NEWS
FOR IMMEDIATE RELEASE
STOCK SYMBOL: TSX: RUS, RUS.PR.C
RUSSEL METALS ANNOUNCES RECORD 2002 RESULTS, 3 TIMES HIGHER FOURTH QUARTER EARNINGS
TORONTO, CANADA -- February 17, 2003 --Russel Metals Inc. announced today fourth quarter 2002 net earnings of Cdn. $6.6 million and basic earnings per share of $0.16. Earnings per share before restructuring charges were $0.20. The fourth quarter results included a before tax restructuring charge of $2.7 million for the closing of a facility in Milwaukee, Wisconsin U.S.A. made redundant by the acquisition of Williams Steel. The fourth quarter earnings were up significantly from the same quarter 2001 earnings of $2.2 million or $0.04 per share.
The earnings per share for the year ended December 31, 2002 was $0.71 compared with $0.17 for the year ended December 31, 2001. The net earnings for the year 2002 were $29.2 million versus $8.6 million for the year 2001. Earnings per share before other costs and unusual items net of tax were $0.75 for 2002 more than double the $0.37 recorded for 2001.
Bud Siegel, President and C.E.O., stated, "The strong rebound in earnings to record levels in 2002 reflect the continued contributions of all our employees and a management focus on profitability throughout the cycle. The results of Russel Metals are in the top decile in the industry and we have achieved this solid performance with a strong and conservative balance sheet, uncluttered with excessive non-performing goodwill.
Our return on ending capital employed was an industry leading 15.3% and our debt ratios are equally impressive with an interest coverage ratio of 4.2 times and a debt to earnings before interest, taxes, depreciation and amortization ratio of 2.4 times."
The cash flow from operations for 2002 was $26.5 million down from the $93.1 million recorded in 2001. The non-cash working capital increased by $29.1 million reflecting the pick-up in revenues supported primarily by increased inventories.
The Board of Directors approved the payment of the quarterly common share dividend of $0.07 per share. The 17% increase in the dividend is the second increase in the per share dividend in the last year. The Board of Directors also approved the preferred share dividend of $0.46875 per share. Both the common and preferred share dividends are payable on March 15, 2003 with a record date of March 3, 2003.
The Company will be holding an Investor Conference Call on Tuesday, February 18, 2003 at 9:00 a.m. EST to review its fourth quarter results for 2002. The dial-in-telephone number for the call is1-888-433-1657.
For those unable to participate in the conference call, it will be recorded and available for listening at1-800-558-5253 until midnight, February 25. You will be required to enter reservation number21014498 in order to access the call.
Russel Metals is one of the largest metals distribution companies in North America. It carries on business in three metals distribution segments: service center, energy sector and import/export, under various names including Russel Metals, A.J. Forsyth, Arrow Steel Processors, B&T Steel, Baldwin International, Comco Pipe and Supply, Drummond McCall, Fedmet Tubulars, McCabe Steel, Métaux Russel, Milspec Industries, Pioneer Pipe, Russel Metals Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph Tubular & Supply, Vantage Laser, Wirth Steel and York Steel.
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For further information, contact:
Brian R. Hedges,C.A.
Executive Vice President
and Chief Financial Officer
Russel Metals Inc.
(905) 819-7401
Web site : www.russelmetals.com
e-mail: info@russelmetals.com
RUSSEL METALS INC.
CONSOLIDATED BALANCE SHEETS
($000)
| Dec. 31,
2002 | Dec. 31,
2001 |
ASSETS | | |
Current | | |
Cash | $ 25,068 | $ 17,151 |
Accounts receivable | 201,675 | 197,716 |
Inventories | 329,415 | 265,417 |
Prepaid expenses and other assets | 6,077 | 5,099 |
Income taxes recoverable | 1,306 | 5,297 |
| | 563,541 | 490,680 |
| | | |
Property, Plant and Equipment | 110,512 | 109,039 |
Deferred Financing Charges | 4,962 | 6,177 |
Goodwill | 2,709 | 15,123 |
Future Income Tax Assets | 10,698 | 12,653 |
Other Assets | 3,172 | 3,197 |
| | $ 695,594 | $ 636,869 |
| | | |
LIABILITIES AND SHAREHOLDERS' EQUITY | | |
Current | | |
Bank indebtedness | $ 21,141 | $ - |
Accounts payable and accrued liabilities | 188,585 | 162,180 |
Income taxes payable | 2,487 | 165 |
| | 212,213 | 162,345 |
Long-Term Debt | 212,602 | 214,105 |
Pensions and Benefits | 9,590 | 9,242 |
Future Income Tax Liabilities | 8,749 | 4,459 |
| | 443,154 | 390,151 |
| | | |
Shareholders' Equity | | |
Preferred shares | 30,000 | 30,000 |
Shareholders' equity | 222,440 | 216,718 |
| | 252,440 | 246,718 |
| | $ 695,594 | $ 636,869 |
RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
| | Quarters ended
December 31, | Years ended
December 31, |
($000) | 2002 | 2001 | 2002 | 2001 |
| | | | | |
Segment Revenues | | | | |
Service center distribution | $ 187,655 | $ 165,863 | $ 750,878 | $ 706,173 |
Energy sector distribution | 72,322 | 72,070 | 289,623 | 360,515 |
Steel import/export | 87,691 | 70,912 | 348,055 | 321,454 |
Other | 4,142 | 5,304 | 14,719 | 14,367 |
| | $ 351,810 | $ 314,149 | $1,403,275 | $1,402,509 |
| | | | |
Segment Operating Profits | | | | |
Service center distribution | $ 7,035 | $ 2,198 | $ 31,516 | $ 19,352 |
Energy sector distribution | 3,498 | 4,082 | 13,612 | 18,406 |
Steel import/export | 7,764 | 2,904 | 28,090 | 14,175 |
Other | 1,893 | 3,162 | 5,732 | 6,177 |
Corporate expenses | (1,671) | (976) | (8,539) | (7,489) |
Earnings before the following | 18,519 | 11,370 | 70,411 | 50,621 |
Restructuring costs | (2,749) | (2,400) | (2,749) | (2,400) |
Foreign exchange gain (loss) | 193 | (303) | 261 | (1,383) |
Debt repurchase costs | - | (55) | - | (391) |
Interest expense | (5,185) | (5,019) | (20,324) | (23,017) |
(Loss) gain on sale of business | - | 500 | - | (6,000) |
Acquisition costs | - | - | - | (1,688) |
Earnings before income taxes | 10,778 | 4,093 | 47,599 | 15,742 |
Provision for income taxes | 4,138 | 1,933 | 18,363 | 7,134 |
Net earnings for the period | 6,640 | 2,160 | 29,236 | 8,608 |
| | | | | |
Retained earnings - | | | | |
| | | | | |
Dividends on preferred shares | (562) | (562) | (2,250) | (2,250) |
| | | | | |
Earnings available to common
shareholders |
6,078
|
1,598
|
26,986
|
6,358
|
Dividends on common shares | (2,284) | (1,899) | (6,466) | (7,596) |
Retained earnings, beginning of the period | 102,064 | 100,762 | 100,461 | 101,699 |
Adjustment for goodwill impairment | - | - | (15,123) | - |
Retained earnings, end of the period | $ 105,858 | $ 100,461 | $ 105,858 | $ 100,461 |
| | | | | |
Basic earnings per common share
Diluted earnings per common share | $ 0.16
$ 0.15 | $ 0.09
$ 0.09 | $ 0.71
$ 0.68 | $ 0.17
$ 0.17 |
RUSSEL METALS INC.
CONSOLIDATED CASH FLOW STATEMENTS
| | Quarters ended
December 31, | Years ended
December 31, |
($000) | 2002 | 2001 | 2002 | 2001 |
| | | | | |
Operating activities | | | | |
Net earnings for the period | $ 6,640 | $ 2,160 | $ 29,236 | $ 8,608 |
Depreciation and amortization | 3,777 | 3,778 | 15,192 | 14,663 |
Future income taxes | (115) | 430 | 8,708 | 3,503 |
Gain (loss) on sale of fixed assets | 3 | (112) | 26 | (113) |
Restructuring costs | 2,749 | 2,400 | 2,749 | 2,400 |
Foreign exchange (gain) loss | (193) | 303 | (261) | 1,093 |
Debt repurchase costs | - | 55 | - | 391 |
Loss on sale of business | - | (500) | - | 6,000 |
Acquisition costs | - | - | - | 1,688 |
Cash from operating activities before
working capital |
12,861
|
8,514
|
55,650
|
38,233
|
| | | | | |
Changes in working capital items of operations | | | | |
Accounts receivable | 33,980 | 40,129 | (210) | 69,182 |
Inventories | (42,075) | 2,274 | (55,841) | 36,772 |
Accounts payable and accrued liabilities | (9,682) | (48,510) | 23,926 | (46,328) |
Current income taxes | 2,782 | (1,102) | 3,919 | (4,397) |
Other | (1,325) | 396 | (923) | (323) |
Change in non-cash working capital | (16,320) | (6,813) | (29,129) | 54,906 |
Cash from (used in) operating activities | (3,459) | 1,701 | 26,521 | 93,139 |
| | | | | |
Financing activities | | | | |
Repurchase of long-term debt | - | (2,975) | - | (14,808) |
Increase (decrease) in bank borrowing | 15,016 | (15,342) | 21,141 | (38,441) |
Dividends on common shares | (2,284) | (1,899) | (6,466) | (7,596) |
Dividends on preferred shares | (562) | (562) | (2,250) | (2,250) |
Issue of common shares | 12 | - | 253 | |
Deferred financing costs | - | (2) | (14) | (29) |
Cash from (used in) financing activities | 12,182 | (20,780) | 12,664 | (63,124) |
| | | | | |
Investing activities | | | | |
Purchase of businesses | - | (20,598) | (21,406) | (25,288) |
Purchase of fixed assets | (3,857) | (1,138) | (12,768) | (8,152) |
Proceeds on sale of fixed assets | 59 | 114 | 2,328 | 255 |
Proceeds on sale of business | - | 809 | - | 10,397 |
Other | (345) | (3,451) | 578 | 1,001 |
Cash used in investing activities | (4,143) | (24,264) | (31,268) | (21,787) |
| | | | | |
Increase (decrease) in cash | 4,580 | (43,343) | 7,917 | 8,228 |
Cash position, beginning of the period | 20,488 | 60,494 | 17,151 | 8,923 |
Cash position, end of the period
|
$25,068
|
$17,151
|
$25,068
|
$17,151
|
