NEWS
FOR IMMEDIATE RELEASE
TSX STOCK SYMBOL: RUS, RUS.PR.C
RUSSEL METALS FOURTH QUARTER EARNINGS IMPROVE TO $0.17 PER SHARE
TORONTO, CANADA -- February 4, 2004 -- Russel Metals Inc. today announced audited fourth quarter 2003 earnings of $7.7 million or $0.17 per share up from $6.6 million or $0.16 per share for the fourth quarter of 2002.
The fourth quarter results include two adjustments - a before tax charge of $2.4 million in our United States Service Centers for goodwill impairment and a tax rate adjustment of $0.9 million for changes in the Ontario Corporate tax rate. These adjustments impacted earnings per share by $0.06 in total. Without these charges, earnings per share would have been $0.23 in the period. The improved earnings for the fourth quarter reflect the successful integration of the Acier Leroux acquisition, rationalization of the combined Acier Leroux and Russel Metals' operations in eastern Canada, and the closure of Acier Leroux's U.S. operations.
The earnings per share for the year ended December 31, 2003, were $0.41 or $18.5 million versus $0.71 or $29.2 million in 2002. The earnings per share would have been $0.54, adjusting the earnings per share for the above fourth quarter adjustments and the restructuring and discontinued operations charges related to the Acier Leroux acquisition recorded in the last two quarters. Earnings for the year were down from 2002 due to declines in the price of steel in the first half, which were partially offset by stronger second half service center segment operating profits due to the Acier Leroux acquisition and improved energy segment operating profits. In addition, the import/export segment operating profits declined by $14.7 million to $13.4 million in 2003 due to lower volumes and margins caused by the weak US dollar, domestic steel price declines in the first half and the extraordinary demand for steel and raw materials in China, which is consuming supplies that normally flowed to North America.
Bud Siegel, President and CEO stated, "The positioning of Russel Metals as a top metals distribution company has continued unabated into the first quarter of 2004. The Acier Leroux acquisition in the third quarter of 2003 strengthened our presence in Quebec. Our first quarter 2004 issue of $45 million of common shares and our planned US $175 million debt refinancing provide Russel Metals with a balance sheet and return on capital employed second to none in the industry."
Mr. Siegel continued, "For the seventh straight year, our return on ending capital was in double digits at 11.7%. The execution of the Acier Leroux operational integration and balance sheet rationalization has progressed ahead of projections due to the dedicated efforts of the staff involved throughout the Company."
Cash generated from operating activities jumped from $26.5 million in 2002 to $152.3 million in 2003. During the last three years, the Company has generated $271.9 million in cash from operations. Reductions in the import/export inventory and the rationalization of the Acier Leroux balance sheet contributed to the improvement in cash flow from operations in 2003.
Brian Hedges, Executive Vice President and Chief Financial Officer, stated, "Our leverage ratio, based on the EBITDA for the last two quarters of 2003, following the Acier Leroux acquisition and reflecting the $45 million equity issue will improve drastically from the ratios at the time of the Acier Leroux acquisition. Our debt to EBITDA ratio on a proforma basis would be 2.4 times, and our debt to capitalization would be 44%."
The Board of Directors approved the payment of the quarterly common share dividend of $0.08 and the preferred share dividend of $0.46875, both payable March 15, 2004.
The Company will be holding an Investor Conference Call on Thursday, February 5, 2004 at 9:00 a.m. EST to review its year-end results for 2003. The dial in telephone number for the call is 1-888-818-6210.
For those unable to participate in the conference call, it will be recorded and available for listening at 1-800-558-5253 until midnight, February 12. You will be required to enter reservation number 21164257 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, Acier Dollard, Acier Leroux, Acier Loubier, Acier Richler, Armabec, Arrow Steel Processors, B&T Steel, Baldwin International, Comco Pipe and Supply, Drummond McCall, Ennisteel, Fedmet Tubulars, Leroux Steel, McCabe Steel, Mégantic Métal, Métaux Russel, Milspec Industries, Poutrelles Delta, Pioneer Pipe, Russel Leroux, 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
E-mail: info@russelmetals.com
