kerm one for the drilling crowd?
INDUSTRY DRILLING STRENGTH PROVIDES PRUDENTIAL WITH RECORD QUARTER
CALGARY, Oct. 24 /CNW/ - Prudential Steel Ltd. today announced record
profits for the third quarter of 1996. Net income for the third quarter was
$6.2 million or $0.62 per share, up from $1.5 million or $0.15 per share in
the third quarter of 1995. Net income for the first nine months of 1996 was
$12.0 million or $1.20 per share, up from $7.0 million or $0.70 per share
during the same period last year.
These improved results reflect both strong energy related shipments and
improved cost of sales compared to the third quarter of 1995. The cost of
sales per tonne increase six per cent from the second quarter due to the
increased mix of higher cost energy releated products.
Drilling in western Canada in the third quarter of 1996 was up 12 per
cent from the same quarter of 1995. There was 3.7 million metres drilled this
quarter compared to 3.3 million in the third quarter of 1995. This increased
drilling improved sales in the third quarter to $62.8 million, up 60 per cent
from the same quarter a year ago. Sales for the first nine months of 1996
were $161.1 million, 32 per cent higher than the first nine months of 1995.
Shipments this quarter were 65,082 tonnes, up from 41,516 tonnes in the
third quarter of 1995. Shipments in the first nine months were 171,102
tonnes, up 24 per cent from the same period last year. Shipments of energy
related products were the major contributor to this increase. These shipments
rose 71 per cent over the third quarter of 1995 due to higher demand for both
Oil Country Tubular Goods and Line Pipe. Strong oil prices have dramatically
increased oil-focused drilling while gas drilling increased considerably
during September.
Industrial product shipments were also strong, increasing 14 per cent
from the second quarter of 1996 and six per cent over last year's levels. This
increase in industrial products reflects continued strong demand for Hollow
Structural Sections.
Selling prices per tonne for our energy related products were virtually
unchanged from the second quarter due to strong demand. The price per tonne
of industrial products increased two per cent over the second quarter based on
a price increase in July. The average price of all products shipped during
the third quarter increased nine per cent over the second quarter. This
increase was mainly due to the increased proportion of higher priced energy
related products in the mix of shipments.
Gross margins in the third quarter increased to $196 per tonne from $162
per tonne in the second quarter due mainly to mix. Gross margins in the first
nine months of 1996 were $160 per tonne compared with $137 per tonne in the
same period of 1995, reflecting both the reduction in steel costs and the
increased shipments of energy related products in 1996.
OUTLOOK
The outlook for the next six months is very encouraging. Strong oil
prices continue to fuel oil drilling while gas drilling appears to be
increasing after a lacklustre six months. These factors should combine to
improve the demand for Line Pipe and Oil Country Tubular Goods.
The outlook for Hollow Structural Sections demand remains fairly strong.
However, pricing and margins remain a concern due to import offerings and
pricing discounts by eastern mills.
Steel costs are expected to remain fairly stable for the balance of the
year but may increase marginally in the first quarter of 1997.
DIVIDEND DECLARED
At the October 24 Board meeting, the Board declared a dividend of $0.10
per share for shareholders of record at the close of business December 13,
1996 to be paid on or about December 31, 1996.
Prudential Steel Ltd. is listed on The Toronto Stock Exchange and trades
under the symbol PTS.
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PREPARED WITHOUT AUDIT
Prudential Steel Ltd.
STATEMENTS OF FINANCIAL POSITION
($ in Thousands)
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AS AT AS AT
SEPTEMBER 30 DECEMBER 31
1996 1995 1995
$ $ $
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Assets
Current
Cash and short term
investments 3,101 --- 3,212
Accounts receivable 30,044 19,016 25,225
Inventories 44,061 66,541 54,442
Prepaid expenses 903 650 525
Income taxes recoverable --- 195 ---
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Total current assets 78,109 86,402 83,404
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Liabilities
Current
Bank loans --- 30,836 21,820
Accounts payable and
accrued liabilities 24,310 16,758 20,617
Income taxes payable 3,359 --- 176
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Total current liabilities 27,669 47,594 42,613
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Working capital 50,440 38,808 40,791
Property, plant,
and equipment 25,650 26,289 26,132
Deferred pension expense 1,335 1,732 1,511
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Capital employed 77,425 66,829 68,434
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Deduct
Post employment
benefits payable 450 433 426
Deferred income taxes 2,129 2,180 2,207
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Shareholders' equity 74,846 64,216 65,801
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Shareholders' equity
is represented by
Common shares 41,101 41,101 41,101
Retained earnings 33,745 23,115 24,700
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74,846 64,216 65,801
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On behalf of the Board:
J. Donald Wilson Norman W. Robertson
President and Chief Executive Officer Chairman of the Board
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PREPARED WITHOUT AUDIT
Prudential Steel Ltd.
STATEMENTS OF INCOME AND RETAINED EARNINGS
($ in Thousands, except per share amounts)
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THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1996 1995 1996 1995
$ $ $ $
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Sales 62,754 39,128 161,123 121,862
Cost of sales 49,968 33,827 133,769 103,055
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Gross profit 12,786 5,301 27,354 18,807
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Expenses
Selling, general and
administration 2,045 1,546 5,592 4,481
Interest (income)
expense (17) 440 (84) 589
Depreciation 923 832 2,736 2,466
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2,951 2,818 8,244 7,536
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Income before
income taxes 9,835 2,483 19,110 11,271
Income tax 3,635 958 7,065 4,233
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Net income for
the period 6,200 1,525 12,045 7,038
Retained earnings,
beginning of period 28,545 22,589 24,700 19,076
Cash dividends (1,000) (1,000) (3,000) (3,000)
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Retained earnings,
at September 30 33,745 23,114 33,745 23,114
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Earnings per share 0.62 0.15 1.20 0.70
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Shipments,
metric tonnes 65,082 41,516 171,102 137,602
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PREPARED WITHOUT AUDIT
Prudential Steel Ltd.
STATEMENTS OF CHANGES IN FINANCIAL POSITION
($ in Thousands)
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THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1996 1995 1996 1995
$ $ $ $
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Operating Activities
Net income for
the period 6,200 1,525 12,045 7,038
Add (deduct) items
not affecting cash
Depreciation 923 832 2,736 2,466
Deferred income
taxes (7) 21 (78) 42
Accrued post
employment benefits 7 4 24 17
Loss (gain) on sale
of fixed assets --- (24) 138 (36)
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7,123 2,358 14,865 9,527
Net change in non-cash
working capital
balances related to
operating activities 707 (1,535) 12,232 (35,207)
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Cash provided by
(used in)
operating activities 7,830 823 27,097 (25,680)
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Financing Activities
Cash dividends (1,000) (1,000) (3,000) (3,000)
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Cash used in financing
activities (1,000) (1,000) (3,000) (3,000)
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Investing Activities
Purchase of property,
plant and equipment (356) (1,128) (2,555) (3,071)
Proceeds from sale of
property, plant
and equipment --- 24 163 36
Deferred pension
expense 76 --- 176 ---
Net change in non-cash
working capital
balances related to
investing activities (187) 498 (172) (788)
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Cash used in
investing activities (467) (606) (2,388) (3,823)
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Net increase
(decrease) in cash 6,363 (783) 21,709 (32,503)
Cash position,
beginning of period (3,262) (30,053) (18,608) 1,667
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Cash position,
at September 30 3,101 (30,836) 3,101 (30,836)
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Cash position is
represented by
Cash and short term 3,101 (2,091) 3,101 (2,091)
investments
Bank loans --- (28,745) --- (28,745)
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3,101 (30,836) 3,101 (30,836)
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For further information: Brian Armstrong, Prudential Steel Ltd., 1-800-661-1050, Ext. 345
16:45e 24-OCT-96 |
