IPSCO Announces Quarterly Earnings Ended March 31, 1996.REGINA Regina (rĭjī`nə), city (1991 pop. 179,178), provincial capital, S Sask., Canada, on Wascana Creek. The city is the distribution and service center for one of the world's largest wheat-growing areas. , SASKATCHEWAN--(BUSINESS WIRE)--April 16, 1996--IPSCO Inc. announced today that its net income for the quarter ended 31 March was $16.7 million on sales of $168.2 million, some 28 percent below the $23.1 million earned in the first quarter of 1995 and 12 percent below the $18.9 million earned in the previous quarter. Earnings per share for the quarter were $0.62 compared with $0.85 in the corresponding period last year, and $0.69 for the fourth quarter of 1995. Sales revenue at $168.2 million was 15 percent below the year earlier figure but almost unchanged from the fourth quarter of 1995. Tonnage TONNAGE, mar. law. The capacity of a ship or vessel. 2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c. shipped was down 18 percent from the first quarter of 1995 but up one percent from the previous quarter. Both sales and tonnage comparisons with the year earlier period are distorted by the fact that the current quarter includes no bar products, the company's bar facility having ceased operations in the second quarter of 1995. Neglecting the impact of this closure sales revenue and tonnage were down eight and six percent respectively. Tonnage sales of flat rolled products were down over 40 percent from the first quarter of 1995, a period typified by excess purchases by end-users and distributors anticipating further price increases. Compared to the previous quarter flat rolled sales were down 19 percent due to two factors - continuing inventory reduction by one major customer on one hand, and IPSCO's declining to meet price competition for certain hot rolled sales on the other. Plate sales remained healthy. Energy related tubular tubular /tu·bu·lar/ (too´bu-lar) 1. shaped like a tube. 2. of or pertaining to a tubule. tubular 1. pertaining to renal tubules. 2. pertaining to fallopian tube. sales tonnage was almost unchanged from either the first or fourth quarters of 1995. Oil country tubular goods and small diameter diameter - The diameter of a graph is the maximum value of the minimum distance between any two nodes. line pipe sales rose compared to the earlier quarters as larger diameter sales of both electric resistance weld and spiral spiral /spi·ral/ (spi´ral) 1. helical; winding like the thread of a screw. 2. helix; a winding structure. pipe fell. No significant price changes from the first quarter of 1995 were evident but the effect of product mix meant that the average price was five percent over the fourth quarter of 1995. Fabricated fab·ri·cate tr.v. fab·ri·cat·ed, fab·ri·cat·ing, fab·ri·cates 1. To make; create. 2. To construct by combining or assembling diverse, typically standardized parts: products saw tonnages increase 21 percent from the year earlier period and 19 percent over the fourth quarter of 1995. Volume increases over the first quarter of 1995 were recorded for cut-to-length and hollow hollow 1. a depression. 2. contains a cavity. hollow back backbone has a downward curvature in the center. hollow horn a mythical disease of cattle in primitive communities; treated by removal of the horns. structural products. Selling prices were, on average, flat compared to the fourth quarter but down 10 percent from the year earlier period. Steelmaking Steelmaking is the second step in producing steel from iron ore. In this stage, impurities such as sulfur, phosphorus, and excess carbon are removed from the raw iron, and alloying elements such as manganese, nickel, chromium and vanadium are added to produce the exact steel at the Regina facility maintained a brisk Brisk as a proper name may refer to:
adj. 1. Of, relating to, located at, or constituting a margin, a border, or an edge: the marginal strip of beach; a marginal issue that had no bearing on the election results. 2. higher than the fourth quarter. Pipe mill utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be in Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. plants for IPSCO averaged 45 percent and at the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. locations 36 percent. Capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. for the quarter totalled $25.2 million, over 95 percent of which was spent on the new U.S. mini-mill. During the quarter IPSCO announced that its turnkey See turnkey system. contractor contractor n. 1) a person or entity that enters into a contract. 2) commonly, a person or entity that agrees to construct a building or to provide or install specialized portions of the construction. had informed it that the commissioning for the new mill would not commence until the third quarter of 1996 with the mill, as an operating whole, to be turned over to IPSCO in the fourth quarter. With up to six months of startup (STARTing UP) "At startup" means when the computer is first turned on or when a program is first loaded. See Startup folder. and commissioning costs being capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. the impact of the new mill on company earnings will consequently not be felt until sometime in the first half of 1997. The contractor and the company are not in agreement as to financial responsibility for the delay. Should agreement not be reached the contract provides for a dispute resolution mechanism after the project completion. A flurry Flurry A drastic volume increase in a specific security. of price increase announcements, primarily for flat rolled products to take effect at mid-year, are being issued by virtually all of the principal steel producers. These follow other increases which were to have been implemented in the second quarter. While it is unclear how much of the higher prices will actually materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. it appears that the last six months constituted a price bottom and that some improvement will take hold for at least a quarter or so. This is positive for the company, but seasonal factors in the Canadian drilling industry usually dictate TO DICTATE. To pronounce word for word what is destined to be at the same time written by another. Merlin Rep. mot Suggestion, p. 5 00; Toull. Dr. Civ. Fr. liv. 3, t. 2, c. 5, n. 410. a poorer second quarter for IPSCO. The combination may well mean a less than normal drop. While we expect the balance of 1996 to remain profitable the degree of IPSCO's success will depend on price factors, the level of late year drilling activity for oil and gas, and large diameter pipe projects which are currently few and far between. INTERIM REPORT TO SHAREHOLDERS To the Shareholders After tax profit for the quarter was $16.7 million, some 28 percent below the first quarter of 1995 and 12 percent below the previous quarter. Sales revenue at $168.2 million was 15 percent below the year earlier figure but almost unchanged from the fourth quarter of 1995. Tonnage shipped was down 18 percent from the first quarter of 1995 but up one percent from the previous quarter. Both sales and tonnage comparisons with the year earlier period are distorted by the fact that the current quarter includes no bar products, the company's bar facility having ceased operations in the second quarter of 1995. Neglecting the impact of this closure sales revenue and tonnage were down eight and six percent respectively. Neglecting bar products (which did not materially impact IPSCO's bottom line) IPSCO's average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. was down a meagre mea·ger also mea·gre adj. 1. Deficient in quantity, fullness, or extent; scanty. 2. Deficient in richness, fertility, or vigor; feeble: the meager soil of an eroded plain. 3. 1.4 percent from the year earlier period. Thus the drop in profit from a year ago was largely volume and product mix related. In the year earlier period IPSCO was able to purchase steel to supplement its own production and to profitably resell re·sell tr.v. re·sold , re·sell·ing, re·sells 1. To sell again. 2. To sell (a product or service) to the public or to an end user, especially as an authorized dealer. products manufactured from this material. Such purchases amounted to 49,000 tons (Transparent Optical Networking Services) A marketing term for providing dark fiber to a customer. The customer is responsible for generating the transmission signal and interpreting it at the other end. See dark fiber. but in 1996 opportunities for such profitable incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. sales were fewer with just under 16,000 tons of purchased steel being consumed con·sume v. con·sumed, con·sum·ing, con·sumes v.tr. 1. To take in as food; eat or drink up. See Synonyms at eat. 2. a. . While price erosion erosion (ĭrō`zhən), general term for the processes by which the surface of the earth is constantly being worn away. The principal agents are gravity, running water, near-shore waves, ice (mostly glaciers), and wind. from the fourth quarter of 1995 probably impacted first quarter sales negatively for many North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. steel companies IPSCO's first quarter average selling price moved upward a slight 1.3 percent, as the company avoided lower priced opportunities and adjusted its product mix somewhat. The decline in profit from the fourth quarter was largely due to lower net interest income and marginally higher cost unit of sales. Tonnage sales of flat rolled products were down over 40 percent from the first quarter of 1995, a period typified by excess purchases by end-users and distributors anticipating further price increases. Compared to the previous quarter flat rolled sales were down 19 percent due to two factors - continuing inventory reduction by one major customer on one hand, and IPSCO's declining to meet price competition for certain hot rolled sales on the other. Plate sales remained healthy. Energy related tubular sales tonnage was almost unchanged from either the first or fourth quarters of 1995. Oil country tubular goods and small diameter line pipe sales rose compared to the earlier quarters as larger diameter sales of both electric resistance weld and spiral pipe fell. No significant price changes from the first quarter of 1995 were evident but the effect of product mix meant that the average price was five percent over the fourth quarter of 1995. Fabricated products saw tonnages increase 21 percent from the year earlier period and 19 percent over the fourth quarter of 1995. Volume increases over the first quarter of 1995 were recorded for cut-to-length and hollow structural products. Selling prices were, on average, flat compared to the fourth quarter but down 10 percent from the year earlier period. Steelmaking at the Regina facility maintained a brisk level of 93 percent of capacity utilization compared to 95 percent a year earlier and 88 percent in the fourth quarter. Scrap costs were marginally higher than the fourth quarter. Pipe mill utilization in Canadian plants for IPSCO averaged 45 percent and at the United States locations 36 percent. Capital spending for the quarter totalled $25.2 million, over 95 percent of which was spent on the new U.S. mini-mill. During the quarter IPSCO announced that its turnkey contractor had informed it that the commissioning for the new mill would not commence until the third quarter of 1996 with the mill to be turned over to IPSCO in the fourth quarter. With up to six months of startup and commissioning costs being capitalized the impact of the new mill on company earnings will consequently not be felt until sometime in the first half of 1997. The contractor and the company are not in agreement as to financial responsibility for the delay. Should agreement not be reached the contract provides for a dispute resolution mechanism after the project completion. Financial Net income for the quarter was $16.7 million, 28 percent lower than the $23.1 million earned in the first quarter of 1995 and 12 percent lower than the $18.9 million earned in the fourth quarter of 1995. The $16.7 million for the quarter is made up of $13.8 million from operations and $2.9 million in net interest income. In the first quarter last year net income of $23.1 million was made up of $21.8 million from operations and $1.3 million in net interest income. In the fourth quarter of 1995 the $18.9 million in net income was made up of $14.7 million from operations, $4.0 million from net interest income, and $.2 million in foreign exchange gains. Earnings per share on the 27.1 million shares that were outstanding were $.62 for the quarter compared to $.85 in the first quarter of 1995 and $.69 for last year's fourth quarter. The annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. rate of return on common shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. this quarter was nine percent which compares with 14 percent and 11 percent respectively for the first and fourth quarters last year. Working capital provided by operations in the quarter was $21.4 million, while investment in non-cash operating working capital increased by $19.5 million, mainly the result of higher inventory and accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying levels required for the large diameter pipe order. As a result net cash derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from operating activities was $1.9 million. Dividends to common shareholders' amounted to $3.3 million, expenditures for capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) were $25.2 million, of which $21.3 million was financed from maturing long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. securities. The cash effect of translation of investments in foreign subsidiaries was a negative $.3 million. Consequently cash decreased by $5.6 million during the quarter to reach $132.0 million at quarter end. At 31 March 1996 long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. was 28 percent of total capitalization Total capitalization The total long-term debt and all types of equity of a company that constitutes its capital structure. total capitalization See capitalization. , current assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. were 2.6 times current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. and $130.7 million was invested in high quality long-term securities that will be liquidated DAMAGES, LIQUIDATED, contracts. When the parties to a contract stipulate for the payment of a certain sum, as a satisfaction fixed and agreed upon by them, for the not doing of certain things particularly mentioned in the agreement, the sum so fixed upon is called liquidated damages. (q.v. to fund the construction of the United States steel mill. Outlook As these comments are being prepared a flurry of price increase announcements, primarily for flat rolled products, are being issued by virtually all of the principal steel producers to take effect at mid-year. These follow other increases which were to have been implemented in the second quarter. While it is unclear how much of the higher prices will actually materialize it appears that the last six months constituted a price bottom and that some improvement will take hold for at least a quarter or so. This is positive for the company, but seasonal factors in the Canadian drilling industry usually dictate a poorer second quarter for IPSCO. The combination may well mean a less than normal drop. While we expect the balance of 1996 to remain profitable the degree of IPSCO's success will depend on price factors, the level of late year drilling activity for oil and gas, and large diameter pipe projects which are currently few and far between. -0- CONSOLIDATED STATEMENT OF INCOME (Thousands except for per share data)
For the Three Months Ended
---------------------------------
31 March 31 March 31 Dec.
1996 1995 1995
------------------------------------------------------------
Tons Shipped 243.7 297.5 240.8
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Revenue
Sales $168,163 $198,404 $167,006
Interest income 4,069 5,895 5,989
--------------------------------
$172,232 $204,299 $172,995
------------------------------------------------------------
Expenses
Cost of sales, exclusive
of the following items $133,747 $153,085 $130,205
Selling, research and
administration 10,007 9,403 9,942
Interest on long-term
debt 50 3,947 50
Amortization of capital
assets 5,243 4,428 4,790
Foreign exchange gain ( 60) ( 28) (375)
----------------------------------
$148,987 $170,835 $144,612
-------------------------------------------------------------
Income Before Income
Taxes $ 23,245 $ 33,464 $ 28,383
Income Taxes 6,555 10,345 9,496
---------------------------------
Net Income $ 16,690 $ 23,119 $ 18,887
------------------------------------------------------------
Summary of Net Income
Operations $ 13,761 $ 21,754 $ 14,685
Net interest income 2,886 1,346 3,952
Foreign exchange gain 43 19 250
---------------------------------
$ 16,690 $ 23,119 $ 18,887
------------------------------------------------------------
Earnings Per Share $ 0.62 $ 0.85 $ 0.69
Number of Shares
Outstanding 27,099 27,082 27,099
Annualized Return on
Common Shareholders'
Equity (in percent) 9 14 11
------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN CASH POSITION (Thousands)
For the Three Months
Ended 31 March
--------------------
1996 1995
------------------------------------------------------------
Cash Derived From (Applied To)
Operating Activities
Working capital provided by
operations $ 21,415 $ 25,296
Change in non-cash operating
working capital (19,559) (21,382)
---------------------
$ 1,856 $ 3,914
-------------------------------------------------------------
Financing Activities
Shares issued pursuant to share
option plan $ - $ 26
Dividends (3,252) (3,250)
---------------------
$ (3,252) $ (3,224)
-------------------------------------------------------------
Investing Activities
Expenditures for capital assets $(25,188) $(74,579)
Reduction in long-term
securities 21,332 61,924
Cash effect of translation of
foreign subsidiaries (305) (233)
--------------------
$ (4,161) $(12,888)
-------------------------------------------------------------
Decrease in Cash $ (5,557) $(12,198)
Cash Position at Beginning of Period 137,526 81,098
-------------------
Cash Position at End of Period $ 131,969 $ 68,900
------------------------------------------------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Thousands)
As at As at
31 March 31 December
--------------------- -----------
1996 1995 1995
------------------------------------------------------------
Current Assets
Cash and cash equivalents $131,969 $ 68,900 $137,526
Accounts receivable 97,077 100,914 82,597
Inventories 143,953 150,071 136,773
Other 2,254 2,063 2,281
Income taxes allocated
to future years 13,820 14,717 14,334
---------------------------------
$389,073 $336,665 $373,511
------------------------------------------------------------
Current Liabilities
Accounts payable and
accrued charges $142,551 $174,835 $129,182
Income and other taxes
payable 3,848 9,175 17,372
Current maturity of
long-term debt 1,495 - 1,500
---------------------------------
$147,894 $184,010 $148,054
------------------------------------------------------------
Working Capital $241,179 $152,655 $225,457
------------------------------------------------------------
Non-Current Assets
Long-term securities $130,690 $328,721 $152,454
Capital and Other 696,919 591,830 681,126
---------------------------------
$827,609 $920,551 $833,580
------------------------------------------------------------
Total Investment $1,068,788 $1,073,206 $1,059,037
------------------------------------------------------------
Long-Term Debt $285,359 $340,358 $286,304
Deferred Pension Credit 7,022 5,158 6,984
Deferred Gain on
Sale-Leaseback 11,267 12,273 11,516
Income Taxes Allocated
to Future Years 33,884 35,245 34,727
---------------------------------
$337,532 $393,034 $339,531
------------------------------------------------------------
Shareholders' Equity $731,256 $680,172 $719,506
------------------------------------------------------------
Derived from
Capital Stock $389,378 $389,105 $389,378
Retained Earnings 337,167 274,945 323,729
Cumulative Translation
Adjustment 4,711 16,122 6,399
---------------------------------
$731,256 $680,172 $719,506
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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. Earnings per share are based on the weighted average number of shares outstanding during the period. Fully diluted earnings per share, which assume the exercise of options described in note 9 of the annual financial statements, do not differ significantly from the reported basic earnings per share. 3. Included in accounts payable and accrued charges are amounts relating to the construction of the company's new U.S. steel mill. These amounts total $32,609 and $73,732 respectively as at 31 March 1996 and 31 March 1995. CONTACT: IPSCO Inc. Anne Anne, British princess Anne (Anne Elizabeth Alice Louise), 1950–, British princess, only daughter of Queen Elizabeth II and Prince Philip, duke of Edinburgh. She was educated at Benenden School. Parker Director of Corporate Communications Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise. (306) 924-7390 |
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