Nov. 12, 2014
Demand Drives Profitable Quarter for Russel
Russel Metals, Inc., Mississauga, Ontario, reported earnings of $33.0 million in the third quarter, an improvement on both the previous quarter and the same quarter of 2013. The Canadian service center company reported earnings of $31 million in the prior quarter and $18.9 million in third-quarter 2013.
Russel’s third-quarter sales totaled $1.04 billion, reflecting strong volumes in each of the company's three business segments. Third-quarter revenues increased 16.2 percent from the previous quarter and 30.2 percent from the same quarter the previous year.
Through three quarters, Russel's net earnings of $92.5 million were up 52.9 percent from 2013. Net sales of $2.86 billion increased 20.2 percent from last year.
"Our operating profits were up 74 percent in the quarter reflecting continued strength in all three operating segments. Revenues increased by 30 percent, which was the main lever for improved profitability, but higher margins and stronger inventory turns also contributed," said Brian Hedges, president and CEO. "Our increase in revenues was fueled by organic growth initiatives, acquisitions and increased activity in the energy sector, particularly in Canada."
Third-quarter revenues in the company's metals service center segment increased 14 percent compared to 2013 to $417 million, the byproduct of stronger demand and higher steel prices. Service center gross margins slipped to 20.2 percent, down 0.5 of a percentage point.
Revenues in the company's energy products segment for the third quarter grew 41 percent to $497 million, led by significant increases in operations servicing oil and gas drilling in Western Canada. "Our Apex acquisitions experienced continued strong performance in the quarter, especially at our Apex Remington operation in the United States," Hedges said.
Third-quarter revenues in Russel's steel distributors segment increased 65 percent to $122 million as international market conditions made imported steel prices more attractive.