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Russel Metals Announces Year-End 2007 Results
02/19/2008 - Russel Metals announces net earnings of $25.3 million on revenues of $598.4 million for the fourth quarter, and net earnings of $111.2 million on revenues of $2559.2 million for the year ended December 31, 2007.
Russel Metals Inc. announced net earnings of $25.3 million on revenues of $598.4 million for the fourth quarter, and net earnings of $111.2 million on revenues of $2559.2 million for the year ended December 31, 2007.
Fourth Quarter Results—Net earnings of $25.3 million ($0.40 per share) reflect a 22.5% decrease from net earnings of $30.6 million ($0.49 per share ) in the same period of 2006. Results included a $1.6 million gain from discontinued operations. Revenues increased 3% compared to the fourth quarter of 2006.
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The company also announced that its Board of Directors had approved a normal course issuer bid, pursuant to which Russel Metals may purchase for cancellation up to six million of its common shares, representing approximately 10% of its public float over the next 12 months. The number of common shares that are currently outstanding is 63,066,092.
Subject to approval from The Toronto Stock Exchange, purchases may commence on February 22, 2008 and would terminate on February 21, 2009 or such earlier date as Russel Metals may complete its purchases pursuant to the Notice of Intention. All common shares purchased by the company under the bid would be cancelled.
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Although fourth quarter results reflect a slight improvement in demand from the prior year in the company’s metals service center segment, steel prices and margins continued to experience market pressure. The company expects announced steel mill price increases in the first quarter of 2008 to increase both selling prices and margins.
Same-store revenues, excluding JMS, were down 4% compared to the fourth quarter of 2006. Demand for the company’s products in the manufacturing sector of Ontario and Quebec was up over both the fourth quarter of 2006 and the third quarter of 2007. The company said that demand in the B.C. region was negatively impacted by weakness in the forestry sector in the last half of 2007.
Full Year Results—Net earnings of $111.2 million ($1.77 per share) reflect a 30% decrease from fiscal 2006 net earnings of $158.7 million ($2.65 per share).
The company’s energy tubular products segment had a strong year, led by the Comco Pipe operation, which had a record year. The strong performance of this operation, which is a leading service provider in the oil sands of northern Alberta, has helped to offset the decline in volume of the company’s other Western Canadian operations that distribute pipe primarily to customers who are involved in drilling for gas. The company said that lower active drilling rigs and excess pipe availability have contributed to reduced volumes and margins, although its U.S. energy tubular operations continue to have strong shipments of line pipe.
Management Comments—“Cash generated from operating activities was $111 million for the fourth quarter of 2007, demonstrating our ability to free up cash from working capital when earnings decline,” said Bud Siegel, President and CEO. “Our fourth quarter free-cash flow was $33 million, and was used to pay our industry-leading dividend of $28 million. The additional $78 million of working capital freed up in the fourth quarter funded an increase in our cash position to $182 million."
Mr. Siegel continued, "We are happy with the progress of the integration of JMS Metal Services with Russel Metals. These operations, now known as JMS Russel Metals, made an accretive contribution in the quarter. As the JMS units do not overlap with any of our other operating units there is no rationalization of operations needed. The operations will be transitioned to our metals service centers central computer systems in the first half of 2008."
The Board of Directors approved a quarterly dividend of $0.45 per common share payable March 15, 2008 to shareholders of record as of March 3, 2008. In addition the Board approved a normal course issuer bid for up to six million of our outstanding common shares.
Russel Metals, one of the largest metals distribution companies in North America, carries on business in three distribution segments: metals service centers, energy tubular products and steel distributors. The company operates 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, Megantic Metal, Metaux Russel, Metaux Russel Produits Specialises, Milspec Industries, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.
The company’s energy tubular products segment had a strong year, led by the Comco Pipe operation, which had a record year. The strong performance of this operation, which is a leading service provider in the oil sands of northern Alberta, has helped to offset the decline in volume of the company’s other Western Canadian operations that distribute pipe primarily to customers who are involved in drilling for gas. The company said that lower active drilling rigs and excess pipe availability have contributed to reduced volumes and margins, although its U.S. energy tubular operations continue to have strong shipments of line pipe.
Management Comments—“Cash generated from operating activities was $111 million for the fourth quarter of 2007, demonstrating our ability to free up cash from working capital when earnings decline,” said Bud Siegel, President and CEO. “Our fourth quarter free-cash flow was $33 million, and was used to pay our industry-leading dividend of $28 million. The additional $78 million of working capital freed up in the fourth quarter funded an increase in our cash position to $182 million."
Mr. Siegel continued, "We are happy with the progress of the integration of JMS Metal Services with Russel Metals. These operations, now known as JMS Russel Metals, made an accretive contribution in the quarter. As the JMS units do not overlap with any of our other operating units there is no rationalization of operations needed. The operations will be transitioned to our metals service centers central computer systems in the first half of 2008."
The Board of Directors approved a quarterly dividend of $0.45 per common share payable March 15, 2008 to shareholders of record as of March 3, 2008. In addition the Board approved a normal course issuer bid for up to six million of our outstanding common shares.
Russel Metals, one of the largest metals distribution companies in North America, carries on business in three distribution segments: metals service centers, energy tubular products and steel distributors. The company operates 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, Megantic Metal, Metaux Russel, Metaux Russel Produits Specialises, Milspec Industries, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.
