Russel Metals Inc. announced fourth quarter 2013 earnings of US$23 million, or US$0.37 per share on revenues of US$811 million.  These results compare to earnings of US$20 million or US$0.34 per share on revenues of US$766 million in the same quarter last year and the third quarter 2013 earnings of US$0.31 per share.
 
Revenues of US$352 million in the metals service center segment were 4% higher than the 2012 fourth quarter due to increased demand offset by lower selling prices.  Demand at metals service centers increased by 9% over the 2012 fourth quarter.  Gross margins at metals service centers in the 2013 fourth quarter were US$3 million higher than the same quarter last year reflecting stronger demand.  The 2013 fourth quarter metals service center operating profits were US$13 million compared to US$17 million in the 2012 fourth quarter due to higher pension, delivery and other operating expenses.
 
Revenues in the energy products segment for the fourth quarter of 2013 increased 12% or US$43 million to US$387 million compared to the 2012 fourth quarter due to the inclusion of a full quarter of operating income of Apex Distribution compared to the 2012 fourth quarter when Apex Distribution was included only from the date of acquisition on 8 November 2012. On a same store basis, revenues in the energy products segment increased 10% over the comparable fourth quarter of 2012.  Operating profit increased 19% in the 2013 fourth quarter versus the same quarter last year due to this increase in revenues.  Russel continued to evaluate and reduce the slow moving inventory created by a fundamental change in string design from vertical drilling to horizontal drilling. The company has aligned the energy products inventory and emphasis on supplying the horizontal drilling market going forward.
 
Revenues in the steel distributors segment decreased by 13% to US$70 million in the 2013 fourth quarter compared to the 2012 fourth quarter. The availability of domestic product and low pricing differential for imported products did not generate the desired returns leading the management of steel distributors operations to decrease activity.
 
Russel recorded finance income of US$5 million in the 2013 fourth quarter and the 2013 year related to a reduction of the expected earnout payment associated with the Apex Distribution offset by an imputed interest charge on expected future payments.
 
For the year, net earnings were US$83 million or US$1.37 per share on revenues of US$3.2 billion compared to US$98 million or US$1.63 per share on revenues of US$3.0 billion in 2012.
 
Brian R. Hedges, president and CEO, commented: "Subsequent to the recession in 2009 we were cautious as the economy remained fragile, however in 2012 and 2013, it was time to proactively look to the future as we grew the footprint with a focus on the energy products segment.  In 2013 we fully integrated Apex Distribution into Russel Metals.  We continued to invest and build this part of the energy products segment by making three acquisitions in this area, the largest of which was Monarch in Drayton Valley, Alberta.  In the U.S., Apex Remington made greenfield investments in the west Texas shale play by opening new field stores.  The pipe distribution market in general continued to undergo significant change in the year with the consolidation of distributors, the purchase of distributors by pipe manufacturers and the spin out of distribution arms of competitors into separate companies."
 
Mr. Hedges continued: "Our energy products segment will continue to be an area of focus in 2014 as new domestic capacity comes online and the consolidation of the distribution channel continues.  We do not anticipate a sustained appreciation in natural gas prices and therefore the vertical gas drilling rig counts will remain low as will demand for that type of product. We believe that rig counts associated with horizontal drilling will remain strong and continue to drive the pipe sales for the foreseeable future."
 
In respect to the metals service centers segment, Mr. Hedges stated: "We accelerated the capital investment in equipment in the service centers and in 2014 we will acquire land for a new consolidated distribution facility in Edmonton, Alberta.  We are looking at greenfield sites for new service centers in the southern U.S.  Also, the selection process and initial testing of the new computer system is well underway and we expect to invest approximately US$50 million on systems upgrades over the next three to five years."
 

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Russel Metals is one of the largest metals distribution companies in North America.  It carries on business in three metals distribution segments: metals service centers, energy products and steel distributors, under various names including Russel Metals, A.J. Forsyth, Acier Leroux, Acier Loubier, Alberta Industrial Metals, Apex Distribution, Apex Monarch, Apex Remington, 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, Siemens Laserworks, Spartan Energy Tubulars, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.