RUSSEL METALS INC. Revenues of
Cash Generated from Operating Activities of
Repurchased
Redeeming
Liquidity1 of
Three Months Ended | |||
Revenues | $ 1,061 | $ 1,019 | $ 1,187 |
EBITDA 1 | 84 | 82 | 116 |
Net Income | 50 | 47 | 74 |
Earnings per share | 0.82 | 0.78 | 1.19 |
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 the three months ended
Three Months Ended | |||
($ millions, except per share data) | |||
Net earnings | $ 49.7 | $ 47.2 | $ 73.9 |
Provision for income taxes | 16.7 | 15.7 | 22.3 |
Interest (income) expense, net | (0.1) | 0.7 | 3.8 |
EBIT 1 | 66.3 | 63.6 | 100.0 |
Depreciation and amortization | 17.7 | 18.6 | 16.4 |
EBITDA 1 | $ 84.0 | $ 82.2 | $ 116.4 |
Basic earnings per share | $ 0.82 | $ 0.78 | $ 1.19 |
_________________________ |
1 Defined in Non-GAAP Measures and Ratios |
Our basic earnings per share of
During our 2024 first quarter we generated
In the quarter, we generated
Market Conditions
Steel prices declined during the mid-to-latter part of the 2024 first quarter prior to stabilizing in late March and into April. Our metals service centers experienced 2% higher average selling prices for the first quarter of 2024 as compared to the fourth quarter of 2023, as we benefited from the higher price levels at the outset of the first quarter and our continued growth in value-added processing. In addition, we shipped 4% higher volumes in the first quarter of 2024 as compared to the fourth quarter of 2023, due to the seasonal pick-up in demand. Our energy field stores generated 12% higher revenues in the first quarter of 2024 as compared to the fourth quarter of 2023, as our business benefited from solid activity and growing market share, including the opening of two new energy field stores in the 2024 first quarter. Steel distributors were negatively impacted in the quarter by overseas shipping issues, which delayed inbound product from the first quarter into the second quarter of 2024.
Capital Investment Growth Initiatives
In the 2024 first quarter, we invested
On
Returning Capital to Shareholders
We have adopted a flexible approach to returning capital to shareholders through: (i) our ongoing dividend; and (ii) share buybacks.
In the 2024 first quarter, we paid dividends of
In
Liquidity and Capital Structure
During the 2024 first quarter, we generated
Outlook
Over the near term, we expect steel prices to stabilize and remain at price levels that are above historical averages, as a result of solid end market demand and expected discipline by North American steel mills. Over the medium-term, we expect growth in North American steel consumption as a result of onshoring activities and infrastructure spending initiatives 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 MD&A 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; volatility in oil and natural gas prices; capital budgets in the energy industry; 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, geopolitical 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 MD&A should not be unduly relied upon. These statements speak only as of the date of this MD&A 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" later in this 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 info@russelmetals.com; or by calling our Investor Relations Line: 905-816-5178.
Condensed Consolidated Statements of Earnings (unaudited)
Three Months Ended | ||
(in millions of Canadian dollars, except per share data) | 2024 | 2023 |
Revenues | $ 1,061.1 | $ 1,186.7 |
Cost of materials | 823.2 | 926.4 |
Employee expenses | 99.8 | 100.9 |
Other operating expenses | 71.8 | 68.3 |
Earnings from joint venture | - | (8.9) |
Earnings before interest and provision for income taxes | 66.3 | 100.0 |
Interest (income) expense, net | (0.1) | 3.8 |
Earnings before provision for income taxes | 66.4 | 96.2 |
Provision for income taxes | 16.7 | 22.3 |
Net earnings for the period | $ 49.7 | $ 73.9 |
Basic earnings per common share | $ 0.82 | $ 1.19 |
Diluted earnings per common share | $ 0.82 | $ 1.19 |
Condensed Consolidated Statements of Comprehensive Income (unaudited)
Three Months Ended | ||
(in millions of Canadian dollars) | 2024 | 2023 |
Net earnings for the period | $ 49.7 | $ 73.9 |
Other comprehensive (loss) income | ||
Items that may be reclassified to earnings | ||
Unrealized foreign exchange gains (losses) on translation of foreign operations | 22.2 | (0.7) |
Items that may not be reclassified to earnings | ||
Actuarial gains (losses) on pension and similar obligations, net of taxes | 3.6 | (0.3) |
Other comprehensive income (loss) | 25.8 | (1.0) |
Total comprehensive income | $ 75.5 | $ 72.9 |
Condensed Consolidated Statements of Financial Position (unaudited)
(in millions of Canadian dollars) |
|
|
ASSETS | ||
Current | ||
Cash and cash equivalents | $ 574.5 | $ 629.2 |
Accounts receivable | 510.8 | 457.4 |
Inventories | 842.8 | 840.3 |
Prepaids and other | 26.5 | 26.2 |
Income taxes receivable | 3.2 | 8.2 |
1,957.8 | 1,961.3 | |
Property, Plant and Equipment | 357.2 | 339.9 |
Right-of-Use Assets | 103.0 | 100.0 |
Deferred Income Tax Assets | 1.3 | 1.2 |
Pension and Benefits | 47.8 | 43.6 |
Financial and Other Assets | 3.9 | 3.9 |
119.7 | 120.2 | |
Total Assets | $ 2,590.7 | $ 2,570.1 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Current | ||
Accounts payable and accrued liabilities | $ 431.5 | $ 454.2 |
Short-term lease obligations | 16.4 | 15.7 |
Income taxes payable | 0.3 | 3.6 |
448.2 | 473.5 | |
Long-Term Debt | 297.6 | 297.2 |
Pensions and Benefits | 1.9 | 2.0 |
Deferred Income Tax Liabilities | 17.1 | 17.5 |
Long-term Lease Obligations | 112.5 | 109.6 |
Provisions and Other Non-Current Liabilities | 36.3 | 30.4 |
Total Liabilities | 913.6 | 930.2 |
Shareholders' Equity | ||
Common shares | 554.0 | 556.3 |
Retained earnings | 972.0 | 954.6 |
Contributed surplus | 10.2 | 10.3 |
Accumulated other comprehensive income | 140.9 | 118.7 |
Total Shareholders' Equity | 1,677.1 | 1,639.9 |
Total Liabilities and Shareholders' Equity | $ 2,590.7 | $ 2,570.1 |
Condensed Consolidated Statements of Cash Flow (unaudited)
Three Months Ended | ||
(in millions of Canadian dollars) | 2024 | 2023 |
Operating Activities | ||
Net earnings for the period | $ 49.7 | $ 73.9 |
Depreciation and amortization | 17.7 | 16.4 |
Provision for income taxes | 16.7 | 22.3 |
Interest (income) expense, net | (0.1) | 3.8 |
Gain on sale of property, plant and equipment | (0.2) | (0.2) |
Earnings from joint venture | - | (8.9) |
Difference between pension expense and amount funded | 0.7 | - |
Debt accretion, amortization and other | 0.4 | 0.3 |
Interest received (paid) net, including interest on lease obligations | 0.4 | (6.7) |
Cash from operating activities before non-cash working capital | 85.3 | 100.9 |
Changes in Non-Cash Working Capital Items | ||
Accounts receivable | (50.4) | (105.9) |
Inventories | 4.6 | 15.2 |
Accounts payable and accrued liabilities | (20.1) | 70.5 |
Other | (0.3) | 2.5 |
Change in non-cash working capital | (66.2) | (17.7) |
Income tax paid, net | (16.9) | (15.9) |
Cash from operating activities | 2.2 | 67.3 |
Financing Activities | ||
Issue of common shares | 0.8 | 8.6 |
Repurchase of common shares | (14.9) | - |
Dividends on common shares | (24.1) | (23.7) |
Lease obligations | (4.7) | (3.9) |
Cash used in financing activities | (42.9) | (19.0) |
Investing Activities | ||
Purchase of property, plant and equipment | (23.8) | (14.2) |
Proceeds on sale of property, plant and equipment | 0.2 | 0.3 |
Dividends received from joint venture | - | 3.9 |
Cash used in investing activities | (23.6) | (10.0) |
Effect of exchange rates on cash and cash equivalents | 9.6 | (0.2) |
(Decrease) increase in cash and cash equivalents | (54.7) | 38.1 |
Cash and cash equivalents, beginning of the period | 629.2 | 363.0 |
Cash and cash equivalents, end of the period | $ 574.5 | $ 401.1 |
Condensed Consolidated Statements of Changes in Equity (unaudited)
(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 | - | (24.1) | - | - | (24.1) |
Net earnings for the period | - | 49.7 | - | - | 49.7 |
Other comprehensive income for the period | - | - | - | 25.8 | 25.8 |
Share options exercised | 0.8 | - | (0.1) | - | 0.7 |
Shares repurchased | (3.1) | (11.8) | - | - | (14.9) |
Transfer of net actuarial gains on defined benefit plans | - | 3.6 | - | (3.6) | - |
Balance, | $ 554.0 | $ 972.0 | $ 10.2 | $ 140.9 | $ 1,677.1 |
(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 | - | (23.7) | - | - | (23.7) |
Net earnings for the period | - | 73.9 | - | - | 73.9 |
Other comprehensive loss for the period | - | - | - | (1.0) | (1.0) |
Share options exercised | 10.1 | - | (1.5) | - | 8.6 |
Transfer of net actuarial losses on defined benefit plans | - | (0.3) | - | 0.3 | - |
Balance, | $ 572.5 | $ 894.5 | $ 10.7 | $ 139.4 | $ 1,617.1 |
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