Tree Island Steel Announces Second Quarter 2024 Results
02 August 2024 - 6:30AM
Tree Island Steel (''Tree Island'' or the ''Company'') (TSX: TSL)
announced today its financial results for the three months ended
June 30, 2024.
For the three-month period ended June 30, 2024,
revenues, net of freight and distribution costs, decreased by $9.6
million to $54.0 million, compared to $63.6 million in 2023. Gross
profit for the quarter decreased to $4.6 million, from $9.1 million
in the same period in 2023. Adjusted EBITDA amounted to $2.9
million, compared to $6.8 million during the same period in 2023.
The largest drivers for the decreased earnings are the lower
average selling prices and reduced spread over raw material costs.
To a lesser extent, the shutdown of Etiwanda facility last year
also impacted the volumes and revenue.
For the six months ended June 30, 2024,
revenues, net of freight and distribution costs, decreased by $28.4
million to $110.5 million compared to $138.9 million in 2023 and
gross profit decreased to $9.4 million from $20.9 million. The
decrease is for the same factors as in the quarter. This resulted
in an Adjusted EBITDA of $6.0 million, compared to $16.6 million
during the same period in 2023.
“The first half of the year was challenged with
customers conservatively managing their inventories and selling
prices trending lower, resulting in further compression in our
gross profit margins. We expect these headwinds to continue into
the second half of the year. The Company is continuing to address
operational challenges that have the potential to impact its future
operating results and cashflows, including the ongoing trade cases
in Canada and the US and increasing environmental and regulatory
compliance requirements. As noted last quarter, these market
conditions require careful management to maintain the Company’s
operating results,” commented Nancy Davies, Chief Operating Officer
of Tree Island Steel.
RESULTS FROM OPERATIONS |
|
Three Months Ended |
|
Six Months Ended |
($'000 unless otherwise stated) |
June 30, |
|
June 30, |
|
2024 |
|
2023 |
|
|
2024 |
|
2023 |
|
Revenue |
57,718 |
|
67,263 |
|
|
118,308 |
|
147,011 |
|
Freight and distribution costs |
(3,732 |
) |
(3,672 |
) |
|
(7,769 |
) |
(8,150 |
) |
Subtotal |
53,986 |
|
63,591 |
|
|
110,539 |
|
138,861 |
|
Cost of sales |
(48,013 |
) |
(53,304 |
) |
|
(98,421 |
) |
(115,461 |
) |
Depreciation |
(1,365 |
) |
(1,205 |
) |
|
(2,682 |
) |
(2,534 |
) |
Gross profit |
4,608 |
|
9,082 |
|
|
9,436 |
|
20,866 |
|
Selling, general and administrative expenses |
(3,288 |
) |
(3,352 |
) |
|
(6,679 |
) |
(6,836 |
) |
Operating income |
1,320 |
|
5,730 |
|
|
2,757 |
|
14,030 |
|
Foreign exchange gain (loss) |
202 |
|
(125 |
) |
|
584 |
|
18 |
|
Loss on disposition of property, plant and equipment disposal |
‐ |
|
(31 |
) |
|
‐ |
|
(97 |
) |
Site closure costs |
‐ |
|
(1,040 |
) |
|
‐ |
|
(1,340 |
) |
Reorganization costs |
(11 |
) |
(2097 |
) |
|
(11 |
) |
(2,097 |
) |
Interest Income |
128 |
|
253 |
|
|
335 |
|
390 |
|
Financing Expenses |
(568 |
) |
(371 |
) |
|
(1,128 |
) |
(807 |
) |
Income before income taxes |
1,071 |
|
2,319 |
|
|
2,537 |
|
10,097 |
|
Income tax expense |
(461 |
) |
(668 |
) |
|
(1,301 |
) |
(2,596 |
) |
Net income |
610 |
|
1,651 |
|
|
1,236 |
|
7,501 |
|
Net income per share |
0.02 |
|
0.06 |
|
|
0.05 |
|
0.27 |
|
Dividends per share |
0.03 |
|
0.05 |
|
|
0.06 |
|
0.10 |
|
|
|
|
|
|
|
|
|
June 30, |
|
|
|
|
December 31, |
|
Financial position as at: |
|
2024 |
|
|
|
2023 |
|
Total assets |
|
173,583 |
|
|
|
174,260 |
|
Total non‐current financial liabilities |
|
30,312 |
|
|
|
28,439 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
($'000 unless otherwise stated) |
June 30, |
|
June 30, |
|
2024 |
|
2023 |
|
|
2024 |
|
2023 |
|
Operating income 5,730 |
1,320 |
|
5,730 |
|
|
2,757 |
|
14,030 |
|
Add back depreciation |
1,365 |
|
1,205 |
|
|
2,682 |
|
2,534 |
|
Foreign exchange (loss) gain |
202 |
|
(125 |
) |
|
584 |
|
18 |
|
Adjusted EBITDA1 |
2,887 |
|
6,810 |
|
|
6,023 |
|
16,582 |
|
|
|
|
|
|
|
1 See definition on Adjusted EBITDA in Section 2 NON‐IFRS
MEASURES of the June 30, 2024, 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, 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 RelationsTree Island Steel(416) 962-3300e-mail:
amahdavi@treeisland.comWebsite: www.treeisland.com
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