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Russel Metals Reports 2009 Annual, Fourth-Quarter Results
02/23/2010 - Russel Metals Inc. reported a fourth-quarter loss of $25 million ($0.42 per share), which includes a pre-tax net inventory write-down of $5 million and an asset impairment charge of $35 million. For the year, the company reported a loss of $92 million ($1.54 per share).
Russel Metals Inc. reported a fourth-quarter loss of $25 million ($0.42 per share), which includes a pre-tax net inventory write-down of $5 million and an asset impairment charge of $35 million. Excluding these items, adjusted quarterly earnings were $0.05 per share.
Net earnings reported in the fourth quarter of 2008 were $29 million ($0.48 per share), which included a pre-tax inventory write-down of $36 million.
For the year, Russel Metals reported a loss of $92 million ($1.54 per share). Excluding inventory write-downs, the asset impairment charge, and a gain on the sale of a property, net earnings were $0.49 per share. Comparable results for 2008 were net earnings of $229 million ($3.67 per share).
The company notes that lower demand and steel pricing have significantly reduced its revenues and operating profits for 2009 in all three of its business segments compared to 2008.
The asset impairment charge of $35 million relates to goodwill, intangibles, and buildings of businesses acquired in the U.S. in 2007 and 2008. This charge taken in the fourth quarter of 2009 resulted from significant volume and price declines in the U.S. service center industry in 2009 and lowered expectations for future earnings potential at these operations.
Consolidated revenues for the fourth quarter of 2009 were $433 million, a decrease of 49% from Q4 2008 revenues of $843 million, and were approximately the same as the third quarter of 2009.
Revenues in the company’s metals service centers segment decreased 44% to $236 million for the fourth quarter of 2009 compared to the same period of 2008, and decreased 9% compared to the previous quarter. Operating profits for its metals service centers for the fourth quarter of 2009 were $7 million, compared to $19 million excluding inventory write-downs in the fourth quarter of 2008. Russel Metals reported operating profits of $13 million for the third quarter of 2009.
Revenues for its energy tubular products segment dropped 50% to $147 million for the fourth quarter of 2009 compared to $297 million for the 2008 period. Revenues increased 27% compared to the third quarter 2009 due to a few large low margin orders. Low natural gas drilling activity continued into the fourth quarter of 2009. Operating profits excluding inventory write-downs were $1 million for the fourth quarter of 2009 compared to operating profits of $41 million for the fourth quarter of 2008 and $6 million for the third quarter of 2009.
Russel Metals’ steel distributors segment had a decline in revenues of 61% to $47 million for the fourth quarter of 2009 compared to Q4 2008 and 18% compared to the previous quarter. Operating profits excluding inventory write-downs were $2 million for the fourth quarter of 2009 compared to $20 million for 2008 and $8 million for the third quarter of 2009.
“I am glad 2009 is behind us,” said Brian R. Hedges, President and CEO. “Early 2010 activity levels have increased for both our metals service center and energy tubular products operations compared to the end of 2009. The mill price increases announced for the first quarter of 2010 have firmed pricing in the market. Our capital structure is well positioned to support growth during 2010.”
Russel Metals is one of the largest metals distribution companies in North America. It carries on business in three 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, Megantic Metal, Metaux Russel, Metaux Russel Produits Specialises, Milspec, Norton Metals, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.
