Russel Metals Reports 4th Quarter, Full Year 2008 Results
02/24/2009 - Russel Metals reports net earnings of $29.0 million on revenues of $842.7 million for the fourth quarter, and net earnings of $228.5 million on revenues of $3.366 billion for the year ended December 31, 2008.
Russel Metals Inc. announced net earnings of $29.0 million on revenues of $842.7 million for the fourth quarter, and net earnings of $228.5 million on revenues of $3.366 billion for the year ended December 31, 2008.
Fourth Quarter Results—Earnings per share, $0.48, compare to earnings $0.40 per share for the fourth quarter of 2007. Net earnings of $29.0 million included a $35.7-million ($0.39 per share) write-down of inventory to net realizable value due to the dramatic decline in steel prices.
Without this write-down, earnings per share would have been $0.87 for the quarter and $4.05 for the year. Despite the inventory write-down, earnings were up 14.6% from $25.3 million in the fourth quarter of 2007.
The company experienced a decline in demand and steel pricing for both its metals service centers and steel distributors segment due to the general economic conditions impacting both Canada and the United States.
The company’s energy tubular products segment reported $32.6 million in earnings for the fourth quarter, up from $12.8 million for the fourth quarter of 2007, despite the unprecedented drop in oil and gas prices late in the quarter.
Full Year Results—Earnings more than doubled in 2008 to $3.67 per share, as compared to $1.77 per share in 2007. Earnings also include the write-down of inventory to net realizable value; without this write-down, earnings per share would have been $4.05 for the year.
Despite the inventory write-down, net earnings for the year were a record $228.5 million, more than double 2007 net earnings of $111.2 million.
Management Comments—"We are proud of our record earnings for 2008, however, that is history and we are now completely focused on the current economy and how it impacts our customers and in turn, Russel Metals,” stated Bud Siegel, President and CEO. “We are taking action to preserve capital and position the Company to continue to be in a strong financial position when the recovery occurs.”
Management Comments—"We are proud of our record earnings for 2008, however, that is history and we are now completely focused on the current economy and how it impacts our customers and in turn, Russel Metals,” stated Bud Siegel, President and CEO. “We are taking action to preserve capital and position the Company to continue to be in a strong financial position when the recovery occurs.”
The Board of Directors approved a quarterly dividend of $0.25 per common share payable March 16, 2009 to shareholders of record as of March 4, 2009. The decision to reduce the quarterly dividend payment to $0.25 per share reflects the abrupt and severe drop in demand experienced to date in 2009. The new annual dividend rate of $1.00 represents a yield of 6.2% at last Friday's closing share price of $16.14.
"We have reduced the dividend due to the drastic and unprecedented decline in our business levels,” stated Brian Hedges, COO and Executive Vice-President. “It continues to be our intention to reward our shareholders at a level our earnings and cash flow justify. Our shareholder base includes a large number of individual investors and the company is aware of how important the dividend is to these owners.
“We have made this change with great reluctance,” added Hedges.
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 conducts business 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, 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.
