Russel Metals Announces 2024 Second Quarter Results
Revenues of
Invested
Repurchased
Redeemed
Liquidity1 of
|
Three Months Ended |
Six Months Ended |
|||
|
|
|
|
|
|
Revenues |
$ 1,072 |
$ 1,061 |
$ 1,189 |
$ 2,133 |
$ 2,376 |
EBITDA1 |
86 |
84 |
131 |
170 |
248 |
Net income |
50 |
50 |
85 |
100 |
159 |
Earnings per share |
0.84 |
0.82 |
1.37 |
1.66 |
2.56 |
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 IFRS Accounting 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.
Cash (for) from working capital - represents the change in non-cash working capital.
The following table shows the reconciliation of net earnings in accordance with GAAP to EBITDA for 2024 and 2023:
|
Three Months Ended |
Six Months Ended |
|||
($ millions, except per share data) |
|
|
|
|
|
Net earnings |
$ 49.9 |
$ 49.7 |
$ 85.0 |
$ 99.6 |
$ 158.9 |
Provision for income taxes |
16.9 |
16.7 |
26.9 |
33.6 |
49.2 |
Interest (income) expense, net |
1.4 |
(0.1) |
2.8 |
1.3 |
6.6 |
EBIT1 |
68.2 |
66.3 |
114.7 |
134.5 |
214.7 |
Depreciation and amortization |
17.6 |
17.7 |
16.7 |
35.3 |
33.1 |
EBITDA1 |
$ 85.8 |
$ 84.0 |
$ 131.4 |
$ 169.8 |
$ 247.8 |
Basic earnings per share |
$ 0.84 |
$ 0.82 |
$ 1.37 |
$ 1.66 |
$ 2.56 |
_________ |
|
1 |
Defined in Non-GAAP Measures and Ratios |
Our earnings per share of
Our EBITDA for the quarter was
Market Conditions
The average price for hot rolled coil and plate decreased by 17% and 12%, respectively, in the second quarter of 2024 as compared to the first quarter of 2024. By contrast, our metals service centers only experienced a 4% reduction in its average selling prices for the second quarter of 2024 as compared to the first quarter of 2024. We shipped 2% higher volumes in the second quarter of 2024 as compared to the first quarter of 2024, due to slightly higher demand. Our energy field stores have reported consistent revenues over the past several quarters as a reflection of steady business activity.
Capital Investment Growth Initiatives
On
In the 2024 second quarter, we made capital expenditure investments of
Returning Capital to Shareholders
We have adopted a flexible approach to returning capital to shareholders through: (i) our ongoing dividend; and (ii) share buy backs.
In
In
Liquidity and Capital Structure
During the 2024 second quarter, we generated
On
On
The new bank structure, in combination with the recent redemption of the
Outlook
Steel prices declined over the past several quarters but are expected to stabilize at levels that are above historical averages, as the industry exhibits inventory discipline. Our average margins, however, are expected to be lower in the third quarter versus the second quarter, as a result of the lower margins towards the end of the second quarter as compared to the second quarter average. Margins should rebound once the lag effect of lower cost inventories continue to work through our cost of goods sold and selling prices stabilize.
Our end market activity remains steady and is expected to continue into the third quarter, other than the impact from reduced shipping days from various seasonal holidays in North American. We expect to benefit from higher shipment activity in both
Investor Conference Call
The Company will be holding an Investor Conference Call on
A replay of the call will be available at 416-764-8677 (
Additional supplemental financial information is available in our investor conference call package located on our website at www.russelmetals.com.
About
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: volatility in metal prices; cyclicality of the metals industry; future acquisitions; facilities modernization; volatility in the energy industry; product claims; significant competition; sources of supply and supply chain disruptions; manufacturers selling directly; material substitution; failure of our key computer-based systems; cybersecurity; credit risk; currency exchange risk; restrictive debt covenants; goodwill or long-term asset impairments; the unexpected loss of key individuals; decentralized operating structure; labour interruptions; laws and governmental regulations; litigious environment; environmental liabilities; climate change; carbon emissions; health and safety laws and regulations; geopolitical risk and common share risk.
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.sedarplus.ca.
If you would like to unsubscribe from receiving Press Releases, you may do so by emailing subscriber@russelmetals.com; or by calling our Investor Relations Line: 905-816-5178.
Website: www.russelmetals.com
|
Three Months Ended |
Six Months Ended |
||
(in millions of Canadian dollars, except per share data) |
2024 |
2023 |
2024 |
2023 |
Revenues |
$ 1,071.5 |
$ 1,189.6 |
$ 2,132.6 |
$ 2,376.3 |
Cost of materials |
846.2 |
914.2 |
1,669.4 |
1,840.6 |
Employee expenses |
89.1 |
105.4 |
188.9 |
206.3 |
Other operating expenses |
68.0 |
61.8 |
139.8 |
130.1 |
Earnings from joint venture |
- |
(6.5) |
- |
(15.4) |
Earnings before interest and |
|
|
|
|
provision for income taxes |
68.2 |
114.7 |
134.5 |
214.7 |
Interest expense, net |
1.4 |
2.8 |
1.3 |
6.6 |
Earnings before provision for income taxes |
66.8 |
111.9 |
133.2 |
208.1 |
Provision for income taxes |
16.9 |
26.9 |
33.6 |
49.2 |
Net earnings for the period |
$ 49.9 |
$ 85.0 |
$ 99.6 |
$ 158.9 |
Basic earnings per common share |
$ 0.84 |
$ 1.37 |
$ 1.66 |
$ 2.56 |
Diluted earnings per common share |
$ 0.84 |
$ 1.37 |
$ 1.66 |
$ 2.56 |
|
Three Months Ended |
Six Months Ended |
||
(in millions of Canadian dollars) |
2024 |
2023 |
2024 |
2023 |
Net earnings for the period |
$ 49.9 |
$ 85.0 |
$ 99.6 |
$ 158.9 |
Other comprehensive income (loss) |
|
|
|
|
Items that may be reclassified to earnings |
|
|
|
|
Unrealized foreign exchange gains (losses) on |
|
|
|
|
translation of foreign operations |
9.5 |
(19.0) |
31.7 |
(19.7) |
Items that may not be reclassified to earnings |
|
|
|
|
Actuarial gains on pension and similar |
|
|
|
|
obligations, net of taxes |
0.3 |
1.6 |
3.9 |
1.3 |
Other comprehensive income (loss) |
9.8 |
(17.4) |
35.6 |
(18.4) |
Total comprehensive income |
$ 59.7 |
$ 67.6 |
$ 135.2 |
$ 140.5 |
(in millions of Canadian dollars) |
|
|
ASSETS |
|
|
Current |
|
|
Cash and cash equivalents |
$ 386.2 |
$ 629.2 |
Accounts receivable |
498.7 |
457.4 |
Inventories |
861.5 |
840.3 |
Prepaids and other |
26.0 |
26.2 |
Income taxes receivable |
11.4 |
8.2 |
Total |
1,783.8 |
1,961.3 |
Property, Plant and Equipment |
372.6 |
339.9 |
Right-of-Use Assets |
104.2 |
100.0 |
Deferred Income Tax Assets |
0.9 |
1.2 |
Pension and Benefits |
47.5 |
43.6 |
Financial and Other Assets |
4.1 |
3.9 |
|
118.1 |
120.2 |
Total Assets |
$ 2,431.2 |
$ 2,570.1 |
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
Current |
|
|
Accounts payable and accrued liabilities |
$ 446.3 |
$ 454.2 |
Short-term lease obligations |
17.0 |
15.7 |
Income taxes payable |
0.3 |
3.6 |
Total |
463.6 |
473.5 |
Long-Term Debt |
148.9 |
297.2 |
Pensions and Benefits |
1.9 |
2.0 |
Deferred Income Tax Liabilities |
20.0 |
17.5 |
Long-term Lease Obligations |
113.5 |
109.6 |
Provisions and Other Non-Current Liabilities |
27.6 |
30.4 |
Total Liabilities |
775.5 |
930.2 |
Shareholders' Equity |
|
|
Common shares |
541.7 |
556.3 |
Retained earnings |
953.6 |
954.6 |
Contributed surplus |
10.0 |
10.3 |
Accumulated other comprehensive income |
150.4 |
118.7 |
Total Shareholders' Equity |
1,655.7 |
1,639.9 |
Total Liabilities and Shareholders' Equity |
$ 2,431.2 |
$ 2,570.1 |
|
Three Months Ended |
Six Months Ended |
||
(in millions of Canadian dollars) |
2024 |
2023 |
2024 |
2023 |
Operating Activities |
|
|
|
|
Net earnings for the period |
$ 49.9 |
$ 85.0 |
$ 99.6 |
$ 158.9 |
Depreciation and amortization |
17.6 |
16.7 |
35.3 |
33.1 |
Provision for income taxes |
16.9 |
26.9 |
33.6 |
49.2 |
Interest expense, net |
1.4 |
2.8 |
1.3 |
6.6 |
Gain on sale of property, plant and equipment |
(0.2) |
(0.3) |
(0.4) |
(0.5) |
Earnings from joint venture |
- |
(6.5) |
- |
(15.4) |
Difference between pension expense and amount funded |
0.6 |
0.6 |
1.3 |
0.6 |
Debt accretion, amortization and other |
1.3 |
0.3 |
1.7 |
0.6 |
Interest received (paid) net, |
|
|
|
|
including interest on lease obligations |
(2.5) |
(2.3) |
(2.1) |
(6.0) |
Cash from operating activities before |
|
|
|
|
non-cash working capital |
85.0 |
123.2 |
170.3 |
227.1 |
Changes in Non-Cash Working Capital Items |
|
|
|
|
Accounts receivable |
13.3 |
18.0 |
(37.1) |
(87.9) |
Inventories |
(15.8) |
(14.2) |
(11.2) |
1.0 |
Accounts payable and accrued liabilities |
7.8 |
16.6 |
(12.3) |
84.1 |
Other |
0.5 |
6.5 |
0.2 |
9.0 |
Change in non-cash working capital |
5.8 |
26.9 |
(60.4) |
6.2 |
Income tax paid, net |
(21.9) |
(19.4) |
(38.8) |
(35.3) |
Cash from operating activities |
68.9 |
130.7 |
71.1 |
198.0 |
Financing Activities |
|
|
|
|
Issue of common shares |
0.8 |
3.2 |
1.6 |
11.8 |
Repurchase of common shares |
(57.0) |
(44.2) |
(71.9) |
(44.2) |
Dividends on common shares |
(25.0) |
(24.7) |
(49.1) |
(48.4) |
Repayment of long-term debt |
(150.0) |
- |
(150.0) |
- |
Lease obligations |
(4.6) |
(4.4) |
(9.3) |
(8.3) |
Cash used in financing activities |
(235.8) |
(70.1) |
(278.7) |
(89.1) |
Investing Activities |
|
|
|
|
Purchase of property, plant and equipment |
(24.2) |
(15.4) |
(48.0) |
(29.6) |
Proceeds on sale of property, plant and equipment |
0.3 |
0.3 |
0.5 |
0.6 |
Dividends received from joint venture |
- |
9.8 |
- |
13.7 |
Cash used in investing activities |
(23.9) |
(5.3) |
(47.5) |
(15.3) |
Effect of exchange rates on cash and cash equivalents |
2.5 |
(6.3) |
12.1 |
(6.5) |
(Decrease) Increase in cash and cash equivalents |
(188.3) |
49.0 |
(243.0) |
87.1 |
Cash and cash equivalents, beginning of the period |
574.5 |
401.1 |
629.2 |
363.0 |
Cash and cash equivalents, end of the period |
$ 386.2 |
$ 450.1 |
$ 386.2 |
$ 450.1 |
(in millions of Canadian dollars) |
Common |
Retained |
Contributed |
Accumulated |
Total |
Balance, |
$ 556.3 |
$ 954.6 |
$ 10.3 |
$ 118.7 |
$ 1,639.9 |
Payment of dividends |
- |
(49.1) |
- |
- |
(49.1) |
Net earnings for the period |
- |
99.6 |
- |
- |
99.6 |
Other comprehensive income for the period |
- |
- |
- |
35.6 |
35.6 |
Share options exercised |
1.9 |
- |
(0.3) |
- |
1.6 |
Shares repurchased |
(16.5) |
(55.4) |
- |
- |
(71.9) |
Transfer of net actuarial gains on defined benefit plans |
- |
3.9 |
- |
(3.9) |
- |
Balance, |
$ 541.7 |
$ 953.6 |
$ 10.0 |
$ 150.4 |
$ 1,655.7 |
(in millions of Canadian dollars) |
Common |
Retained |
Contributed |
Accumulated |
Total |
Balance, |
$ 562.4 |
$ 844.6 |
$ 12.2 |
$ 140.1 |
$ 1,559.3 |
Payment of dividends |
- |
(48.4) |
- |
- |
(48.4) |
Net earnings for the period |
- |
158.9 |
- |
- |
158.9 |
Other comprehensive loss for the period |
- |
- |
- |
(18.4) |
(18.4) |
Share options exercised |
13.7 |
- |
(1.9) |
- |
11.8 |
Shares repurchased |
(11.4) |
(32.8) |
- |
- |
(44.2) |
Transfer of net actuarial gains on defined benefit plans |
- |
1.3 |
- |
(1.3) |
- |
Balance, |
$ 564.7 |
$ 923.6 |
$ 10.3 |
$ 120.4 |
$ 1,619.0 |
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