IPSCO First Quarter Results; Improvements on Year-Over-Year Basis Noted
19 April 2000
IPSCO First Quarter Results; Improvements on Year-Over-Year Basis Noted
Business Editors
REGINA, Saskatchewan--April 19, 2000--IPSCO Inc.
(NYSE:IPS) announced today that its first quarter net income was $17.3
million, up seven percent from the first quarter of 1999. After
deducting preferred share dividends and interest on subordinated
notes, net income available to common shareholders was $15.2 million.
After provision for preferred share dividends and subordinated note
interest, the earnings per common share were $0.37 as compared to
$0.36 and $0.49 in the first and fourth quarters of 1999.
Year-over-year improvements in first quarter results were
attributed to improved output and costs from IPSCO's Montpelier
Steelworks; higher sales of oil country tubular goods, non-energy
tubulars, and cut-to-length steel from the company's coil processing
facilities; and generally higher prices, all of which served to
overcome the absence of large diameter gas transmission pipe for the
Alliance pipeline, shipments for which have been completed.
Sales revenue at $258 million was up 43 percent from the first
quarter of 1999 and up 12 percent from the fourth quarter of 1999.
Steel mill product shipments at 243,400 tons and further
fabricated products at 347,000 tons were both substantially ahead of
the first quarter of 1999, surpassing it by 69 and 32 percent
respectively.
The Regina Steelworks operated at effective full capacity
utilization. The Montpelier Steelworks saw continuing productivity
improvement with March production exceeding an annualized one million
ton rate.
Capital spending of $46.6 million during the quarter was
predominantly dedicated to the Mobile Steelworks, which remains
scheduled for a first quarter 2001 startup.
IPSCO had foreseen a year over year improvement in first quarter
profits as compared to 1999 although the absence of Alliance pipeline
shipments meant a reduction from the fourth quarter of 1999.
Continuing price improvements in general steel markets and cost and
productivity improvements at the Montpelier Steelworks are expected,
barring a major economic downturn, to result in continuing
profitability increases throughout the year with the greatest
improvement in the last half of the year.
For further information on IPSCO, please visit the company's web
site at www.ipsco.com.
This news release contains forward looking information with
respect to IPSCO's operations and beliefs. Actual results may differ
from these forward looking statements due to numerous factors,
including estimated time of completion of equipment installation, cost
of installation, dramatic pricing developments or overall economic
fluctuations, and potential markets for the materials produced. These
and other factors are outlined in IPSCO's regulatory filings with the
Securities and Exchange Commission, including those on IPSCO's Annual
Report for 1999, its MD&A and Form 40-F.
*T
CONSOLIDATED STATEMENTS OF INCOME
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(thousands of United States Dollars except for share,
per share, ton and per ton data)
For the
Three Months Ended
----------------------------
31 March 31 March 31 Dec.
2000 1999 1999
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Coil and Plate Tons Produced
(thousands) 494.7 366.8 423.3
Finished Tons Shipped (thousands) 590.4 406.5 515.1
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Revenue
Sales $257,726 $180,006 $230,498
Interest income 1,241 1,633 1,945
----------------------------
258,967 181,639 232,443
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Expenses
Cost of sales exclusive of
the following items 208,057 139,822 177,456
Selling, research and
administration 14,398 9,623 14,376
Interest on long-term debt 4,137 5,325 4,485
Amortization of capital assets 8,791 5,831 8,333
Foreign exchange loss (gain) (95) 58 (1,094)
----------------------------
235,288 160,659 203,556
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Income Before Income Taxes 23,679 20,980 28,887
Income Taxes 6,340 4,720 7,406
----------------------------
Net Income 17,339 16,260 21,481
Dividends on Preferred Shares 1,522 1,464 1,483
Interest on Subordinated Notes 578 - 133
----------------------------
Net Income Available to
Common Shareholders $15,239 $14,796 $19,865
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Summary of Net Income Available
to Common Shareholders
Steel business $19,390 $19,166 $22,556
Net interest expense (2,121) (2,861) (1,889)
Foreign exchange gain (loss) 70 (45) 814
Dividends on preferred shares (1,522) (1,464) (1,483)
Interest on subordinated notes (578) - (133)
----------------------------
$15,239 $14,796 $19,865
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Earnings Per Common Share
- Basic $0.37 $0.36 $0.49
- Fully Diluted $0.33 $0.34 $0.43
Number of Common Shares
Outstanding (thousands) 40,796 40,709 40,796
Annualized Return on Common
Shareholders' Equity 8% 8% 10%
Operating Profit Per Ton $45 $61 $61
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CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------
(thousands of United States Dollars)
For the Three Months
Ended 31 March
--------------------
2000 1999
--------------------------------------------------------------
Cash Derived From (Applied To)
Operating Activities
Working capital provided by operations $26,015 $18,279
Change in non-cash operating
working capital (72,239) 7,560
--------------------
(46,224) 25,839
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--------------------------------------------------------------
Financing Activities
Common share dividends (3,503) (3,359)
Issue of subordinated notes
(net of issue costs) 89,824 -
Common shares issued pursuant to
share option plan - 68
Preferred share dividends (1,426) (1,407)
Subordinated notes interest (199) -
--------------------
84,696 (4,698)
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Investing Activities
Expenditures for capital assets (47,044) (35,271)
Investment (2,075) (1,995)
--------------------
(49,119) (37,266)
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Effect of exchange rate changes on
cash and cash equivalents (456) 1,630
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Decrease in Cash and Cash Equivalents
net of Bank Indebtedness (11,103) (14,495)
Cash and Cash Equivalents net of Bank
Indebtedness at Beginning of Period 94,831 133,271
--------------------
Cash and Cash Equivalents net of Bank
Indebtedness at End of Period $83,728 $118,776
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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
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(thousands of United States Dollars)
31 March 31 March 31 Dec.
-----------------------------
2000 1999 1999
--------------------------------------------------------------
Current Assets
Cash and cash equivalents $92,828 $118,776 $103,931
Accounts receivable 168,181 127,967 120,346
Inventories 234,061 145,147 212,382
Other 2,332 2,278 2,758
Income taxes allocated to
future years 40,097 44,594 39,779
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537,499 438,762 479,196
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Current Liabilities
Bank indebtedness 9,100 - 9,100
Accounts payable and
accrued charges 160,754 125,367 159,314
Income and other taxes payable - - 7,157
Current portion of long-term
debt 21,100 1,100 21,100
-----------------------------
190,954 126,467 196,671
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Working Capital 346,545 312,295 282,525
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Non-Current Assets
Capital and other 946,685 827,231 913,069
Income taxes allocated to
future years 92,374 26,177 80,694
-----------------------------
1,039,059 853,408 993,763
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Total Investment 1,385,604 1,165,703 1,276,288
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Long-Term Debt 297,238 287,689 297,501
Deferred Pension Liability 9,456 - -
Income Taxes Allocated to
Future Years 107,345 67,407 98,915
-----------------------------
414,039 355,096 396,416
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Shareholders' Equity $971,565 $810,607 $879,872
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Derived from
Preferred Shares $98,612 $98,576 $98,593
Common Shares 255,657 254,574 255,657
Subordinated Notes 100,850 - 10,198
Retained Earnings 454,187 408,488 451,548
Cumulative Translation Adjustment 62,259 48,969 63,876
-----------------------------
$971,565 $810,607 $879,872
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Percentage of Long-Term Debt to
Total Capitalization 23% 26% 25%
Ratio of Current Assets to
Current Liabilities 2.8 : 1 3.5 : 1 2.4 : 1
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*T NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
-------------------------------------------------------------- 1. The
consolidated interim financial statements are unaudited and are based
on accounting principles and practices consistent with those used in
the preparation of the annual financial statements.
2. Effective 01 January 2000, the company adopted the new
recommendation of the Canadian Institute of Chartered Accountants with
respect to accounting for employee future benefits. The effect of
adopting the new pronoucement was a one time increase to the deferred
pension liability of $14,249. The increase in the deferred pension
liability, net of income taxes of $5,272, has been charged to retained
earnings.
Editors Note: Please Note That Ipsco Financial Results are Now
Being Reported in US$