Russel Metals Reports Stronger Q1 Net Earnings
05/14/2010 - Russel Metals Inc. announced first-quarter earnings of $17 million or $0.28 per share, compared to net earnings of $0.10 per share, excluding inventory write-downs, in the first quarter of 2009. Reported results for Q1 2009 were a loss of $0.92 per share due to inventory write-downs.
Russel Metals Inc. announced first-quarter earnings of $17 million or $0.28 per share, compared to net earnings of $0.10 per share, excluding inventory write-downs, in the first quarter of 2009. Reported results for Q1 2009 were a loss of $0.92 per share due to inventory write-downs.
Consolidated revenues for the first quarter of 2010 were $526 million, up from the fourth quarter of 2009. Revenues in the first quarter of 2009 were $642 million. Volumes increased from the first and fourth quarters of 2009. Though the average selling price for the first quarter of 2010 was lower than the first quarter of 2009, it generated stronger gross margins per ton, Russel noted.
The company is encouraged by the improvement in its metals service centers results, despite a drop in revenue to $280 million for the first quarter of 2010. Volumes increased 14% from the comparable quarter in 2009, and gross margins per ton have improved. Operating profits for its metals service centers for the first quarter of 2010 were $15 million, compared to an operating loss of $7 million in the first quarter of 2009, excluding inventory write-downs. Operating profit was $7 million in the fourth quarter of 2009.
Energy tubular products revenues were up 32% to $195 million in the first quarter of 2010 from the fourth quarter of 2009. The first quarter of 2009 saw revenues of $231 million. Excess inventory levels in the industry that led to the price declines and margin pressures have improved, Russel said. Operating profits were $11 million for Q1 2010 compared to $21 million, excluding inventory write-downs, for the same period a year ago.
The company says its steel distributors operations have continued to be very cautious with their inventory purchases as the current North American steel environment consists of strong product availability, lower steel prices, and uncertainty of future pricing. As a result, its steel distributors segment had revenues of $50 million, a decline of 41% from the comparable quarter in 2009. Operating profits for the first quarter of 2010 were $4 million, up from $3 million in the first quarter of 2009 excluding inventory write-downs, due to increased selling prices for inventory on hand.
"Increasing steel prices have had a positive effect on our first-quarter results,” said Brian R. Hedges, President and CEO. “Our volumes are up 14% in our service center operations compared to the first quarter of 2009 and 17% compared to the fourth quarter of 2009. We are optimistic based on the current price of steel and the improving environment. Our balance sheet strength positions us to aggressively grow the business."
The Board of Directors approved a quarterly dividend of $0.25 per common share payable June 15, 2010, to shareholders of record as of June 1, 2010.
Russel Metals is one of the largest metals distribution companies in North America. It conducts 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, Mégantic Métal, Métaux Russel, Métaux Russel Produits Spécialisés, 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.
