Tree Island Steel Announces Q2 2017 Results

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/03/17 --

Q2 2017 Financial Highlights(1)
      Revenues increased by 0.4% to $61.5 when excluding the stainless
      product lines from the comparison against last year
      Volumes decreased by 8.9% to 45,636 tons when excluding the stainless
      product lines from the comparison against last year(2)
      Gross profit amounted to $5.9 million
      EBITDA totalled $2.4 million

YTD 2017 Financial Highlights
      Revenues increased by 4.3% to $124.5 million when excluding the
      stainless product lines from the comparison against last year
      Volumes increased by 3.1% to 96,972 tons when excluding the stainless
      product lines from the comparison against last year
      Gross profit amounted to $13.4 million
      EBITDA totalled $6.6 million

Tree Island Steel Ltd. ("Tree Island" or the "Company") (TSX: TSL) announced today its financial results for the three-month and six-month periods ended June 30, 2017.

For the three-month period ended June 30, 2017, revenues decreased by 6.0% to $61.5 million versus $65.4 million during the corresponding period in 2016 on account of competitive pressures in a softer than expected market. Excluding the stainless product lines from the comparison, revenues increased slightly over the same period last year. Gross profit for the three months amounted to $5.9 million versus $11.5 million during the same period in 2016 due to the continued impact of average selling prices lagging the rapid increase in input costs earlier in the year. As a result, gross margin in the quarter was 9.7% compared to 17.6% in the same period last year. The lower gross profit resulted in EBITDA amounting to $2.4 million versus $7.9 million during the second quarter of 2016.

For the six-month period ended June 30, 2017 revenues decreased by 2.5% to $124.5 million versus $127.6 million during the corresponding period in 2016 reduced by the disposition of the stainless product lines in late 2016. Excluding the Specialty product lines from the comparison against last year, volume and revenues improved by 3.1% and 4.3% over the same period last year, respectively. Gross profit for the six months was $13.4 million and the gross margin was 10.8%. EBITDA for the first six months amounted to $6.6 million.

"We continue to face adverse market conditions brought about by intense competition, which is tempering the ability of steel wire producers to adjust prices to better reflect the recent raw material price increases," noted Dale R. MacLean, President and CEO. "The result is a compression in the gross margin during the quarter. Nonetheless, we are undeterred by the current conditions as we remain confident in our long-term plans and our ability to manage our resources appropriately to continue to grow the business."

"This current cycle of compressed margins has posed a challenge for the industry," said Amar S. Doman, Chairman of Tree Island Steel Ltd. "Our focus will be to overcome our current challenges while maintaining focus to deliver long-term profitable growth."

Summary of Results
($'000 unless otherwise stated)
                                     Three Months Ended    Six Months Ended
                                               June 30,            June 30,
                                    ----------------------------------------
                                         2017      2016      2017      2016
                                    ----------------------------------------

Revenue                                61,455    65,384   124,495   127,624
  Cost of sales                       (54,694)  (53,033) (109,422) (103,438)
  Depreciation                           (818)     (827)   (1,634)   (1,653)
                                    ----------------------------------------
Gross profit                            5,943    11,524    13,439    22,533
  Selling, general and
   administrative expenses             (4,325)   (4,812)   (8,547)   (9,695)
                                    ----------------------------------------
Operating income                        1,618     6,712     4,892    12,838
  Foreign exchange gain (loss)            (61)      319        36        79
  Gain (loss) on sale of property,
   plant and equipment                    (27)        -       (74)        -
  Changes in financial liabilities
   recognized at fair value               246       380       256       830
  Financing expenses                     (725)     (721)   (1,436)   (1,437)
                                    ----------------------------------------
Income before income taxes              1,051     6,690     3,674    12,310
  Income tax (expense) recovery          (316)     (330)   (1,189)     (723)
                                    ----------------------------------------
Net income (loss)                         735     6,360     2,485    11,587
                                    ----------------------------------------
                                    ----------------------------------------

Operating Income                        1,618     6,712     4,892    12,838
  Add back depreciation                   818       827     1,634     1,653
  Foreign exchange gain (loss)            (61)      319        36        79
                                    ----------------------------------------
EBITDA(3)                               2,375     7,858     6,562    14,570
                                    ----------------------------------------
                                    ----------------------------------------

Net income per share                     0.02      0.20      0.08      0.37
Dividends per share                      0.02      0.02      0.02      0.02

Sales volume (tons)(4)                 45,636    50,997    96,972    95,765
Gross profit per ton ($/ton)              130       226       139       235
EBITDA per ton ($/ton)                     52       154        68       152

                                                      June 30,  December 31,
Financial Position as at:                                 2017          2016
                                                   -------------------------

Total Assets                                           150,660       137,455
Total non-current financial liabilities                 18,869        19,090

About Tree Island Steel

Tree Island Steel, headquartered in Richmond, British Columbia, since 1964, through its four 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® and Tough Strand® 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 statements, prospective investors should specifically consider various factors including the risks outlined in the Company's most recent annual information form and management discussion and analysis 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, the cyclical nature of our business and demand for our products, financial condition of our customers, competition, volume and price pressure from import competition, deterioration in the Company's liquidity, disruption in the supply of raw materials, volatility in the costs of raw materials, transportation costs, foreign exchange fluctuations, leverage and restrictive covenants, labour relations, trade actions, dependence on key personnel and skilled workers, intellectual property risks, energy costs, un-insured loss, credit risk, operating risk, management of growth, changes in tax, environmental and other legislation, 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.

(1)  Please refer to our Q2 2017 MD&A for further information.
(2)  On September 30, 2016, the Company divested the stainless business
     assets.
(3)  See definition of EBITDA in Section 2 NON-IFRS MEASURES of the Q2 2017
     MD&A.
(4)  Sales volume excludes tons which were processed as part of tolling
     arrangements.

Contacts:
Tree Island Steel Ltd.
Ali Mahdavi
Investor Relations
(416) 962-3300
[email protected]
www.treeisland.com

Source: Tree Island Steel Ltd.

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