TORONTO, Feb. 10, 2022 /CNW/ - Russel Metals Inc.
(TSX: RUS) announces financial results for the fourth quarter and
the year ended December 31, 2021.
Annual Revenues of $4.2 Billion and EBITDA1 of $664 Million
Strong Capital Structure with Liquidity1 of $495 Million
Business Transformation Over Past Year
|
Three Months
Ended
|
Year Ended
|
|
Dec 31
2021
|
Dec 31
2020
|
Sep 30
2021
|
Dec 31
2021
|
Dec 31
2020
|
Revenues
|
$
1,147
|
$
671
|
$
1,108
|
$
4,209
|
$
2,688
|
EBITDA1
|
162
|
11
|
196
|
664
|
125
|
Adjusted
EBITDA1
|
164
|
41
|
196
|
667
|
159
|
Net Income
|
102
|
(9)
|
132
|
432
|
25
|
Earnings per
share
|
1.62
|
(0.14)
|
2.10
|
6.90
|
0.39
|
Dividends Paid per
common share
|
0.38
|
0.38
|
0.38
|
1.52
|
1.52
|
All amounts are
reported in millions of Canadian dollars except per share figures,
which are in Canadian dollars.
|
Non-GAAP Measures and Ratios
We use a number of measures that are not prescribed by
International Financial Reporting Standards ("IFRS" or "GAAP") and
as such may not be comparable to similar measures presented by
other companies. We believe these measures are commonly employed to
measure performance in our industry and are used by analysts,
investors, lenders and other interested parties to evaluate
financial performance and our ability to incur and service debt to
support our business activities. These non-GAAP measures include
EBITDA, Adjusted EBITDA and Liquidity and are defined
below. Refer to Non-GAAP Measures and Ratios and Adjusted
Non-GAAP Measures on page 2 of our Management Discussion and
Analysis.
EBIT - represents net earnings before interest and income
taxes.
Adjusted EBIT - represents net earnings before asset impairment,
interest and, income taxes.
EBITDA - represents net earnings before interest, income taxes,
depreciation and amortization.
Adjusted EBITDA - we adjust our EBITDA to remove the impact of
long-lived asset impairment, to calculate the Adjusted
EBITDA.
Adjusted Net Earnings - we adjust our reported net earnings to
remove long-lived asset impairment, net of income taxes, to
calculate adjusted net earnings.
Adjusted Net Earnings Per Share - we adjust our reported net
earnings to remove the impact of long-lived asset impairment, net
of income taxes, to calculate the adjusted net earnings per
share.
Liquidity - represents cash on hand less bank indebtedness plus
excess availability under our bank credit facility.
1Defined in Non-GAAP Measures and Ratios
|
The following table shows the reconciliation of net earnings in
accordance with GAAP to Adjusted EBITDA for 2021 and 2020:
|
Three Months
Ended
December 31
|
Year Ended
December 31
|
(millions)
|
2021
|
2020
|
2021
|
2020
|
Net
earnings
|
$
|
102.2
|
$
|
(8.8)
|
$
|
432.2
|
$
|
24.5
|
Provision for income
taxes
|
38.3
|
(3.8)
|
147.9
|
3.4
|
Interest,
net
|
6.6
|
9.0
|
26.0
|
36.7
|
Asset
impairment
|
2.6
|
30.1
|
2.6
|
33.8
|
Adjusted
EBIT
|
149.7
|
26.5
|
608.7
|
98.4
|
Depreciation and
amortization
|
14.6
|
14.6
|
57.9
|
60.6
|
Adjusted
EBITDA
|
$
|
164.3
|
$
|
41.1
|
$
|
666.6
|
$
|
159.0
|
Our net earnings for the year ended December 31, 2021, were $432 million or $6.90 per share compared to net earnings of
$25 million or $0.39 per share for 2020. Our adjusted net
earnings for the year ended December 31,
2021 were $434 million or
$6.93 per share. Revenues for
the year ended December 31, 2021 were
$4.2 billion compared to $2.7 billion in 2020. Adjusted EBITDA was
$667 million compared to $159 million in 2020.
In the 2021 fourth quarter, our revenues, Adjusted EBITDA and
adjusted earnings per share were $1.1
billion, $164 million and
$1.65 per share, respectively.
Revenues during the quarter benefited from the continued strong
steel price environment and good demand in the metals service
centers and steel distributors segments, as well as an improvement
in energy activity. The 2021 fourth quarter results also
included contributions related to the Boyd Metals ("Boyd")
acquisition on November 30,
2021. During the 2021 fourth quarter, EBITDA was negatively
impacted by a non-cash asset impairment charge of $3 million related to one of our energy
businesses, a $3 million
mark-to-market expense for share-based compensation and a
$2 million charge for the acquisition
accounting and transaction costs for the Boyd acquisition.
Market Conditions
Steel markets were very strong
through most of 2021 as a result of favourable demand and
constrained supply. Prices rose during the year and remained
well above historical levels for the 2021 fourth quarter. Our
metals service centers experienced an increase in selling price per
ton of 62% for 2021 compared to 2020 and same store tons shipped
increased 5% for 2021 compared to 2020. Similarly, our steel
distributors segment experienced an increase in demand and selling
prices. Overall conditions in the energy products segment
recovered modestly throughout 2021 as a result of higher energy
prices and capital spending.
Reallocation of Capital Investments
In 2021, we made a
series of changes to our business portfolio with the objectives of:
(i) enhancing our return on capital over a cycle; (ii) increasing
our margins over a cycle; and (iii) reducing earnings
volatility.
During 2021, we reduced the capital employed in our OCTG/line
pipe segments by approximated $300
million. This was achieved by the liquidation of our
U.S. OCTG/line pipe businesses and the merger of our Canadian
OCTG/line pipe operation with a Canadian subsidiary of
Marubeni-Itochu to form TriMark Tubulars.
On November 30, 2021, we acquired
a group of companies that operate as Boyd Metals. Boyd is a full
line metals service center that operates in five locations in
Fort Smith (Arkansas), Joplin (Missouri), Little
Rock (Arkansas),
Oklahoma City (Oklahoma) and Tyler (Texas). Boyd expands our metals service
center presence in the Southern and Midwest U.S., complements our
existing operations in the region, was immediately accretive to
earnings and enhances our return on capital.
During 2021, we invested in a series of value-added processing
equipment projects and we also developed business plans for further
investments in 2022. These projects are designed to both grow
our business platforms in the various regions and generate
attractive financial returns.
Capital Structure Flexibility
Over the past twelve
months, our financial profile was strengthened as we generated
$305 million of cash from operating
activities. As a result, we ended the year with total
liquidity of $495 million. In
December 2021, we amended our
$450 million credit facility to
provide more favourable pricing and extend the maturity date to
September 21, 2025. Our strong
capital structure provides us with significant flexibility to
further explore opportunities for capital reinvestment.
Outlook
Steel availability has improved and inventory
in the supply chain has increased since the industry experienced
extreme supply challenges in mid-2021. We expect this
improvement in availability to continue in 2022, albeit with
certain ongoing constraints due to COVID-related staffing and
transportation issues. Demand is expected to continue to
improve into 2022 as a result of a recovery in activity related to
non-residential construction, infrastructure projects and general
manufacturing. As a result, we expect a favourable supply and
demand balance in 2022, although steel prices are expected to
remain volatile. The energy sector activity is expected to continue
to improve as a result of the recovery in oil and natural gas
prices and higher capital spending programs by energy
producers.
Investor Conference Call
The Company will be holding
an Investor Conference Call on Friday,
February 11, 2022 at 9:00 a.m.
ET to review its 2021 fourth 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, Friday, February 25, 2022. You will be required
to enter pass code #016473 to access the call.
Additional supplemental financial information is available in
our investor conference call package located on our website at
www.russelmetals.com.
About Russel Metals Inc.
Russel Metals is one
of the largest metals distribution companies in North America with a growing focus on
value-added processing. It carries on business in three segments:
metals service centers, energy products and steel distributors. Its
network of metals service centers carries an extensive line of
metal products in a wide range of sizes, shapes and specifications,
including carbon hot rolled and cold finished steel, pipe and
tubular products, stainless steel, aluminum and other non-ferrous
specialty metals. Its energy products operations carry a
specialized product line focused on the needs of energy industry
customers. Its steel distributors operations act as master
distributors selling steel in large volumes to other steel service
centers and large equipment manufacturers mainly on an "as is"
basis.
Cautionary Statement on Forward-Looking
Information
Certain statements contained in this press
release constitute forward-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
|
Three Months
Ended
December 31
|
Years Ended
December 31
|
(in millions of
Canadian dollars, except per share data)
|
2021
|
2020
|
2021
|
2020
|
Revenues
|
$
1,146.8
|
$
670.6
|
$
4,208.5
|
$
2,688.3
|
Cost of
materials
|
847.6
|
531.2
|
2,996.1
|
2,169.6
|
Employee
expenses
|
95.4
|
60.3
|
376.0
|
231.3
|
Other operating
expenses
|
57.4
|
52.6
|
233.8
|
189.0
|
Share of
(earnings) from joint venture
|
(3.3)
|
-
|
(6.1)
|
-
|
Impairment of
goodwill and long-lived assets
|
2.6
|
30.1
|
2.6
|
33.8
|
Earnings before
interest and provision for income taxes
|
147.1
|
(3.6)
|
606.1
|
64.6
|
Interest
expense
|
6.6
|
9.0
|
26.0
|
36.7
|
Earnings before
provision for income taxes
|
140.5
|
(12.6)
|
580.1
|
27.9
|
Provision for income
taxes
|
38.3
|
(3.8)
|
147.9
|
3.4
|
Net earnings for the
period
|
$
102.2
|
$
(8.8)
|
$
432.2
|
$
24.5
|
Basic earnings per
common share
|
$
1.62
|
$
(0.14)
|
$
6.90
|
$
0.39
|
Diluted earnings
per common share
|
$
1.62
|
$
(0.14)
|
$
6.89
|
$
0.39
|
Condensed Consolidated Statements of Comprehensive
Income
|
Three Months
Ended
December 31
|
Years Ended
December 31
|
(in millions of
Canadian dollars)
|
2021
|
2020
|
2021
|
2020
|
Net earnings for
the period
|
$
102.2
|
$
(8.8)
|
$
432.2
|
$
24.5
|
Other comprehensive
income (loss)
|
|
|
|
|
Items that may be
reclassified to earnings
|
|
|
|
|
Unrealized foreign exchange losses
on
|
|
|
|
|
translation of foreign
operations
|
(3.0)
|
(25.2)
|
(0.3)
|
(10.4)
|
Items that may not
be reclassified to earnings
|
|
|
|
|
Actuarial gains (losses) on pension
and similar
|
|
|
|
|
obligations net of
taxes
|
4.0
|
2.8
|
25.9
|
(2.0)
|
Other comprehensive
income (loss)
|
1.0
|
(22.4)
|
25.6
|
(12.4)
|
Total comprehensive
income
|
$
103.2
|
$
(31.2)
|
$
457.8
|
$
12.1
|
Condensed Consolidated Statements of Financial
Position
(in millions of
Canadian dollars)
|
December 31
2021
|
December 31
2020
|
ASSETS
|
|
|
Current
|
|
|
Cash and cash
equivalents
|
$
133.1
|
$
26.3
|
Accounts receivable
|
554.1
|
344.0
|
Inventories
|
986.0
|
716.4
|
Prepaid and other
|
30.3
|
13.6
|
Income taxes receivable
|
16.1
|
19.8
|
|
1,719.6
|
1,120.1
|
|
|
|
Property, Plant
and Equipment
|
302.4
|
269.5
|
Right-of-Use
Assets
|
86.7
|
81.4
|
Investment in
Joint Venture
|
37.6
|
-
|
Deferred Income
Tax Assets
|
1.5
|
5.9
|
Pension and
Benefits
|
29.5
|
5.1
|
Financial and
Other Assets
|
5.0
|
4.7
|
Goodwill and
Intangibles
|
132.2
|
109.6
|
|
$
2,314.5
|
$
1,596.3
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
Current
|
|
|
Accounts payable and accrued
liabilities
|
$
557.7
|
$
294.6
|
Short-term lease
obligations
|
15.8
|
16.9
|
Income taxes payable
|
66.7
|
3.7
|
|
640.2
|
315.2
|
|
|
|
Long-Term
Debt
|
294.8
|
293.7
|
Pensions and
Benefits
|
3.4
|
13.0
|
Deferred Income
Tax Liabilities
|
19.6
|
9.5
|
Long-term Lease
Obligations
|
93.7
|
88.8
|
Provisions and
Other Non-Current Liabilities
|
14.5
|
11.4
|
|
1,066.2
|
731.6
|
Shareholders'
Equity
|
|
|
Common shares
|
571.0
|
546.2
|
Retained earnings
|
575.2
|
212.5
|
Contributed surplus
|
12.1
|
15.7
|
Accumulated other comprehensive
income
|
90.0
|
90.3
|
Total
Shareholders' Equity
|
1,248.3
|
864.7
|
Total Liabilities
and Shareholders' Equity
|
$
2,314.5
|
$
1,596.3
|
Condensed Consolidated Statements of Cash Flow
|
Three Months
Ended
December 31
|
Years Ended
December 31
|
(in millions of
Canadian dollars)
|
2021
|
2020
|
2021
|
2020
|
Operating
activities
|
|
|
|
|
Net
earnings for the period
|
$
102.2
|
$
(8.8)
|
$
432.2
|
$
24.5
|
Depreciation and
amortization
|
14.6
|
14.6
|
57.9
|
60.6
|
Provision for (recovery of) income
taxes
|
38.3
|
(3.8)
|
147.9
|
3.4
|
Interest expense
|
6.6
|
9.0
|
26.0
|
36.7
|
Impairment of goodwill and
long-lived assets
|
2.6
|
30.1
|
2.6
|
33.8
|
Loss (gain) on sale of property,
plant and equipment
|
0.2
|
(0.2)
|
0.5
|
(6.5)
|
Share of earnings from joint
venture
|
(3.3)
|
-
|
(6.1)
|
-
|
Share-based compensation
|
-
|
-
|
0.2
|
0.3
|
Difference between pension expense
and
|
|
|
|
|
amount
funded
|
0.4
|
0.3
|
1.0
|
0.3
|
Debt accretion, amortization and
other
|
0.3
|
1.5
|
1.1
|
2.5
|
Interest paid, including interest
on lease obligations
|
(6.1)
|
(11.8)
|
(24.8)
|
(36.4)
|
Cash from operating
activities before
|
|
|
|
|
non-cash working capital
|
155.8
|
30.9
|
638.5
|
119.2
|
Changes in
non-cash working capital items
|
|
|
|
|
Accounts receivable
|
45.3
|
(7.6)
|
(160.8)
|
114.8
|
Inventories
|
(144.0)
|
67.6
|
(337.6)
|
169.0
|
Accounts payable and accrued
liabilities
|
(27.4)
|
27.2
|
253.9
|
(31.3)
|
Other
|
(10.3)
|
(2.1)
|
(13.3)
|
4.6
|
Change in non-cash
working capital
|
(136.4)
|
85.1
|
(257.8)
|
257.1
|
Income tax paid, net
|
(26.4)
|
(9.9)
|
(76.2)
|
(5.3)
|
Cash from
operating activities
|
(7.0)
|
106.1
|
304.5
|
371.0
|
Financing
activities
|
|
|
|
|
Decrease in bank
indebtedness
|
-
|
-
|
-
|
(62.1)
|
Issue of common shares
|
3.7
|
2.0
|
21.0
|
2.2
|
Dividends on common
shares
|
(24.0)
|
(23.6)
|
(95.4)
|
(94.5)
|
Issuance of long-term
debt
|
-
|
146.4
|
-
|
146.4
|
Repayment of long-term
debt
|
-
|
(300.0)
|
-
|
(300.0)
|
Deferred financing
|
(0.9)
|
(0.1)
|
(0.9)
|
(1.2)
|
Lease obligations
|
(6.5)
|
(3.8)
|
(18.2)
|
(17.9)
|
Cash used in
financing activities
|
(27.7)
|
(179.1)
|
(93.5)
|
(327.1)
|
Investing
activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
(8.5)
|
(6.1)
|
(28.8)
|
(24.9)
|
Proceeds on sale of property, plant
and equipment
|
0.2
|
9.5
|
1.1
|
14.4
|
Sale of business
|
-
|
-
|
77.1
|
-
|
Purchase of business
|
(156.6)
|
(16.8)
|
(156.6)
|
(16.8)
|
Cash used in
investing activities
|
(164.9)
|
(13.4)
|
(107.2)
|
(27.3)
|
Effect of exchange
rates on cash
|
|
|
|
|
and cash
equivalents
|
(4.1)
|
(8.8)
|
3.0
|
(6.3)
|
Increase in cash and
cash equivalents
|
(203.7)
|
(95.2)
|
106.8
|
10.3
|
Cash and cash
equivalents, beginning of the period
|
336.8
|
121.5
|
26.3
|
16.0
|
Cash and cash
equivalents, end of the year
|
$
133.1
|
$
26.3
|
$
133.1
|
$
26.3
|
Condensed Consolidated Statements of Changes in
Equity
(in millions of
Canadian dollars)
|
Common
Shares
|
Retained
Earnings
|
Contributed
Surplus
|
Accumulated
Other
Comprehensive
Income
|
Total
|
Balance, January 1,
2021
|
$
546.2
|
$
212.5
|
$
15.7
|
$
90.3
|
$
864.7
|
Payment of
dividends
|
-
|
(95.4)
|
-
|
-
|
(95.4)
|
Net earnings for the
year
|
-
|
432.2
|
-
|
-
|
432.2
|
Other comprehensive
income for the year
|
-
|
-
|
-
|
25.6
|
25.6
|
Recognition of
share-based compensation
|
-
|
-
|
0.2
|
-
|
0.2
|
Share options
exercised
|
24.8
|
-
|
(3.8)
|
-
|
21.0
|
Transfer of net
actuarial gains on defined benefit plans
|
-
|
25.9
|
-
|
(25.9)
|
-
|
Balance, December
31, 2021
|
$
571.0
|
$
575.2
|
$
12.1
|
$
90.0
|
$ 1,248.3
|
(in millions of
Canadian dollars)
|
Common
Shares
|
Retained
Earnings
|
Contributed
Surplus
|
Accumulated
Other
Comprehensive
Income
|
Total
|
Balance, January 1,
2020
|
$
543.7
|
$
284.5
|
$
15.7
|
$
100.7
|
$
944.6
|
Payment of
dividends
|
-
|
(94.5)
|
-
|
-
|
(94.5)
|
Net earnings for the
year
|
-
|
24.5
|
-
|
-
|
24.5
|
Other comprehensive
income for the year
|
-
|
-
|
-
|
(12.4)
|
(12.4)
|
Recognition of
share-based compensation
|
-
|
-
|
0.3
|
-
|
0.3
|
Share options
exercised
|
2.5
|
-
|
(0.3)
|
-
|
2.2
|
Transfer of net
actuarial losses on defined benefit plans
|
-
|
(2.0)
|
-
|
2.0
|
-
|
Balance, December
31, 2020
|
$
546.2
|
$
212.5
|
$
15.7
|
$
90.3
|
$
864.7
|
View original
content:https://www.prnewswire.com/news-releases/russel-metals-announces-2021-annual--fourth-quarter-results-301480228.html
SOURCE Russel Metals Inc.