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Stelco Reports Strong Fourth Quarter 2018 Results and Declares Special Cash Dividend of $100 million

HAMILTON, ONTARIO, February 19, 2019 - Stelco Holdings Inc. (“Stelco Holdings” or the “Company”), (TSX: STLC), a low cost, integrated and independent steelmaker with one of the newest and most technologically advanced integrated steelmaking facilities in North America, today announced financial results of the Company and that of Stelco Inc. (“Stelco” or “Stelco Inc.”) for the three months and full year ended December 31, 2018. Stelco Holdings is the 100% owner of Stelco, the operating company.

Stelco Inc. Highlights:

Selected Financial Information:

(in millions except volume and per nt figures)

Q4 2018

Q4 2017

Change

Q3 2018

Change

 2018

 2017

Change

Revenue ($)

648

452

43%

619

5 %

2,460

1,601

54 %

Operating income ($)

116

54

115%

137

(15)%

471

115

310 %

Net income ($)

108

16

575%

123

(12)%

247

3,579

(93)%

Average selling price per nt ($)*

917

718

28%

980

(6)%

889

772

15 %

Shipping volume* (in thousands of nt)

673

592

14%

586

15 %

2,620

2,003

31 %

Adjusted net income ($)*

98

49

100%

131

(25)%

431

45

858 %

Adjusted EBITDA ($)*

145

69

110%

154

(6)%

544

216

152 %

Tariff Adjusted EBITDA ($)*

168

69

143%

193

(13)%

617

216

186 %

Adjusted EBITDA per nt ($)*

215

117

84%

263

(18)%

208

108

93 %

Tariff Adjusted EBITDA per nt ($)*

250

117

114%

329

(24)%

235

108

118 %

“Stelco continued to deliver strong shipping volumes and financial results, including what we believe to be the North American steel industry’s leading adjusted EBITDA margin1,2 of 22% in the fourth quarter and for the full year 2018, demonstrating the benefits of the operational improvements we continue to make in the Company,” said Alan Kestenbaum, the Company’s Executive Chairman. “We are pleased with our full year financial performance and operational resiliency. Our full year 2018 operating income of $471 million, adjusted EBITDA of $544 million, and tariff adjusted EBITDA of $617 million, are a reflection of our company's strength of operations and a testament to Stelco's low cost position and tactical flexibility model.”

“By executing our tactical flexibility model, during the fourth quarter we reduced our tariff related costs by more than 41% sequentially, from $39 million in the third quarter to $23 million in the fourth quarter,” Kestenbaum added. “We are continuing with efforts to reduce our tariff exposure into 2019 and fully support the Canadian government’s efforts to eliminate the 232 tariffs against Canadian steel. We welcome and appreciate the Canadian government’s implementation of various measures including provisional safeguard measures in Q4 2018, that have helped to prevent a surge of offshore imports into the Canadian market.”

“During the fourth quarter, we generated $100 million of cash flow from operations and ended the year with a considerable cash balance of $438 million3,” Kestenbaum concluded. “As a result, consistent with our strategy and focus on generating exceptional total shareholder returns, we are pleased to announce we are declaring a special cash dividend of $100 million ($1.13 per share), in addition to our regular quarterly dividend of $0.10 per share. These dividends, coupled with the $150 million special dividend paid in August and our four regular quarterly dividends paid in 2018, will bring total dividends paid to our shareholders since the beginning of 2018 to $295 million ($3.32 per share). In addition to returning substantial capital to shareholders, we continue to maintain healthy liquidity and a strong balance sheet, providing flexibility to drive growth. As 2019 is getting underway, we are beginning to see the benefits of our unique approach to capital allocation as we both return capital to shareholders and maintain a strong, flexible and liquid balance sheet as good, strategic and accretive M&A growth opportunities are starting to emerge.”

For Further Information

For investor enquiries: Don Newman, Chief Financial Officer, 905-577-4432, don.newman@stelco.com

For media enquiries: Trevor Harris, Vice-President, Corporate Affairs, 905-577-4447, trevor.harris@stelco.com

Click here to read the full press release.

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