Samuel Manu-Tech reports third quarter results



    TORONTO, Oct. 28 /CNW/ - Samuel Manu-Tech Inc. (Samuel) (TSX - SMT), a
leading North American industrial products and technology company, today
reported third quarter results for the three months ended September 30, 2008.

    Sales

    Sales for the third quarter ended September 30, 2008 were $265.6 million,
which represents an increase of $39.0 million or 17% over the $226.7 million
achieved in the comparable period of last year. The increase results from the
contribution of recent acquisitions and start-up operations as well as
increased selling prices. These positive factors more than offset continued
weaker end user demand in certain key sectors resulting from the economic
slowdown in North America.

    Earnings

    Net earnings from continuing operations for the third quarter were
$22.4 million or $0.70 per share compared to $4.1 million or $0.12 per share
in the comparable quarter of last year. On August 29, 2008, the Company sold
its Nanticoke, Ontario steel pickling operations to U.S. Steel Canada for
$37.5 million, subject to normal closing adjustments, resulting in an
estimated after tax gain of $10.4 million or $0.32 per share. The results for
the third quarter this year also included a pre-tax restructuring charge of
$2.7 million, or the equivalent $1.9 million after tax or $0.06 per share,
related to the closure of the Scarborough, Ontario strapping manufacturing
facility.
    "We are pleased with our results this quarter as they indicate that both
our acquisition strategy and our recent new business expansions are positive
for the Company," said Mark C. Samuel, Chairman and CEO. "While difficult
economic conditions will negatively impact our business in the fourth quarter,
we believe that opportunities for growth will continue to exist," he added.

    Outlook

    Carbon steel pricing levels began to decrease late in the third quarter
of 2008 after substantial increases earlier in the year. The increases were
driven by reduced imports and higher raw material input costs. The weak North
American and global economies and the strengthening of the U.S. dollar have
all been factors in the more recent overall decline in demand. The outlook for
the fourth quarter is for demand to weaken further. Carbon prices are
weakening due to the significant decline in base metal prices and the weak
economy. This will likely be offset with production cuts by several of the
North American steel mills, which may help to mitigate further price
decreases.
    Stainless steel surcharges decreased in the third quarter along with some
reduction in base prices, driven by weak demand, particularly in the
automotive and housing markets. Surcharges will decrease significantly in the
fourth quarter due in part to continuing lower demand and the reduction in the
price of nickel, iron and other base metals used in the production of
stainless steel.
    In addition, the Canadian dollar started to weaken relative to the U.S.
dollar in the latter part of the third quarter having a net positive impact on
the Company's results. Continued decline in the Canadian dollar relative to
the U.S. dollar would also be anticipated to have a positive impact on the
Company's results.
    In summary, more challenging market conditions are anticipated for the
balance of the year, including the current global liquidity crisis, which will
have a significant negative impact on the fourth quarter results. While faced
with the prospect of an extended economic slowdown, the Company is confident
that it is well positioned and capitalized to weather this difficult period.

    About Samuel Manu-Tech Inc.

    Samuel Manu-Tech Inc. (SMT-TSX) is a leading North American industrial
products and technology company producing and distributing a wide range of
steel, plastic and related industrial products and services from locations in
Canada, United States and Mexico.

    Forward looking information

    Some of the statements contained in this release are forward-looking
statements, such as estimates and statements that describe the Company's
future plans, objectives or goals, including words to the effect that the
Company or management expects a stated condition or result to occur. Since
forward-looking statements address future events and conditions, by their very
nature, they involve inherent risks and uncertainties. Actual results in each
case could differ materially from those currently anticipated in such
statements. We do not intend to update this information and disclaim any legal
obligation to the contrary.

    For further information on Samuel Manu-Tech Inc., readers should refer to
the Company's Third Quarter Report to Shareholders 2008, which will be filed
on SEDAR, and made available on the Company's website at
www.samuelmanutech.com.


    
    CONSOLIDATED STATEMENTS OF EARNINGS
    -------------------------------------------------------------------------
    Nine Months ended September 30, 2008 and 2007 (unaudited)
    (in thousands of dollars except per share amounts)

    -------------------------------------------------------------------------
                                       3RD QUARTER             NINE MONTHS
    -------------------------------------------------------------------------
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------
    NET SALES                  $ 265,639   $ 226,663   $ 753,174   $ 690,506
    COSTS AND EXPENSES (INCOME):
      Cost of sales, selling &
       administration            235,283     211,680     683,001     634,295
      Depreciation and
       amortization                7,405       5,483      21,565      16,672
      Foreign exchange loss
       (gain)                        161         661        (219)      1,491
      Interest on long-term
       debt                        1,954       1,844       6,069       5,235
      Interest on short-term
       debt                           43         351         137         896
      Interest income                (75)        (23)       (107)        (56)
    -------------------------------------------------------------------------
                                 244,771     219,996     710,446     658,533
    -------------------------------------------------------------------------

    EARNINGS FROM CONTINUING
     OPERATIONS BEFORE GAIN ON
     SALE OF STEEL PICKLING
     OPERATIONS, RESTRUCTURING
     CHARGE AND INCOME TAXES      20,868       6,667      42,728      31,973

    GAIN ON SALE OF STEEL
     PICKLING OPERATIONS         (15,203)          -     (15,203)          -

    RESTRUCTURING CHARGE           2,691         997       2,703       5,989
    -------------------------------------------------------------------------

    EARNINGS FROM CONTINUING
     OPERATIONS BEFORE
     INCOME TAXES                 33,380       5,670      55,228      25,984

    INCOME TAXES (RECOVERY):
      Current                     12,028       1,810      19,333       8,367
      Future                      (1,078)       (244)     (1,683)       (453)
    -------------------------------------------------------------------------
                                  10,950       1,566      17,650       7,914
    -------------------------------------------------------------------------

    NET EARNINGS FROM
     CONTINUING OPERATIONS        22,430       4,104      37,578      18,070
    -------------------------------------------------------------------------
    NET EARNINGS FROM
     DISCONTINUED OPERATIONS           -       3,696           -       5,951
    -------------------------------------------------------------------------

    NET EARNINGS               $  22,430   $   7,800   $  37,578   $  24,021
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    BASIC EARNINGS PER SHARE
      From continuing
       operations                   0.70        0.12        1.17        0.56
      From discontinued
       operations                   0.00        0.12        0.00        0.19
    -------------------------------------------------------------------------
                               $    0.70   $    0.24   $    1.17   $    0.75
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    DILUTED EARNINGS PER SHARE
      From continuing
       operations                   0.70        0.12        1.17        0.55
      From discontinued
       operations                   0.00        0.12        0.00        0.19
    -------------------------------------------------------------------------
                               $    0.70   $    0.24   $    1.17   $    0.74
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
    -------------------------------------------------------------------------
    Nine Months ended September 30, 2008 and 2007 (unaudited)
    (in thousands of dollars)

    -------------------------------------------------------------------------
                                                              3RD QUARTER
    -------------------------------------------------------------------------
                                                            2008        2007
    -------------------------------------------------------------------------

    RETAINED EARNINGS, BEGINNING OF PERIOD             $ 341,925   $ 327,472
    NET EARNINGS                                          37,578      24,021
    DIVIDENDS PAID ON COMMON SHARES                       (9,639)     (9,633)
    -------------------------------------------------------------------------
    RETAINED EARNINGS, END OF PERIOD                   $ 369,864   $ 341,860
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
    September 30, 2008 (unaudited) and December 31, 2007 (audited)
    (in thousands of dollars)

    -------------------------------------------------------------------------
                                                        Sept. 30,    Dec. 31,
                                                            2008        2007
    -------------------------------------------------------------------------
    ASSETS

    CURRENT ASSETS:
      Cash and cash equivalents                        $   3,544   $   1,876
      Accounts receivable                                165,178     123,801
      Inventories                                        231,356     180,555
      Prepaid expenses and sundry                          5,956       3,260
      Income taxes receivable                                  -       6,475
      Future income taxes                                  5,942       5,500
      Assets held for sale                                     -         345
    -------------------------------------------------------------------------
                                                         411,976     321,812

    CAPITAL ASSETS                                       166,899     173,150
    ACCRUED PENSION ASSET                                  7,073       9,335
    FUTURE INCOME TAXES                                      364       1,260
    GOODWILL                                              84,080      50,008
    INTANGIBLE ASSETS                                     19,535      11,396
    OTHER ASSETS                                           2,523       1,294
    -------------------------------------------------------------------------
                                                       $ 692,450   $ 568,255
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY

    CURRENT LIABILITIES:
      Bank indebtedness                                $   8,359   $   3,915
      Accounts payable and accrued liabilities            96,127      68,462
      Deferred revenue                                     6,348       5,880
      Dividends payable                                    3,253       3,245
      Income taxes payable                                 8,437           -
    -------------------------------------------------------------------------
                                                         122,524      81,502

    LONG-TERM DEBT                                       177,704     131,414
    POST-RETIREMENT BENEFITS OTHER THAN PENSIONS           2,518       2,326
    FUTURE INCOME TAXES                                   13,476      15,285
    OTHER LONG-TERM LIABILITIES                              938         366
    -------------------------------------------------------------------------
                                                         317,160     230,893

    SHAREHOLDERS' EQUITY:
      Capital stock                                       30,126      29,891
      Contributed surplus                                    141         216
      Retained earnings                                  369,864     341,925
      Accumulated other comprehensive loss               (24,841)    (34,670)
    -------------------------------------------------------------------------
                                                         375,290     337,362

    -------------------------------------------------------------------------
                                                       $ 692,450   $ 568,255
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
    Nine Months ended September 30, 2008 and 2007 (unaudited)
    (in thousands of dollars)

    -------------------------------------------------------------------------
                                       3RD QUARTER             NINE MONTHS
    -------------------------------------------------------------------------
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------
    CASH FLOWS FROM (USED IN)
     OPERATING ACTIVITIES:
      Net earnings from
       continuing operations   $  22,430   $   4,104   $  37,578   $  18,070
      Items not involving cash:
        Depreciation and
         amortization              7,405       5,483      21,565      16,672
        Loss (gain) on disposal
         of capital assets       (16,763)         (2)    (16,824)         54
        Future income taxes       (1,078)       (244)     (1,683)       (453)
        Decrease (increase) in
         accrued pension asset     2,853        (756)      2,295      (3,057)
        Decrease in post-
         retirement benefits
         other than pensions          25           8          59         296
    -------------------------------------------------------------------------
                                  14,872       8,593      42,990      31,582
      Change in non-cash
       operating working
       capital:
        Decrease (increase) in
         accounts receivable      (4,681)     (7,693)    (30,651)    (22,503)
        Decrease (increase) in
         inventories             (19,184)     11,665     (39,320)     (8,409)
        Decrease (increase) in
         prepaid expenses and
         sundry                   (1,917)        405      (2,521)        949
        Decrease (increase) in
         income taxes receivable   1,687           -       6,611           -
        Increase (decrease) in
         accounts payable and
         accrued liabilities       4,025      (2,419)     22,166      (1,129)
        Increase (decrease) in
         deferred revenue          1,816      (1,732)         84      (1,832)
        Increase (decrease) in
         income taxes payable      8,053       1,410       8,053         214
    -------------------------------------------------------------------------
                                   4,671      10,229       7,412      (1,128)
    CASH FLOWS FROM (USED IN)
     INVESTING ACTIVITIES:
      Proceeds on sale of
       capital assets             37,320          29      38,409         120
      Purchase of capital assets  (6,557)     (8,110)    (14,987)    (27,211)
      Business acquisitions            -     (41,664)    (60,130)    (41,664)
    -------------------------------------------------------------------------
                                  30,763     (49,745)    (36,708)    (68,755)
    CASH FLOWS FROM (USED IN)
     FINANCING ACTIVITIES:
      Increase in other assets      (519)       (108)     (1,085)       (462)
      Issuance of common shares      160          62         160         421
      Increase in long-term debt       -       5,776      43,827      28,135
      Repayment of long-term
       debt                      (37,102)          -      (6,500)          -
      Dividends paid on common
       shares                     (3,214)     (3,212)     (9,639)     (9,633)
    -------------------------------------------------------------------------
                                 (40,675)      2,518      26,763      18,461
    CASH FLOWS FROM (USED IN)
     DISCONTINUED OPERATIONS
      Operating activities             -       1,640           -        (917)
      Investing activities             -      26,210           -      26,164
    -------------------------------------------------------------------------
                                       -      27,850           -      25,247

    EFFECT OF EXCHANGE RATE
     CHANGES ON CASH POSITION       (267)        186        (243)        222
    INCREASE (DECREASE) IN
     CASH POSITION                (5,508)     (8,962)     (2,776)    (25,953)
    CASH POSITION, BEGINNING
     OF PERIOD                       693     (21,258)     (2,039)     (4,267)
    -------------------------------------------------------------------------
    CASH POSITION, END
     OF PERIOD                 $  (4,815)  $ (30,220)  $  (4,815)  $ (30,220)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash position is comprised of cash and cash equivalents, with maturities
    at the date of purchase of three months or less, less bank indebtedness.


    SEGMENTED INFORMATION
    -------------------------------------------------------------------------
    Nine Months ended September 30, 2008 and 2007 (unaudited)
    (in thousands of dollars)

    -------------------------------------------------------------------------
                                       3RD QUARTER             NINE MONTHS
    -------------------------------------------------------------------------
    NET SALES                       2008        2007        2008        2007
    -------------------------------------------------------------------------

    Packaging                  $ 125,530   $ 113,813   $ 356,236   $ 352,977
    Metal Processing             140,109     112,850     396,938     337,529
    -------------------------------------------------------------------------
    Consolidated               $ 265,639   $ 226,663   $ 753,174   $ 690,506
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                       3RD QUARTER             NINE MONTHS
    -------------------------------------------------------------------------
    EARNINGS FROM CONTINUING
     OPERATIONS BEFORE GAIN ON
     SALE OF STEEL PICKLING
     OPERATIONS, RESTRUCTURING
     CHARGE, INTEREST AND
     INCOME TAXES                   2008        2007        2008        2007
    -------------------------------------------------------------------------

    Packaging                  $  10,513   $   2,913   $  20,394   $  14,106
    Metal Processing              14,791       8,812      35,529      32,054
    Corporate                     (2,514)     (2,886)     (7,096)     (8,112)
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before gain on
     sale of steel pickling
     operations, restructuring
     charge, interest and
     income taxes                 22,790       8,839      48,827      38,048
    Gain on sale of steel
     pickling operations         (15,203)          -     (15,203)          -
    Restructuring charge           2,691         997       2,703       5,989
    Interest on long-term debt     1,954       1,844       6,069       5,235
    Interest on short-term debt       43         351         137         896
    Interest income                  (75)        (23)       (107)        (56)
    -------------------------------------------------------------------------
    Earnings from continuing
     operations before income
     taxes                     $  33,380   $   5,670   $  55,228   $  25,984
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
    -------------------------------------------------------------------------
    Nine Months ended September 30, 2008 and 2007 (unaudited)
    (in thousands of dollars)

    -------------------------------------------------------------------------
                                       3RD QUARTER             NINE MONTHS
    -------------------------------------------------------------------------
                                    2008        2007        2008        2007
    -------------------------------------------------------------------------
    NET EARNINGS               $  22,430   $   7,800   $  37,578   $  24,021

    OTHER COMPREHENSIVE INCOME
     (LOSS):
      Unrealized gain (loss) on
       translation of net
       foreign operations          3,982      (8,965)     10,092     (20,225)
      Change in unrealized gain
       (loss) on derivatives
       designated as cash
       flow hedges                  (330)        778        (575)        892
      Income taxes on change
       in unrealized gains
       (losses)                      100        (267)        174        (306)
      Reclassification of
       realized loss on cash
       flow hedges                    49         (53)        210         590
      Income taxes on
       reclassification of
       unrealized loss               (16)         18         (72)       (202)
    -------------------------------------------------------------------------
    TOTAL OTHER COMPREHENSIVE
     INCOME (LOSS)                 3,785      (8,489)      9,829     (19,251)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    COMPREHENSIVE INCOME
     (LOSS)                    $  26,215   $    (689)  $  47,407   $   4,770
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00002004E




For further information:

For further information: John D. Amodeo, Vice President and Chief
Financial Officer, Samuel Manu-Tech Inc., 185 The West Mall, Suite 1500,
Toronto, ON, M9C 5L5, Telephone: (416) 626-2190, Website:
www.samuelmanutech.com, Email address: smt@samuelmanutech.com

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SAMUEL MANU-TECH INC.

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