Feb 21, 2020, 09:45 EST
Feb 21, 2020, 09:45 /Comserve / -- Russel Metals, Inc. (RUS: TSX), one of the leading metal distribution companies based in Canada has recently made its financial results public for the fourth quarter, including for financial year ending on 31st December, 2019.
Russel Metals, Inc. announced its financial results for the fourth quarter and financial year ended 31st December, 2019. The company had reported gross revenues of USD 3.7 billion for the year ended 31st December, 2019 as against gross revenues of USD 4.2 billion earned for the year ended 31st December, 2018. Meanwhile, it had reported earnings of USD 1.23 per share for the year ended 31st December, 2019, as against USD 3.53 per share. The company had reported a net income of USD 77 million, as compared to a net income of USD 219 million for the year ended 31st December, 2018. Meanwhile, Russel Metals reported a loss amounting to USD 7 million on gross revenues of USD 0.8 billion earned for the quarter ended 31st December, 2019, while a net income of USD 46 million was reported for the fourth quarter ending 31st December, 2018. The earnings per share recorded for the quarter ended 31st December, 2019 was USD 0.11 per share, in comparison to USD 0.74 per share recorded for the fourth quarter ending 31st December, 2018.
The company had recorded its inventory provisions for their energy products as well as steel distributor segments that was associated with the decline of the line pipe including the OCTG market that had happened owing to decrease in the rig counts.
The revenues arising from metal service centers of the company had fallen to USD 412 million, registering a decrease of 21% for the quarter ended 31st December, 2019 as compared to the earlier year due to shipping of lesser tons, including fall in the selling price per ton. The average selling price had reported a decrease of 15% this year, as compared to the fourth quarter of 2018. Moreover, there was a 7% decrease observed in the quantity of tons that were shipped during the period. The fourth quarter of 2019 reported a gross margin of 18.8%, as compared to a gross margin of 20.9% reported at the end of the fourth quarter of 2018. The company generated an operating profit of USD 9 million for the fourth quarter ending 31st December, 2019, as compared to USD 28 million generated in the same quarter ending 31st December, 2018.
The energy products segment of the company had reported revenues of USD 343 million for the quarter ended 31st December, 2019, as compared to USD 432 million reported for the quarter ended 31st December, 2018, due to low demand and a line pipe project not materializing for the year ended 31st December, 2019. Additionally, there was a reduction in gross margin calculated as a percentage of revenues that stood at 11.4%, as compared to gross margin of 17.8% registered during the last quarter of 2018. This was partly due to the fact that provisions for inventory to the tune of USD 14 million had existed for the quarter ended 31st December, 2019. Moreover, an operating loss to the tune of USD 2 million had been incurred for the quarter ended 31st December, 2019, while on the other hand, the company had registered an operating profit of USD 33 million during the same quarter last year.
The company had reported a 49% decrease in its revenues that amounted to USD 81 million for the fourth quarter ended 31st December, 2019, as compared to revenues of USD 157 million generated for the same quarter ending on 31st December, 2018. The company had created a provision for its inventory in their U.S. steel distributor operations to the extent of USD 4 million, which had led to its gross margins as a percentage of its revenues to be 3.6% for the fourth quarter of 2019, as compared to 13.3% recorded during the same quarter of 2018. Operating loss of USD 3 million was recorded for the quarter ended 31st December, 2019, as compared to an operating profit of USD 11 million reported during the same quarter of 2018.
The President and CEO of Russel Metals, John G. Reid had mentioned that 2019 had been a tough year, although the performance of the company had been strong enough to withstand the various problems being faced globally, that included the rise in prices of steel in 2018 as a result of trade actions becoming reversed in the middle of 2019, that had helped them sell at prices that was as low as in the year 2017. He also stated that for the year 2019, the company had focused their efforts towards managing working capital that had helped them generate about USD 250 million in cash arising from operating activities. He further expressed that he is looking forward to 2020 that has seen a slight increase in pricing as well as a steady demand.
Additionally, Mr. Reid stated that for the fourth quarter of 2019, the company had company had completed the process of acquiring City Pipe, which is in tune with their strategy of planning to grow their oilfield store operations. He further stated that Elite Supply Partners which has been formed as a result of merger of Apex Remington and City Pipe is currently predicted to hold revenues that can cross USD 300 million for the year 2020 and that the company is looking forward to continue to grow successfully from the combined operation of both the companies.
A quarterly dividend of USD 0.38 per share had been declared by the Board of Directors that will be payable by March 16, 2020 to the shareholders whose name is present on the record as on February 28, 2020.
An Investor Conference Call is also expected to be held by the company on 12th February, 2020 at 9.00 a.m. ET for reviewing the results of the fourth quarter of 2019.
About Russel Metals
Russel Metals, Inc., a metals distribution company having its operations based in Canada has been carrying on the business under three metal distribution segments namely, Metal service centers, energy products and steel distributors.
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