VANCOUVER, British Columbia, March 14, 2024 (GLOBE NEWSWIRE) -- Tree Island Steel ('Tree Island' or the 'Company') (TSX: TSL) announced today its financial results for the year ended December 31, 2023.
For the three-month period ended December 31, 2023, revenues, net of freight and distribution, decreased by $19.8 million to $47.3 million, from $67.1 million in the same period in 2022. The reduction was the result of declines in steel prices in the year influencing market prices for our products, current market headwinds and lower shipped volume from the previously announced closure of our Etiwanda facility. Gross profit for the fourth quarter decreased to $3.4 million, from $8.3 million in the same period in 2022, for the same reasons. Adjusted EBITDA amounted to $0.9 million, compared to $5.7 million during the same period in 2022 from lower gross profit.
For the year ended December 31, 2023, revenues, net of freight and distribution, decreased by $98.9 million to $239.6 million, from $338.4 million in 2022. This decrease is for the same reasons as in the quarter. Gross profit decreased to $30.3 million from $65.3 million, due to lower overall shipped volumes and return of margins to pre-pandemic levels as raw material pricing decreased. This resulted in an Adjusted EBITDA of $21.5 million, compared to $55.9 million during 2022.
"We faced several challenges in the fourth quarter, such as inventory reduction by customers, and lower activity in the construction and agricultural markets. We are cautiously optimistic that demand will recover as customers begin to restock their supplies, although we expect to face ongoing competition from both domestic and foreign sources. We also successfully finished the installation and commissioning of several capital equipment projects that we moved from the Etiwanda facility that will enhance our production capabilities in the coming years," commented Nancy Davies, Chief Operating Officer of Tree Island Steel.
"We will continue to use our disciplined approach to maximize our operational efficiency and profitability," said Amar S. Doman, Executive Chair of Tree Island Steel.
| RESULTS FROM OPERATIONS | ||||||||||
| Three Months Ended | Year Ended | |||||||||
| ($'000 unless otherwise stated) | December 31, | December 31, | ||||||||
| 2023 | 2022, Restated1 | 2023 | 2022, Restated1 | |||||||
| Revenue | 50,635 | 71,001 | 254,466 | 359,563 | ||||||
| Freight and distribution costs | 3,291 | 3,885 | 14,895 | 21,129 | ||||||
| Subtotal | 47,344 | 67,116 | 239,571 | 338,434 | ||||||
| Cost of sales | (42,684 | ) | (57,315 | ) | (204,261 | ) | (267,604 | ) | ||
| Depreciation | (1,273 | ) | (1,484 | ) | (5,019 | ) | (5,497 | ) | ||
| Gross profit | 3,387 | 8,317 | 30,291 | 65,333 | ||||||
| Selling, general and administrative expenses | (3,539 | ) | (4,120 | ) | (13,588 | ) | (14,851 | ) | ||
| Operating income (loss) | (152 | ) | 4,197 | 16,703 | 50,482 | |||||
| Foreign exchange gain (loss) | (261 | ) | 4 | (222 | ) | (36 | ) | |||
| Loss on property, plant and equipment sale | (183 | ) | (214 | ) | (287 | ) | (214 | ) | ||
| Other expenses | - | - | - | (31 | ) | |||||
| Site closure costs | - | (2,229 | ) | (1,340 | ) | (2,229 | ) | |||
| Interest income | 217 | 54 | 763 | 131 | ||||||
| Financing expenses | (425 | ) | (545 | ) | (1,817 | ) | (2,405 | ) | ||
| Equipment impairment | - | (1,363 | ) | - | (1,363 | ) | ||||
| Reorganization costs | (197 | ) | - | (2,293 | ) | (124 | ) | |||
| Income (loss) before income taxes | (1,001 | ) | (96 | ) | 11,507 | 44,211 | ||||
| Income tax expense | (894 | ) | (660 | ) | (3,959 | ) | (11,105 | ) | ||
| Net income (loss) | (1,895 | ) | (756 | ) | 7,548 | 33,106 | ||||
| Net income (loss) per share | (0.07 | ) | (0.03 | ) | 0.27 | 1.17 | ||||
| Dividends per share | 0.03 | 0.05 | 0.16 | 1.38 | ||||||
| December 31, | December 31, | |||||||||
| Financial position as at: | 2023 | 2022 | ||||||||
| Total assets | 171,979 | 176,326 | ||||||||
| Total non-current financial liabilities | 28,439 | 27,557 | ||||||||
| Adjusted EBITDA | ||||||||||
| Three Months Ended | Year Ended | |||||||||
| ($'000 unless otherwise stated) | December 31, | December 31, | ||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||
| Operating income | (152 | ) | 4,197 | 16,703 | 50,482 | |||||
| Add back depreciation | 1,273 | 1,484 | 5,019 | 5,497 | ||||||
| Foreign exchange (loss) gain | (261 | ) | 4 | (222 | ) | (36 | ) | |||
| Adjusted EBITDA2 | 860 | 5,685 | 21,500 | 55,943 | ||||||
| 1See Financial Statement Note 23 of the December 31, 2023, Financial Statements. | ||||||||||
| 2See definition on Adjusted EBITDA in Section 2 NON-IFRS MEASURES of the December 31, 2023, MD&A. | ||||||||||
About Tree Island Steel
Tree Island Steel, headquartered in Richmond, British Columbia since 1964, through its 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 forward-looking statements, prospective investors should specifically consider various factors including the risks outlined herein under the heading "Risk Factors" 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, public health epidemics, the economy and potentially its supply chain, the cyclical nature of our business and demand for our products, impact of any tax reassessments or appeals therefrom, financial condition of our customers, competition, deterioration in Tree Island Steel's liquidity, leverage, and restrictive covenants, disruption in the supply of raw materials, volatility in the costs of raw materials, dependence on the construction industry, transportation costs and availability, foreign exchange fluctuations, labour relations, trade actions, dependence on key personnel and skilled workers, reliance on key customers, environmental matters, intellectual property risks, energy costs, un-insured loss, credit risk, operating risk, relocation of certain production equipment from the Etiwanda operations, management of growth, success of acquisition and integration strategies, 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) 962-3300 |
| e-mail: amahdavi@treeisland.com |
| Website: www.treeisland.com |
