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Russel Metals Reports 1st Quarter Earnings
05/13/2008 - Russel Metals reports net earnings of $29.2 million on consolidated revenues of $712 million for the first quarter of 2008.
Russel Metals Inc. reported net earnings of $29.2 million on consolidated revenues of $712 million for the first quarter of 2008.
The $29.2 million net earnings ($0.46 per share) compares to net earnings of $28.7 million ($0.46 per share) in the year-ago first quarter. Consolidated revenues, $712 million, represent an increase from revenues of $684 million in the year-ago first quarter, and from $598 million reported in the fourth quarter of 2007.
Operating profits were $52 million, compared to operating profits of $46 million for the first quarter of 2007 and $38 million for the fourth quarter of 2007. Operating profits as a percentage of revenues improved in both metals service centers and steel distributors, which reflects the steel price increases announced by steel mills.
Results include $0.03 per share for stock-based compensation expense and $0.04 per share to write down the company’s investment in asset-backed commercial paper to estimated fair value. In addition, the translation of earnings from U.S. operations to Canadian dollars at lower exchange rates impacted earnings by $0.03 per share, for a total impact of $0.10 per share. The comparable reported earnings per share were $0.46 for the first quarter of 2007 and $0.38 for the fourth quarter of 2007.
“Since January 2008, steel mills have increased the price of steel consistently month over month,” commented Bud Siegel, President and CEO. “The costs of metallic inputs, energy, and transportation have all dramatically increased, resulting in steel pricing reaching all-time highs in the second quarter of 2008. Our metals service centers had progressively higher operating profits throughout the first quarter of 2008 as a result of increased pricing, and we anticipate margins to be significantly higher during the second quarter of 2008 due to the on-going steel price increases.
“In addition,” continued Siegel, “the energy tubular products segment had continued strong volumes from sales to the oil sands of Northern Alberta and oil and gas drilling activity in the U.S. Rockies, resulting in higher operating profits despite tighter margins.”
Segment Results—Revenues for the company’s Energy Tubular Products segment $214 million, a $35 million increase compared to $179 million for the first quarter of 2007.
Operating profits for the company’s Metals Service Centers reached $32 million, a $7 million increase over the first quarter of 2007. The company said the increase was due to steel price increases that improved margins and operating profits. Demand, excluding JMS Russel Metals, was consistent with the year-ago first quarter.
Revenues for the company’s Steel Distributors segment were down by $44 million to $96 million, impacted by both lower imports and lower demand. The company commented its steel distributors segment had reduced its activities as the economics of importing steel into North America continue to weaken due to strong worldwide steel demand, higher steel prices outside of the region and the weak U.S. dollar. The volume decline was offset by higher selling prices and gross margins as a percentage of revenues resulting in operating profits declining only by $1 million to $11 million compared to $12 million in the first quarter 2007.
Russel Metals, one of the largest metals distribution companies in North America, conducts business in three distribution segments: metals service centers, energy tubular products and steel distributors. The company’s business is carried out 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.
Results include $0.03 per share for stock-based compensation expense and $0.04 per share to write down the company’s investment in asset-backed commercial paper to estimated fair value. In addition, the translation of earnings from U.S. operations to Canadian dollars at lower exchange rates impacted earnings by $0.03 per share, for a total impact of $0.10 per share. The comparable reported earnings per share were $0.46 for the first quarter of 2007 and $0.38 for the fourth quarter of 2007.
“Since January 2008, steel mills have increased the price of steel consistently month over month,” commented Bud Siegel, President and CEO. “The costs of metallic inputs, energy, and transportation have all dramatically increased, resulting in steel pricing reaching all-time highs in the second quarter of 2008. Our metals service centers had progressively higher operating profits throughout the first quarter of 2008 as a result of increased pricing, and we anticipate margins to be significantly higher during the second quarter of 2008 due to the on-going steel price increases.
“In addition,” continued Siegel, “the energy tubular products segment had continued strong volumes from sales to the oil sands of Northern Alberta and oil and gas drilling activity in the U.S. Rockies, resulting in higher operating profits despite tighter margins.”
Segment Results—Revenues for the company’s Energy Tubular Products segment $214 million, a $35 million increase compared to $179 million for the first quarter of 2007.
Operating profits for the company’s Metals Service Centers reached $32 million, a $7 million increase over the first quarter of 2007. The company said the increase was due to steel price increases that improved margins and operating profits. Demand, excluding JMS Russel Metals, was consistent with the year-ago first quarter.
Revenues for the company’s Steel Distributors segment were down by $44 million to $96 million, impacted by both lower imports and lower demand. The company commented its steel distributors segment had reduced its activities as the economics of importing steel into North America continue to weaken due to strong worldwide steel demand, higher steel prices outside of the region and the weak U.S. dollar. The volume decline was offset by higher selling prices and gross margins as a percentage of revenues resulting in operating profits declining only by $1 million to $11 million compared to $12 million in the first quarter 2007.
Russel Metals, one of the largest metals distribution companies in North America, conducts business in three distribution segments: metals service centers, energy tubular products and steel distributors. The company’s business is carried out 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.
