Tree Island Steel Announces Q3 2017 Results

VANCOUVER, BRITISH COLUMBIA–(Marketwired – Nov. 2, 2017) – Tree Island Steel Ltd. (“Tree Island” or the “Company”) (TSX:TSL) announced today its financial results for the three-month and nine-month periods ended September 30, 2017.

For the three month period ended September 30, 2017, revenues increased 2.8% over the same period last year when excluding the stainless product lines from the comparison, which were divested in late 2016. Inclusive of the stainless product lines, revenues decreased by 3.6% to .6 million versus .7 million during the corresponding period in 2016. Gross profit for the three months amounted to .3 million versus .6 million during the same period in 2016 due to the continued compression between selling price and input costs. As a result, gross margin in the quarter was 4.1%. The lower gross profit resulted in EBITDA amounting to (.5) million versus .4 million during the third quarter of 2016.

For the nine-month period ended September 30, 2017 volume and revenues improved by 2.4% and 4.1% over the same period last year, respectively, when excluding the stainless product lines from the comparisons. Inclusive of the stainless product lines, revenues decreased by 2.8% to 0.1 million versus 5.4 million during the corresponding period in 2016. For the nine month period, Gross profit was .7 million (representing a gross margin of 8.7%) and EBITDA amounted to .1 million.

“The third quarter followed a continuation of industry wide pressures on margins driven by higher raw material input costs and an aggressive pricing environment,” said Dale R. MacLean, President and CEO. “Raw material prices for rod and zinc, which make up the majority of the production costs for manufacturers like us, continued to trend upward at a much more rapid pace than corresponding price adjustments for finished goods. Over time, we anticipate market conditions to be in better balance as we work through this current industry cycle.”

“The past six months has been a very challenging time for our industry with rapid increases in input costs and stagnant prices for finished goods,” noted Amar S. Doman, Chairman of Tree Island Steel Ltd. “We will continue our focus on long‐term profitable growth as a guiding principle when addressing this malaise and further strengthen the Company for optimal performance as we navigate through this cycle and return to more normalized margin and operating patterns.”

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 Q3 2017 MD&A for further information.

⁽²⁾ The comparison excludes the stainless product lines, which were divested on September 30, 2016.

⁽³⁾ See definition of EBITDA in Section 2 NON-IFRS MEASURES of the Q3 2017 MD&A.

⁽⁴⁾ Sales volume excludes tons which were processed as part of tolling arrangements.