Russel Metals Reports Nine Month Revenues and Earnings
10/25/0 12:54 (New York)
Business Editors
TORONTO--(BUSINESS WIRE)--Oct. 25, 2000--Russel Metals Inc.
(TSE:RUS.)(TSE:RUS.PR.C.) today announced financial results for the
third quarter and nine months ended September 30, 2000.
Revenues in the third quarter increased by 5% to $372.0 million
versus the same period a year ago. The third quarter ended September
30, 2000 net earnings were $3.5 million or $0.08 per share compared
with $7.7 million or $0.14 per share in the same period last year.
The nine month revenues were up 9% to $1,156.6 million. The nine
month net earnings were $20.1 million or $0.44 per share, an
improvement over $0.34 per share for the nine months ended September
30, 1999.
Bud Siegel, President and CEO stated, "Our favourable mix of
distribution businesses has helped dampen the impact of the gross
margin pressures experienced by our own service centers and those of
many of our competitors. Our energy sector revenues and gross profit
were up substantially in the third quarter and we expect very strong
results in the next two quarters. The recent acquisition of Triumph
Tubular will provide even more of a positive impetus to our energy
sector results. The steel import/export segment revenue was unchanged
and their segment operating profit of $4.4 million remained healthy.
Our service center operations turn their inventory a reported full
turn better than our competitors and we will be one of the first to
reap the full benefits of lower steel prices and to experience
improved gross margins."
Bud Siegel added, "Our nine month results are very strong with our
operating earnings before interest and taxes up 38% to $52.4 million
from $38.1 million for the first nine months of 1999. The positive
impact of our share buy back offsets the significantly higher tax
expense. The tax rate was 42.5% for the first nine months of 2000
versus 7.7% for the same period in 1999."
The balance sheet remains strong and working capital grew in the
quarter to support higher revenue and due to the acquisition. The
trailing twelve months interest coverage ratio (EBITDA over interest
expense) was 4.0x which compares favourably to 2.6x for the trailing
twelve months ended September 30, 1999.
During the quarter, the Company delisted its common shares from
NASDAQ and continued to make purchases of its common shares under its
normal course issuer bid. As of September 30, 2000 there were
38,721,512 common shares outstanding.
The Company paid the second $0.05 dividend on its common shares in
the quarter. The Board of Directors has approved a third $0.05 per
common share dividend to be paid December 15, 2000.
The Company's strong trailing twelve months performance was
attributable to a combination of strong general economic conditions in
the market in which it operates, the positive impact of various
initiatives undertaken by management, and the current strength of the
Company's balance sheet. Management believes that a softening in
demand, particularly evident in September in our service center
operations, may be an indicator of lower volumes in the fourth quarter
of 2000. The selling price of many carbon products peaked in the
second quarter of 2000. In addition, the increased North American
capacity in wide flange beams and plate could negatively impact the
margins for those products. We anticipate our energy sector to
strengthen in the fourth quarter, as oil and gas activities pickup in
the West due to strong commodity pricing. It is anticipated that the
fourth quarter earnings of the Company will be similar to the third
quarter.
Russel Metals is one of the largest metals distribution companies
in North America. It carries on business in three metals distribution
segments: service center distribution, energy sector distribution and
steel import/export, under various names including Russel Metals, B&T
Steel, Bahcall Group, Baldwin International, Comco Pipe and Supply,
Drummond McCall, Fedmet Tubulars, Metaux Russel, Pioneer Pipe, Sunbelt
Group, Total Distributors, Triumph Tubular & Supply and Wirth Steel.
*T
RUSSEL METALS INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
($000) Sept. 30, Dec. 31,
2000 1999
----------------------------------------------------------------------
ASSETS
Current
Cash $ - $ 19,968
Accounts receivable 248,057 212,156
Income taxes recoverable 6,551 -
Inventories 301,839 254,527
Prepaid expenses and other assets 5,167 4,581
Current assets - discontinued operations - 15,439
----------------------------------------------------------------------
561,614 506,671
----------------------------------------------------------------------
Fixed
Property, plant and equipment 97,159 96,265
Property held for resale 2,203 19,941
----------------------------------------------------------------------
99,362 116,206
----------------------------------------------------------------------
Other
Long-term receivables 2,971 10,600
Other investments 1,212 4,539
Deferred financing charges 7,361 8,249
Goodwill 7,596 5,066
Future income tax assets 17,418 4,522
Other assets 517 593
----------------------------------------------------------------------
37,075 33,569
----------------------------------------------------------------------
$ 698,051 $ 656,446
----------------------------------------------------------------------
----------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Bank indebtedness $ 14,235 $ -
Accounts payable and accrued
liabilities 194,629 173,415
Current income taxes payable 6,229 552
Current liabilities - discontinued
operations - 8,353
----------------------------------------------------------------------
215,093 182,320
Long-Term Debt 218,375 210,413
Pensions and Benefits 9,403 9,411
Future Income Taxes 4,708 -
----------------------------------------------------------------------
447,579 402,144
----------------------------------------------------------------------
Shareholders' Equity
Preferred shares 30,000 30,000
Shareholders' equity 220,472 224,302
----------------------------------------------------------------------
250,472 254,302
----------------------------------------------------------------------
$ 698,051 $ 656,446
----------------------------------------------------------------------
----------------------------------------------------------------------
RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
(UNAUDITED)
Quarters ended Nine months ended
Sept. 30, Sept. 30,
($000) 2000 1999 2000 1999
----------------------------------------------------------------------
Segment Revenues
Service center
distribution $ 195,528 $ 186,066 $ 624,016 $ 573,089
Energy sector
distribution 75,746 65,141 236,135 198,629
Steel import/export 98,096 98,858 289,201 282,977
Other 2,608 2,815 7,220 7,992
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$ 371,978 $ 352,880 $1,156,572 $1,062,687
----------------------------------------------------------------------
----------------------------------------------------------------------
Segment Operating Profits
Service center
distribution $ 6,280 $ 8,659 $ 28,793 $ 26,925
Energy sector
distribution 2,876 848 10,354 3,751
Steel import/export 4,414 4,965 17,911 12,220
Other 791 867 1,545 2,342
Corporate expenses (1,939) (1,810) (6,195) (6,092)
Debt redemption cos - - - (1,087)
----------------------------------------------------------------------
Earnings before interest and
taxes 12,422 13,529 52,408 38,059
Interest expense 6,061 5,528 17,424 14,635
----------------------------------------------------------------------
Earnings before income
taxes 6,361 8,001 34,984 23,424
Provision for income taxes 2,854 325 14,883 1,809
----------------------------------------------------------------------
Net earnings for the
period 3,507 7,676 20,101 21,615
----------------------------------------------------------------------
Retained earnings -
Distributions on preferred
shares and convertible
debentures
Dividends on preferred
shares (563) (563) (1,688) (1,688)
9% Convertible
Debentures - - - (2,885)
----------------------------------------------------------------------
(563) (563) (1,688) (4,573)
----------------------------------------------------------------------
Earnings available to common
shareholders 2,944 7,113 18,413 17,042
Dividends on common
shares (1,960) - (3,954) -
Amount related to common shares
purchased for
cancellation (563) (584) (8,700) (1,062)
Retained earnings, beginning
of the period 100,185 50,009 76,182 54,862
Adjustment for income
taxes (see Note) - - 18,665 -
Adjustment for pensions and
benefits - - - (14,304)
----------------------------------------------------------------------
Retained earnings, end of
the period $ 100,606 $ 56,538 $ 100,606 $ 56,538
----------------------------------------------------------------------
----------------------------------------------------------------------
Basic earnings per
common share $ 0.08 $ 0.14 $ 0.44 $ 0.34
----------------------------------------------------------------------
----------------------------------------------------------------------
Number of Shares
Common shares
Average for the
period 39,054,803 49,238,352 42,075,795 50,195,734
End of the period 38,721,512 48,345,247 38,721,512 48,345,247
Class II preferred
shares, Series C 1,200,000 1,200,000 1,200,000 1,200,000
----------------------------------------------------------------------
----------------------------------------------------------------------
NOTE: The Company adopted the Canadian Institute of Chartered
Accountants new accounting standard for income taxes effective January
1, 2000. The tax benefit of loss carry forwards and timing difference
has been reported on the balance sheet and the difference increased
retained earnings. See Note 18 to the 1999 Consolidated Financial
Statements.
RUSSEL METALS INC.
CONSOLIDATED CASH FLOW STATEMENTS
(UNAUDITED)
Quarters ended Nine months ended
Sept. 30, Sept. 30,
($000) 2000 1999 2000 1999
----------------------------------------------------------------------
Operating activities
Net earnings for the
period $ 3,507 $ 7,676 $ 20,101 $ 21,615
Depreciation and
amortization 3,596 3,044 10,375 8,730
Future income taxes (1,941) - 1,191 -
Loss (gain) on sale of fixed
assets 341 (32) 384 (104)
Debt redemption costs - - - 1,087
----------------------------------------------------------------------
Cash from operating activities before
working capital 5,503 10,688 32,051 31,328
----------------------------------------------------------------------
Changes in working capital items of
operations
Accounts receivable 3,887 (5,762) (16,768) 10,973
Inventories 329 18,249 (37,816) 83,948
Accounts payable and accrued
liabilities (6,086) 2,763 2,751 (7,299)
Current income taxes 3,428 2,086 7,354 3,897
Other 329 867 (572) (1)
----------------------------------------------------------------------
Change in non-cash working
capital 1,887 18,203 (45,051) 91,518
----------------------------------------------------------------------
Cash from (used in) operating
activities 7,390 28,891 (13,000) 122,846
----------------------------------------------------------------------
Financing activities
Purchase of common shares (3,137) (5,992) (36,825) (9,699)
Issue of long-term debt - - - 184,050
Redemption of long-term debt - - - (198,209)
Deferred financing costs - (1,898) - (7,070)
Distributions (2,523) (563) (5,642) (4,573)
----------------------------------------------------------------------
Cash used in financing
activities (5,660) (8,453) (42,467) (35,501)
----------------------------------------------------------------------
Investing activities
Purchase of fixed assets (3,126) (4,465) (9,540) (14,820)
Proceeds on sale of fixed
assets 78 72 87 300
Purchase of businesses (9,770) - (9,770) -
Proceeds from assets held
for sale 1,291 - 36,919 (383)
Other 1,242 (734) 3,568 (3,811)
----------------------------------------------------------------------
Cash from (used in) investing
activities (10,285) (5,127) 21,264 (18,714)
----------------------------------------------------------------------
Increase (decrease) in cash
from operations (8,555) 15,311 (34,203) 68,631
Cash from discontinued
operations - (1,040) - (646)
----------------------------------------------------------------------
Increase (decrease) in cash (8,555) 14,271 (34,203) 67,985
Cash position, beginning of the
period (5,680) (4,554) 19,968 (58,268)
----------------------------------------------------------------------
Cash position, end of the
period $ (14,235) $ 9,717 $ (14,235) $ 9,717
----------------------------------------------------------------------
----------------------------------------------------------------------
NOTE: For 2000 end of the periods and beginning of the quarter and
1999 beginning of periods, cash position represents bank indebtedness.
*T
--30--jsk/in*
CONTACT: Russel Metals Inc.
Brian R. Hedges
Executive Vice President and Chief Financial Officer
Tel: 905/819-7401
www.russelmetals.com
info@russelmetals.com
KEYWORD: INTERNATIONAL CANADA
INDUSTRY KEYWORD: MINING/METALS EARNINGS |
