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

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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.

Stelco Holdings Inc. Schedules Fourth Quarter and Full-Year 2018 Earnings Release and Conference Call

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Stelco management will host a conference call to discuss its results on Wednesday, February 20, 2019 at 9:00 a.m. ET.  To access the call, please dial 1-800-239-9838 (U.S. and Canada) or 1-323-794-2551 (international) and reference conference 6187330. The conference call will also be webcasted live on the Investor Relations section of Stelco’s web site at https://www.stelco.com/investors.

Following the conclusion of the live call, a replay of the webcast will be available on the Investor Relations section of the Company's website for at least 90 days. A telephonic replay of the conference call will also be available from 12:00 p.m. ET on February 20, 2019 until 11:59 p.m. ET on March 6, 2019 by dialing 1-844-512-2921 (U.S. and Canada) or 1-412-317-6671 (international) and using the pin number 6187330.

About Stelco

Stelco is a low cost, integrated and independent steelmaker with one of the newest and most technologically advanced integrated steelmaking facilities in North America. Stelco produces flat-rolled value-added steels, including premium-quality coated, cold-rolled and hot-rolled steel products.  With first-rate gauge, crown, and shape control, as well as reliable uniformity of mechanical properties, our steel products are supplied to customers in the construction, automotive and energy industries across Canada and the United States as well as to a variety of steel service centres, which are regional distributers of steel products.

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

Stelco Holdings Inc. Schedules Third Quarter 2018 Earnings Release and Conference Call

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Stelco management will host a conference call to discuss its results on Wednesday, November 14, 2018 at 9:00 a.m. ET.  To access the call, please dial 1-866-548-4713 (U.S. and Canada) or 1-323-794-2093 (international) and reference conference 2533649. The conference call will also be webcasted live on the Investor Relations section of Stelco’s web site at https://www.stelco.com/investors.

Following the conclusion of the live call, a replay of the webcast will be available on the Investor Relations section of the Company's website for at least 90 days. A telephonic replay of the conference call will also be available from 12:00 p.m. ET on November 14, 2018 until 11:59 p.m. ET on November 28, 2018 by dialing 1-844-512-2921 (U.S. and Canada) or 1-412-317-6671(international) and using the pin number 2533649.

About Stelco

Stelco is a low cost, integrated and independent steelmaker with one of the newest and most technologically advanced integrated steelmaking facilities in North America. Stelco produces flat-rolled value-added steels, including premium-quality coated, cold-rolled and hot-rolled steel products.  With first-rate gauge, crown, and shape control, as well as reliable uniformity of mechanical properties, our steel products are supplied to customers in the construction, automotive and energy industries across Canada and the United States as well as to a variety of steel services centres, which are regional distributers of steel products.

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  

Stelco Reports Second Quarter 2018 Results

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Revenue up 67% to $711 Million; Adjusted EBITDA up 130% to $175 million; Adjusted EBITDA Margin of 25%

Second quarter 2018 highlights include:

– Revenue of $711 million, up 67% year-over-year and up 48% sequentially

– Operating income of $161 million, up 544% year-over-year and up 182% sequentially

– Adjusted EBITDA of $175 million, up 130% year-over-year, up 150% sequentially, and above top end  of guidance

– Adjusted EBITDA margin of 25%, up from 15% in Q1 2018 and from 18% in Q2 2017

– Steel shipping volumes up 49% year-over-year and 22% sequentially, and steel ASPs up 18% from Q1 2018

– Company declares special cash dividend of $150 million ($1.69 per share) in addition to regular quarterly dividend of $0.10 per share

Click here to download the complete press release.

HAMILTON, ONTARIO, July 31, 2018 - 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 ended June 30, 2018. Stelco Holdings is the 100% owner of Stelco, the operating company.

Stelco Inc. Highlights

Table of Selected

  •  
  • “Our second quarter results substantially exceeded the high-end of our previously issued guidance range, with adjusted EBITDA of $175 million, representing a 25% adjusted EBITDA margin despite incurring approximately $11 million of tariff related costs,” said Alan Kestenbaum, the Company’s Executive Chairman and Chief Executive Officer. ”Our second quarter performance reflects shipping volume at nearly three million tons annually and an average selling price of $898/nt, which is still below current market prices. We achieved this as a direct result of the successful implementation of enhanced shipping logistics including our newly repurposed dock and newly leased railcars that have reduced our dependency on trucks. The sharp improvement in our financial results year-over-year and sequentially reflects the improved efficiency of our operations, continuous efforts to drive down costs, strong demand throughout North America, and higher steel prices.

“Consistent with our core strategy to unlock value in all assets, we sold more than 70 thousand tons of coke related products in the second quarter and generated approximately $39 million in non-steel sales at healthy profit margins. We will continue to seek to extract more value from other underutilized assets.  Our acquisition of 3,000 acres of land under and around our facilities during the second quarter should enable us to achieve at least three tangible benefits: (i) position us to extract  additional value from our operating assets by enhancing operating flexibility previously unavailable to us, (ii) lowering our costs, and (iii) creating significant and previously unrealizable value for our shareholders through development of excess land and port facilities in the very strong Greater Toronto Area (“GTA”) property constrained Industrial market.

“We generated $165 million of cash flow from operations and $145 million of free cash flow during the quarter which drove our quarter end cash balance to $421 million,” Kestenbaum added.  “We have a strong balance sheet, a healthy cash position, and a $375 million revolver that is completely undrawn. As a result, and consistent with our strategy to relentlessly focus on generating exceptional total shareholder returns, we are pleased to announce that we are declaring a special cash dividend of $150 million ($1.69 per share), in addition to our regular quarterly dividend of $0.10 per share. In parallel, we are maintaining significant liquidity, financial strength, and flexibility to drive both inorganic and organic growth through accretive transactions and growth initiatives in our core steel business.”

 

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

Stelco Reports Strong Third Quarter 2018 Results

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Third quarter 2018 highlights include:

  • Q3 2018 operating income of $137 million
  • Q3 2018 revenue increased by $283 million, or 84%, from revenue of $336 million in Q3 2017
  • Q3 2018 Adjusted EBITDA of $154 million and adjusted EBITDA per ton of $263, up 2,100% and 1,447%, respectively, compared to Q3 2017
  • Industry-leading Adjusted EBITDA margin of 25% in Q3 2018, up from 2% in Q3 2017, an increase of 1,150%
  • Q3 2018 steel shipping volumes of 586,000 net tons, up 43% compared to Q3 2017
  • Q3 2018 Tariff adjusted EBITDA of $193 million, up 2,657% from $7 million in Q3 2017, and up 4% from $186 million from Q2 2018
  • Board has approved, subject to TSX approval, a share repurchase program (normal course issuer bid) of up to 4,440,681 shares
  • Board has approved the regular quarterly dividend of $0.10 per share
  •  

HAMILTON, ONTARIO, November 13, 2018 - 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 and nine months ended September 30, 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)

Q3 2018

Q3 2017

Change

Q2 2018

Change

YTD 2018

YTD 2017

Change

Revenue ($)

619

336

84%

711

(13)%

1,812

1,149

58 %

Operating income ($)

137

NM

161

(15)%

355

61

482 %

Net income (loss) ($)

123

(13)

NM

(12)

NM

139

3,563

(96)%

Adjusted EBITDA ($)*

154

7

NM

175

(12)%

399

147

171 %

Tariff Adjusted EBITDA*

193

7

NM

186

4 %

449

147

205 %

Adjusted net income (loss) ($)*

131

(9)

NM

153

(14)%

333

(4)

NM

Selling price per nt ($)*

980

793

24%

898

9 %

880

794

11 %

Adjusted EBITDA per nt ($)*

263

17

NM

234

12 %

205

104

97 %

Tariff Adjusted EBITDA per nt ($)*

329

17

NM

249

32 %

231

104

122 %

Shipping volume* (in thousands of nt)

586

411

43%

748

(22)%

1,947

1,411

38 %

* See "Non-IFRS measures" for a description of certain Non-IFRS measures used in this Press Release and “Non-IFRS Measures Reconciliation” below. Per net ton figures are now presented for steel shipments only and prior period per net ton metrics have been restated.

“Stelco’s strong financial performance during the first half of the year continued into the quarter, demonstrating the strength of our business model and our operational improvements, despite the impact from our planned outage at our hot strip mill in September and tariffs,” said Alan Kestenbaum, the Company’s Executive Chairman and Chief Executive Officer. “Our third quarter 2018 operating income was $137 million and adjusted EBITDA was $154 million, which represents what we believe to be the North American industry-leading adjusted EBITDA margin1, 2 of 25%, despite being the only reporting steel company in North America subject to 232 tariffs. Our tariff adjusted EBITDA1 (calculated by adding back $39 million of tariffs to our adjusted EBITDA figure), was a record high since being acquired by Bedrock of $193 million. Our strong financial performance was the result of improved steel selling prices, Stelco's low cost position, and strong domestic steel demand from our customers.”

“This quarter we invested in initiatives to enhance our operational efficiency, such as improvements at our hot strip mill, to better enable us to participate in higher margin segments of the steel market including auto advanced high strength steel (AHSS), High Strength Low Alloy (HSLA) and value-added coated markets. We are maintaining significant liquidity, financial strength, and flexibility to drive both inorganic and organic growth through accretive transactions and growth initiatives in our core steel business. We continue to see strong demand from our customers across all end markets. In the fourth quarter, we are expecting a significant increase in shipments, stable pricing and higher earnings.”

Kestenbaum concluded, “I would like to express our gratitude to the Canadian government, in particular the Prime Minister, the Minister of Finance, the Minister for Foreign Affairs and the Minister of Innovation, Science and Economic Development, for introducing retaliatory tariffs and for the initiation of safeguard measures that cover the import of a number of steel products, including both hot rolled sheet and pre-painted sheet. The recently implemented safeguard measures on October 25 are providing market stability by limiting the amount of off-shore imports that threaten to be diverted to Canada as a result of the Section 232 tariffs in the United States. With these measures in place, we expect growth in our business related to our recent investments, including the installation of annealing furnaces, and the recent work on the hot strip mill, that have enhanced our product capabilities. Our plan of action utilizing our tactical flexibility business model is to increase margins even further by selling higher value margin products while also reducing our tariff costs on shipments to the United States in 2019 to as close to zero as possible, while the government continues its discussions on removal of the 232 tariffs.”

Third Quarter 2018 Financial Review:

Q3 2018 revenue increased $283 million, or 84%, from revenue of $336 million in Q3 2017. The year-over- year revenue increase was due primarily to a 43% increase in steel shipping volumes and a 24% increase in average steel selling price, as well as an increase in non-steel sales. Shipping volumes increased from 411 thousand nt in Q3 2017 to 586 thousand nt in Q3 2018. Average selling price increased from $793/nt in Q3 2017 to $980/nt in Q3 2018.

Finance costs remained flat compared to Q3 2017 due to a $4 million increase in interest on loans and borrowings, $4 million higher accretion expense associated with our employee benefit commitment obligation, offset by $3 million related to the gross impact period-over-period of foreign exchange translation on U.S. dollar denominated working capital, $2 million remeasurement recovery on our employee benefit commitment obligation due to a change in timing of estimated cash flows and future funding requirements, and $3 million lower accretion on financial lease obligations and other interest costs.

Net income for the quarter was $123 million, up from a net loss of $13 million in the third quarter of 2017, which benefited from an increase in operating income of $137 million, partially offset by higher restructuring costs. Adjusted net income1 increased $140 million year-over-year, from an adjusted net loss of $9 million in Q3 2017 to adjusted net income of $131 million in Q3 2018. The improvement was largely due to higher revenue and lower selling, general and administrative expenses, excluding the ERP implementation costs, partly offset by higher finance costs, excluding the adjustment for remeasurement recovery related to the employee benefit commitments.

Adjusted EBITDA in Q3 2018 totaled $154 million, an increase of $147 million from adjusted EBITDA of $7 million in Q3 2017. Tariff adjusted EBITDA of $193 million in Q3 2018, up from $7 million compared to Q3 2017 and up from $186 million from Q2 2018. The year-over-year improvement reflects the increase in revenue from increased shipping volumes and an improvement in the market price of steel.

On a sequential basis, our financial performance was impacted by a planned upgrade at our hot strip mill intended to provide better gauge control and increased rolling force, and enable Stelco to better participate in the AHSS, HSLA, and value added coated steel markets. Were it not for the $10 million of costs related to the outage, the adjusted EBITDA would have been even higher at $164 million and the tariff adjusted EBITDA would have been $203 million. Revenue decreased 13%, from $711 million in Q2 2018 to $619 million in Q3 2018. The decrease in revenue reflects a 22% decrease in steel shipping volumes, from the recent record 748 thousand nt in Q2 2018 to 586 thousand nt in Q3 2018, partially offset by a 9% increase in average selling price, which increased from $898/nt in Q2 2018 to $980/nt in Q3 2018, as well as an increase in non-steel sales. Operating income decreased to $137 million in Q3 2018, down 15% from Q2 2018 operating income of $161 million. Adjusted EBITDA decreased to $154 million, down 12% from Q2 2018, primarily due to lower shipping volumes, higher tariff and outage related costs, partially offset by higher selling prices. Despite the outage, we achieved a 25% adjusted EBITDA margin, remaining flat compared to Q2 2018.

Summary of Net Tons Shipped by Product:

(in thousands of nt)

Tons Shipped by Product

Hot-rolled Coated Cold-rolled Other Total

Q3 2018 Q3 2017

446          299

82           78

19           12

39           22

Change

49%

5%

58%

77%

Q2 2018    Change

590         (24)%

93         (12)%

33         (42)%

32          22 %

YTD 2018 1,527

259

67

94

YTD 2017

998

302

43

68

Change

53 %

(14)%

56 %

38 %

586          411

43%

748

(22)%

1,947

1,411

38 %

Shipments by Product (%)

Hot-rolled Coated Cold-rolled Other Total

 

76%         73%

14%         19%

3%          3%

7%          5%

 

 

79%

13%

4%

4%

 

 

78%

13%

4%

5%

 

71%

21%

3%

5%

 

100%       100%

 

100%

100%

100%

 

Stelco Holdings Highlights:

Stelco Holdings’ consolidated statements of income primarily include Stelco’s financial results for the period. The following is a financial summary of Stelco Holdings' results for the third quarter of 2018 and 2017 as well as the first nine months of 2018:

Selected Financial Information:

(in millions except volume and per nt figures)

Q3 2018

Q3 2017

Change

Q2 2018

Change

YTD 2018

Revenue ($)

619

336

84%

711

(13)%

1,812

Operating income (loss) ($)

138

(17)

NM

162

(15)%

358

Net income (loss) ($)

125

(30)

NM

(11)

NM

143

Net income (loss) per share ($)

1.41

(0.40)

NM

(0.12)

NM

1.61

Adjusted EBITDA ($)*

154

7

NM

174

(11)%

397

Tariff Adjusted EBITDA*

193

7

NM

185

4 %

447

Adjusted net income (loss) ($)*

135

(11)

NM

154

(12)%

339

Adjusted net income per share ($)*

1.52

(0.15)

NM

1.73

(12)%

3.82

Average selling price per nt ($)*

980

793

24%

898

9 %

880

Adjusted EBITDA per nt ($)*

263

17

NM

233

13 %

204

Tariff Adjusted EBITDA per nt ($)*

329

17

NM

247

33 %

230

Shipping volume* (in thousands of nt)

586

411

43%

748

(22)%

1,947

* See "Non-IFRS measures" for a description of certain Non-IFRS measures used in this Press Release and “Non-IFRS Measures Reconciliation” below. Per net ton figures are now presented for steel shipments only and prior period per net ton metrics have been restated.

1 See "Non-IFRS measures" for a description of certain Non-IFRS measures used in this Press Release and “Non-IFRS Measures Reconciliation” below.

2 North American steel industry comparables are based on public filings and press releases issued by: Steel Dynamics Inc., Nucor Corporation, United States Steel Corporation, AK Steel Holding Corporation, Commercial Metals Company and Timken Steel Corporation. The information about other issuers was obtained from public sources and has not been verified by the Company. The comparable issuers face different risks from those applicable to the Company. Investors are cautioned that past performance is not indicative of future performance and the performance of the Company may be materially different from the comparable issuers. Investors are cautioned to not put undue reliance on the comparables. Adjusted EBITDA is not necessarily based on the same definition across all issuers.

 

Click here to read the full press release.

Stelco Holdings Inc. Schedules Second Quarter 2018 Earnings Release and Conference Call

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HAMILTON, ONTARIO, July 19, 2018– Stelco Holdings Inc., (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 that it plans to release its second quarter 2018 financial results on Tuesday, July 31, 2018, after the close of the market.

Stelco management will host a conference call to discuss its results on Wednesday, August 1, 2018 at 9:00 a.m. ET.  To access the call, please dial 1-866-548-4713 (U.S. and Canada) or 1-323-794-2093 (international) and reference conference ID 5678595. The conference call will also be webcasted live on the Investor Relations section of Stelco’s web site at https://www.stelco.com/investors.

Following the conclusion of the live call, a replay of the webcast will be available on the Investor Relations section of the Company's website for at least 90 days. A telephonic replay of the conference call will also be available from 12:00 p.m. ET on August 1, 2018 until 11:59 p.m. ET on August 14, 2018 by dialing 1-844-512-2921 (U.S. and Canada) or 1-412-317-6671 (international) and using the pin number 5678595.

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

Stelco Announces Land Acquisition

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HAMILTON, ONTARIO, June 5, 2018 - Stelco Holdings Inc. (“Stelco Holdings” or the “Company”), (TSX: STLC), today announced that its wholly owned subsidiary, Stelco Inc. (“Stelco”) has completed the acquisition of lands beneficially owned by Legacy Lands Limited Partnership (the “Land Vehicle”) on which Stelco conducts its operations in Hamilton (approximately 760 acres) and Nanticoke, Ontario (approximately 2300 acres), including lands in Hamilton that contain the Hamilton Works blast furnace and cast houses, as well as developable lands and port facilities (collectively, the “Lands”). The purchase price payable for the Lands is approximately $114 million and will be financed with a 25-year, 8% per annum mortgage note (the “Mortgage Note”) issued to the Land Vehicle.  The quarterly Note payments will be distributed by the Land Vehicle to fund various pension and other post-employment benefit commitments (“OPEBs”) for Stelco retirees.

In connection with the Land acquisition, existing lease arrangements between Stelco and the Land Vehicle were terminated and the associated rental payments have been cancelled.  In addition, Stelco has entered into an amended OPEB funding agreement (the “Amended OPEB Funding Agreement”) that reduced Stelco’s exposure to future variable funding requirements (including future excess free cash flow contributions) and provided the independent employee life and health trusts (“ELHTs”) established as part of Stelco’s CCAA reorganization, with a fixed funding commitment by Stelco.

The Amended OPEB Funding Agreement replaces Stelco’s funding obligations under the OPEB funding agreement that was entered into at the closing of Stelco’s CCAA reorganization (the “Original OPEB Funding Agreement”).  The following outlines Stelco’s OPEB funding obligations (excluding payments associated with excess free cash flow):

 

Original OPEB Funding Agreement and Lease Payments

Amended OPEB Funding Agreement and Mortgage Note Payments

Years 1-10

Average annual funding of $26.4 million (minimum) to $37.5 million[1] (maximum) per annum

 

Average annual funding of $33 million per annum

Years 11-20

 

Average annual funding of $20.2 million (minimum) to $31.2 million1 (maximum) per annum

Average annual funding of $30 million per annum

Years 21-25

Average annual lease rental payments of $15 million per annum[2]

Average annual funding of $15 million per annum


[1] Assuming maximum free cash flow payments under the Original OPEB Funding Agreement.

[2] Management assumption that lease rental payments continue to be allocated to OPEBs

The Land acquisition provides Stelco with the flexibility to utilize the Lands for its existing operations and allows Stelco to develop the Lands in a manner that both complements our current and future operations and pursue others uses for the Lands.  In addition to providing for more fixed annual funding of OPEBs, the Amended OPEB Funding Agreement and Mortgage Note payments could save Stelco up to $87 million compared to the Original OPEB Funding Agreement and lease payments and eliminates Stelco’s variable funding obligations tied to excess free cash flow that could have resulted in significant additional OPEB funding contributions.

Stelco continues to receive the benefit of the environmental release in respect of the Lands that was granted by the Ministry of the Environment and Climate Change on closing of the CCAA reorganization.

“This acquisition provides Stelco with significantly greater strategic operational flexibility and allows Stelco   the ability to grow its core business.  Our retirees and employees will also directly benefit as this new arrangement will provide more certainty in terms of the funding to be provided by Stelco to the ELHTs to support OPEBs. Additionally, we look forward to engaging with various other parties including the City of Hamilton on further development opportunities of the land and port area” said Alan Kestenbaum, the Company’s Executive Chairman and Chief Executive Officer.

About Stelco

Stelco is a low cost, integrated and independent steelmaker with one of the newest and most technologically advanced integrated steelmaking facilities in North America. Stelco produces flat-rolled value-added steels, including premium-quality coated, cold-rolled and hot-rolled steel products. With first-rate gauge, crown, and shape control, as well as reliable uniformity of mechanical properties, our steel products are supplied to customers in the construction, automotive and energy industries across Canada and the United States as well as to a variety of steel services centres, which are regional distributers of steel products.

Forward-Looking Information

This release contains ‘‘forward-looking information’’ within the meaning of applicable securities laws. Forward-looking information may relate to our future outlook and anticipated events or results and may include information regarding our financial position, business strategy, growth strategy, budgets, operations, financial results, taxes, dividend policy, plans and objectives of our Company. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as ‘‘plans’’, ‘‘targets’’, ‘‘expects’’ or ‘‘does not expect’’, ‘‘is expected’’, ‘‘an opportunity exists’’, ‘‘budget’’, ‘‘scheduled’’, ‘‘estimates’’, ‘‘outlook’’, ‘‘forecasts’’, ‘‘projection’’, ‘‘prospects’’, ‘‘strategy’’, ‘‘intends’’, ‘‘anticipates’’, ‘‘does not anticipate’’, ‘‘believes’’, or variations of such words and phrases or state that certain actions, events or results ‘‘may’’, ‘‘could’’, ‘‘would’’, ‘‘might’’, ‘‘will’’, ‘‘will be taken’’, ‘‘occur’’ or ‘‘be achieved’’. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances may be forward looking statements. Forward-looking statements are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances. The forward-looking statements contained herein are presented for the purpose of assisting the holders of our securities and financial analysts in understanding our financial position and results of operations as at and for the periods ended on the dates presented, as well as our financial performance objectives, vision and strategic goals, and may not be appropriate for other purposes.

Forward-looking information in this news release includes the amount of funding payable in respect of the Amended OPEB Funding Agreement, the amount of lease rental payments and the consumer price index escalation in respect thereof over the term of the Hamilton and Lake Erie Works leases, the expected cost savings under the Amended OPEB Funding Agreement, potential development of the Lands, tactical flexibility resulting from the acquisition of the Lands, increased fixed funding obligations along with reduced variable funding obligations. Undue reliance should not be placed on forward-looking information. The forward-looking information in this press release is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Certain assumptions in respect of our ability to complete the transactions, as well as those set out in this press release, are material factors made in preparing the forward-looking information and management's expectations contained in this press release.

Such forward-looking information is subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results or achievements to be materially different from those expressed or implied by such forward-looking information, including: arriving at mutually acceptable terms in respect of the transactions between Stelco and various stakeholders as well as those described in the Company’s annual information form and the Company’s MD&A for the period ended December 31, 2017 available under the Company’s profile on SEDAR at www.sedar.com.

 

There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents our expectations as of the date of this news release, and are subject to change after such date. Stelco Holdings disclaims any intention or obligation or undertaking to update publicly or revise any forward-looking statements, whether written or oral, whether as a result of new information, future events or otherwise, except as required by law.

 

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

Stelco Reports First Quarter 2018 Results

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HAMILTON, ONTARIO, May 2, 2018 - 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 ended March 31, 2018. Stelco Holdings is the 100% owner of Stelco, the operating company.

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

First quarter 2018 highlights include:

  • Revenue of $482 million, up 25% year-over-year
  • Operating income increased 58% year-over-year to $57 million
  • Adjusted EBITDA of $70 million, up 9% year-over-year
  • Company reaffirms Q2 2018 earnings estimates
  • Company declares dividend of $0.10 per share with a record date of May 15, 2018 and payment date of May 18, 2018

 

 

Stelco Announces First and Second Quarter 2018 Earnings Estimates

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HAMILTON, ONTARIO, March 28, 2018 – Stelco Holdings Inc. (“Stelco Holdings”, the “Company” or “we”), (TSX: STLC), which, through its wholly owned operating company, Stelco Inc. (“Stelco” or “Stelco Inc.”), is a low cost, integrated and independent steelmaker with one of the newest and most technologically advanced integrated steelmaking facilities in North America, today provided an update on the market and its operational performance.

Given favourable market conditions for its core steel products, the Company is providing earnings estimates for Q1 and Q2 of 2018.[1]

The Company continues to experience improving market conditions and favourable pricing trends across its key products. The Company also has a strong order book across its hot-rolled coil, cold-rolled coil, and coated products. The Company’s order book is subject to a lag in order entry and revenue recognition with orders being booked today estimated to be delivered in eight to ten weeks. As a result, the Company’s Q1 2018 sales will largely reflect sales orders booked in Q4 2017, and Q2 2018 sales are expected to largely reflect sales orders booked in Q1 2018. In Q1 2018, shipments are expected to be 3% to 5% higher than Q4 2017. In late Q1 2018, the Company expanded its distribution capabilities by adding approximately 200 rail cars to its distribution fleet and increased its shipping capacity through its LEW dock enhancement project. Those enhancements are expected to result in Q2 2018 shipments increasing from Q1 2018 levels. The capital projects described in the prospectus relating to the Company’s IPO remain largely on schedule and on budget.

The Company anticipates Q1 2018 adjusted EBITDA to be between $60 million and $70 million, largely reflecting sales orders booked in Q4 2017 at market prices materially below current levels and incremental transportation costs resulting from general shortages of trucks used to deliver products in Q1. The Company anticipates revenue and adjusted EBITDA will improve in Q2 2018 as legacy sales contracts from Q4 2017 roll-off and are replaced by higher price contracts executed in Q1 2018 and as shipping volumes and efficiencies improve. Based upon these expectations, the Company anticipates Q2 2018 adjusted EBITDA to be between $120 million and $150 million.

See “Forward-Looking Information”.

[1] Note: “Q1” refers to the 3 months ended March 31 and “Q2” refers to the 3 months ended June 30.

Reconciliation of Estimated Net Income to Estimated Adjusted EBITDA:

The following table provides a reconciliation of estimated net income (the most directly comparable measure calculated in accordance with IFRS) to the noted estimated adjusted EBITDA (a non-IFRS measure) ranges for Q1 2018 and Q2 2018, as well as the midpoint for each respective range.

Table of Estimated Adjusted EBITDA

Non-IFRS Measures

This press release refers to certain non-IFRS measures that are not recognized under International Financial Reporting Standards (“IFRS”) and do not have a standardized meaning prescribed by IFRS. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management’s perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. We use non-IFRS measures including ‘‘adjusted EBITDA’’ to provide supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS financial measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management uses these non-IFRS financial measures to facilitate operating performance comparisons from period-to-period, to prepare annual operating budgets and forecasts, and drive performance through our management compensation program. For a reconciliation of certain of these non-IFRS measures refer to the “Reconciliation of Estimated Net Income to Estimated Adjusted EBITDA” section above and the “Non-IFRS Performance Measures” in our Management Discussion and Analysis for the period ended December 31, 2017 available on SEDAR at www.sedar.com (the “MD&A”). For a definition of certain non-IFRS measures, refer to the “Non-IFRS Performance Measures” section of the Company’s MD&A.

Key Assumptions Underlying Our Q1 and Q2 2018 Earnings Estimates:

The Q1 and Q2 2018 earnings estimate ranges referenced in this press release are based on a number of assumptions, including but not limited to, the following material assumptions:

  • - that the Company’s anticipated margins per net ton will increase largely due to price and volume increases, as well as operating efficiencies, partially offset by inflation in fixed and variable cost structures over the period;
  • - steel prices will generally increase period to period consistent with current trends and sales activities over the period;
  • - increases in shipping volume as we expand our distribution capabilities through the relevant period;
  • - we expect Q1 2018 and Q2 2018 product mix to be comparable to Q4 2017, although as our trial shipments to automotive OEMs continue to see success, we could see a gradual shift in some of our product mix toward higher value products if such shift results in higher margins;
  • - the Company’s ability to attract new customers and further develop and maintain existing customers;
  • no significant additional legal or regulatory developments, changes in economic conditions, or macro changes in the competitive environment affecting our business activities. We note that potential further changes to trade regulations in the United States or amendments to the North American Free Trade Agreement could materially alter underlying assumptions around our expected financial performance;
  • future operating expenses, capital expenditures and debt service costs;
  • upgrades to existing facilities remaining on schedule and on budget and their anticipated effect on revenue and costs;
  • - the Company’s ability to continue to access the U.S. market without any adverse trade restrictions;
  • expectations regarding industry trends, market growth rates and the Company’s future growth rates, plans and strategies to increase revenue and cut costs; and
  • - the Company’s ability to increase the volume of shipments to its customers and realize upon the increase in the market price of hot-rolled coil and other steel products.
  •  

Forward-Looking Information  

This release contains ‘‘forward-looking information’’ within the meaning of applicable securities laws. Forward-looking information may relate to our future outlook and anticipated events or results and may include information regarding our financial position, business strategy, growth strategy, budgets, operations, financial results, taxes, dividend policy, plans and objectives of our Company. Particularly, information regarding our expectations of future results, performance, achievements, prospects or opportunities is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as ‘‘plans’’, ‘‘targets’’, ‘‘expects’’ or ‘‘does not expect’’, ‘‘is expected’’, ‘‘an opportunity exists’’, ‘‘budget’’, ‘‘scheduled’’, ‘‘estimates’’, ‘‘outlook’’, ‘‘forecasts’’, ‘‘projection’’, ‘‘prospects’’, ‘‘strategy’’, ‘‘intends’’, ‘‘anticipates’’, ‘‘does not anticipate’’, ‘‘believes’’, or variations of such words and phrases or state that certain actions, events or results ‘‘may’’, ‘‘could’’, ‘‘would’’, ‘‘might’’, ‘‘will’’, ‘‘will be taken’’, ‘‘occur’’ or ‘‘be achieved’’. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances may be forward looking statements. Forward-looking statements are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances. The forward-looking statements contained herein are presented for the purpose of assisting the holders of our securities and financial analysts in understanding our financial position and results of operations as at and for the periods ended on the dates presented, as well as our financial performance objectives, vision and strategic goals, and may not be appropriate for other purposes.

Forward-looking information includes estimates and projections related to the following items, some of which are non-IFRS measures (see “Reconciliation of Estimated Net Income to Estimated Adjusted EBITDA”), among others:

  • - adjusted EBITDA;
  • - shipments;
  • - net Income;
  • - deprecation;
  • - finance costs;
  • - loss related to commodity based swaps;
  • - restructuring costs; and
  • - separation costs.
  •  

Undue reliance should not be placed on forward-looking information. The forward-looking information in this press release is based on our opinions, estimates and assumptions in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we currently believe are appropriate and reasonable in the circumstances. Despite a careful process to prepare and review the forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. Certain assumptions in respect of our ability to source raw materials and other inputs; our ability to supply to new customers and markets; our ability to effectively manage costs; our ability to attract and retain key personnel and skilled labour; our ability to obtain and maintain existing financing on acceptable terms; currency exchange and interest rates; the impact of competition; changes in laws, rule, and regulations, including international trade regulations; and growth in steel markets and industry trends, as well as those set out in this press release, are material factors made in preparing the forward-looking information and management’s expectations contained in this press release.

Forward-looking information contained in this press release is subject to risks, including: North American and global steel overcapacity; imports and trade remedies; competition from other producers, imports or alternative materials; and the availability and cost of inputs placing downward pressure on steel prices or increasing our costs; as well as those described in the MD&A and referred to under the heading “Risk Factors” in the Company’s final supplemented prep prospectus dated November 2, 2017 in respect of the Company’s initial public offering that closed on November 10, 2017 and available on SEDAR at www.sedar.com. Forward-looking information contained in this press release is subject to other risks, uncertainties, assumptions and other factors not presently known to us or that we presently believe are not material that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents our expectations as of the date of this news release, and are subject to change after such date. Stelco Holdings disclaims any intention or obligation or undertaking to update publicly or revise any forward-looking statements, whether written or oral, whether as a result of new information, future events or otherwise, except as required by law.

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

 

Stelco Holdings Inc. Announces Timing of Fourth-Quarter and Full-Year 2017 Earnings Release and Conference Call

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HAMILTON, ONTARIO, February 15, 2018 –  Stelco Holdings Inc., (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 that it plans to release its fourth quarter and year-end 2017 financial results on Wednesday, February 21, 2018, after the close of the market.

Stelco management will host a conference call to discuss its results on Thursday, February 22, 2018 at 9:00 a.m. ET.  To access the call, please dial 1-800-289-0438 (U.S. and Canada) or 1-323-794-2423 (international) and reference conference ID 4877607. The conference call will also be webcasted live on the Investor Relations section of Stelco’s web site at https://www.stelco.com/investors.

Following the conclusion of the live call, a replay of the webcast will be available on the Investor Relations section of the Company's website for at least 90 days. A telephonic replay of the conference call will also be available from 12:00 p.m. ET on February 22, 2018 until 11:59 p.m. ET on March 8, 2018 by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (international) and using the pin number 4877607.

About Stelco

Stelco is a low cost, integrated and independent steelmaker with one of the newest and most technologically advanced integrated steelmaking facilities in North America. Stelco produces flat-rolled value-added steels, including premium-quality coated, cold-rolled and hot-rolled steel products.  With first-rate gauge, crown, and shape control, as well as reliable uniformity of mechanical properties, our steel products are supplied to customers in the construction, automotive and energy industries across Canada and the United States as well as to a variety of steel services centres, which are regional distributers of steel products.

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

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