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Russel Metals Reports 2nd Quarter Earnings
08/06/2008 - Russel Metals reports net earnings of $79 million on consolidated revenues of $856 million for the quarter ended June 30, 2008.
Russel Metals Inc. reported net earnings of $79 million on consolidated revenues of $856 million for the quarter ended June 30, 2008.
Second Quarter Results—Net earnings of $79 million ($1.25 per share) compare to net earnings of $29 million ($0.47 per common share) in the second quarter of 2007. Consolidated revenues of $856 million reflect a 31% increase from revenues of $653 million in the second quarter of 2007, and a 20% increase from $712 million reported in the first quarter of 2008.
Second Quarter Segment Results—Russel’s energy tubular products segment reported revenues of $235 million, which compares to revenues of $167 million for the second quarter of 2007. Operating profits of $29 million—a solid improvement over operating profits of $11 million in the second quarter of 2007—were boosted by steel price increases and increased volumes in the company’s U.S. energy operations as well as the operation servicing the oil sands of Northern Alberta. The company said that strength in its U.S. energy operations and Alberta oil sands businesses outweighed the seasonal downturn in operations that service Alberta-based gas drilling.
Metals service center revenues increased 34% to $497 million for the second quarter of 2008 compared to 2007. Operating profits for the company’s metals service centers were $72 million, up $41 million from the second quarter of 2007. Results were strengthened by steel price increases initiated in the first quarter of 2008, improved same store volumes and the acquisition of JMS Russel Metals.
Steel distributors produced operating profits of $26 million, which compare to operating profits of $12 million for the second quarter of 2007. The company said the increase is the result of higher margins which more than offset the reduced volumes. Volumes were lower (compared to 2007) due to lower import levels as strong worldwide steel demand, higher steel prices outside of the region and the weak U.S. dollar have made imports uneconomical for some products.
Management Comments—“We are extremely pleased with our results for the second quarter,” commented Bud Siegel, President and CEO. “The primary sectors serviced by our metals operations have outperformed the rest of the Canadian economy and even our same store volumes were up in the second quarter. In addition, our energy tubular products segment had increased volumes which further strengthened their results. Although economic uncertainty is evident in certain sectors, many of the sectors we service remain buoyant.
“Free cash flow for the second quarter 2008 was $79 million and was $116 million for the six months ended June 30, 2008. Our focus on working capital management allowed the company to moderate the impact of steel price increases and net working capital increased by only $8 million for the first six months of 2008,” added Marion Britton, Vice President and Chief Financial Officer. “Our strong cash flow over the cycle supports our industry leading dividend policy. The strength of our year to date cash flow in an environment of significant steel price increases reflects positively on the working capital management skills of our operations.”
The Board of Directors approved a quarterly dividend of $0.45 per common share and a supplemental dividend of $0.05 per common share payable September 15, 2008 to shareholders of record as of August 28, 2008.
Second Quarter Segment Results—Russel’s energy tubular products segment reported revenues of $235 million, which compares to revenues of $167 million for the second quarter of 2007. Operating profits of $29 million—a solid improvement over operating profits of $11 million in the second quarter of 2007—were boosted by steel price increases and increased volumes in the company’s U.S. energy operations as well as the operation servicing the oil sands of Northern Alberta. The company said that strength in its U.S. energy operations and Alberta oil sands businesses outweighed the seasonal downturn in operations that service Alberta-based gas drilling.
Metals service center revenues increased 34% to $497 million for the second quarter of 2008 compared to 2007. Operating profits for the company’s metals service centers were $72 million, up $41 million from the second quarter of 2007. Results were strengthened by steel price increases initiated in the first quarter of 2008, improved same store volumes and the acquisition of JMS Russel Metals.
Steel distributors produced operating profits of $26 million, which compare to operating profits of $12 million for the second quarter of 2007. The company said the increase is the result of higher margins which more than offset the reduced volumes. Volumes were lower (compared to 2007) due to lower import levels as strong worldwide steel demand, higher steel prices outside of the region and the weak U.S. dollar have made imports uneconomical for some products.
Management Comments—“We are extremely pleased with our results for the second quarter,” commented Bud Siegel, President and CEO. “The primary sectors serviced by our metals operations have outperformed the rest of the Canadian economy and even our same store volumes were up in the second quarter. In addition, our energy tubular products segment had increased volumes which further strengthened their results. Although economic uncertainty is evident in certain sectors, many of the sectors we service remain buoyant.
“Free cash flow for the second quarter 2008 was $79 million and was $116 million for the six months ended June 30, 2008. Our focus on working capital management allowed the company to moderate the impact of steel price increases and net working capital increased by only $8 million for the first six months of 2008,” added Marion Britton, Vice President and Chief Financial Officer. “Our strong cash flow over the cycle supports our industry leading dividend policy. The strength of our year to date cash flow in an environment of significant steel price increases reflects positively on the working capital management skills of our operations.”
The Board of Directors approved a quarterly dividend of $0.45 per common share and a supplemental dividend of $0.05 per common share payable September 15, 2008 to shareholders of record as of August 28, 2008.
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 Industries, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.
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