Tree Island Steel (''Tree Island'' or the ''Company'') (TSX: TSL)
announced today its financial results for the nine months ended
September 30, 2022.
For the three-month period ended September 30,
2022, revenues decreased by $4.4 million to $80.2 million with
lower U.S. demand, particularly in the construction and industrial
market segments. Gross profit for the third quarter decreased to
$14.6 million, from $21.8 million in the same period in 2021 from
lower volumes. Adjusted EBITDA amounted to $12.2 million, compared
to $20.0 million during the same period in 2021.
For the nine months ended September 30, 2022,
revenues increased by $45.4 million to $271.3 million when compared
to 2021. The increase is primarily due to prior pricing increases
across all market segments. Gross profit increased to $57.0 million
from $51.3 million with these increased selling prices recovering
overall inflationary cost increases. The higher gross margins also
resulted in an Adjusted EBITDA of $50.3 million, compared to $45.4
million during the same period in 2021.
In the third quarter of 2022, we experienced
increased volume over prior year third quarter in the Canadian
market, notably in the agricultural and commercial construction
market segments, supporting fencing, agricultural wire and welded
wire reinforcement product demand. However, demand slowed in the
U.S. market in the quarter, with residential, commercial
construction and industrial customers reducing purchasing volume in
volatile economic conditions.
On November 10, 2022 the Board of Directors
declared a quarterly dividend of $0.03 per share and an additional
$0.02 per share as a special dividend on the issued and outstanding
Common Shares of the Company, payable on January 16, 2023 to
holders of record at the close of business on December 31,
2022.
During the three months ending September 30,
2022 $5.9 million of term debt was settled and subsequent to the
quarter end, the remaining outstanding balance of $5.7 million on
the Senior Term Loan was paid in full.
On November 7, 2022 the Company announced that
it has renewed its normal course issuer bid to purchase up to
1,410,000 shares. The period of the normal course issuer bid will
extend from November 9, 2022 to November 8, 2023.
“With the near term economic uncertainty, we
remain cautious in our outlook for steel wire and wire products,
requiring ongoing diligent management of raw materials, finished
goods inventory and overall financial position,” said Remy
Stachowiak, President and COO of Tree Island Steel.
“We will continue to adapt to market conditions
while remaining committed to long term profitability, supporting
the improved financial position we have achieved over the past
several years,” said Amar S. Doman, Executive Chair of Tree Island
Steel.
RESULTS FROM OPERATIONS |
|
|
|
|
($'000
unless otherwise stated) |
Three Months
Ended |
Nine Months
Ended |
|
September 30, |
September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Revenue |
80,202 |
|
84,642 |
|
271,318 |
|
225,894 |
|
Cost of sales |
(64,322 |
) |
(61,326 |
) |
(210,292 |
) |
(170,187 |
) |
Depreciation |
(1,289 |
) |
(1,478 |
) |
(4,010 |
) |
(4,403 |
) |
Gross profit |
14,591 |
|
21,838 |
|
57,016 |
|
51,304 |
|
Selling, general and administrative expenses |
(3,674 |
) |
(3,734 |
) |
(10,731 |
) |
(10,534 |
) |
Operating income |
10,917 |
|
18,104 |
|
46,285 |
|
40,770 |
|
Foreign exchange (loss) gain |
(2 |
) |
445 |
|
(40 |
) |
233 |
|
Financing expenses |
(629 |
) |
(663 |
) |
(1,783 |
) |
(1,853 |
) |
Other expenses |
(126 |
) |
- |
|
(156 |
) |
(3 |
) |
Income before income taxes |
10,160 |
|
17,886 |
|
44,306 |
|
39,147 |
|
Income tax expense |
(2,147 |
) |
(4,488 |
) |
(10,445 |
) |
(10,217 |
) |
Net income |
8,013 |
|
13,398 |
|
33,861 |
|
28,930 |
|
|
|
|
|
|
Net income
per share |
0.28 |
|
0.47 |
|
1.19 |
|
1.02 |
|
|
|
|
|
|
Financial position as at: |
September 30, 2022 |
December 31, 2021 |
Total assets |
|
194,004 |
|
|
225,806 |
|
Total
non‐current financial liabilities |
|
37,009 |
|
|
38,907 |
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
($'000
unless otherwise stated) |
|
|
|
|
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
Operating
income |
10,917 |
|
18,104 |
|
46,285 |
|
40,770 |
|
Add back depreciation |
1,289 |
|
1,478 |
|
4,010 |
|
4,403 |
|
Foreign exchange (loss) gain |
(2 |
) |
445 |
|
(40 |
) |
233 |
|
Adjusted EBITDA1 |
12,204 |
|
20,027 |
|
50,255 |
|
45,406 |
|
1See definition on Adjusted EBITDA in Section 2 NON‐IFRS MEASURES
of the September 30, 2022, MD&A. |
|
|
About Tree Island Steel
Tree Island Steel, headquartered in Richmond,
British Columbia since 1964, through its four operating facilities
in Canada and the United States, produces wire products for a
diverse range of industrial, residential construction, commercial
construction and agricultural applications. Its products include
galvanized wire, bright wire; a broad array of fasteners, including
packaged, collated and bulk nails; stucco reinforcing products;
concrete reinforcing mesh; fencing and other fabricated wire
products. The Company markets these products under the Tree
Island®, Halsteel®, K‐Lath®, TI Wire®, ToughStrand® and ToughPanel®
brand names.
Forward‐Looking Statements
This press release includes forward‐looking
information with respect to Tree Island including its business,
operations and strategies, its dividend policy and the declaration
and payment of dividends thereunder as well as financial
performance and conditions. The use of forward‐looking words such
as, "may," "will," "expect" or similar variations generally
identify such statements. Any statements that are contained herein
that are not statements of historical fact may be deemed to be
forward‐looking statements. Although management believes that
expectations reflected in forward‐looking statements are
reasonable, such statements involve risks and uncertainties
including risks and uncertainties discussed under the heading “Risk
Factors” in Tree Island’s most recent annual information form and
management discussion and analysis.
The forward‐looking statements contained herein
reflect management's current beliefs and are based upon certain
assumptions that management believes to be reasonable based on the
information currently available to management. By their very
nature, forward‐looking statements involve inherent risks and
uncertainties, both general and specific, and a number of factors
could cause actual events or results to differ materially from the
results discussed in the forward‐looking statements. In evaluating
these statements, prospective investors should specifically
consider various factors including the risks outlined in the
Company’s most recent annual information form and management
discussion and analysis which may cause actual results to differ
materially from any forward‐looking statement. Such risks and
uncertainties include, but are not limited to: general economic,
market and business conditions, the impact of COVID‐19 on the
Company, its customers and vendors, the cyclical nature of our
business and demand for our products, financial condition of our
customers, competition, volume and price pressure from import
competition, deterioration in the Company’s liquidity, disruption
in the supply of raw materials, volatility in the costs of raw
materials, transportation costs and availability, foreign exchange
fluctuations, leverage and restrictive covenants, labour relations,
trade actions, dependence on key personnel and skilled workers,
intellectual property risks, energy costs, un‐insured loss, credit
risk, operating risk, relocation of the Etiwanda operations,
management of growth, changes in tax, environmental and other
legislation, and other risks and uncertainties set forth in our
publicly filed materials.
This press release has been reviewed by the
Company's Board of Directors and its Audit Committee, and contains
information that is current as of the date of this press release,
unless otherwise noted. Events occurring after that date could
render the information contained herein inaccurate or misleading in
a material respect. Readers are cautioned not to place undue
reliance on this forward‐looking information and management of the
Company undertakes no obligation to update publicly or revise any
forward‐looking information, whether as a result of new
information, future events or otherwise except as required by
applicable securities laws.
For further information contact: Ali Mahdavi, Investor Relations
Tree Island Steel(416) 962‐3300e‐mail: amahdavi@treeisland.com
Website: www.treeisland.com
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