Tree Island Steel Announces Third Quarter 2013 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Nov. 7, 2013) - Tree Island Steel Ltd. (TSX:TSL)(TSX:TSL.DB) -

Q3 2013 versus Q2 2012 Financial Highlights:

• Volumes up by 21.1% at 29,345 tons
  
  
• Revenue increases by 14.8% to $39.0 million
  
  
• Gross Profit at $3.9 million or 10.0% of revenues
  
  
• EBITDA² increases by 55.3% to $1.6 million
  
  

Tree Island Steel Ltd. ("Tree Island" or the "Company") (TSX:TSL)(TSX:TSL.DB) announced today its financial results for the three and nine month periods ended September 30, 2013¹.

For the three-month period ended September 30, 2013, revenues increased to $39.0 million versus $34.0 million during the third quarter in 2012. Volumes also increased by 21.1% in the third quarter to 29,345 tons, primarily due to increasing demand for industrial and construction products in the Company's markets. Gross profit continued to strengthen in the quarter, amounting to $3.9 million, representing an 11.7% improvement when compared to $3.5 million in the corresponding period in 2012. Gross margin decreased slightly to 10.0% from 10.3%, along with gross profit per ton, which decreased to $133 per ton, from $144 per ton in the same period in 2012. These decreases were more than offset by the increase in the volume experienced in the quarter, and were a result of market pressure on prices and a focus to grow volume in key markets. These strategies resulted in EBITDA increasing by 55.3% to $1.6 million, or $53 per ton, compared to $1.0 million and $41 per ton, respectively, during the corresponding period in 2012. The improvements in revenues, volumes, and EBITDA are the result of ongoing focus on profitable growth, cost management and operational efficiencies.

For the nine-month period ended September 30, 2013, revenues amounted to $117.7 million on 86,107 tons, compared to $117.6 million on 80,825 tons during the same period in 2012. The higher revenues in 2013 primarily reflect increased volumes particularly in the Industrial and commercial construction market segments. The growth in volume was partially reduced by price adjustments that were in line with corresponding raw material cost reductions, coupled with product mix changes and competitive factors in certain business lines. Gross profit increased to $13.5 million at a margin of 11.5%, compared to $11.7 million or 10.0%, while gross profit per ton also increased to $157 per ton versus $145 per ton in the corresponding period in 2012. During the period, EBITDA increased by 32.0% to $6.2 million versus $4.7 million during the corresponding period last year. 

"The third quarter and year-to-date financial results are indicative of our success in remaining focused on our ongoing priorities such as cost management and operational efficiencies, while growing revenues by leveraging Tree Island's brand and quality where we can ultimately realize profitable growth," said Dale R. MacLean, President and CEO of Tree Island Steel. "We continue to see strength and momentum in demand building up in some of our key end markets in the U.S., which combined with our internal priorities leads us to maintain a cautiously optimistic view in the near to mid-term."

Amar S. Doman, Chairman of Tree Island Steel noted, "I am pleased to see key metrics continuing to move in the right direction with revenues and profits increasing on a year-over-year basis. Tree Island is perfectly positioned to benefit from, and service the demand in any of its growing and recovering end markets."

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, agricultural, and specialty 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, Industrial Alloys, TI Wire, and Tough Strand and Select Brand names. The Company also owns and operates a China-based company that assists the international sourcing of products to Tree Island and its customers.

Forward-Looking Statements

This press release includes forward-looking information with respect to Tree Island including its business, operations and strategies, 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 Fund'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, significant exposure to the Western United States due to lack of geographic diversity, dependence on the construction industry, transportation costs, foreign exchange fluctuations, leverage and restrictive covenants, labour relations, trade actions, dependence on key personnel and skilled workers, reliance on key customers, 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 2013 MD&A for further information.
2. References made above to "EBITDA" are to operating profit plus depreciation and references to "Adjusted Net Income" are to net income per IFRS adjusted for certain non-cash items including non-cash financing expenses, changes in fair value of convertible instruments, and deferred income tax. EBITDA is a measure used by many investors to compare issuers on the basis of ability to generate cash flows from operations. Adjusted Net Income is a measure for investors to understand the impact of significant non-cash items that affect our results from operations. Neither EBITDA nor Adjusted Net Income are earnings measures recognized by IFRS and do not have a standardized meaning prescribed by IFRS. We believe that EBITDA and Adjusted Net Income are important supplemental measure in evaluating the Fund's performance. You are cautioned that EBITDA and Adjusted Net Income should not be construed as alternatives to net income or loss, determined in accordance with IFRS, or as indicators of performance. Our method of calculating EBITDA and Adjusted Net Income may differ from methods used by other issuers and, accordingly, our EBITDA or Adjusted Net Income may not be comparable to similar measures presented by other issuers.