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Russel Metals Announces First Quarter Results
05/04/2012 - Russel Metals Inc. announced first quarter 2012 earnings of $33 million, or $0.55 per share on revenues of $803 million. These results matched the earnings in the same quarter last year and are above the fourth quarter 2011 earnings of $0.47 per share.
Russel Metals Inc. announced first quarter 2012 earnings of $33 million, or $0.55 per share on revenues of $803 million. These results matched the earnings of $33 million or $0.55 per share on revenues of $658 million in the same quarter last year and are above the fourth quarter 2011 earnings of $0.47 per share.
Revenues in its metals service center segment increased 18% to $428 million in the first quarter of 2012 compared to the 2011 first quarter on stronger demand levels. The company’s gross margins improved from the 2011 fourth quarter and operating profit as a percentage of revenues improved to 7.5% in the 2012 first quarter from 5.7% in the fourth quarter last year.
Brian R. Hedges, President and CEO, said, “Operating profit for the first quarter in our metals service center segment was generated by strong demand levels unlike the comparable first quarter of 2011, which experienced inventory holding gains. The growth in the first quarter reflects a continued healthy recovery in the industrial segment of the North American economy. In Canada, the western provinces were buoyed by high oil prices, which led to a stronger recovery in the west compared to the eastern provinces.”
Revenues in the company’s energy tubular products segment for the first quarter of 2012 increased 23% to $275 million compared to the 2011 first quarter. Increased volume as a result of large linepipe orders improved the operating profits to $19 million. These large orders have lower gross margin percentages, the company noted, so operating profits as a percentage of revenues declined to 6.9% from 7.9% reported in the first quarter of 2011. According to Russel Metals, the second quarter is historically the weakest quarter for this segment as spring breakup impacts Canadian shipments.
Strong demand was also experienced in its steel distributors segment, which had a 42% increase in 2012 first quarter revenues to $99 million from the 2011 first quarter. Operating profits for the first quarter of 2012 increased by $1 million to $10 million from the 2011 first quarter.
Hedges said, “Both of our operations in this segment positioned themselves well during the fourth quarter of 2011, which generated strong operating profits of 9.8% in the first quarter of 2012. This is a strong performance in a market experiencing tighter gross profit margins due to softening domestic steel prices.”
During April 2012, the market for Canadian denominated high yield bonds strengthened due to a shortage of issuers, and the company was able to take advantage to strengthen its capital structure. It issued $300 million of Canadian dollar ten-year senior notes at a 6% interest rate.
Marion E. Britton, Vice President and Chief Financial Officer, said, “We are extremely pleased with our capital structure and the timing could not have been better as the number of acquisition opportunities in the marketplace has escalated in 2012. Our recently announced purchase of Siemens Laserworks allows us to increase our plate processing capabilities by acquiring a leading laser facility in the prairie region.”
The Board of Directors approved an increase of 17% in the company’s quarterly dividend to $0.35 per common share payable June 15, 2012 to shareholders of record as of May 30, 2012.
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 tubular products, and steel distributors, under various names including Russel Metals, A.J. Forsyth, Acier Leroux, Acier Loubier, Acier Richler, Arrow Steel Processors, B&T Steel, Baldwin International, Comco Pipe and Supply, Fedmet Tubulars, JMS Russel Metals, Leroux Steel, McCabe Steel, Mégantic Métal, Métaux Russel, Métaux Russel Produits Spécialisés, Milspec, Norton Metals, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Siemens Laserworks, Spartan Energy Tubulars, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.
