Russel Metals Releases Third Quarter Earnings Results
10/31/2012 - Russel Metals Inc. announced third quarter 2012 earnings of $23 million on revenues of $713 million, noting competitive pricing pressures and lower margins despite higher volume line pipe orders.
Russel Metals Inc. announced third quarter 2012 earnings of $23 million on revenues of $713 million compared to earnings of $26 million in the third quarter of 2011. Net earnings for the nine months ended 30 September 2012 were $78 million compared to earnings of $90 million for the nine months ended 30 September 2011.
Revenues in its metals service center segment decreased 2% to $382 million in the third quarter of 2012 compared to the 2011 third quarter on decreased demand levels and pricing. Gross margins in this segment were 20.1% compared to 20.6% in the 2011 third quarter.
Revenues in its energy tubular products segment for the third quarter of 2012 increased 12% to $249 million compared to the 2011 third quarter due to increased volumes shipped of large diameter line pipe in its U.S. operations and strong demand in our operation servicing the Alberta oil sands. Segment gross margins were down to 13.4% in the 2012 third quarter compared to 14.3% in the 2011 third quarter due to competitive pricing pressure and lower margins experienced on the higher volume line pipe orders. The strong activity in these operations resulted in operating profits for the 2012 third quarter increasing by 5% to $16 million.
Revenues in the steel distributors segment decreased 12% in the 2012 third quarter to $78 million compared to the 2011 third quarter. Gross margins in this segment were down to 13.0% compared to 14.5% experienced in the 2011 third quarter. Domestic steel pricing declined in the quarter due to the state of the world economy.
Brian R. Hedges, President and CEO, commented, "All of our segments experienced margin pressure in the third quarter as steel prices declined due to lack of demand. The energy segment was able to produce stronger operating results due to higher volumes; however, our other segments were impacted by industry-wide lower shipments. We continue to outpace industry shipments in our metals service center operations."
Mr. Hedges continued, "Our issuance of $300 million of 6% Senior Notes earlier this year enables the purchase of Apex Distribution for cash. This acquisition is expected to close in November 2012. We believe that Apex Distribution will be immediately accretive to earnings."
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, Alberta Industrial Metals, 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.
