NEWS
FOR IMMEDIATE RELEASE
TSX STOCK SYMBOL: RUS
RUSSEL METALS ANNOUNCES 2ND QTR. EARNINGS OF $1.03 PER SHARE
TORONTO, CANADA -- July 22, 2004 -- Russel Metals Inc. today reported second quarter 2004 net earnings of $50.4 million, or $1.03 per share compared to the second quarter 2003 net earnings of $3.5 million or $0.08 per share. The second quarter results included a pre-tax charge of $1.9 million related to the final redemption of the 10% Senior Notes. The quarter also included a pre-tax charge of $0.5 million for restructuring and a $0.9 million loss from discontinued operations, net of tax. The earnings per share excluding these charges was $1.08.
Net earnings for the six months ended June 30, 2004 were $75.7 million or $1.58 per share, which was significantly above the six months ended June 30, 2003 net earnings of $7.1 million or earnings per share of $0.16.
The 2004 first half results include a pre-tax charge of $13.2 million related to the redemption of long-term debt, $1.4 million for restructuring and $1.0 million, net of tax, related to previously discontinued operations. The earnings per share, without these charges, was $1.82 for the six months ended June 30, 2004.
Revenue for the second quarter 2004 was $597 million up 16% from the first quarter 2004 and 76% from the second quarter of 2003. Revenue for the second quarter of 2003 was $340 million, and excludes Acier Leroux, which was acquired in the third quarter of 2003.
Revenue for the first half of 2004 was $1,113 million up 57% from $707 million in the same period of 2003. Although the successful integration of Acier Leroux and Russel Metals makes a same store analysis difficult, a substantial portion of the quarter and six months 2004 revenue increase is attributable to the acquisition of Acier Leroux. Revenue in Quebec, where a majority of the Acier Leroux facilities are located, increased by 278% to $208.1 million in the first half.
Bud Siegel, President and C.E.O. stated, "The positive momentum generated in the first quarter continued into the second quarter with all business segments experiencing stronger results. The healthy customer demand levels that began late in the first quarter of 2004 continued in the second quarter. Management's ongoing focus has been on ensuring adequate supply of product and optimizing inventory levels. To date, we have been able to balance both and while inventory levels have increased in absolute dollars, our service center inventory levels, in tons, have decreased since year-end. The Russel Metals service center inventory turns were 5.0 for the second quarter."
Mr. Siegel continued, "We have reaped the short-term benefits associated with higher steel prices, but what sets Russel Metals apart is the Company is positioned for stronger long-term performance. The three major acquisitions completed over the last three years, the $25 million capital expenditure for a new cut-to-length facility in Ontario, and the recapitalization of the balance sheet during the first half of 2004 were strategic decisions that will increase our profitability over the cycle and provide the flexibility and capital structure necessary to react to business conditions and opportunities presented by the steel sector."
The Board of Directors approved a 50% increase in the quarterly dividend to $0.15 per common share payable September 15, 2004 to shareholders of record as of August 6, 2004.
Brian Hedges, Executive Vice President and CFO stated, "The dividend increase reflects our confidence in the earnings levels and strong cash generated from operations. The second quarter generated positive cash from operating activities of $34.7 million despite a $44.1 million increase in inventory, which was very positive. Consequently our debt to equity ratio continued to improve from 1.1 at December 31, 2003 to 0.6 at June 30, 2004."
The Company will be holding an Investor Conference Call on Friday, July 23, 2004 at 9:00 a.m. ET to review its second quarter results for 2004. The dial in telephone number for the call is 1-800-818-6210.
For those unable to participate in the conference call, it will be recorded and available for listening at 1-800-558-5253 until midnight, July 30. You will be required to enter reservation number 21164259 in order 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: service center, energy tubular products and import/export, under various names including Russel Metals, A.J. Forsyth, 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
Website: www.russelmetals.com
RUSSEL METALS INC. |
CONSOLIDATED BALANCE SHEETS |
(UNAUDITED) |
| | |
| June 30, | December 31, |
($000) | 2004 | 2003 |
|
ASSETS | | |
Current | | |
Cash | $ 17,799 | $ 19,008 |
Accounts receivable | 357,059 | 248,904 |
Inventories | 367,464 | 303,048 |
Prepaid expenses and other assets | 6,362 | 5,028 |
Income taxes receivable | 716 | 5,912 |
Discontinued operations | 863 | 1,107 |
|
| 750,263 | 583,007 |
| | |
Property, Plant and Equipment | 180,938 | 184,929 |
Assets Held For Sale | 3,558 | 1,622 |
Deferred Financing Charges | 7,396 | 3,547 |
Goodwill | 7,815 | 4,216 |
Future Income Tax Assets | 7,609 | 10,458 |
Other Assets | 4,930 | 2,840 |
|
| $ 962,509 | $ 790,619 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY | | |
Current | | |
Bank indebtedness | $ 18,554 | $ 78,093 |
Accounts payable and accrued liabilities | 283,423 | 217,173 |
Income taxes payable | 33,107 | 11,729 |
Discontinued operations | 3,202 | 2,729 |
|
| 338,286 | 309,724 |
Long-Term Debt | 234,570 | 179,402 |
Pensions and Benefits | 12,251 | 11,542 |
Future Income Tax Liabilities | 6,551 | 6,109 |
|
| 591,658 | 506,777 |
|
Shareholders' Equity | | |
Preferred shares | - | 30,000 |
Shareholders' equity | 370,851 | 253,842 |
|
| 370,851 | 283,842 |
|
| $ 962,509 | $ 790,619 |
|
|
|
RUSSEL METALS INC. |
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS |
(UNAUDITED) |
| |
| Quarters ended June 30, | Six months ended June 30, |
($000, except per share data) | 2004 | 2003 | 2004 | 2003 |
|
Revenues | $ 596,747 | $ 339,756 | $1,112,550 | $ 706,777 |
Cost of sales and operating expenses | 505,893 | 329,208 | 962,173 | 685,668 |
|
Earnings before the following | 90,854 | 10,548 | 150,377 | 21,109 |
Restructuring | (520) | - | (1,352) | - |
Debt redemption costs | (1,862) | - | (13,172) | - |
Foreign exchange gain | - | - | - | 348 |
Interest expense | (5,718) | (4,871) | (10,916) | (9,975) |
|
Earnings before income taxes | 82,754 | 5,677 | 124,937 | 11,482 |
Provision for income taxes | (31,431) | (2,155) | (48,256) | (4,421) |
|
Earnings from continuing operations | 51,323 | 3,522 | 76,681 | 7,061 |
Loss from discontinued operations | (916) | - | (970) | - |
|
Net earnings for the period | 50,407 | 3,522 | 75,711 | 7,061 |
| | | | |
Retained earnings -- | | | | |
| | | | |
Dividends on preferred shares | - | (562) | (611) | (1,125) |
|
| | | | |
Earnings available to common | | | | |
shareholders | 50,407 | 2,960 | 75,100 | 5,936 |
Dividends on common shares | (4,903) | (2,670) | (8,818) | (5,337) |
Retained earnings, beginning of the period | 131,280 | 106,167 | 110,502 | 105,858 |
|
Retained earnings, end of the period | $ 176,784 | $ 106,457 | $ 176,784 | $ 106,457 |
|
| | | | |
Basic earnings per common share - continuing operations | $ 1.05 | $ 0.08 | $ 1.60 | $ 0.16 |
|
Basic earnings per common share | $ 1.03 | $ 0.08 | $ 1.58 | $ 0.16 |
|
Diluted earnings per common share - continuing operations | $ 1.01 | $ 0.08 | $ 1.57 | $ 0.16 |
|
Diluted earnings per common share | $ 1.00 | $ 0.08 | $ 1.54 | $ 0.16 |
|
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