Effective for the quarter ending September 30, 2007, the segment formerly known as Distribution was combined with the Packaging segment. The change was the result of the completion of the sale of Energy Steel Products Inc. on July 31, 2007. Comparative figures have been restated accordingly.
Samuel Manu-Tech Inc. achieved significantly improved results as compared to the first quarter of 2008.
Net Sales
Sales for the second quarter ended June 30, 2008 were $259.8 million, which represents an increase of $30.6 million or 13.4% over the $229.2 million achieved in the comparable period of last year. Sales for the six months to June 30, 2008 were $487.5 million which represents an increase of $23.7 million or 5.1% over the $463.8 million achieved in the comparable period of last year. In both cases, the increase results primarily from the contribution from 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, increased competition and the negative impact of the strong Canadian dollar.
Compared to the first quarter of this year sales are up 14.1%.
Sales of the Packaging segment in the second quarter, at $121.2 million, were up $2.6 million or 2.2% compared to last year with increased sales in the U.S. reflecting higher volumes and selling prices which more than offset decreases in Canada. Sales in Canada continued to be negatively impacted by the continued softening in the forestry and construction sectors and increased competition due to exchange. Compared to the first quarter of this year sales of the Packaging segment are up 10.7%.
Metal Processing sales for the second quarter were $138.6 million, which is up $28.0 million or 25.3% compared to last year. This was primarily due to higher sales of roll formed products reflecting the ramp up of the U.S. operations in Iuka, Mississippi as well as the acquisition of Omega Joists Inc. in February 2008. Sales of steel pressure vessels and stainless and carbon steel tubular products were also higher in the second quarter reflecting increased volumes and selling prices and the acquisitions of Northland Stainless, Inc., Associated Tube USA Inc. in August 2007, and Tubular Products Company in January 2008. These increases were offset in part by lower steel pickling and existing welded tubular assembly sales reflecting lower volume levels. Compared to the first quarter of this year, sales of the Metal Processing segment are up 17.2%.
Earnings
Net earnings from continuing operations for the second quarter were $12.1 million or $0.37 per share compared to $8.0 million or $0.25 per share in the comparable quarter of last year. Net earnings from continuing operations for the six months to June 30, 2008 were $15.1 million or $0.47 per share compared to $14.0 million or $0.44 per share last year. On July 31, 2007, the Company sold the operations and net assets of its subsidiary, Energy Steel Products, Inc. The results from this subsidiary, which were previously included in the Distribution segment, have been reclassified as discontinued operations in the accompanying interim consolidated financial statements.
Additional details are outlined in Note 6 - Discontinued Operations to the interim consolidated financial statements. Net earnings for the second quarter were $12.1 million or $0.37 per share compared to $9.2 million or $0.29 per share in the comparable quarter of last year. Net earnings for the six months to June 30, 2008 were $15.1 million or $0.47 per share compared to $16.2 million or $0.51 per share last year. The results for the second quarter this year include a pre-tax restructuring gain of $0.5 million ($0.3 million after tax) related to the closure of the Scarborough, Ontario strapping manufacturing facility as outlined in Note 5 to the interim consolidated financial statements and positively impacted earnings by $0.01 per share. For the six months in 2008 the net restructuring charge had no impact on earnings. This compares to the second quarter and six months results last year which included a restructuring charge of $1.3 million ($0.9 million after tax) and $5.0 million ($3.3 million after tax) and which negatively impacted earnings in the second quarter and first six months last year by $0.03 and $0.10 per share respectively.
Operating profit (see below for cautionary language regarding non-GAAP measures) for the second quarter amounted to $19.1 million compared to $15.1 million in the comparable quarter of last year with increases in both the Packaging and Metal Processing segments.
The Packaging segment had an operating profit of $8.1 million, which was $2.9 million higher than the $5.2 million earned last year with all of the increase occurring in the U.S. reflecting increased volumes and higher pricing levels. In addition, increased operating efficiencies were realized as the new steel strapping facility in Heath County, Ohio started to achieve targeted production levels. Operating profit in Canada remained relatively unchanged with the benefits from certain cost reduction measures and increased pricing levels offsetting the continued slowdown in the forestry and construction sectors and the negative effects from increased competition and the stronger Canadian dollar. Compared to the first quarter of this year, operating profit for the Packaging segment increased by over 300%.
The Metal Processing segment generated operating profits of $13.9 million, which was $1.4 million higher than the $12.5 million earned in the comparable quarter of last year. Operating profits from roll formed products were up reflecting increased sales levels and the positive contribution from the U.S. operations. Operating profits from steel pressure vessels and tubular operations were also higher reflecting increased sales and the acquisitions of Northland Stainless, Inc. and Tubular Products Company. These increases were offset in part by decreased operating profits from stainless steel tubular products reflecting a less favourable product mix and slowdowns at the U.S. and Mexican operations. Operating profits from steel pickling operations were also down reflecting lower overall volumes primarily as a result of reduced demand for pickling from our major Southern Ontario customer relating mainly to reduced automotive parts production. Compared to the first quarter of this year, operating profit for the Metal Processing segment was up 103%. -- www.cnxmarketlink.com
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