TORONTO, Feb. 10, 2021 /PRNewswire/ - Russel Metals
Inc. (TSX: RUS) announces financial results for the fourth quarter
and the year ended December 31,
2020.
Annual Revenues of $2.7
Billion and Adjusted EBITDA of $159
Million
Liquidity of $406 Million and Net Debt to Invested Capital of
24%
|
Three Months
Ended
|
Year Ended
|
|
Dec 31
2020
|
Dec 31
2019
|
Sep 30
2020
|
Dec 31
2020
|
Dec 31
2019
|
|
|
|
|
|
|
Revenues
|
$
|
671
|
$
|
837
|
$
|
615
|
$
|
2,688
|
$
|
3,676
|
EBITDA1
|
11
|
18
|
47
|
125
|
203
|
Adjusted
EBITDA1
|
41
|
18
|
47
|
159
|
203
|
Net Income
(Loss)
|
(9)
|
(7)
|
18
|
25
|
77
|
Earnings (Loss) per
share
|
(0.14)
|
(0.11)
|
0.29
|
0.39
|
1.23
|
Cash from
Operations
|
106
|
141
|
81
|
371
|
250
|
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.
|
1Adjusted EBITDA and EBITDA are
non-GAAP measures. Adjusted EBITDA represent earnings before
long-lived asset impairment, interest, income taxes, depreciation
and amortization. EBITDA represents earnings before interest,
income taxes, depreciation and amortization. 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", and "Reconciliation of net earnings to Adjusted
EBITDA."
|
Our net earnings for the year ended December 31, 2020, were $25 million or $0.39 per share compared to net earnings of
$77 million or $1.23 per share for 2019. Our adjusted net
earnings (excluding the after-tax impact of non-cash asset
impairment charges of $26 million
related to our U.S. energy operations) for the year ended
December 31, 2020 were $50 million or $0.81 per share. Revenues for the year
ended December 31, 2020 were
$2.7 billion compared to $3.7 billion in 2019. Adjusted EBITDA was
$159 million compared to $203 million in 2019.
In the 2020 fourth quarter, our revenues, Adjusted EBITDA and
adjusted earnings per share were $671
million, $41 million and
$0.22 per share, respectively.
Revenues during the quarter benefited from multiple steel price
increases and stronger seasonal demand in the metals service
centers and steel distributors segments. During the 2020
fourth quarter, items of note that negatively impacted Adjusted
EBITDA included a net increase in our inventory valuation reserves
of $3 million related to our line
pipe/OCTG operations and non-cash stock-based compensation expense
of $4 million due to our improved
share price. During the 2020 fourth quarter, we recognized
$8 million in federal government wage
subsidies, as compared to $20 million
in the 2020 third quarter.
Mr. John G. Reid, President and
CEO, commented, "The global pandemic created a new working
environment causing us to adapt our operations as an essential
industry and develop new health and safety protocols for our
employees and other stakeholders. I want to commend the teams
in our service center and distribution operations for their
tremendous efforts in successfully navigating 2020 as we emerged a
stronger company. Our metals service centers and distribution
operations experienced improving demand and multiple price
increases in the fourth quarter which provides a springboard going
into 2021."
Mr. Reid continued, "Oil prices and rig counts continued to
modestly improve in the 2020 fourth quarter. Steel price
increases have recently been reflected in rising energy product
prices as the supply chain continues to rebalance. During the
fourth quarter we continued our strategy to redeploy capital from
our OCTG and line pipe energy operations and 2021 offers further
opportunities to advance this initiative."
The Board of Directors approved a quarterly dividend of
$0.38 per common share payable
March 15, 2021 to shareholders of
record as of February 26, 2021.
We will continue our practice of prudently reviewing our dividend
to ensure it is supported by a strong balance sheet and cash
flows.
Market Conditions
The global pandemic created
extraordinary market volatility in 2020, from a severe
deterioration of activity in the second quarter to gradual
improvement through the third quarter and a stronger pick-up
towards the end of the fourth quarter in metals service centers and
steel distributors. Our operations were deemed essential and
remained open throughout 2020. In the 2020 fourth quarter,
rapid increases in raw material pricing, improved demand and low
inventory levels throughout the supply chain drove a substantial
increase in steel prices.
Business Optimization
During 2020, we implemented a
number of our value-added processing initiatives in several of our
regions. On December 30, 2020,
we acquired Sanborn Tube Sales of Wisconsin, Inc. ("Sanborn "), a leader in
value-added manufacturing, for US$13
million. Sanborn operates three tube lasers from its
facility located in Pewaukee,
Wisconsin and will complement our existing locations in that
region. During 2020, we expanded our Trenton, Georgia facility which now includes a
bar storage facility, fiber tube and flat lasers. The
rationalization of our B.C. region was completed through the
closure and sale of the real estate related to our Kelowna and Kitimat service centers. The sale of
these two facilities resulted in proceeds of $10 million and a gain on sale of $6 million which was recorded in the 2020 third
quarter.
In our energy products segment, we furthered our objective of
reducing capital employed in our line pipe/OCTG operations.
During the year, we completed the merger of our two Canadian line
pipe/OCTG operations and advanced the orderly liquidation of our
U.S. line pipe/OCTG operations. As a result, we reduced our
line pipe/OCTG inventory by $73
million for the year, including $34
million in the 2020 fourth quarter. In our field
stores, we rationalized six Elite Supply Partners locations.
Liquidity and Capital Structure Improvements
During
2020, we generated $371 million of
cash from operating activities and ended the year with total
liquidity of $406 million.
During September 2020, we updated
and improved our credit facility to provide additional borrowing
base flexibility and extended its maturity. In October 2020, we issued $150 million 5 ¾% senior unsecured notes due
October 2025. In November 2020,
we redeemed our $300 million 6%
senior unsecured notes due 2022. The combination of these
initiatives will reduce our interest expense and extend our debt
maturities. During the 2020 fourth quarter, our interest
expense included $1.3 million in
deferred financing costs related to the redemption of senior
unsecured notes due 2022.
The Company will be holding an Investor Conference Call on
Thursday, February 11, 2021 at
9:00 a.m. ET to review its 2020
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, Thursday, February 25, 2021. You will be
required to enter pass code 972349# 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 metals service centers operations carry 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. These operations distribute tubes,
flanges, valves, fittings, oil country tubular goods ("OCTG") and
line pipe through our field stores and OCTG/line pipe operations.
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; 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.
CONSOLIDATED
STATEMENTS OF EARNINGS (LOSS)
|
|
|
|
|
|
|
|
|
Quarters
ended
|
Years
ended
|
|
December
31
|
December
31
|
(in millions of
Canadian dollars, except per share data)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenues
|
$
|
670.6
|
$
|
837.4
|
$
|
2,688.3
|
$
|
3,675.9
|
Cost of
materials
|
|
531.2
|
|
715.4
|
|
2,169.6
|
|
3,035.9
|
Employee
expenses
|
|
60.3
|
|
70.3
|
|
231.3
|
|
295.9
|
Other operating
expenses
|
|
52.6
|
|
49.4
|
|
189.0
|
|
197.8
|
Impairment of
goodwill and long-lived assets
|
|
30.1
|
|
-
|
|
33.8
|
|
-
|
Earnings before
interest and provision for income taxes
|
|
(3.6)
|
|
2.3
|
|
64.6
|
|
146.3
|
Interest
expense
|
|
9.0
|
|
9.9
|
|
36.7
|
|
40.9
|
Earnings (loss)
before provision for income taxes
|
|
(12.6)
|
|
(7.6)
|
|
27.9
|
|
105.4
|
Provision for
(recovery of) income taxes
|
|
(3.8)
|
|
(1.0)
|
|
3.4
|
|
28.8
|
Net earnings
(loss) for the period
|
$
|
(8.8)
|
$
|
(6.6)
|
$
|
24.5
|
$
|
76.6
|
Basic earnings
(loss) per common share
|
$
|
(0.14)
|
$
|
(0.11)
|
$
|
0.39
|
$
|
1.23
|
Diluted earnings
(loss) per common share
|
$
|
(0.14)
|
$
|
(0.11)
|
$
|
0.39
|
$
|
1.23
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
|
Quarters
ended
|
Years
ended
|
|
December
31
|
December
31
|
(in millions of
Canadian dollars)
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net earnings
(loss) for the period
|
$
|
(8.8)
|
$
|
(6.6)
|
$
|
24.5
|
$
|
76.6
|
Other comprehensive
income (loss)
|
|
|
|
|
|
|
|
|
Items that may be
reclassified to earnings
|
|
|
|
|
|
|
|
|
Unrealized foreign exchange losses
on
|
|
|
|
|
|
|
|
|
translation of foreign
operations
|
|
(25.2)
|
|
(10.6)
|
|
(10.4)
|
|
(27.8)
|
Items that may not
be reclassified to earnings
|
|
|
|
|
|
|
|
|
Actuarial gains (losses) on pension
and similar
|
|
|
|
|
|
|
|
|
obligations, net of
taxes
|
|
2.8
|
|
1.9
|
|
(2.0)
|
|
(0.1)
|
Other comprehensive
income (loss)
|
|
(22.4)
|
|
(8.7)
|
|
(12.4)
|
|
(27.9)
|
Total
comprehensive income (loss)
|
$
|
(31.2)
|
$
|
(15.3)
|
$
|
12.1
|
$
|
48.7
|
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
|
|
|
|
|
|
|
December
31
|
December
31
|
(in millions of
Canadian dollars)
|
2020
|
2019
|
ASSETS
|
|
|
|
|
Current
|
|
|
|
|
Cash and cash
equivalents
|
$
|
26.3
|
$
|
16.0
|
Accounts receivable
|
|
344.0
|
|
458.1
|
Inventories
|
|
716.4
|
|
883.6
|
Prepaids and other
|
|
13.6
|
|
18.1
|
Income taxes receivable
|
|
19.8
|
|
18.9
|
|
|
1,120.1
|
|
1,394.7
|
|
|
|
|
|
Property, Plant
and Equipment
|
|
269.5
|
|
288.9
|
Right-of-use
Assets
|
|
81.4
|
|
90.1
|
Deferred Income
Tax Assets
|
|
5.9
|
|
4.8
|
Pension and
Benefits
|
|
5.1
|
|
5.4
|
Financial and
Other Assets
|
|
4.7
|
|
4.0
|
Goodwill and
Intangibles
|
|
109.6
|
|
137.0
|
|
$
|
1,596.3
|
$
|
1,924.9
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
|
|
|
|
|
Bank indebtedness
|
$
|
-
|
$
|
62.1
|
Accounts payable and accrued
liabilities
|
|
294.6
|
|
326.4
|
Short-term lease
obligations
|
|
16.9
|
|
17.1
|
Income taxes payable
|
|
3.7
|
|
0.3
|
|
|
315.2
|
|
405.9
|
|
|
|
|
|
Long-Term
Debt
|
|
293.7
|
|
444.8
|
Pensions and
Benefits
|
|
13.0
|
|
10.4
|
Deferred Income
Tax Liabilities
|
|
9.5
|
|
13.2
|
Long-term Lease
Obligations
|
|
88.8
|
|
94.4
|
Provisions and
Other Non-Current Liabilities
|
|
11.4
|
|
11.6
|
|
|
731.6
|
|
980.3
|
Shareholders'
Equity
|
|
|
|
|
Common shares
|
|
546.2
|
|
543.7
|
Retained earnings
|
|
212.5
|
|
284.5
|
Contributed surplus
|
|
15.7
|
|
15.7
|
Accumulated other comprehensive
income
|
|
90.3
|
|
100.7
|
Total
Shareholders' Equity
|
|
864.7
|
|
944.6
|
Total Liabilities
and Shareholders' Equity
|
$
|
1,596.3
|
$
|
1,924.9
|
CONSOLIDATED
STATEMENTS OF CASH FLOW
|
|
|
|
|
Quarters
ended
|
Years
ended
|
|
December
31
|
December
31
|
(in
millions of Canadian dollars)
|
2020
|
2019
|
2020
|
2019
|
Operating
activities
|
|
|
|
|
|
|
|
|
Net
earnings (loss) for the period
|
$
|
(8.8)
|
$
|
(6.6)
|
$
|
24.5
|
$
|
76.6
|
Depreciation and
amortization
|
|
14.6
|
|
15.3
|
|
60.6
|
|
56.7
|
Provision for (recovery of) income
taxes
|
|
(3.8)
|
|
(1.0)
|
|
3.4
|
|
28.8
|
Interest expense
|
|
9.0
|
|
9.9
|
|
36.7
|
|
40.9
|
Impairment of goodwill and
long-lived assets
|
|
30.1
|
|
-
|
|
33.8
|
|
-
|
Gain on sale of property, plant and
equipment
|
|
(0.2)
|
|
(0.1)
|
|
(6.5)
|
|
(0.5)
|
Share-based compensation
|
|
-
|
|
0.1
|
|
0.3
|
|
0.3
|
Difference between pension expense
and amount funded
|
|
0.3
|
|
(0.2)
|
|
0.3
|
|
(0.9)
|
Debt accretion, amortization and
other
|
|
1.5
|
|
0.3
|
|
2.5
|
|
1.2
|
Interest paid, including interest
on lease obligations
|
|
(11.8)
|
|
(4.1)
|
|
(36.4)
|
|
(31.6)
|
Cash from operating
activities before non-cash working capital
|
|
30.9
|
|
13.6
|
|
119.2
|
|
171.5
|
Changes in non-cash
working capital items
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
(7.6)
|
|
62.2
|
|
114.8
|
|
121.1
|
Inventories
|
|
67.6
|
|
122.6
|
|
169.0
|
|
202.5
|
Accounts payable and accrued
liabilities
|
|
27.2
|
|
(49.2)
|
|
(31.3)
|
|
(175.7)
|
Other
|
|
(2.1)
|
|
(2.9)
|
|
4.6
|
|
(3.8)
|
Change in non-cash
working capital
|
|
85.1
|
|
132.7
|
|
257.1
|
|
144.1
|
Income tax refund (paid),
net
|
|
(9.9)
|
|
(5.2)
|
|
(5.3)
|
|
(65.9)
|
Cash from
operating activities
|
|
106.1
|
|
141.1
|
|
371.0
|
|
249.7
|
Financing
activities
|
|
|
|
|
|
|
|
|
Decrease in bank
borrowings
|
|
-
|
|
(73.1)
|
|
(62.1)
|
|
(66.3)
|
Issue of common shares
|
|
2.0
|
|
-
|
|
2.2
|
|
1.3
|
Dividends on common
shares
|
|
(23.6)
|
|
(23.7)
|
|
(94.5)
|
|
(94.5)
|
Issuance of long-term
debt
|
|
146.4
|
|
-
|
|
146.4
|
|
-
|
Repayment of long-term
debt
|
|
(300.0)
|
|
-
|
|
(300.0)
|
|
-
|
Deferred financing costs
|
|
(0.1)
|
|
-
|
|
(1.2)
|
|
-
|
Lease obligations
|
|
(3.8)
|
|
(4.3)
|
|
(17.9)
|
|
(17.2)
|
Cash used in
financing activities
|
|
(179.1)
|
|
(101.1)
|
|
(327.1)
|
|
(176.7)
|
Investing
activities
|
|
|
|
|
|
|
|
|
Purchase of property, plant and
equipment
|
|
(6.1)
|
|
(11.2)
|
|
(24.9)
|
|
(34.8)
|
Proceeds on sale of property, plant
and equipment
|
|
9.5
|
|
0.5
|
|
14.4
|
|
1.4
|
Purchase of business
|
|
(16.8)
|
|
(139.4)
|
|
(16.8)
|
|
(139.4)
|
Cash used in
investing activities
|
|
(13.4)
|
|
(150.1)
|
|
(27.3)
|
|
(172.8)
|
Effect of exchange
rates on cash and cash equivalents
|
|
(8.8)
|
|
(2.5)
|
|
(6.3)
|
|
(8.5)
|
Increase
(decrease) in cash and cash equivalents
|
|
(95.2)
|
|
(112.6)
|
|
10.3
|
|
(108.3)
|
Cash and cash
equivalents, beginning of the period
|
|
121.5
|
|
128.6
|
|
16.0
|
|
124.3
|
Cash and cash
equivalents, end of the year
|
$
|
26.3
|
$
|
16.0
|
$
|
26.3
|
$
|
16.0
|
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, 2020
|
$
|
543.7
|
$
|
284.5
|
$
|
15.7
|
$
|
100.7
|
$
|
944.6
|
Payment of
dividends
|
|
-
|
|
(94.5)
|
|
-
|
|
-
|
|
(94.5)
|
Net income for the
year
|
|
-
|
|
24.5
|
|
-
|
|
-
|
|
24.5
|
Other comprehensive
loss for the year
|
|
-
|
|
-
|
|
-
|
|
(12.4)
|
|
(12.4)
|
Recognition of
share-based compensation
|
|
-
|
|
-
|
|
0.3
|
|
-
|
|
0.3
|
Share options
exercised
|
|
2.5
|
|
-
|
|
(0.3)
|
|
-
|
|
2.2
|
Transfer of net
actuarial losses on defined benefit plans
|
|
-
|
|
(2.0)
|
|
-
|
|
2.0
|
|
-
|
Balance, December
31, 2020
|
$
|
546.2
|
$
|
212.5
|
$
|
15.7
|
$
|
90.3
|
$
|
864.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
Common
|
Retained
|
Contributed
|
Comprehensive
|
|
|
(in
millions of Canadian dollars)
|
Shares
|
Earnings
|
Surplus
|
Income
|
Total
|
Balance, January 1,
2019
|
$
|
542.1
|
$
|
318.6
|
$
|
15.7
|
$
|
128.5
|
$
|
1,004.9
|
Payment of
dividends
|
|
-
|
|
(94.5)
|
|
-
|
|
-
|
|
(94.5)
|
Change in accounting
policy
|
|
-
|
|
(16.1)
|
|
-
|
|
-
|
|
(16.1)
|
Net income for the
year
|
|
-
|
|
76.6
|
|
-
|
|
-
|
|
76.6
|
Other comprehensive
loss for the year
|
|
-
|
|
-
|
|
-
|
|
(27.9)
|
|
(27.9)
|
Recognition of
share-based compensation
|
|
-
|
|
-
|
|
0.3
|
|
-
|
|
0.3
|
Share options
exercised
|
|
1.6
|
|
-
|
|
(0.3)
|
|
-
|
|
1.3
|
Transfer of net
actuarial losses on defined benefit plans
|
|
-
|
|
(0.1)
|
|
-
|
|
0.1
|
|
-
|
Balance, December 31,
2019
|
$
|
543.7
|
$
|
284.5
|
$
|
15.7
|
$
|
100.7
|
$
|
944.6
|
View original
content:http://www.prnewswire.com/news-releases/russel-metals-announces-2020-annual--fourth-quarter-results-301226265.html
SOURCE Russel Metals Inc.