In the news release, Russel Metals Announces 2020 First Quarter
Results, issued 04-May-2020 by Russel
Metals Inc. over CNW, the first sentence of the first paragraph
immediately following the first table, should read "For the 2020
first quarter we generated net income of $11
million or $0.17 per share on
revenues of $815 million."; rather
than "For the 2020 first quarter we generated net income of
$13 million or $0.21 per share on revenues of $815 million." as incorrectly transmitted by CNW.
The complete, corrected release follows:
Russel Metals Announces 2020 First Quarter Results
TORONTO, May 4, 2020 /PRNewswire/ - Russel Metals Inc.
(RUS - TSX) announces financial results for three months ended
March 31, 2020.
Revenues of $815
Million and EBITDA of $36
Million
Liquidity of $393 Million and Net Debt to Invested Capital
31%
|
Three Months
Ended
|
|
March 31
|
December
31
|
March 31
|
|
2020
|
2019
|
2019
|
|
|
|
|
Revenues
|
$
|
815
|
$
|
837
|
$
|
1,033
|
EBITDA1
|
36
|
18
|
72
|
EBIT1
|
20
|
2
|
58
|
Net Income
(Loss)
|
11
|
(7)
|
34
|
Earnings (loss) per
share
|
0.17
|
(0.11)
|
0.55
|
Free Cash Flow per
share1
|
0.41
|
0.04
|
0.94
|
Cash from
Operations
|
68
|
141
|
(6.1)
|
Shareholders'
Equity
|
980
|
945
|
988
|
Dividends Paid per
common share
|
0.38
|
0.38
|
0.38
|
All amounts are
reported in millions of Canadian dollars except per share figures,
which are in Canadian dollars.
|
1
EBITDA, EBIT and Free Cash Flow per share are non-GAAP
measures. EBITDA represent earnings before interest,
finance
expense, taxes and depreciation. EBIT represents earnings
before interest, finance expense and taxes. Free cash flow
per share
represents cash from operating activities before change in working
capital less capital expenditures divided by average shares
outstanding for the period. Our Management's Discussion and
Analysis includes additional information regarding these
non-GAAP
measures, including a reconciliation to the most directly
comparable GAAP measures, under the headings "Non-GAAP
Measures",
"EBIT and EBITDA", and "Free Cash Flow".
|
For the 2020 first quarter we generated net income of
$11 million or $0.17 per share on revenues of $815 million. These results compare to net
income of $34 million or $0.55 per share on revenues of $1 billion in the 2019 first quarter and a loss
of $7 million in the fourth quarter
of 2019.
During the 2020 first quarter, we generated $68 million in cash from operations, as our
business generates strong cash flow from working capital reductions
during a downturn. At March 31,
2020, we maintained our conservative balance sheet and as of
the end of the quarter our available liquidity from the undrawn
portion of our committed credit facility was $393 million.
Revenues in our metals service centers decreased 19% to
$437 million for the quarter compared
to $538 million in the same quarter
in 2019. The average selling price declined 16% over the
first quarter of 2019 and was 1% lower than the 2019 fourth
quarter. Tons shipped were approximately 3% lower than the
2019 first quarter but 8% higher than the 2019 fourth
quarter. Operating profits were $18
million compared to $27
million in the 2019 first quarter.
Revenues in our energy products segment decreased 15% to
$316 million compared to $373 million in the 2019 first quarter. On
a same store basis, our decline was 24%. Price pressure on
our OCTG and line pipe operations continued due to low
demand. We recorded inventory valuation provisions of
$5 million to reflect a
reduction in net realizable value which reduced gross margins as a
percentage of revenues to 15.9% compared to 18.9% for the 2019
first quarter. Operating profits were $6 million compared to $30
million in the first quarter of 2019. During the quarter
ended March 31, 2020 we recorded a
non-cash asset impairment of $4
million relating to the right-of-use assets at our U.S. line
pipe operation in our energy products segment.
First quarter revenues in our steel distributors segment
decreased by 49% to $62 million
compared to $122 million in the 2019
first quarter. In the first quarter of 2019 we experienced
higher demand as a result of tariffs and our ability to
internationally source product. Gross margins as a percentage
of revenues for the 2020 first quarter were 14.1% compared to 13.9%
in the same period 2019. Operating profits of $1 million for the quarter compared $9 million in the 2019 first quarter.
Mr. John G. Reid, President and
CEO, commented, "we quickly established health and safety protocols
surrounding our approach to the pandemic, putting the welfare of
the Russel family, customers and suppliers first and foremost. Over
our history, we have reinforced our businesses to adapt to changes
in economic cycles by empowering local management. Our
managers in the field continue to demonstrate their keen business
acumen as they adjust to this unique challenge."
Mr. Reid commented further "operationally, steel prices began to
decline late in the quarter and demand flattened. The
increased oil supply drove down the price of oil and, coupled with
the deterioration of the economy due to the pandemic, further
pressured our energy operations as our customers rapidly reduced
capital spending. As this unprecedented environment evolved, our
operations have worked tirelessly to adapt."
Mr. Reid continued, "as a critical member of the supply chain,
we have been categorized as an essential business under applicable
government orders and we continue to serve our customers who have
also been deemed essential. We have reduced our workforce to
coincide with the reduction of business activity and our
counter-cyclical cash flows will continue to generate cash in the
2020 second quarter."
The Board of Directors approved a quarterly dividend of
$0.38 per common share payable
June 15, 2020 to shareholders of
record as of May 28, 2020. We will
continue our practice of prudently reviewing our dividend and
ensure that it is supported by a strong balance sheet and cash
flows.
The Company will be holding an Investor Conference Call on
Tuesday, May 5, 2020 at 9:00 a.m. ET to review its 2020 first quarter
results. The dial-in telephone numbers for the call are
416-764-8688 (Toronto and
International callers) and 1-888-390-0546 (U.S. and Canada). Please dial in 10 minutes prior
to the call to ensure that you get a line.
A replay of the call will be available at 416-764-8677
(Toronto and International
callers) and 1-888-390-0541 (U.S. and Canada) until midnight, Tuesday, May 19, 2020. You will be required
to enter pass code 235762# to access the call.
Additional supplemental financial information is available in
our investor conference call package located on our website at
www.russelmetals.com.
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 Wirth, Alberta
Industrial Metals, Apex Distribution, Apex Monarch, Apex Valve
Services, Apex Western Fiberglass, Arrow Steel Processors, B&T
Steel, Baldwin International, Color Steels, Comco Pipe &
Supply, Couleur Aciers, DuBose
Steel, Elite Supply Partners, Fedmet Tubulars, JMS Russel
Metals, Leroux Steel, Mégantic
Métal, Métaux Russel, Métaux Russel Produits Spécialisés, Milspec,
Norton Metals, Pemco Steel, Pioneer Pipe, Russel Metals Processing,
Russel Metals Specialty Products, Russel Metals Williams Bahcall,
Spartan Energy Tubulars, Sunbelt Group, Triumph Tubular &
Supply, Wirth Steel and
York-Ennis.
Cautionary Statement on Forward-Looking
Information
Certain statements contained in this press
release constitute forard-looking statements or information within
the meaning of applicable securities laws, including statements as
to our future capital expenditures, our outlook, the availability
of future financing and our ability to pay dividends.
Forward-looking statements relate to future events or our future
performance. All statements, other than statements of
historical fact, are forward-looking statements.
Forward-looking statements are often, but not always, identified by
the use of words such as "seek", "anticipate", "plan", "continue",
"estimate", "expect", "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe" and similar expressions. Forward-looking statements
are necessarily based on estimates and assumptions that, while
considered reasonable by us, inherently involve known and unknown
risks, uncertainties and other factors that may cause actual
results or events to differ materially from those anticipated in
such forward-looking statements, including the factors described
below.
We are subject to a number of risks and uncertainties which
could have a material adverse effect on our future profitability
and financial position, including the risks and uncertainties
listed below, which are important factors in our business and the
metals distribution industry. Such risks and uncertainties
include, but are not limited to: the volatility in metal prices;
volatility in oil and natural gas prices; cyclicality of the metals
industry; capital budgets in the energy industry; pandemics and
epidemics; climate change; product claims; significant competition;
sources of metals supply; manufacturers selling directly; material
substitution; credit risk; currency exchange risk; restrictive debt
covenants; asset impairments; the unexpected loss of key
individuals; decentralized operating structure; future
acquisitions; the failure of our key computer-based systems, labour
interruptions; laws and governmental regulations; litigious
environment; environmental liabilities; carbon emissions; health
and safety laws and regulations; and common share risks.
While we believe that the expectations reflected in our
forward-looking statements are reasonable, no assurance can be
given that these expectations will prove to be correct, and our
forward-looking statements included in this press release should
not be unduly relied upon. These statements speak only as of
the date of this press release and, except as required by law, we
do not assume any obligation to update our forward-looking
statements. Our actual results could differ materially from
those anticipated in our forward-looking statements including as a
result of the risk factors described above and under the heading
"Risk" in our MD&A and under the heading "Risk Management and
Risks Affecting Our Business" in our most recent Annual Information
Form and as otherwise disclosed in our filings with securities
regulatory authorities which are available on SEDAR at
www.sedar.com.
If you would like to unsubscribe from receiving Press
Releases, you may do so by emailing info@russelmetals.com; or by
calling our Investor Relations Line: 905-816-5178.
CONDENSED
CONSOLIDATED STATEMENTS OF
EARNINGS (UNAUDITED)
|
|
Quarters ended March
31
|
(in millions of
Canadian dollars, except per share data)
|
2020
|
2019
|
Revenues
|
$
|
814.7
|
$
|
1,032.6
|
Cost of
materials
|
662.3
|
842.1
|
Employee
expenses
|
67.9
|
79.4
|
Other operating
expenses
|
60.9
|
52.9
|
Asset
impairment
|
3.7
|
-
|
Earnings before
interest and provision for income taxes
|
19.9
|
58.2
|
Interest
expense
|
9.4
|
11.1
|
Earnings before
provision for income taxes
|
10.5
|
47.1
|
Provision for income
taxes
|
-
|
12.8
|
Net earnings for
the period
|
$
|
10.5
|
$
|
34.3
|
Basic earnings per
common share
|
$
|
0.17
|
$
|
0.55
|
Diluted earnings
per common share
|
$
|
0.17
|
$
|
0.55
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
|
|
Quarters ended March
31
|
(in millions of
Canadian dollars)
|
2020
|
2019
|
Net earnings for
the period
|
$
|
10.5
|
$
|
34.3
|
Other comprehensive
income (loss)
|
|
|
Items that may be
reclassified to earnings
|
|
|
Unrealized foreign
exchange gains (losses) on translation of foreign
operations
|
50.1
|
(12.0)
|
Items that may not
be reclassified to earnings
|
|
|
Actuarial losses on
pension and similar obligations, net of taxes
|
(1.7)
|
-
|
Other comprehensive
income (loss)
|
48.4
|
(12.0)
|
Total
comprehensive income
|
$
|
58.9
|
$
|
22.3
|
CONDENSED
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(UNAUDITED)
|
|
March 31
|
December
31
|
(in millions of
Canadian dollars)
|
2020
|
2019
|
ASSETS
|
|
|
Current
|
|
|
Cash and cash
equivalents
|
$
|
52.4
|
$
|
16.0
|
Accounts
receivable
|
475.2
|
458.1
|
Inventories
|
906.6
|
883.6
|
Prepaid and
other
|
18.4
|
18.1
|
Income taxes
receivable
|
23.6
|
18.9
|
|
1,476.2
|
1,394.7
|
|
|
|
Property, Plant
and Equipment
|
293.4
|
288.9
|
Right-of-Use
Assets
|
90.2
|
90.1
|
Deferred Income
Tax Assets
|
3.5
|
4.8
|
Pension and
Benefits
|
1.8
|
5.4
|
Financial and
Other Assets
|
4.2
|
4.0
|
Goodwill and
Intangibles
|
141.2
|
137.0
|
|
$
|
2,010.5
|
$
|
1,924.9
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
Current
|
|
|
Bank
indebtedness
|
$
|
50.8
|
$
|
62.1
|
Accounts payable and
accrued liabilities
|
385.8
|
326.4
|
Short-term lease
obligations
|
18.4
|
17.1
|
Income taxes
payable
|
0.2
|
0.3
|
|
455.2
|
405.9
|
|
|
|
Long-Term
Debt
|
445.1
|
444.8
|
Pensions and
Benefits
|
9.1
|
10.4
|
Deferred Income
Tax Liabilities
|
14.8
|
13.2
|
Long-term Lease
Obligations
|
97.6
|
94.4
|
Provisions and
Other Non-Current Liabilities
|
8.5
|
11.6
|
|
1,030.3
|
980.3
|
Shareholders'
Equity
|
|
|
Common
shares
|
544.0
|
543.7
|
Retained
earnings
|
269.7
|
284.5
|
Contributed
surplus
|
15.7
|
15.7
|
Accumulated other
comprehensive income
|
150.8
|
100.7
|
Total
Shareholders' Equity
|
980.2
|
944.6
|
Total Liabilities
and Shareholders' Equity
|
$
|
2,010.5
|
$
|
1,924.9
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
|
|
Quarters ended March
31
|
(in millions of
Canadian dollars)
|
2020
|
2019
|
Operating
activities
|
|
|
Net earnings for the
period
|
$
|
10.5
|
$
|
34.3
|
Depreciation and
amortization
|
15.6
|
13.7
|
Provision for income
taxes
|
-
|
12.8
|
Interest
expense
|
9.4
|
11.1
|
Gain on disposal of
property, plant and equipment
|
(0.1)
|
(0.2)
|
Asset
impairment
|
3.7
|
-
|
Share-based
compensation
|
0.1
|
0.1
|
Difference between
pension expense and amount funded
|
-
|
(0.3)
|
Debt accretion,
amortization and other
|
0.3
|
0.3
|
Interest paid,
including interest on lease obligations
|
(6.8)
|
(8.4)
|
Cash from operating
activities before non-cash working capital
|
32.7
|
63.4
|
Changes in non-cash
working capital items
|
|
|
Accounts
receivable
|
(9.6)
|
(23.9)
|
Inventories
|
(0.3)
|
15.3
|
Accounts payable and
accrued liabilities
|
46.5
|
(26.2)
|
Other
|
(0.4)
|
(1.2)
|
Change in non-cash
working capital
|
36.2
|
(36.0)
|
Income taxes paid,
net
|
(0.8)
|
(33.5)
|
Cash from (used
in) operating activities
|
68.1
|
(6.1)
|
Financing
activities
|
|
|
(Decrease) increase in
bank indebtedness
|
(11.4)
|
25.7
|
Issue of common
shares
|
0.2
|
0.1
|
Dividends on common
shares
|
(23.6)
|
(23.6)
|
Lease
obligations
|
(4.5)
|
(4.4)
|
Cash used in
financing activities
|
(39.3)
|
(2.2)
|
Investing
activities
|
|
|
Purchase of property,
plant and equipment
|
(7.1)
|
(5.2)
|
Proceeds on sale of
property, plant and equipment
|
2.5
|
0.4
|
Cash used in
investing activities
|
(4.6)
|
(4.8)
|
Effect of exchange
rates on cash and cash equivalents
|
12.2
|
(4.3)
|
Increase
(decrease) in cash and cash equivalents
|
36.4
|
(17.4)
|
Cash and cash
equivalents, beginning of the period
|
16.0
|
124.3
|
Cash and cash
equivalents, end of the period
|
$
|
52.4
|
$
|
106.9
|
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY (UNAUDITED)
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Other
|
|
|
Common
|
Retained
|
Contributed
|
Comprehensive
|
|
(in
millions of Canadian dollars)
|
Shares
|
Earnings
|
Surplus
|
Income
|
Total
|
Balance, January 1,
2020
|
$
|
543.7
|
$
|
284.5
|
$
|
15.7
|
$
|
100.7
|
$
|
944.6
|
Payment of
dividends
|
-
|
(23.6)
|
-
|
-
|
(23.6)
|
Net earnings for the
period
|
-
|
10.5
|
-
|
-
|
10.5
|
Other comprehensive
income for the period
|
-
|
-
|
-
|
48.4
|
48.4
|
Recognition of
share-based compensation
|
-
|
-
|
0.1
|
-
|
0.1
|
Share options
exercised
|
0.3
|
-
|
(0.1)
|
-
|
0.2
|
Transfer of net
actuarial losses on defined benefit plans
|
-
|
(1.7)
|
-
|
1.7
|
-
|
Balance, March 31,
2020
|
$
|
544.0
|
$
|
269.7
|
$
|
15.7
|
$
|
150.8
|
$
|
980.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Other
|
|
|
Common
|
Retained
|
Contributed
|
Comprehensive
|
|
(in
millions of Canadian dollars)
|
Shares
|
Earnings
|
Surplus
|
Income
|
Total
|
Balance, January 1,
2019
|
$
|
542.1
|
$
|
318.6
|
$
|
15.7
|
$
|
128.5
|
$
|
1,004.9
|
Payment of
dividends
|
-
|
(23.6)
|
-
|
-
|
(23.6)
|
Change in accounting
policy
|
-
|
(16.1)
|
-
|
-
|
(16.1)
|
Net earnings for the
period
|
-
|
34.3
|
-
|
-
|
34.3
|
Other comprehensive
income for the period
|
-
|
-
|
-
|
(12.0)
|
(12.0)
|
Recognition of
share-based compensation
|
-
|
-
|
0.1
|
-
|
0.1
|
Share options
exercised
|
0.1
|
-
|
-
|
-
|
0.1
|
Balance, March 31,
2019
|
$
|
542.2
|
$
|
313.2
|
$
|
15.8
|
$
|
116.5
|
$
|
987.7
|
View original
content:http://www.prnewswire.com/news-releases/russel-metals-announces-2020-first-quarter-results-301052428.html
SOURCE Russel Metals Inc.