
|
17.1
|
Income taxes payable
|
7.7
|
0.3
|
|
296.5
|
405.9
|
|
|
|
Long-Term
Debt
|
445.7
|
444.8
|
Pensions and
Benefits
|
12.3
|
10.4
|
Deferred Income Tax
Liabilities
|
12.6
|
13.2
|
Long-term Lease
Obligations
|
90.3
|
94.4
|
Provisions and
Other Non-Current Liabilities
|
12.8
|
11.6
|
|
870.2
|
980.3
|
Shareholders'
Equity
|
|
|
Common shares
|
544.0
|
543.7
|
Retained earnings
|
242.1
|
284.5
|
Contributed surplus
|
15.9
|
15.7
|
Accumulated other comprehensive
income
|
115.5
|
100.7
|
Total Shareholders'
Equity
|
917.5
|
944.6
|
Total Liabilities
and Shareholders' Equity
|
$
|
1,787.7
|
$
|
1,924.9
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOW (UNAUDITED)
|
|
|
|
|
Quarters
ended September 30
|
Nine months
ended September 30
|
|
(in millions
of Canadian dollars)
|
2020
|
2019
|
2020
|
2019
|
Operating
activities
|
|
|
|
|
Net
earnings for the period
|
$
|
18.2
|
$
|
18.1
|
$
|
33.3
|
$
|
83.2
|
Depreciation and
amortization
|
15.0
|
13.8
|
46.0
|
41.4
|
Provision for income
taxes
|
4.9
|
6.8
|
7.2
|
29.8
|
Interest expense
|
9.1
|
10.0
|
27.7
|
31.0
|
Gain
on sale of property, plant and equipment
|
(6.1)
|
(0.1)
|
(6.3)
|
(0.4)
|
Asset impairment
|
-
|
-
|
3.7
|
-
|
Share-based compensation
|
0.1
|
0.1
|
0.3
|
0.2
|
Difference between pension expense
and
|
|
|
|
|
amount
funded
|
-
|
-
|
-
|
(0.7)
|
Debt
accretion, amortization and other
|
0.4
|
0.3
|
1.0
|
0.9
|
Interest paid, including interest
on lease obligations
|
(6.5)
|
(7.3)
|
(24.6)
|
(27.5)
|
Cash from operating
activities before
|
|
|
|
|
non-cash working capital
|
35.1
|
41.7
|
88.3
|
157.9
|
Changes in non-cash
working capital items
|
|
|
|
|
Accounts receivable
|
(18.7)
|
27.7
|
122.4
|
58.9
|
Inventories
|
67.4
|
47.2
|
101.4
|
79.9
|
Accounts payable and accrued
liabilities
|
(11.2)
|
(45.4)
|
(58.5)
|
(126.5)
|
Other
|
3.1
|
3.7
|
6.7
|
(0.9)
|
Change in non-cash
working capital
|
40.6
|
33.2
|
172.0
|
11.4
|
Income tax refund (paid),
net
|
5.5
|
(10.0)
|
4.6
|
(60.7)
|
Cash from operating
activities
|
81.2
|
64.9
|
264.9
|
108.6
|
Financing
activities
|
|
|
|
|
(Decrease) increase in bank
indebtedness
|
(11.3)
|
(0.2)
|
(62.1)
|
6.8
|
Issue of common shares
|
-
|
1.2
|
0.2
|
1.3
|
Dividends on common
shares
|
(23.6)
|
(23.6)
|
(70.9)
|
(70.8)
|
Deferred financing
|
(1.1)
|
-
|
(1.1)
|
-
|
Lease obligations
|
(4.7)
|
(4.2)
|
(14.1)
|
(12.9)
|
Cash used in
financing activities
|
(40.7)
|
(26.8)
|
(148.0)
|
(75.6)
|
Investing
activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
(6.4)
|
(9.7)
|
(18.8)
|
(23.6)
|
Proceeds on sale of property, plant
and equipment
|
1.6
|
0.2
|
4.9
|
0.9
|
Cash used in
investing activities
|
(4.8)
|
(9.5)
|
(13.9)
|
(22.7)
|
Effect of exchange
rates on cash
|
|
|
|
|
and cash
equivalents
|
(3.3)
|
1.9
|
2.5
|
(6.0)
|
Increase in cash
and cash equivalents
|
32.4
|
30.5
|
105.5
|
4.3
|
Cash and cash
equivalents, beginning of the period
|
89.1
|
98.1
|
16.0
|
124.3
|
Cash and cash
equivalents, end of the period
|
$
|
121.5
|
$
|
128.6
|
$
|
121.5
|
$
|
128.6
|
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY (UNAUDITED)
|
|
|
|
|
Accumulated
Other
Comprehensive
Income
|
|
|
|
|
|
|
|
Common
Shares
|
Retained
Earnings
|
Contributed
Surplus
|
|
(in
millions of Canadian dollars)
|
Total
|
Balance, January 1,
2020
|
$
543.7
|
$
284.5
|
$
15.7
|
$
100.7
|
$
944.6
|
Payment of
dividends
|
-
|
(70.9)
|
-
|
-
|
(70.9)
|
Net earnings for the
period
|
-
|
33.3
|
-
|
-
|
33.3
|
Other comprehensive
income for the period
|
-
|
-
|
-
|
10.0
|
10.0
|
Recognition of
share-based compensation
|
-
|
-
|
0.3
|
-
|
0.3
|
Share options
exercised
|
0.3
|
-
|
(0.1)
|
-
|
0.2
|
Transfer of net
actuarial losses on defined benefit plans
|
-
|
(4.8)
|
-
|
4.8
|
-
|
Balance, September
30, 2020
|
$
544.0
|
$
242.1
|
$
15.9
|
$
115.5
|
$
917.5
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Other
Comprehensive
Income
|
|
|
|
|
|
|
|
Common
Shares
|
Retained
Earnings
|
Contributed
Surplus
|
|
(in
millions of Canadian dollars)
|
Total
|
Balance, January 1,
2019
|
$
542.1
|
$
318.6
|
$
15.7
|
$
128.5
|
$ 1,004.9
|
Payment of
dividends
|
-
|
(70.8)
|
-
|
-
|
(70.8)
|
Change in accounting
policy
|
-
|
(16.1)
|
-
|
-
|
(16.1)
|
Net earnings for the
period
|
-
|
83.2
|
-
|
-
|
83.2
|
Other comprehensive
loss for the period
|
-
|
-
|
-
|
(19.2)
|
(19.2)
|
Recognition of
share-based compensation
|
-
|
-
|
0.2
|
-
|
0.2
|
Share options
exercised
|
1.6
|
-
|
(0.3)
|
-
|
1.3
|
Transfer of net
actuarial losses on defined benefit plans
|
-
|
(2.0)
|
-
|
2.0
|
-
|
Balance, September
30, 2019
|
$
543.7
|
$
312.9
|
$
15.6
|
$
111.3
|
$
983.5
|
View original
content:http://www.prnewswire.com/news-releases/russel-metals-announces-2020-third-quarter-results-301166546.html
SOURCE Russel Metals Inc.