/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE
SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES/
Stelco Holdings Inc.'s first quarter 2020 highlights
include:
- Revenue of $445 million for
the quarter, compared to $435 million
for Q4 2019
- Operating income of $7 million
for the quarter, compared to an operating loss of $6 million for Q4 2019
- Adjusted EBITDA* of $20
million for the quarter, compared to $10 million for Q4 2019
- Shipments* of 621,000 tons for the quarter, compared to
633,000 for Q4 2019
HAMILTON, ON, May 5, 2020 /CNW/ - Stelco Holdings Inc.
("Stelco Holdings" or the "Company"), (TSX:
STLC), a low cost, integrated and independent steelmaker with one
of the newest and most technologically advanced integrated
steelmaking facilities in North
America, today announced financial results of the Company
for the three months ended March 31, 2020. Stelco Holdings is
the 100% owner of Stelco Inc. ("Stelco"), the operating
company.
Selected Financial Information:
(in millions Canadian
dollars, except volume, per share and nt figures)
|
Q1
2020
|
Q1 2019
|
Change
|
Q4 2019
|
Change
|
Revenue ($)
1
|
445
|
515
|
(14)%
|
435
|
2%
|
Operating income
(loss) ($)
|
7
|
44
|
(84)%
|
(6)
|
NM
|
Net income (loss)
($)
|
(24)
|
43
|
(156)%
|
(24)
|
—%
|
Adjusted net income
(loss) ($) *
|
(26)
|
60
|
(143)%
|
(13)
|
(100)%
|
|
|
|
|
|
|
Net income (loss) per
common share (diluted) ($)
|
(0.27)
|
0.48
|
(156)%
|
(0.27)
|
—%
|
Adjusted net income
(loss) per common share (diluted) ($) *
|
(0.29)
|
0.68
|
(143)%
|
(0.15)
|
(93)%
|
|
|
|
|
|
|
Average selling price
per nt ($) 1, *
|
705
|
824
|
(14)%
|
659
|
7%
|
Shipping volume (in
thousands of nt) *
|
621
|
612
|
1%
|
633
|
(2)%
|
|
|
|
|
|
|
Adjusted EBITDA ($)
*
|
20
|
76
|
(74)%
|
10
|
100%
|
|
|
|
|
|
|
Adjusted EBITDA per
nt ($) *
|
32
|
124
|
(74)%
|
16
|
100%
|
1
|
Certain comparative
results have been adjusted to conform to the Q1 2020 presentation
of revenue.
|
*
|
See "Non-IFRS
measures" for a description of certain Non-IFRS measures used in
this Press Release and "Non-IFRS Measures Reconciliation"
below.
|
"During the first quarter, our business successfully met the
market headwinds and shipped close to our capacity which in turn
allowed us to generate Adjusted EBITDA of $20 million – a 100 percent increase over the
previous quarter," said Alan
Kestenbaum, Executive Chairman and Chief Executive Officer.
"We reached 150,000 tons or an annualized run rate of close to
600,000 net tons, of value added cold-rolled and coated shipments.
With our order book approximately 85 percent filled for the second
quarter, we are hopeful to be able to ship to capacity yet again
for this current quarter despite the uncertainty resulting from the
pandemic."
"In the months ahead, we are planning to complete our blast
furnace upgrade which will increase our steelmaking capacity
and improve our cost structure. Also, as announced last week,
we entered into a new 8-year iron ore pellet purchase agreement
with United States Steel Corporation, as well as an option
agreement granting Stelco a long-dated option to purchase a 25%
ownership interest in the Minntac Mine. This transaction represents
a major milestone for Stelco as it secures a long-term supply of
high-quality iron ore pellets and a highly valuable future option
in the Minntac Mine - the best asset on the iron range. Having
this level of security for our iron ore supply, combined with the
efficiencies gained from our remaining capital projects for 2020,
positions Stelco as one of the lowest cost producers in the North
American steel market," continued Kestenbaum.
"I also want to acknowledge the exceptional work being done by
everyone to manage through the global pandemic that has had such an
impact on all of our lives in recent weeks. I am grateful for the
exceptional efforts of the frontline workers and all those who are
providing critical services, keeping us safe and maintaining
critical supply chains. I also want to express my sincere
appreciation to Stelco's team, who have been exceptional throughout
this crisis. Our employees' dedication and continued focus on
working safely has allowed our business to be in a position to
succeed through this challenging time," concluded Kestenbaum.
First Quarter 2020 Financial Review:
Q1 2020 revenue decreased $70
million, or 14%, from $515
million in Q1 2019, primarily due to a 14% decrease in
average steel selling prices and lower non-steel sales of
$4 million, partly offset by 1% higher steel shipping volumes.
The average selling price of our steel products decreased from
$824/nt in Q1 2019 to $705/nt in Q1 2020, due largely to decreases in
market prices for flat steel products. Shipping volumes increased 9
thousand nt, from 612 thousand nt in Q1 2019 to 621 thousand nt in
Q1 2020, mostly from higher coated and cold rolled steel product
shipments, partly offset by fewer hot rolled coil shipments during
the quarter.
The Company realized operating income of $7 million for the
quarter, compared to $44 million in Q1 2019, a decrease of
$37 million due to lower gross profit of $42 million
(consisting of a decrease in revenue of $70
million, partly offset by lower cost of goods sold of
$28 million) which was partly offset
by lower selling, general and administrative expenses of
$5 million during Q1 2020. Cost of
goods sold includes raw material and conversion costs, depreciation
and freight expense from steel inventory sold and shipped during
the period.
Finance costs increased by $30
million, from $3 million in Q1
2019, due to the following: $22 million related to the
period-over-period impact of unfavourable foreign exchange
translation on U.S. dollar denominated working capital,
$6 million related to the
remeasurement impact from our employee benefit commitment
obligation, $3 million increase in interest on loans and
borrowings and a $1 million increase
in accretion expense related to our lease obligations, partly
offset by $2 million lower accretion
expense associated with our employee benefit commitment
obligation.
The Company realized a net loss of $24
million for the quarter, compared to net income of
$43 million in the first quarter of
2019, a decrease of $67
million due to the following: $42
million in lower gross profit, $30
million in higher finance costs and a $1 million increase in restructuring and other
costs, partly offset by $5 million in lower selling, general
and administrative expenses and a $1
million increase in finance and other income. Adjusted net
income decreased $86 million
year-over-year, from $60 million in
Q1 2019 to an adjusted net loss of $26
million in Q1 2020.
Adjusted EBITDA in Q1 2020 totaled $20
million, a decrease of $56
million from adjusted EBITDA of $76 million in Q1 2019,
which reflects the decrease in revenue from lower average price of
steel sales and reduced non-steel sales, partly offset by an
increase in shipping volumes realized during the quarter.
Summary of Net Tons Shipped by Product:
(in thousands of nt)
Tons Shipped by
Product
|
Q1
2020
|
Q1 2019
|
Change
|
Q4 2019
|
Change
|
Hot-rolled
|
447
|
517
|
(14)%
|
382
|
17%
|
Coated
|
112
|
66
|
70%
|
106
|
6%
|
Cold-rolled
|
35
|
4
|
NM
|
40
|
(13)%
|
Other
a
|
27
|
25
|
8%
|
105
|
(74)%
|
Total
|
621
|
612
|
1%
|
633
|
(2)%
|
|
|
|
|
|
|
Shipments by
Product (%)
|
|
|
|
|
|
Hot-rolled
|
72%
|
84%
|
|
60%
|
|
Coated
|
18%
|
11%
|
|
17%
|
|
Cold-rolled
|
6%
|
1%
|
|
6%
|
|
Other
a
|
4%
|
4%
|
|
17%
|
|
Total
|
100%
|
100%
|
|
100%
|
|
a
|
Includes other steel
products: slabs and non-prime steel sales.
|
Statement of Financial Position and Liquidity:
On a consolidated basis, Stelco Holdings ended Q1 2020 with cash
of $232 million and $74 million
of borrowing capacity under ABL revolver at March 31, 2020.
The following table shows selected information regarding the Stelco
Holdings' consolidated balance sheet as at the noted dates:
(millions of Canadian
dollars)
|
|
|
As at
|
March 31,
2020
|
|
December 31,
2019
|
|
ASSETS
|
|
|
Cash
|
232
|
|
257
|
|
Trade and other
receivables
|
139
|
|
158
|
|
Inventories
|
378
|
|
483
|
|
Total current
assets
|
762
|
|
914
|
|
Total
assets
|
1,493
|
|
1,594
|
|
|
|
|
LIABILITIES
|
|
|
Trade and other
payables
|
346
|
|
444
|
|
Asset-based lending
facility
|
12
|
|
8
|
|
Obligations to
independent employee trusts
|
34
|
|
35
|
|
Total current
liabilities
|
419
|
|
521
|
|
|
|
|
Asset-based lending
facility
|
122
|
|
90
|
|
Obligations to
independent employee trusts
|
474
|
|
472
|
|
Total non-current
liabilities
|
657
|
|
623
|
|
Total
liabilities
|
1,076
|
|
1,144
|
|
|
|
|
Total
equity
|
417
|
|
450
|
|
Stelco Holdings and its subsidiaries ended Q1 2020 with current
assets of $762 million, which exceeded current liabilities of
$419 million by $343 million. Stelco Holdings'
liabilities include $508 million of obligations to independent
pension and OPEB trusts, which includes $396 million of
employee benefit commitments and $112 million under a mortgage
note payable associated with the June
2018 land purchase. Non-current liabilities of
$657 million as at March 31, 2020 include
$474 million of obligations to independent pension and OPEB
trusts. Stelco Holdings' consolidated equity totaled
$417 million at March 31, 2020.
COVID-19 Pandemic
In March 2020, the World Health
Organization declared the coronavirus (COVID-19) a global pandemic.
This contagious disease outbreak, which has continued to spread,
and related adverse public health developments, have adversely
affected workforces, economies, and financial markets globally,
potentially leading to an economic downturn. Global equity markets
have experienced significant volatility and weakness. Governments
and central banks have reacted with significant monetary and fiscal
interventions designed to stabilize economic conditions.
The extent to which these events may impact the Company's
business activities will depend on future developments, such as the
ultimate geographic spread of the disease, the duration of the
outbreak, travel restrictions, business disruptions, and the
effectiveness of actions taken in Canada and other countries to contain and
treat the disease. These events are highly uncertain and as such,
the Company cannot determine the ultimate financial impacts at this
time.
While it is currently unclear how quickly a broad-based market
recovery from COVID-19 will take place, we are confident that as
one of North America's most
technologically advanced steel companies we are well positioned to
succeed. Our tactical flexibility business model will ensure that
Stelco remains competitive, versatile and ready to capitalize on
the expected economic recovery across North America.
Organization Change
On March 9, 2020, Stelco Holdings
announced the appointment of Paul
Scherzer as the Company's Chief Financial Officer,
effective March 16, 2020.
Quarterly Results Conference Call
Stelco management will host a conference call to discuss its
results tomorrow, Wednesday, May 6,
2020, at 9:00 a.m. ET. To
access the call, please dial 1 (888) 390-0546 or 1 (416) 764-0688
and reference "Stelco". The conference call will also be webcasted
live on the Investor Relations section of Stelco's website at
https://www.stelco.com/investors. A presentation that will
accompany the conference call will also be available on the website
prior to the conference call. 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 May 6, 2020 until 11:59
p.m. ET on May 20, 2020 by
dialing 1 (888) 390-0541 or 1 (416) 764-8677 and using the pin
number 975751#.
Consolidated Financial Statements and Management's Discussion
and Analysis
The Company's unaudited interim condensed consolidated financial
statements for the period ended March 31, 2020, and
Management's Discussion & Analysis thereon are available under
the Company's profile on SEDAR at www.sedar.com.
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.
Non-IFRS Measures
This news 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
net income", "adjusted net income per share", ''adjusted EBITDA'',
''adjusted EBITDA per nt'', ''selling price per nt'', and
''shipping volume'' 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 these non-IFRS
measures, refer to the Company's "Non-IFRS Measures Reconciliation"
section below. For a definition of these non-IFRS measures, refer
to the Company's MD&A for the period ended March 31, 2020
available under the Company's profile on SEDAR at
www.sedar.com.
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 our
intention to continue making strategic investments in our business;
expectations that we will ship volumes during the second quarter of
2020 that are consistent with those of the first quarter of 2020;
expectations that our capital projects will be successful;
expectations that the Company's willingness to invest and innovate
will allow the Company to succeed; statements with respect to the
completion of the first phase of an upgrade and reline project at
our blast furnace facility at the Company's Lake Erie Works
facility; expectations that the blast furnace will produce
increased volumes of hot metal and result in reduced production
costs; expectations that these capital projects will position
Stelco for growth across both existing and new markets;
expectations regarding the anticipated production and shipment
timing that may be realized upon completion of the projects;
expectations regarding the future growth of our cold-rolled and
coated shipments, including galvanized; statements regarding the
Company's annualized run rate of 600,000 net tons of cold-rolled
and coated steel shipments; expectations that the iron ore
transactions with United States Steel Corporation will provide the
Company with a long-term supply of high-quality, low-cost iron-ore
pellets and that the option regarding the Minntac Mine will remain
highly valuable; and statements regarding our ability to succeed
despite the COVID-19 pandemic. 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 new capital projects on schedule and within
budget and their anticipated effect on revenue and costs; 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; our ability
to continue to access the U.S. market without any adverse trade
restrictions; upgrades to existing facilities remaining on schedule
and on budget and their anticipated effect on revenue and costs;
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.
Such forward-looking information is subject to known and unknown
risks, uncertainties, assumptions and other factors 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, 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
Company's annual information form dated February 18, 2020 and the Company's MD&A for
the period ended March 31, 2020
available under the Company's profile on SEDAR at
www.sedar.com.
Key Assumptions Underlying Our Shipping Volume
Estimates
The estimates with respect to our future shipping volumes
included in this press release are based on a number of
assumptions, including, but not limited to, the following material
assumptions; the Company's ability to continue to access the U.S.
market without any adverse trade restrictions; consistent demands
for steel in North America; no
significant additional legal or regulatory developments; no
material failure with respect to any of our operations; no changes
in economic conditions, or macro changes in the competitive
environment affecting our business activities; upgrades to existing
facilities and the construction of new facilities remaining on
schedule and within budget and their anticipated effect on revenue
and costs being fully realized; the Company's ability to attract
new customers and further develop and maintain existing customers;
currency exchange and interest rates; the impact of competition;
and growth in steel markets and industry trends. We note that: (i)
potential further changes to trade regulations in the United States; (ii) a failure by
Canada to implement the
Canada-U.S.-Mexico-Agreement on North American trade; and/or (iii)
the outcome of trade deliberations between the U.S. and
China could materially alter
underlying assumptions around anticipated shipping volumes and the
steel market, generally. In addition, the effect that the COVID-19
pandemic may have on the Company's future results of operations and
financial condition are highly unpredictable and it is possible
that the COVID-19 pandemic may have a material adverse effect on
the Company's ability to (i) operate at or near full capacity, (ii)
find customers that are willing to purchase our products at fair
market prices, and (iii) transport and deliver our products to
customers.
Key Assumptions Underlying the Blast Furnace Repair
The estimated budget, schedule and production volumes with
respect to the planned repair of our blast furnace at Lake Erie
Works referenced in this press release are based on a number of
assumptions, including, but not limited to, the following material
assumptions: our ability to enter into definitive agreements with
third party contractors and suppliers on terms acceptable to the
Company; expectations that third party contractors and suppliers
will deliver, construct and perform in accordance with agreed upon
budgets and schedules; our ability to obtain any applicable
regulatory approvals and permits required in connection with this
project; expectations that, upon completion, our facilities will
produce in accordance with anticipated design capacity;
expectations that the market for steel does not experience a
material adverse change in the short to medium term; expectations
that our customers will continue to purchase material volumes of
production upon completion of the project; the currently planned
blast furnace repair proceeding on schedule and, upon completion,
performing in such a manner so as to provide molten metal to meet
our production needs; and expectations that we will fully realize
current and future production levels at our Lake Erie Works
facility. In addition, the effect that the COVID-19 pandemic may
have on the Company's ability to complete the proposed blast
furnace repair is highly unpredictable and is subject to many
variables, including, but not limited to, the possibility that the
applicable contractors' may be impeded and/or restricted from
completing the work on schedule and within the budget.
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.
Selected Financial Information
The following includes financial information prepared by
management in accordance with IFRS. This financial information does
not contain all disclosures required by IFRS, and accordingly
should be read in conjunction with Stelco Holdings Inc.'s
Consolidated Financial Statements and MD&A for the period ended
March 31, 2020, which is available on the Company's website
and on SEDAR (www.sedar.com).
Stelco Holdings Inc.
Consolidated Statements of Income
(unaudited)
|
Three months ended
March 31,
|
(millions of Canadian
dollars)
|
2020
|
|
2019
|
Revenue from sale of
goods
|
$
|
445
|
|
$
|
515
|
Cost of goods
sold
|
429
|
|
457
|
Gross
profit
|
16
|
|
58
|
Selling, general and
administrative expenses
|
9
|
|
14
|
Operating
income
|
7
|
|
44
|
|
|
|
Other income
(loss) and (expenses)
|
|
|
Finance
costs
|
(33)
|
|
(3)
|
Finance and other
income
|
4
|
|
3
|
Restructuring and
other costs
|
(1)
|
|
—
|
Share of loss from
joint ventures
|
(1)
|
|
(1)
|
Income (loss)
before income taxes
|
(24)
|
|
43
|
Income tax
expense
|
—
|
|
—
|
Net income
(loss)
|
$
|
(24)
|
|
$
|
43
|
Stelco Holdings Inc.
Consolidated Balance Sheets
(In millions of Canadian dollars) (unaudited)
As at
|
March 31,
2020
|
December 31,
2019
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
Cash
|
$
|
232
|
$
|
257
|
Restricted
cash
|
7
|
8
|
Trade and other
receivables
|
139
|
158
|
Inventories
|
378
|
483
|
Prepaid
expenses
|
6
|
8
|
Total current
assets
|
$
|
762
|
$
|
914
|
|
|
|
Non-current
assets
|
|
|
Property, plant and
equipment, net
|
722
|
670
|
Intangible
assets
|
7
|
7
|
Investment in joint
ventures
|
2
|
3
|
Total non-current
assets
|
$
|
731
|
$
|
680
|
Total
assets
|
$
|
1,493
|
$
|
1,594
|
|
|
|
LIABILITIES
|
|
|
Current
liabilities
|
|
|
Trade and other
payables
|
$
|
346
|
$
|
444
|
Other
liabilities
|
27
|
34
|
Asset-based lending
facility
|
12
|
8
|
Obligations to
independent employee trusts
|
34
|
35
|
Total current
liabilities
|
$
|
419
|
$
|
521
|
|
|
|
Non-current
liabilities
|
|
|
Provisions
|
6
|
6
|
Pension
benefits
|
8
|
7
|
Other
liabilities
|
47
|
48
|
Asset-based lending
facility
|
122
|
90
|
Obligations to
independent employee trusts
|
474
|
472
|
Total non-current
liabilities
|
$
|
657
|
$
|
623
|
Total
liabilities
|
$
|
1,076
|
$
|
1,144
|
|
|
|
EQUITY
|
|
|
Common
shares
|
512
|
512
|
Accumulated
deficit
|
(95)
|
(62)
|
Total
equity
|
$
|
417
|
$
|
450
|
Total liabilities
and equity
|
$
|
1,493
|
$
|
1,594
|
Non-IFRS Measures Results
The following table provides a reconciliation of net income
(loss) to adjusted net income (loss) for the period indicated:
|
Three months ended
March 31,
|
(millions of Canadian
dollars)
|
2020
|
2019
|
Net income
(loss)
|
$
|
(24)
|
$
|
43
|
Add
back/(Deduct):
|
|
|
Restructuring and
other costs 1
|
1
|
—
|
Transaction-based and
other corporate-related costs 2
|
1
|
—
|
Unrealized gain on
commodity-based swap
|
(2)
|
—
|
Share-based
compensation expense (recovery) 3
|
(1)
|
2
|
Remeasurement of
employee benefit commitment 4
|
(1)
|
(7)
|
Tariff related
costs
|
—
|
13
|
Separation costs
related to USS support services
|
—
|
5
|
Carbon tax
expense
|
—
|
3
|
Property related idle
costs included in cost of goods sold
|
—
|
1
|
Adjusted net
income (loss)
|
$
|
(26)
|
$
|
60
|
1
|
Restructuring and
other costs include certain building demolition costs, employee
termination benefits and consulting costs.
|
2
|
Represents certain
non-routine items that include, but are not limited to,
professional fees, including those connected with Stelco Inc.'s
withdrawn proposed senior secured notes offering during September
2019.
|
3
|
Share-based
compensation consists of costs (recovery) connected with share
options awarded to certain members of the Company's executive
senior leadership team during the period.
|
4
|
Remeasurement of
employee benefit commitment for change in the timing of estimated
cash flows and future funding requirements.
|
The following table provides a reconciliation of net income
(loss) to adjusted EBITDA for the periods indicated:
|
Three months ended
March 31,
|
(millions of Canadian
dollars, except where otherwise noted)
|
2020
|
2019
|
Net income
(loss)
|
$
|
(24)
|
$
|
43
|
Add
back/(Deduct):
|
|
|
Finance
costs
|
33
|
3
|
Depreciation
|
13
|
8
|
Restructuring and
other costs 1
|
1
|
—
|
Transaction-based and
other corporate-related costs 2
|
1
|
—
|
Unrealized gain on
commodity-based swap
|
(2)
|
—
|
Share-based
compensation 3
|
(1)
|
2
|
Finance
income
|
(1)
|
(2)
|
Tariff related
costs
|
—
|
13
|
Separation costs
related to USS support services
|
—
|
5
|
Carbon tax
expense
|
—
|
3
|
Property related idle
costs included in cost of goods sold
|
—
|
1
|
Adjusted
EBITDA
|
$
|
20
|
$
|
76
|
|
|
|
Adjusted EBITDA as
a percentage of total revenue
|
4%
|
15%
|
1
|
Restructuring and
other costs include certain employee termination benefits,
consulting and demolition costs.
|
2
|
Represents certain
non-routine items that include, but are not limited to,
professional fees, including those connected with Stelco Inc.'s
withdrawn proposed senior secured notes offering during September
2019.
|
3
|
Share-based
compensation consists of costs (recovery) connected with share
options awarded to certain members of the Company's executive
senior leadership team during the period.
|
SOURCE Stelco