Russel Metals Inc. today announced financial results for fourth quarter and annual 2014.
Fourth quarter earnings were $31 million, or $0.50 per share on revenues of $1 billion. These results compare to earnings of $23 million or $0.37 per share on revenues of $811 million in the same quarter last year and 2014 third quarter earnings of $0.54 per share.
Revenues of $403 million in our metals service center segment were 14% higher than the 2013 fourth quarter due to stronger demand and selling prices. Tons shipped at our metals service centers increased by 5% and selling prices were higher by 10% over the 2013 fourth quarter. Gross margin dollars at our metals service centers in the 2014 fourth quarter were $6 million higher than the same quarter last year reflecting stronger demand. Gross margin was 19.2% compared to 20.2% for the fourth quarter of 2013 due to steel price erosion resulting from competitive pressure. The 2014 fourth quarter metals service center operating profits were $13 million which was equivalent to the 2013 fourth quarter.
Fourth quarter 2014 revenues in our energy products segment increased 25% to $484 million compared to the 2013 fourth quarter due to strong drilling activity in the energy sector. Operating profits increased $10 million or 46% in the 2014 fourth quarter versus the same quarter last year due to increased volumes.
Revenues in our steel distributors segment increased by 77% to $125 million in the 2014 fourth quarter compared to the 2013 fourth quarter. Weak international market conditions combined with robust U.S. demand levels and a strong U.S. dollar resulted in imported steel products becoming more attractive in North America.
We recorded financial income of $6 million or $0.10 per share due to the change in fair value of the contingent consideration related to our Apex Distribution and Apex Monarch acquisitions. The income was a result of an expected reduction in future payments related to lower activity caused by the lower oil price offset by imputed interest on expected future payments. In addition, our net earnings include an after-tax non cash asset impairment of $7 million or $0.12 per share related to our Thunder Bay Terminals operation due to lower expected future cash flows.
Our revenues for 2014 were $3.9 billion up 21% from $3.2 billion for 2013. Our 2014 earnings of $124 million or $2.01 per share resulted in one of our best years ever; up 48% from 2013. All segments contributed to these strong results.
Mr. Brian R. Hedges, President and CEO, commented "Our operating profits were up 62% in the quarter reflecting continued strength in all three operating segments. Looking forward into 2015, the deterioration in the price of oil has led our energy customers to announce reductions in their projects and capital expenditures. While we expect a reduction in demand for our products as a result of these announcements, the extent to which this will affect our operating results has yet to be determined."
Mr. Hedges further commented, "The current economic uncertainty differs from what we experienced in 2009 as current metal prices are significantly lower than the peaks experienced in 2008. Although metal prices will be under pressure, we do not expect a significant decrease in metal prices. In addition, the acquisition of Apex and its related companies although increasing our exposure to the energy sector is expected to provide a more stable stream of earnings than our traditional energy business units due to the maintenance and repair component of this sector."
The Board of Directors approved a quarterly dividend of $0.38 per common share payable March 16, 2015 to shareholders of record as of March 3, 2015.
The Company will be holding an Investor Conference Call on Thursday, February 19, 2015 at 9:00 a.m. ET to review its 2014 fourth quarter and annual results. The dial-in telephone numbers for the call are 416-764-8688 (Toronto and International callers) and 1-888-390-0546 (U.S. and Canada). Please dial in 10 minutes prior to the call to ensure that you get a line.
A replay of the call will be available at 416-764-8677 (Toronto and International callers) and 1-888-390-0541 (U.S. and Canada) until midnight, Thursday, March 5, 2015. You will be required to enter pass code 096596 in order to access the call.
Additional supplemental financial information is available in our investor conference call package located on our website at www.russelmetals.com.
Russel Metals is one of the largest metals distribution companies in North America. It carries on business in three metals distribution segments: metals service centers, energy products and steel distributors, under various names including Russel Metals, A.J. Forsyth, Acier Leroux, Acier Loubier, Alberta Industrial Metals, Apex Distribution, Apex Monarch, Apex Remington, Arrow Steel Processors, B&T Steel, Baldwin International, Comco Pipe and Supply, Fedmet Tubulars, JMS Russel Metals, Leroux Steel, McCabe Steel, Mégantic Métal, Métaux Russel, Métaux Russel Produits Spécialisés, Milspec, Norton Metals, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Siemens Laserworks, Spartan Energy Tubulars, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.