Stelco Holdings Inc. Reports Fourth Quarter and Full Year 2023 Results
NOT FOR DISTRIBUTION TO
-
Revenue of
$613 million for the quarter, down 9% from Q4 2022 and 21% from Q3 2023 -
Operating loss of
$16 million for the quarter -
Adjusted EBITDA* of
$51 million , down 38% from Q4 2022 and 67% from Q3 2023, representing an 8% margin -
Adjusted Net Income* of
$9 million and Adjusted Net Income per common share* of$0.16 , down 72% from Q4 2022 and 88% from Q3 2023 - Shipping Volume* of 609 thousand tons, down 9% from Q4 2022 and 8% from Q3 2023
-
Average Selling Price* per net ton of
$941 , down 2% from Q4 2022 and 13% from Q3 2023 -
Quarterly dividend increased by almost 20% to
$0.50 per share, payable onMarch 7, 2024 - Plans to commence NCIB to purchase up to 3,344,684 common shares
Selected Financial Information
(in millions Canadian dollars, except volume, per share and net tons (nt) figures) |
Q4 2023 |
Q4 2022 |
Change |
Q3 2023 |
Change |
2023 |
2022 |
Change |
Revenue ($) |
613 |
674 |
(9%) |
776 |
(21%) |
2,917 |
3,463 |
(16%) |
Operating income (loss) ($) |
(16) |
47 |
NM |
121 |
NM |
309 |
1,085 |
(72%) |
Net income (loss) ($) |
(25) |
23 |
NM |
68 |
NM |
149 |
997 |
(85%) |
Adjusted Net Income ($) * |
9 |
32 |
(72%) |
76 |
(88%) |
218 |
819 |
(73%) |
|
|
|
|
|
|
|
|
|
Net income (loss) per common share (diluted) ($) |
(0.45) |
0.39 |
NM |
1.23 |
NM |
2.70 |
14.64 |
(82%) |
Adjusted Net Income per common share (diluted) ($) * |
0.16 |
0.55 |
(71%) |
1.38 |
(88%) |
3.95 |
12.02 |
(67%) |
|
|
|
|
|
|
|
|
|
Average Selling Price per nt ($)* |
941 |
963 |
(2%) |
1,083 |
(13%) |
1,051 |
1,261 |
(17%) |
Shipping Volume (in thousands of nt) * |
609 |
670 |
(9%) |
661 |
(8%) |
2,618 |
2,627 |
—% |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA ($) * |
51 |
82 |
(38%) |
153 |
(67%) |
484 |
1,193 |
(59%) |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per nt ($) * |
84 |
122 |
(31%) |
231 |
(64%) |
185 |
454 |
(59%) |
* See "Non-IFRS measures" for a description of certain Non-IFRS measures used in this Press Release and “Non-IFRS Measures Reconciliation” below. |
||||||||
NM - Not Meaningful |
“Our fourth quarter results were down over the previous quarter, but we do expect improved margins in Q1 and into Q2 2024, as we begin to realize the higher market pricing that we saw in the latter part of 2023,” said
“Our Average Selling Price declined 13% quarter-over-quarter which, combined with a scheduled maintenance outage that had an impact on our shipments for the fourth quarter, led to a decline in Adjusted EBITDA to
“Entering Q1 2024, we anticipate a return to Shipping Volume of approximately 625 thousand to 675 thousand net tons and an improvement in Adjusted EBITDA due to the realization of more favourable pricing witnessed through much of the fourth quarter,” continued Scherzer. “Overall, we are pleased with what we were able to accomplish through 2023 and anticipate a continuation of our successful track record of delivering positive results and strong returns for all our stakeholders.”
Fourth Quarter 2023 Financial Review
Compared to Q4 2022
Q4 2023 revenue decreased
The Company realized an operating loss of
Finance costs decreased by
The Company realized a net loss of
Adjusted EBITDA in Q4 2023 totaled
Compared to Q3 2023
Q4 2023 revenue decreased
The Company realized an operating loss of
Full Year 2023 Financial Review
Revenue for 2023 decreased
Operating income for the year decreased
Finance costs increased
Net income for the year was
Adjusted EBITDA in 2023 totaled
Summary of Net Tons Shipped by Product
(in thousands of nt)
Tons Shipped by Product |
Q4 2023 |
Q4 2022 |
Change |
Q3 2023 |
Change |
2023 |
2022 |
Change |
Hot-rolled |
421 |
480 |
(12%) |
471 |
(11%) |
1,879 |
1,881 |
—% |
Coated |
82 |
80 |
3% |
95 |
(14%) |
361 |
345 |
5% |
Cold-rolled |
49 |
56 |
(13%) |
51 |
(4%) |
207 |
192 |
8% |
Other 1 |
57 |
54 |
6% |
44 |
30% |
171 |
209 |
(18%) |
Total |
609 |
670 |
(9%) |
661 |
(8%) |
2,618 |
2,627 |
—% |
|
|
|
|
|
|
|
|
|
Shipments by Product (%) |
|
|
|
|
|
|
|
|
Hot-rolled |
69% |
72% |
|
71% |
|
72% |
72% |
|
Coated |
13% |
12% |
|
14% |
|
14% |
13% |
|
Cold-rolled |
8% |
8% |
|
8% |
|
8% |
7% |
|
Other 1 |
10% |
8% |
|
7% |
|
6% |
8% |
|
Total |
100% |
100% |
|
100% |
|
100% |
100% |
|
1 Includes other steel products: pig iron and non-prime steel sales. |
Statement of Financial Position and Liquidity
On a consolidated basis, the Company ended the period with total liquidity of
(millions of Canadian dollars) |
|
|
||
As at |
|
|
||
ASSETS |
|
|
||
Cash |
645 |
809 |
||
Trade and other receivables |
185 |
147 |
||
Inventories |
832 |
789 |
||
Total current assets |
1,696 |
1,796 |
||
|
|
|
||
Property, plant and equipment, net |
1,263 |
1,199 |
||
Deferred tax asset |
3 |
2 |
||
Total non-current assets |
1,369 |
1,335 |
||
Total assets |
3,065 |
3,131 |
||
|
|
|
||
LIABILITIES |
|
|
||
Trade and other payables |
780 |
663 |
||
Other liabilities |
73 |
83 |
||
Asset-based lending facility |
15 |
15 |
||
Income taxes payable |
2 |
2 |
||
Obligations to independent employee trusts |
45 |
143 |
||
Total current liabilities |
915 |
906 |
||
|
|
|
||
Other liabilities |
429 |
404 |
||
Asset-based lending facility |
38 |
54 |
||
Deferred tax liability |
58 |
18 |
||
Obligations to independent employee trusts |
298 |
315 |
||
Total non-current liabilities |
854 |
820 |
||
Total liabilities |
1,769 |
1,726 |
||
|
|
|
||
Total equity |
1,296 |
1,405 |
Normal Course Issuer Bid
The Company has received approval from the
The maximum number of common shares that may be repurchased for cancellation under the NCIB represents approximately 10% of the Company’s public float as of
The board of directors of the Company believes that the underlying value of the Company may not be reflected in the market price of the common shares from time to time and that, accordingly, the purchase of common shares will increase the proportionate interest in the Company of, and be advantageous to, all remaining shareholders of
Repurchases will be made through the facilities of the TSX as well as through other designated exchanges and alternative trading systems in
The Company’s most recent normal course issuer bid (the “2023 NCIB”) commenced on
Declaration of Quarterly Dividend
The regular quarterly dividend has been designated as an "eligible dividend" for purposes of the Income Tax Act (
Quarterly Results Conference Call
Consolidated Financial Statements and Management’s Discussion and Analysis
The Company’s consolidated financial statements for the year ended
About
Non-IFRS Measures
This press release refers to certain non-IFRS measures that are not recognized under International Financial Reporting Standards ("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 common share," "Adjusted EBITDA," "Adjusted EBITDA per nt," "Average 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 year ended
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, acquisitions, opportunities, budgets, operations, financial results, taxes, dividend policy, Average Selling Prices, Shipping Volume, Adjusted EBITDA margins, 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", "goal", "scheduled", "estimates", "outlook", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates" or "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 press release includes: statements regarding expected higher market pricing for steel; statements regarding expected continued strong market demand for steel; statements regarding future cash generation and delivering positive results and strong returns to stakeholders; expectations regarding expected Shipping Volume and Adjusted EBITDA in the first quarter of 2024 and improved Adjusted EBITDA margins during the first and second quarters of 2024; statements regarding our dividend policy; statements regarding the NCIB and that any purchase of common shares by the Company thereunder will result in a proportionate interest in the Company of, and be advantageous to, all remaining shareholders.
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 the utilization of and access to our production capacity; capital expenditures associated with accessing such production capacity; the ongoing impact of global conflicts on the international supply chain and economy overall; the impact of
Key Assumptions Underlying our Q1 2024 Shipping Volume Estimates and Adjusted EBITDA Estimates and H1 2024 Adjusted EBITDA Margins
The estimates with respect to our Shipping Volumes and Adjusted EBITDA during the first quarter of 2024 and Adjusted EBITDA margins during the first half of 2024 referenced in this press release are based on a number of assumptions in addition to the foregoing 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; no significant legal or regulatory developments, no adverse changes in economic conditions, or macro changes in the competitive environment affecting our business activities; upgrades to existing facilities remaining on schedule and on 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 not having an adverse impact on steel demand; the impact of competition; and growth in steel markets and industry trends.
We believe that our performance and our ability to achieve these shipments during the first quarter of 2024 depend on a number of material factors including: (i) growth in global demand; (ii) steel production capacity curtailments in
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 press release and are subject to change after such date.
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 year ended
Consolidated Statements of Income
|
Three months ended |
Years ended |
|||||||||||||
(millions of Canadian dollars) |
2023 |
2022 |
2023 |
2022 |
|||||||||||
Revenue from sale of goods |
$ |
613 |
|
$ |
674 |
|
$ |
2,917 |
|
$ |
3,463 |
|
|||
Cost of goods sold |
|
586 |
|
|
601 |
|
|
2,517 |
|
|
2,303 |
|
|||
Gross profit |
|
27 |
|
|
73 |
|
|
400 |
|
|
1,160 |
|
|||
|
|
|
|
|
|||||||||||
Selling, general and administrative expenses |
|
43 |
|
|
26 |
|
|
91 |
|
|
75 |
|
|||
Operating income (loss) |
|
(16 |
) |
|
47 |
|
|
309 |
|
|
1,085 |
|
|||
|
|
|
|
|
|||||||||||
Finance costs |
|
(18 |
) |
|
(26 |
) |
|
(110 |
) |
|
(78 |
) |
|||
Other costs |
|
(2 |
) |
|
(3 |
) |
|
(11 |
) |
|
(15 |
) |
|||
Finance and other income |
|
— |
|
|
10 |
|
|
9 |
|
|
7 |
|
|||
Share of income from joint ventures |
|
2 |
|
|
— |
|
|
2 |
|
|
1 |
|
|||
Gain on sale of land and buildings |
|
— |
|
|
— |
|
|
— |
|
|
260 |
|
|||
Income (Loss) before income taxes |
|
(34 |
) |
|
28 |
|
|
199 |
|
|
1,260 |
|
|||
|
|
|
|
|
|||||||||||
Current income tax expense (recovery) |
|
(19 |
) |
|
(26 |
) |
|
11 |
|
|
171 |
|
|||
Deferred income tax expense |
|
10 |
|
|
31 |
|
|
39 |
|
|
92 |
|
|||
Net income (loss) |
$ |
(25 |
) |
$ |
23 |
|
$ |
149 |
|
$ |
997 |
|
Consolidated Balance Sheets
(millions of Canadian dollars)
As at |
|
|
||||
ASSETS |
|
|
||||
Current assets |
|
|
||||
Cash |
$ |
645 |
$ |
809 |
||
Restricted cash |
|
10 |
|
9 |
||
Trade and other receivables |
|
185 |
|
147 |
||
Inventories |
|
832 |
|
789 |
||
Prepaid expenses and deposits |
|
24 |
|
42 |
||
Total current assets |
$ |
1,696 |
$ |
1,796 |
||
|
|
|
||||
Non-current assets |
|
|
||||
Derivative asset |
|
71 |
|
108 |
||
Property, plant and equipment, net |
|
1,263 |
|
1,199 |
||
Intangible assets |
|
13 |
|
8 |
||
Investment in joint ventures |
|
19 |
|
18 |
||
Deferred tax asset |
|
3 |
|
2 |
||
Total non-current assets |
$ |
1,369 |
$ |
1,335 |
||
Total assets |
$ |
3,065 |
$ |
3,131 |
||
|
|
|
||||
LIABILITIES |
|
|
||||
Current liabilities |
|
|
||||
Trade and other payables |
$ |
780 |
$ |
663 |
||
Other liabilities |
|
73 |
|
83 |
||
Asset-based lending facility |
|
15 |
|
15 |
||
Income taxes payable |
|
2 |
|
2 |
||
Obligations to independent employee trusts |
|
45 |
|
143 |
||
Total current liabilities |
$ |
915 |
$ |
906 |
||
|
|
|
||||
Non-current liabilities |
|
|
||||
Provisions |
|
18 |
|
18 |
||
Pension benefits |
|
13 |
|
11 |
||
Other liabilities |
|
429 |
|
404 |
||
Asset-based lending facility |
|
38 |
|
54 |
||
Deferred tax liability |
|
58 |
|
18 |
||
Obligations to independent employee trusts |
|
298 |
|
315 |
||
Total non-current liabilities |
$ |
854 |
$ |
820 |
||
Total liabilities |
$ |
1,769 |
$ |
1,726 |
||
|
|
|
||||
EQUITY |
|
|
||||
Common shares |
|
318 |
|
318 |
||
Retained earnings |
|
978 |
|
1,087 |
||
Total equity |
$ |
1,296 |
$ |
1,405 |
||
Total liabilities and equity |
$ |
3,065 |
$ |
3,131 |
Non-IFRS Measures Reconciliation
The following table provides a reconciliation of net income (loss) to Adjusted Net Income for the periods indicated:
|
Three months ended |
Years ended |
||||||||||||||
(millions of Canadian dollars) |
2023 |
2022 |
2023 |
2022 |
||||||||||||
Net income (loss) |
$ |
(25 |
) |
$ |
23 |
|
$ |
149 |
|
$ |
997 |
|
||||
Add back (Deduct) following items: |
|
|
|
|
||||||||||||
Share-based compensation 1 |
|
27 |
|
|
7 |
|
|
39 |
|
|
13 |
|
||||
Loss (Gain) on derivative asset |
|
11 |
|
|
3 |
|
|
37 |
|
|
18 |
|
||||
Other costs 2 |
|
2 |
|
|
3 |
|
|
11 |
|
|
15 |
|
||||
Transaction-based and other corporate-related costs |
|
5 |
|
|
2 |
|
|
8 |
|
|
4 |
|
||||
Remeasurement of employee benefit commitment 3 |
|
— |
|
|
(3 |
) |
|
(3 |
) |
|
(2 |
) |
||||
Gain on sale of land and buildings |
|
— |
|
|
— |
|
|
— |
|
|
(260 |
) |
||||
Total adjusted items before tax |
|
45 |
|
|
12 |
|
|
92 |
|
|
(212 |
) |
||||
Tax impact of above items |
|
(11 |
) |
|
(3 |
) |
|
(23 |
) |
|
34 |
|
||||
Total adjusted items after tax |
|
34 |
|
|
9 |
|
|
69 |
|
|
(178 |
) |
||||
Adjusted Net Income |
$ |
9 |
|
$ |
32 |
|
$ |
218 |
|
$ |
819 |
|
||||
1. Share-based compensation consists of costs connected with the Company's Total Shareholder Return Based Incentive Program and other share-based compensation plans. |
||||||||||||||||
2. Other costs includes the write-down of certain capital projects that are no longer being pursued by the Company, representing aborted construction in progress costs without future benefit to |
||||||||||||||||
3. Remeasurement of employee benefit commitment for change in the timing of projected cash flows and future funding requirements. |
The following table provides a reconciliation of net income (loss) to Adjusted EBITDA for the periods indicated:
(millions of Canadian dollars, except where otherwise noted) |
Three months ended |
Years ended |
||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
Net income (loss) |
$ |
(25 |
) |
$ |
23 |
|
$ |
149 |
|
$ |
997 |
|
||||
Add back (Deduct) following items: |
|
|
|
|
||||||||||||
Depreciation |
|
32 |
|
|
26 |
|
|
124 |
|
|
90 |
|
||||
Finance costs |
|
18 |
|
|
26 |
|
|
110 |
|
|
78 |
|
||||
Income tax expense (recovery): |
|
|
|
|
||||||||||||
Current |
|
(19 |
) |
|
(26 |
) |
|
11 |
|
|
171 |
|
||||
Deferred |
|
10 |
|
|
31 |
|
|
39 |
|
|
92 |
|
||||
Finance income and other |
|
(10 |
) |
|
(13 |
) |
|
(44 |
) |
|
(25 |
) |
||||
Share-based compensation 1 |
|
27 |
|
|
7 |
|
|
39 |
|
|
13 |
|
||||
Loss (Gain) on derivative asset |
|
11 |
|
|
3 |
|
|
37 |
|
|
18 |
|
||||
Other costs 2 |
|
2 |
|
|
3 |
|
|
11 |
|
|
15 |
|
||||
Transaction-based and other corporate-related costs |
|
5 |
|
|
2 |
|
|
8 |
|
|
4 |
|
||||
Gain on sale of land and buildings |
|
— |
|
|
— |
|
|
— |
|
|
(260 |
) |
||||
Adjusted EBITDA |
$ |
51 |
|
$ |
82 |
|
$ |
484 |
|
$ |
1,193 |
|
||||
|
|
|
|
|
||||||||||||
Adjusted EBITDA as a percentage of total revenue |
|
8 |
% |
|
12 |
% |
|
17 |
% |
|
34 |
% |
||||
1. Share-based compensation consists of costs connected with the Company's Total Shareholder Return Based Incentive Program and other share-based compensation plans. |
||||||||||||||||
2. Other costs includes the write-down of certain capital projects that are no longer being pursued by the Company, representing aborted construction in progress costs without future benefit to |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240221801248/en/
For Further Information
For investor enquiries:
For media enquiries:
Source: