Russel Metals Reports Second Quarter 2008 Net Earnings of $1.25 Per ...

Tag : metals products

Steel distributors produced operating profits of $26 million forthe second quarter of 2008 compared to $12 million for the secondquarter of 2007. The increase is a result of higher margins whichmore than offset the reduced volumes. Volumes in this segment werelower compared to 2007 due to lower import levels as strongworldwide steel demand, higher steel prices outside of the regionand the weak U.S. dollar have made imports uneconomical for someproducts.

Bud Siegel, President and Chief Executive Officer, commented,"We are extremely pleased with our results for the secondquarter. The primary sectors serviced by our metals operations haveoutperformed the rest of the Canadian economy and even our samestore volumes were up in the second quarter. In addition, ourenergy tubular products segment had increased volumes which furtherstrengthened their results. Although economic uncertainty isevident in certain sectors, many of the sectors we service remainbuoyant."

Free cash flow for the second quarter 2008 was $79 million and was$116 million for the six months ended June 30, 2008. Our focus onworking capital management allowed the Company to moderate theimpact of steel price increases and net working capital increasedby only $8 million for the first six months of 2008. MarionBritton, Vice President and Chief Financial Officer, commented"Our strong cash flow over the cycle supports our industryleading dividend policy. The strength of our year to date cash flowin an environment of significant steel price increases reflectspositively on the working capital management skills of ouroperations."

The Board of Directors approved a quarterly dividend of $0.45 percommon share and a supplemental dividend of $0.05 per common sharepayable September 15, 2008 to shareholders of record as of August28, 2008.

The Company will be holding an Investor Conference Call onWednesday, August 6, 2008 at 9:00 a.m. ET to review its secondquarter results for 2008. The dial-in telephone numbers for thecall are 416-641-6130 (Toronto and International callers) and1-866-226-1793 (U.S. and Canada). Please dial in 10 minutes priorto the call to ensure that you get a line.

A replay of the call will be available at 416-695-5800 (Toronto andInternational callers) and 1-800-408-3053 (U.S. and Canada) untilmidnight, Wednesday, August 13, 2008. You will be required to enterpass code 3264763 in order to access the call.

Additional supplemental financial information is available in ourinvestor conference call package located on our website atwww.russelmetals.com.

Russel Metals is one of the largest metals distribution companiesin North America. It carries on business in three distributionsegments: metals service centers, energy tubular products and steeldistributors, under various names including Russel Metals, A.J.Forsyth, Acier Leroux, Acier Loubier, Acier Richler, Arrow SteelProcessors, B&T Steel, Baldwin International, Comco Pipe andSupply, Fedmet Tubulars, JMS Russel Metals, Leroux Steel, McCabeSteel, Megantic Metal, Metaux Russel, Metaux Russel ProduitsSpecialises, Milspec Industries, Pioneer Pipe, Russel MetalsSpecialty Products, Russel Metals Williams Bahcall, Spartan SteelProducts, Sunbelt Group, Triumph Tubular & Supply, Wirth Steeland York-Ennis.

Statements contained in this press release or on the relatedconference call that relate to Russel Metals' beliefs orexpectations as to certain future events are not statements ofhistorical fact and are forward-looking statements. Russel Metalscautions readers that there are important factors, risks anduncertainties, including but not limited to economic, competitiveand governmental factors affecting Russel Metals' operations,markets, products, services and prices that could cause its actualresults, performance or achievements to be materially differentfrom those forecasted or anticipated in such forward lookingstatements.

The forward-looking statements in this document reflectmanagement's current beliefs and are based on information currentlyavailable to management. The material assumptions applied in makingthe forward-looking statements in this document include thefollowing: demand from the manufacturing, resource and constructionsegments of the Canadian economy will be consistent with what weexperienced in the second quarter of 2008, oil and gas prices willnot change materially, the recent stability in the price of steelwill either remain constant or increase, and the Canadian dollarwill maintain recent gains while not appreciating significantly.Although the forward-looking statements contained in this documentare based upon what management believes to be reasonable estimatesand assumptions, Russel Metals cannot ensure that actual resultswill not be materially different from those expressed or implied bythese forward-looking statements.

RUSSEL METALS INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

June 30, December 31,
(millions) 2008 2007
-------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents $ 235.5 $ 181.8
Accounts receivable 478.4 341.8
Inventories 620.5 572.6
Prepaid expenses and other assets 5.5 8.5
Income taxes 0.3 3.9
-------------------------------------------------------------------------
1,340.2 1,108.6

Property, Plant and Equipment 231.8 227.9
Deferred Financing Charges 0.2 0.3
Future Income Tax Assets 1.0 1.0
Other Assets 9.0 12.1
Goodwill and Intangibles 54.5 53.4
-------------------------------------------------------------------------
$ 1,636.7 $ 1,403.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 442.7 $ 294.2
Income taxes payable 19.6 2.8
Current portion long-term debt 1.1 0.9
-------------------------------------------------------------------------
463.4 297.9

Derivatives 39.1 39.5
Long-Term Debt 180.4 174.9
Pensions and Benefits 1.3 1.4
Future Income Tax Liabilities 6.8 5.8
-------------------------------------------------------------------------
691.0 519.5
-------------------------------------------------------------------------
Shareholders' Equity
Common shares 507.3 504.2
Retained earnings 462.8 411.7
Contributed surplus 8.6 6.2
Accumulated other comprehensive loss (33.0) (38.3)
-------------------------------------------------------------------------
945.7 883.8
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$ 1,636.7 $ 1,403.3
-------------------------------------------------------------------------
-------------------------------------------------------------------------

RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)

(millions, except per Quarters ended June 30, Six months ended June30,
share data) 2008 2007 2008 2007
----------------------------------------------------------------------------
Revenues $ 856.3 $ 652.8 $ 1,568.6 $ 1,336.5
Cost of sales and operating
expenses 734.9 603.9 1,395.1 1,241.6
----------------------------------------------------------------------------
Earnings before the following 121.4 48.9 173.5 94.9
Other income (expense) 0.7 - (2.5) -
Interest expense, net (2.3) (1.6) (4.4) (3.4)
----------------------------------------------------------------------------
Earnings before income taxes 119.8 47.3 166.6 91.5
Provision for income taxes (41.0) (18.0) (58.6) (33.5)
----------------------------------------------------------------------------
Net earnings for the period $ 78.8 $ 29.3 $ 108.0 $ 58.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Basic earnings per common
share $ 1.25 $ 0.47 $ 1.71 $ 0.93
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Diluted earnings per common
share $ 1.24 $ 0.47 $ 1.71 $ 0.92
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----------------------------------------------------------------------------

RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(UNAUDITED)

Quarters ended Six months ended
June 30, June 30,
(millions) 2008 2007 2008 2007
----------------------------------------------------------------------------
Retained earnings, beginning of the
period, as previously reported $ 412.5 $ 414.3 $ 411.7 $ 411.1
Transitional adjustment -
financial instruments - - - (0.5)
----------------------------------------------------------------------------
Retained earnings, beginning of the
period, as restated 412.5 414.3 411.7 410.6
Net earnings for the period 78.8 29.3 108.0 58.0
Dividends on common shares (28.5) (28.3) (56.9) (53.3)
----------------------------------------------------------------------------
Retained earnings, end of the period $ 462.8 $ 415.3 $ 462.8 $415.3
----------------------------------------------------------------------------
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RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

Quarters Six months
Ended June 30, Ended June 30,
(millions) 2008 2007 2008 2007
----------------------------------------------------------------------------
Net earnings for the period $ 78.8 $ 29.3 $ 108.0 $ 58.0
----------------------------------------------------------------------------
Other comprehensive income (loss)
Unrealized foreign exchange gains
(losses) on translating financial
statements of self sustaining foreign
operations (U.S. subsidiaries) (2.6) (16.2) 9.6 (18.5)
Gains and (losses) on derivatives
designated as net investment hedges 0.5 5.6 (1.6) 6.4
Gains and (losses) on derivatives
designated as cash flow hedges (2.2) 1.4 (2.7) 2.3
----------------------------------------------------------------------------
Other comprehensive income (loss) (4.3) (9.2) 5.3 (9.8)
----------------------------------------------------------------------------
Comprehensive income $ 74.5 $ 20.1 $ 113.3 $ 48.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------

RUSSEL METALS INC.
CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS
(UNAUDITED)

Quarters Six months
Ended June 30, Ended June 30,
(millions) 2008 2007 2008 2007
---------------------------------------------------------------------------
Accumulated net unrealized foreign
currency translation gains (losses)
Balance, beginning of period $ (33.5) $ (13.5) $ (45.7) $ (11.2)
Net unrealized gain (loss) on
translation of net investment
in foreign operations (2.6) (16.2) 9.6 (18.5)
---------------------------------------------------------------------------
Balance, end of period (36.1) (29.7) (36.1) (29.7)
---------------------------------------------------------------------------
Accumulated net unrealized loss on cash
flow and net investment hedges
Balance, beginning of period 4.8 (7.6) 7.4 -
Transitional adjustment - - - (9.3)
Unrealized gains (losses) on items
designated as net investment hedges 0.5 5.6 (1.6) 6.4
Unrealized gains (losses) on items
designated as cash flow hedges (2.2) 1.4 (2.7) 2.3
---------------------------------------------------------------------------
Balance, end of period 3.1 (0.6) 3.1 (0.6)
---------------------------------------------------------------------------
Total accumulated other
comprehensive loss $ (33.0) $ (30.3) $ (33.0) $ (30.3)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

RUSSEL METALS INC.
CONSOLIDATED CASH FLOW STATEMENTS
(UNAUDITED)

Quarters ended Six months ended
June 30, June 30,
(millions) 2008 2007 2008 2007
--------------------------------------------------------------------------
Operating activities
Net earnings $ 78.8 $ 29.3 $ 108.0 $ 58.0
Depreciation and amortization 5.7 5.0 11.4 9.9
Future income taxes 1.2 1.5 1.3 1.9
Gain on sale of fixed assets 0.1 0.1 0.1 (0.6)
Stock-based compensation 0.4 3.1 2.9 3.9
Pension expense (funding) - 0.3 (0.1) (1.3)
Other (0.7) 0.1 2.7 0.3
--------------------------------------------------------------------------
Cash from operating activities
before working capital 85.5 39.4 126.3 72.1
--------------------------------------------------------------------------
Changes in non-cash working
capital items
Accounts receivable (62.4) 18.4 (133.7) (38.6)
Inventories (55.3) (12.7) (42.6) 9.6
Accounts payable and accrued
liabilities 90.1 (14.2) 145.8 18.8
Current income taxes 13.1 (4.1) 21.9 (12.7)
Other (0.9) (0.8) 0.2 0.1
--------------------------------------------------------------------------
Change in non-cash working capital (15.4) (13.4) (8.4) (22.8)
--------------------------------------------------------------------------
Cash from operating activities 70.1 26.0 117.9 49.3
--------------------------------------------------------------------------
Financing activities
Issue of common shares - options
exercised 1.5 10.0 2.5 10.8
Dividends on common shares (28.5) (28.3) (56.9) (53.3)
Repayment of long-term debt (0.2) - (0.4) -
--------------------------------------------------------------------------
Cash used in financing activities (27.2) (18.3) (54.8) (42.5)
--------------------------------------------------------------------------
Investing activities
Purchase of fixed assets (6.1) (4.9) (10.4) (8.6)
Proceeds on sale of fixed assets 0.1 - 0.1 1.3
Other (0.8) (0.5) (0.3) 0.2
--------------------------------------------------------------------------
Cash used in investing activities (6.8) (5.4) (10.6) (7.1)
--------------------------------------------------------------------------
Effect of exchange rates on cash (0.2) (2.7) 1.2 (2.9)
--------------------------------------------------------------------------
Increase (decrease) in cash and
cash equivalents 35.9 (0.4) 53.7 (3.2)
Cash and cash equivalents,
beginning of the period 199.6 207.1 181.8 209.9
--------------------------------------------------------------------------
Cash and cash equivalents,
end of the period $ 235.5 $ 206.7 $ 235.5 $ 206.7
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Supplemental Cash flow information:
Income taxes paid $ 25.5 $ 21.6 $ 35.7 $ 44.9
Interest paid $ 0.1 $ - $ 7.5 $ 7.6

Contacts:
Russel Metals Inc.
Marion E. Britton, C.A.
Vice President and Chief Financial Officer
(905) 819-7407
Email: info@russelmetals.com
Website: www.russelmetals.com

Copyright ? 2008 Marketwire

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