TORONTO, Aug. 10,
2022 /PRNewswire/ - Russel Metals Inc. (TSX: RUS)
announces financial results for three months ended June 30, 2022.
Record Revenues of $1,362
Million and EBITDA1 of $189 Million
Strong Capital Structure with Liquidity1 of $472 Million
Initiating a Normal Course Issuer Bid
|
Three Months
Ended
|
Six Months
Ended
|
|
Jun 30 2022
|
Jun 30 2021
|
Mar 31 2022
|
Jun 30 2022
|
Jun 30 2021
|
Revenues
|
$ 1,362
|
$ 1,068
|
$ 1,339
|
$ 2,701
|
$ 1,954
|
EBITDA1
|
189
|
178
|
153
|
342
|
307
|
Net earnings
|
124
|
118
|
99
|
223
|
198
|
Earnings per
share
|
1.96
|
1.88
|
1.56
|
3.53
|
3.18
|
Dividends paid per
common share
|
0.38
|
0.38
|
0.38
|
0.76
|
0.76
|
|
|
|
|
|
|
|
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 and Liquidity
and are defined below. Refer to Non-GAAP Measures and Ratios on
page 2 of our Management Discussion and Analysis.
EBIT - represents net earnings before interest and income
taxes.
EBITDA - represents net earnings before interest, income taxes,
depreciation and amortization.
Liquidity - represents cash on hand less bank indebtedness plus
excess availability under our bank credit facility.
The following table shows the reconciliation of net earnings in
accordance with GAAP to EBITDA for 2022 and 2021:
|
Three Months Ended
June 30
|
Six Months Ended
June 30
|
(millions)
|
2022
|
2021
|
2022
|
2021
|
Net earnings
|
$ 124.0
|
$ 117.8
|
$ 222.7
|
$ 198.4
|
Provision for income
taxes
|
42.1
|
39.2
|
74.0
|
66.7
|
Interest and finance
expense
|
6.6
|
6.5
|
13.3
|
12.9
|
EBIT
1
|
172.7
|
163.5
|
310.0
|
278.0
|
Depreciation and
amortization
|
16.1
|
14.3
|
31.9
|
28.8
|
EBITDA
1
|
$ 188.8
|
$ 177.8
|
$ 341.9
|
$ 306.8
|
|
|
|
|
1
|
Defined in Non-GAAP
Measures and Ratios
|
Our basic earnings per share of $1.96 for the quarter ended June 30, 2022, was higher than the $1.88 per share recorded in the second quarter of
2021 and the $1.56 recorded in the
2022 first quarter. For the six months ended June 30, 2022, our basic earnings per share of
$3.53 compared to $3.18 for the same period in 2021. Revenues of
$1.4 billion were higher than the
$1.1 billion experienced in second
quarter of 2021. Our gross margins of 25.3% compared to 30.7% in
the same quarter of 2021 and 21.7% in the 2022 first quarter. Our
EBITDA for the quarter was $189
million compared to EBITDA of $178
million in the same quarter of 2021 and $153 million in the first quarter of 2022. EBITDA
in the second quarter of 2022 benefited by $4 million related to the non-cash mark-to-market
on our stock-based compensation compared to an EBITDA reduction of
$8 million in the 2021 second quarter
and $nil in the 2022 first quarter.
Summary Operating Results
In the 2022 second quarter,
each of our business segments contributed to our record quarterly
revenues and strong margins. Our metals service centers segment
reported higher revenues and margins in the 2022 second quarter
versus the 2022 first quarter due to higher average steel prices,
consistent demand and the benefits from our value-added processing
initiatives. Metals service centers realized an increase in selling
price per ton of 31% compared to the 2021 second quarter and 6%
compared to the 2022 first quarter. Tons shipped in metals service
centers were consistent with the same period in 2021 and the 2022
first quarter. In our energy products segment, our revenues
and margins increased in the 2022 second quarter versus the 2022
first quarter and the 2021 second quarter due to a continuation of
the favourable trend in sector business activity. Our steel
distributors segment benefited from continued high margins due to
the favourable market conditions.
Market Conditions
Steel market conditions rebounded
late in the 2022 first quarter and remained favourable for most of
the 2022 second quarter, albeit with price declines on certain
products in the later part of the quarter. In addition, some of the
supply chain issues that were experienced over the past several
quarters have improved. The energy sector experienced improved
demand with higher rig counts due to high oil and natural gas
prices and the relatively mild spring break up in Canada, which led to improved operating
conditions in what is typically a seasonally slow second quarter.
At June 30, 2022, the Canadian rig
counts were 154 compared to 126 in the 2021 second quarter and the
U.S. rig counts were 753 compared to 470 at June 30, 2021.
Liquidity and Capital Structure
During the 2022 second
quarter, we generated $69 million of
cash from operating activities and ended the quarter with total
available liquidity of $472
million.
Subject to approval from the Toronto Stock Exchange, we intend
to initiate a normal course issuer bid to purchase for cancellation
up to approximately 3.2 million of our common shares, representing
5% of our issued and outstanding shares, over the next 12
months.
On June 20, 2022, Moody's
Investors Service upgraded our corporate credit rating from Ba2 to
Ba1.
Declaration of Quarterly Dividends
The Board of
Directors approved a quarterly dividend of $0.38 per common share payable September 15, 2022, to shareholders of record as
of August 29, 2022. We will continue
our practice of prudently reviewing our dividend and ensure that it
is supported by a strong balance sheet and cash flows.
Outlook
Over the past several months, steel prices
have moderated but demand remains steady across most of our
operating regions. We expected steel prices to continue to exhibit
volatility over the near term, particularly as industry-wide
inventory levels adjust to more historical levels. As a result of
the lag effect that steel price declines have on the cost of goods
sold in our metals service centers and steel distributors segments,
we expect the recent steel price moderations to reduce our
near-term gross margins from the high levels that were generated in
the second quarter of 2022. In our energy segment, we expect
a continuation of the improving trend in operating conditions
through the balance of 2022.
Investor Conference Call
The Company will be holding
an Investor Conference Call on Thursday,
August 11, 2022, at 9:00 a.m.
ET to review its 2022 second 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, Thursday, August 25, 2022. You will be required
to enter pass code 673428# 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. 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 (unaudited)
|
Three Months Ended
June 30
|
Six Months Ended June
30
|
(in millions of
Canadian dollars, except per share data)
|
2022
|
2021
|
2022
|
2021
|
Revenues
|
$ 1,362.3
|
$ 1,068.2
|
$ 2,700.9
|
$ 1,953.6
|
Cost of
materials
|
1,017.8
|
740.3
|
2,066.1
|
1,370.6
|
Employee
expenses
|
108.6
|
103.1
|
209.6
|
187.7
|
Other operating
expenses
|
62.9
|
61.3
|
120.9
|
117.3
|
Loss (earnings) from
joint venture
|
0.3
|
-
|
(5.7)
|
-
|
Earnings before interest and
|
|
|
|
|
provision for income
taxes
|
172.7
|
163.5
|
310.0
|
278.0
|
Interest
expense
|
6.6
|
6.5
|
13.3
|
12.9
|
Earnings before
provision for income taxes
|
166.1
|
157.0
|
296.7
|
265.1
|
Provision for income
taxes
|
42.1
|
39.2
|
74.0
|
66.7
|
Net earnings for the
period
|
$ 124.0
|
$ 117.8
|
$ 222.7
|
$ 198.4
|
Basic earnings per common share
|
$ 1.96
|
$ 1.88
|
$ 3.53
|
$ 3.18
|
Diluted earnings per common
share
|
$ 1.96
|
$ 1.88
|
$ 3.52
|
$ 3.18
|
Condensed Consolidated Statements of
Comprehensive Income (unaudited)
|
Three Months Ended
June 30
|
Six Months Ended June
30
|
(in millions of
Canadian dollars)
|
2022
|
2021
|
2022
|
2021
|
Net earnings for the period
|
$ 124.0
|
$ 117.8
|
$ 222.7
|
$ 198.4
|
Other comprehensive
income (loss)
|
|
|
|
|
Items that may be reclassified to
earnings
|
|
|
|
|
Unrealized foreign exchange gains
(losses) on
|
|
|
|
|
translation of foreign
operations
|
21.9
|
(7.4)
|
11.9
|
(13.8)
|
Items that may not be reclassified to
earnings
|
|
|
|
|
Actuarial gains on pension and
similar
|
|
|
|
|
obligations, net of
taxes
|
0.3
|
1.6
|
9.1
|
18.1
|
Other comprehensive
income (loss)
|
22.2
|
(5.8)
|
21.0
|
4.3
|
Total comprehensive income
|
$ 146.2
|
$ 112.0
|
$ 243.7
|
$ 202.7
|
Condensed Consolidated Statements of
Financial Position (unaudited)
(in millions of
Canadian dollars)
|
June 30
2022
|
December 31
2021
|
ASSETS
|
|
|
Current
|
|
|
Cash and cash
equivalents
|
$ 186.9
|
$ 133.1
|
Accounts receivable
|
658.3
|
554.1
|
Inventories
|
1,025.1
|
986.0
|
Prepaid and other
|
41.6
|
30.3
|
Income taxes receivable
|
6.5
|
16.1
|
|
1,918.4
|
1,719.6
|
Property, Plant and Equipment
|
301.9
|
302.4
|
Right-of-Use Assets
|
93.5
|
86.7
|
Investment in Joint Venture
|
43.3
|
37.6
|
Deferred Income Tax Assets
|
1.1
|
1.5
|
Pension and Benefits
|
40.5
|
29.5
|
Financial and Other Assets
|
4.8
|
5.0
|
Goodwill and Intangibles
|
128.0
|
132.2
|
|
$ 2,531.5
|
$ 2,314.5
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
Current
|
|
|
Accounts payable and accrued
liabilities
|
$ 628.9
|
$ 557.7
|
Short-term lease
obligations
|
14.8
|
15.8
|
Income taxes payable
|
8.9
|
66.7
|
|
652.6
|
640.2
|
Long-Term Debt
|
295.4
|
294.8
|
Pensions and Benefits
|
2.1
|
3.4
|
Deferred Income Tax Liabilities
|
21.3
|
19.6
|
Long-term Lease Obligations
|
100.4
|
93.7
|
Provisions and Other Non-Current
Liabilities
|
15.3
|
14.5
|
|
1,087.1
|
1,066.2
|
Shareholders' Equity
|
|
|
Common shares
|
571.4
|
571.0
|
Retained earnings
|
759.0
|
575.2
|
Contributed surplus
|
12.1
|
12.1
|
Accumulated other comprehensive
income
|
101.9
|
90.0
|
Total Shareholders' Equity
|
1,444.4
|
1,248.3
|
Total Liabilities and Shareholders'
Equity
|
$ 2,531.5
|
$ 2,314.5
|
Condensed Consolidated Statements of
Cash Flow (unaudited)
|
Three Months Ended
June 30
|
Six Months Ended June
30
|
(in millions of
Canadian dollars)
|
2022
|
2021
|
2022
|
2021
|
Operating activities
|
|
|
|
|
Net
earnings for the period
|
$ 124.0
|
$ 117.8
|
$ 222.7
|
$ 198.4
|
Depreciation and
amortization
|
16.1
|
14.3
|
31.9
|
28.8
|
Provision for income
taxes
|
42.1
|
39.2
|
74.0
|
66.7
|
Interest expense
|
6.6
|
6.5
|
13.3
|
12.9
|
Gain on sale of property, plant and
equipment
|
(2.3)
|
(0.1)
|
(2.5)
|
(0.3)
|
Loss (earnings) from joint
venture
|
0.3
|
-
|
(5.7)
|
-
|
Share-based compensation
|
-
|
0.1
|
0.1
|
0.1
|
Difference between pension expense
and
|
|
|
|
|
amount
funded
|
-
|
0.3
|
-
|
0.6
|
Debt accretion, amortization and
other
|
0.3
|
0.2
|
0.6
|
0.5
|
Interest paid, including interest
on lease obligations
|
(6.4)
|
(6.3)
|
(12.8)
|
(12.6)
|
Cash from operating
activities before
|
|
|
|
|
non-cash working capital
|
180.7
|
172.0
|
321.6
|
295.1
|
Changes in non-cash working capital
items
|
|
|
|
|
Accounts receivable
|
10.7
|
(61.5)
|
(104.3)
|
(189.2)
|
Inventories
|
(120.5)
|
(56.5)
|
(39.2)
|
(67.3)
|
Accounts payable and accrued
liabilities
|
49.0
|
77.5
|
67.9
|
202.1
|
Other
|
(10.7)
|
(1.6)
|
(11.3)
|
(4.3)
|
Change in non-cash
working capital
|
(71.5)
|
(42.1)
|
(86.9)
|
(58.7)
|
Income tax paid, net
|
(40.3)
|
(20.2)
|
(123.2)
|
(30.7)
|
Cash from operating activities
|
68.9
|
109.7
|
111.5
|
205.7
|
Financing activities
|
|
|
|
|
Issue of common shares
|
-
|
9.4
|
0.3
|
9.4
|
Dividends on common
shares
|
(24.0)
|
(23.8)
|
(48.0)
|
(47.5)
|
Deferred financing
|
-
|
-
|
(0.1)
|
-
|
Lease obligations
|
(3.7)
|
(4.0)
|
(9.3)
|
(7.9)
|
Cash used in financing
activities
|
(27.7)
|
(18.4)
|
(57.1)
|
(46.0)
|
Investing activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
(7.8)
|
(6.8)
|
(16.0)
|
(12.7)
|
Proceeds on sale of property, plant
and equipment
|
2.6
|
0.1
|
3.1
|
0.5
|
Sale of business
|
-
|
-
|
9.7
|
-
|
Cash used in investing
activities
|
(5.2)
|
(6.7)
|
(3.2)
|
(12.2)
|
Effect of exchange rates on cash and cash
equivalents
|
4.7
|
(1.7)
|
2.6
|
1.4
|
Increase in cash and cash
equivalents
|
40.7
|
82.9
|
53.8
|
148.9
|
Cash and cash
equivalents, beginning of the period
|
146.2
|
92.3
|
133.1
|
26.3
|
Cash and cash equivalents, end of the
period
|
$ 186.9
|
$ 175.2
|
$ 186.9
|
$ 175.2
|
Condensed Consolidated Statements of
Changes in Equity (unaudited)
(in millions of
Canadian dollars)
|
Common
Shares
|
Retained
Earnings
|
Contributed
Surplus
|
Accumulated
Other
Comprehensive
Income
|
Total
|
Balance, January 1,
2022
|
$ 571.0
|
$ 575.2
|
$ 12.1
|
$ 90.0
|
$ 1,248.3
|
Payment of
dividends
|
-
|
(48.0)
|
-
|
-
|
(48.0)
|
Net earnings for the
period
|
-
|
222.7
|
-
|
-
|
222.7
|
Other comprehensive
income for the period
|
-
|
-
|
-
|
21.0
|
21.0
|
Recognition of
share-based compensation
|
-
|
-
|
0.1
|
-
|
0.1
|
Share options
exercised
|
0.4
|
-
|
(0.1)
|
-
|
0.3
|
Transfer of net
actuarial gains on defined benefit plans
|
-
|
9.1
|
-
|
(9.1)
|
-
|
Balance, June 30, 2022
|
$ 571.4
|
$ 759.0
|
$ 12.1
|
$ 101.9
|
$ 1,444.4
|
(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
|
-
|
(47.5)
|
-
|
-
|
(47.5)
|
Net earnings for the
period
|
-
|
198.4
|
-
|
-
|
198.4
|
Other comprehensive
income for the period
|
-
|
-
|
-
|
4.3
|
4.3
|
Recognition of
share-based compensation
|
-
|
-
|
0.1
|
-
|
0.1
|
Share options
exercised
|
11.1
|
-
|
(1.7)
|
-
|
9.4
|
Transfer of net
actuarial gains on defined benefit plans
|
-
|
18.1
|
-
|
(18.1)
|
-
|
Balance, June 30,
2021
|
$ 557.3
|
$ 381.5
|
$ 14.1
|
$ 76.5
|
$ 1,029.4
|
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content:https://www.prnewswire.com/news-releases/russel-metals-announces-2022-second-quarter-results-301603611.html
SOURCE Russel Metals Inc.