May 14, 2014

Russel Reports Strong First Quarter

Russel Metals Inc., Mississauga, Ontario, reported first-quarter earnings of $29 million on revenues of $924 million reflecting strong operating results in all segments. This compares to earnings of $22 million on revenues of $822 million in the same quarter last year, and fourth-quarter 2013 earnings of $23 million.

Revenues in Russel's metals service center segment increased 9 percent to $392 million in the first quarter, compared to the prior-year quarter, due to stronger demand and pricing levels. Gross margins improved nearly 1 percent to 21.7 percent, reflecting increased steel prices.

First-quarter revenues in Russel's energy products segment increased 14 percent to $445 million led by significant increases in operations servicing oil and gas drilling in Canada. Gross margins in energy products improved to 17 percent, a 1.5 percent gain over both the previous and prior-year quarters.

Revenues in Russel's steel distributors segment increased by 19 percent to $87 million due to stronger demand and higher pricing, while operating profits hit $6 million, up from $5 million in first-quarter 2013.

"The economy improved in the quarter, and our recent investments in equipment, new locations and acquisitions left us well positioned to capitalize and improve our quarterly operating margins and net income," said Brian R. Hedges, Russel president and CEO.

Russel reported a pickup in the operating profits of all of its business segments led by the energy group, which was up 34 percent in the first quarter. It also experienced strong volume increases in its U.S. metals service centers and most of its operations in the energy products segment. "We anticipate higher revenues from our steel distribution segment in the second quarter based on current market conditions," Hedges said. "Energy products will be affected by the seasonality in the second quarter, but the segment is expected to improve over the same period last year."

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