Revenue up 67% to $711 Million; Adjusted EBITDA up 130% to
$175 million; Adjusted EBITDA Margin
of 25%
/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE
SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES/
Second quarter 2018 highlights include:
- Revenue of $711 million, up
67% year-over-year and up 48% sequentially
- Operating income of $161
million, up 544% year-over-year and up 182%
sequentially
- Adjusted EBITDA of $175
million, up 130% year-over-year, up 150% sequentially, and
above top end of guidance
- Adjusted EBITDA margin of 25%, up from 15% in Q1 2018 and
from 18% in Q2 2017
- Steel shipping volumes up 49% year-over-year and 22%
sequentially, and steel ASPs up 18% from Q1 2018
- Company declares special cash dividend of $150 million ($1.69
per share) in addition to regular quarterly dividend of
$0.10 per share
HAMILTON, ON, July 31, 2018
/CNW/ - Stelco Holdings Inc. ("Stelco Holdings" or the
"Company"), (TSX: STLC), a low cost, integrated and
independent steelmaker with one of the newest and most
technologically advanced integrated steelmaking facilities in
North America, today announced
financial results of the Company and that of Stelco Inc.
("Stelco" or "Stelco Inc.") for the three months
ended June 30, 2018. Stelco Holdings
is the 100% owner of Stelco, the operating company.
Stelco Inc. Highlights:
Selected Financial Information:
|
|
|
|
|
|
|
|
|
(in millions except
volume and per nt figures)
|
Q2
2018
|
Q2 2017
|
Change
|
Q1 2018
|
Change
|
YTD
2018
|
YTD
2017
|
Change
|
Revenue
($)
|
711
|
427
|
67%
|
482
|
48%
|
1,193
|
813
|
47%
|
Operating profit
($)
|
161
|
25
|
544%
|
57
|
182%
|
218
|
61
|
257%
|
Net income (loss)
($)*
|
(12)
|
3,593
|
NM
|
28
|
N/A
|
16
|
3,576
|
NM
|
Adjusted EBITDA
($)*
|
175
|
76
|
130%
|
70
|
150%
|
245
|
140
|
75%
|
Adjusted net income
($)*
|
153
|
(3)
|
NM
|
49
|
212%
|
202
|
5
|
NM
|
Average selling price
per nt ($)*
|
898
|
828
|
8%
|
762
|
18%
|
837
|
795
|
5%
|
Shipping volume* (in
thousands of nt)
|
748
|
501
|
49%
|
613
|
22%
|
1,361
|
1,000
|
36%
|
|
|
|
|
|
|
|
|
|
*
|
See "Non-IFRS
measures" for a description of Non-IFRS measures used in this Press
Release and "Non-IFRS Measures Reconciliation" below. Per ton
figures are now presented for steel shipments only and prior period
per ton metrics have been restated.
|
"Our second quarter results substantially exceeded the high-end
of our previously issued guidance range, with adjusted EBITDA of
$175 million, representing a 25%
adjusted EBITDA margin despite incurring approximately $11 million of tariff related costs," said
Alan Kestenbaum, the Company's
Executive Chairman and Chief Executive Officer. "Our second quarter
performance reflects shipping volume at nearly three million tons
annually and an average selling price of $898/nt, which is still below current market
prices. We achieved this as a direct result of the successful
implementation of enhanced shipping logistics including our newly
repurposed dock and newly leased railcars that have reduced our
dependency on trucks. The sharp improvement in our financial
results year-over-year and sequentially reflects the improved
efficiency of our operations, continuous efforts to drive down
costs, strong demand throughout North
America, and higher steel prices.
"Consistent with our core strategy to unlock value in all
assets, we sold more than 70 thousand tons of coke related products
in the second quarter and generated approximately $39 million in non-steel sales at healthy profit
margins. We will continue to seek to extract more value from other
underutilized assets. Our acquisition of 3,000 acres of land
under and around our facilities during the second quarter should
enable us to achieve at least three tangible benefits: (i) position
us to extract additional value from our operating assets by
enhancing operating flexibility previously unavailable to us, (ii)
lowering our costs, and (iii) creating significant and previously
unrealizable value for our shareholders through development of
excess land and port facilities in the very strong Greater Toronto Area ("GTA") property
constrained Industrial market.
"We generated $165 million of cash
flow from operations and $145 million
of free cash flow during the quarter which drove our quarter end
cash balance to $421 million,"
Kestenbaum added. "We have a strong balance sheet, a healthy
cash position, and a $375 million
revolver that is completely undrawn. As a result, and consistent
with our strategy to relentlessly focus on generating exceptional
total shareholder returns, we are pleased to announce that we are
declaring a special cash dividend of $150
million ($1.69 per share), in
addition to our regular quarterly dividend of $0.10 per share. In parallel, we are maintaining
significant liquidity, financial strength, and flexibility to drive
both inorganic and organic growth through accretive transactions
and growth initiatives in our core steel business."
Second Quarter 2018 Financial Review:
Sequential Performance (Q2 2018 versus Q1 2018):
On a sequential basis, financial performance improved
significantly in Q2 2018 over Q1 2018 as a result of higher sales
shipping volumes, increased average selling price for our steel
products, increased sales of non-steel products, operating
leverage, and cost management. Revenue increased 48%, from
$482 million in Q1 2018 to
$711 million in Q2 2018. The increase
in revenue reflects a 22% increase in steel shipping volumes, from
613 thousand nt in Q1 2018 to 748 thousand nt in Q2 2018, and an
18% increase in average selling price, which increased from
$762/nt in Q1 2018 to $898/nt in Q2 2018. Investments in logistics
capabilities, including rail and barge shipping, significantly
increased our capacity to ship products to our customers, and was
an important driver in achieving our Q2 2018 shipping volumes. In
Q2 2018, non-steel revenue increased $24
million quarter-over-quarter due primarily to the sale of
coke related products. Operating income improved to $161 million in Q2 2018, up 182% from Q1 2018
operating income of $57 million.
Adjusted EBITDA also improved significantly in Q2 2018, increasing
150% from $70 million in Q1 to
$175 million in Q2, reflecting higher
revenue and stable costs, partly offset by approximately
$11 million of tariff related costs
during the second quarter. A positive outcome from the Q2 2018
growth in shipping volumes, improved pricing, and stable costs was
the 25% adjusted EBITDA margin in the quarter, up from the 15%
adjusted EBITDA margin in Q1 2018.
Year-Over-Year Performance:
Q2 2018 revenue increased $284
million, or 67%, from revenue of $427
million in Q2 2017. The year-over-year revenue increase was
due primarily to a 49% increase in steel shipping volumes and an 8%
increase in average selling price. Shipping volumes increased from
501 thousand nt in Q2 2017 to 748 thousand nt in Q2 2018. Average
selling price increased from $828/nt
in Q2 2017 to $898/nt in Q2 2018.
Finance costs increased by $99
million, from $71 million Q2
2017 to $170 million in Q2 2018,
primarily due to $167 million of
remeasurement and accretion expenses associated with our employee
benefit commitment ("EBC") obligations in Q2 2018, partially offset
by a $61 million decrease in interest
on loans and borrowings related to the extinguishment of
$1.8 billion of debt through the CCAA
process, and $7 million related to
the gross impact period-over-period of foreign exchange translation
on U.S. dollar denominated working capital. The Q2 2018
remeasurement charge was due to amendment of EBC agreements which
impacted projected future funding over the term of those
commitments, which end in 2043.
Net loss for the quarter was $12
million, down from a net income of $3,593 million in the second quarter of 2017,
which benefitted from a $3,665
million gain related to the emergence from CCAA, partially
offset by higher costs for separation from USS support services,
restructuring costs, acquisition-related costs, and provision on
pension and OPEB costs. Adjusted net income increased $156 million year-over-year, from an adjusted net
loss of $3 million in Q2 2017 to
adjusted net income of $153 million
in Q2 2018. The improvement was largely due to higher revenue
and lower finance costs, excluding the adjustment for remeasurement
charges related to the employee benefit commitments.
Adjusted EBITDA in Q2 2018 totaled $175
million, an increase of $99
million from adjusted EBITDA of $76
million in Q2 2017. The year-over-year improvement reflects
the increase in revenue from increased shipping volumes and an
improvement in the market price of steel.
Summary of Net Tons Shipped by Product:
(in thousands of
nt)
|
|
|
|
|
|
|
|
|
Tons Shipped by
Product
|
Q2
2018
|
Q2 2017
|
Change
|
Q1 2018
|
Change
|
YTD
2018
|
YTD
2017
|
Change
|
Hot-rolled
|
590
|
359
|
64%
|
491
|
20%
|
1,081
|
699
|
55%
|
Coated
|
93
|
103
|
-10%
|
84
|
11%
|
177
|
224
|
-21%
|
Cold-rolled
|
33
|
17
|
94%
|
15
|
120%
|
48
|
31
|
55%
|
Other
|
32
|
22
|
45%
|
23
|
39%
|
55
|
46
|
20%
|
Total
|
748
|
501
|
49%
|
613
|
22%
|
1,361
|
1,000
|
36%
|
|
|
|
|
|
|
|
|
|
Shipments by
Product (%)
|
|
|
|
|
|
|
|
|
Hot-rolled
|
79%
|
72%
|
|
80%
|
|
79%
|
70%
|
|
Coated
|
12%
|
21%
|
|
14%
|
|
13%
|
22%
|
|
Cold-rolled
|
4%
|
3%
|
|
2%
|
|
4%
|
3%
|
|
Other
|
4%
|
4%
|
|
4%
|
|
4%
|
5%
|
|
Total
|
100%
|
100%
|
|
100%
|
|
100%
|
100%
|
|
Stelco Holdings Highlights:
Stelco Holdings' consolidated statement of income for the three
and six months ended June 30, 2018,
which primarily includes Stelco's financial results for the period.
The following is a financial summary of Stelco Holdings' results
for the second quarter and first half of 2018:
Selected Financial
Information
|
|
|
|
|
|
|
|
|
|
(in millions, except
volume and per nt figures)
|
Q2
2018
|
Q1 2018
|
Change
|
YTD
2018
|
Revenue
($)
|
711
|
482
|
48%
|
1,193
|
Operating income
($)
|
162
|
58
|
179%
|
220
|
Net income (loss)
($)
|
(11)
|
29
|
-138%
|
18
|
Net income (loss) per
share ($)
|
(0.12)
|
0.32
|
-138%
|
0.20
|
Adjusted net income*
($)
|
154
|
50
|
208%
|
204
|
Adjusted net income
per share* ($)
|
1.73
|
0.57
|
204%
|
2.30
|
Adjusted EBITDA*
($)
|
174
|
69
|
152%
|
243
|
Average selling price
per nt* ($)
|
898
|
762
|
18%
|
837
|
Adjusted EBITDA per
nt* ($)
|
233
|
113
|
106%
|
179
|
Shipping volume* (in
thousands of nt)
|
748
|
613
|
22%
|
1,361
|
|
|
|
|
|
*
|
See "Non-IFRS
measures" for a description of Non-IFRS measures used in this Press
Release and "Non-IFRS Measures Reconciliation" below. Per ton
figures are now presented for steel shipments only and prior period
per ton metrics have been restated.
|
Stelco Holdings' SG&A expenses for the first half of
2018 include employee salary and benefits, enterprise resource
planning ("ERP") implementation expenses relating to the separation
from USS and professional, consulting and legal fees. The
incremental SG&A incurred by Stelco Holdings in the second
quarter of $1 million ($14 million of the Stelco Holdings' SG&A was
incurred directly by Stelco Inc.), relates to audit and legal fees,
insurance costs, as well as director and regulatory fees.
Land Purchase and Employee Benefit Commitment
Amendments
During the second quarter, Stelco announced the purchase of the
land, and related buildings, on which Stelco conducts its
operations (the "Lands"), as well as other developable lands and
port facilities from Legacy Land Limited Partnership (the "Land
Vehicle"). The purchase price was $114
million and was financed with a 25-year mortgage payable to
the Land Vehicle. Prior to the Lands purchase, Stelco was leasing
from the Land Vehicle portions of the Lands that were ultimately
purchased. That lease was cancelled as a result of the purchase of
the Lands. As with the original lease, Stelco's quarterly mortgage
payments are to be distributed by the Land Vehicle to various
pension and other post-employment benefit ("OPEBs") trusts for the
benefit of certain active and retired Stelco employees.
The Company believes that this transaction could enable it to
extract additional value from currently non-operating steel making
assets by enhancing flexibility previously unavailable to it, to
reduce costs, and to extract significant and previously
unrealizable value for our shareholders from development of the
excess land.
In addition to purchasing the land and buildings, Stelco amended
the OPEB funding agreement in Q2 2018, reducing its exposure to
potential future variable funding requirements, including future
excess free cash flow contributions, in exchange for a more fixed
funding commitment, which also provides greater certainty
to our employees as to deposits into the trusts.
Statement of Financial Position and Liquidity:
On a consolidated basis, Stelco Holdings ended Q2 2018 with cash
and cash equivalents of $421 million.
Additionally, as at June 30, 2018,
Stelco's $375 million ABL revolver
remains completely undrawn.
The following table shows selected information regarding the
Stelco Holdings consolidated balance sheet as at the noted
dates:
(millions of Canadian
dollars)
|
|
|
As
at
|
June 30,
2018
|
December 31,
2017
|
ASSETS
|
|
|
Cash and cash
equivalents
|
421
|
250
|
Trade and other
receivables
|
263
|
204
|
Inventories
|
380
|
448
|
Total current
assets
|
1,096
|
932
|
Total
assets
|
1,492
|
1,223
|
|
|
|
LIABILITIES
|
|
|
Trade and other
payables
|
332
|
309
|
Total current
liabilities
|
484
|
374
|
Total non-current
liabilities
|
508
|
352
|
Total
liabilities
|
992
|
726
|
|
|
|
Equity
|
500
|
497
|
Stelco Holdings and its subsidiaries ended Q2 2018 with current
assets of $1,096 million, which
exceeded current liabilities of $484
million by $612 million.
Stelco Holdings liabilities include $606
million of obligations to independent pension and OPEB
trusts, which include $492 million of
employee benefit commitments and $114
million under a mortgage note payable associated the land
purchase discussed above. Long term liabilities of $508 million as at June
30, 2018 include $489 million
of obligations to independent pension and OPEB trusts. Stelco
Holdings consolidated equity totaled $500
million as at June 30,
2018.
Declaration of Special and Regular Quarterly Dividend
Stelco's Board of Directors approved the payment of a special
cash dividend of $150 million
($1.69 per share), in addition to the
regular quarterly cash dividend of $0.10 per share. The special dividend of
$1.69 per share will be paid on
August 15, 2018 and the regular
quarterly dividend of $.10 per share
will be paid on August 17, 2018 to
shareholders of record as of the close of business on August 10, 2018. The special dividend and
the regular quarterly dividend have been designated as an "eligible
dividend" for purposes of the Income Tax Act (Canada).
Quarterly Results Conference Call
Stelco management will host a conference call to discuss its
results tomorrow, Wednesday, August 1,
2018 at 9 a.m. EST. To access
the call, please dial 1-866-548-4713 (U.S. and Canada) or 1-323-794-2093 (international) and
reference conference ID 5678595. The conference call will also be
webcasted live on the Investor Relations section of Stelco's web
site at https://www.stelco.com/investors. A presentation that will
accompany the conference call will also be available on the website
prior to the conference call.
Following the conclusion of the live call, a replay of the
webcast will be available on the Investor Relations section of the
Company's website for at least 90 days. A telephonic replay of the
conference call will also be available from 12 p.m. ET on August 1,
2018 until 11:59 p.m. ET on
August 14, 2018 by dialing
1-844-512-2921 (United States) or
1-412-317-6671 (international) and using the pin number
5678595.
Consolidated Financial Statements and Management's Discussion
and Analysis
The Company's (including both Stelco Holdings Inc. and Stelco
Inc.) unaudited interim condensed consolidated financial statements
for the period ended June 30, 2018,
and Management's Discussion & Analysis thereon are available
under the Company's profile on SEDAR at www.sedar.com.
About Stelco
Stelco is a low cost, integrated and independent steelmaker with
one of the newest and most technologically advanced integrated
steelmaking facilities in North
America. Stelco produces flat-rolled value-added steels,
including premium-quality coated, cold-rolled and hot-rolled steel
products. With first-rate gauge, crown, and shape control, as well
as reliable uniformity of mechanical properties, our steel products
are supplied to customers in the construction, automotive and
energy industries across Canada
and the United States as well as
to a variety of steel services centres, which are regional
distributers of steel products.
Non-IFRS Measures
This news release refers to certain non-IFRS measures that are
not recognized under International Financial Reporting Standards
("IFRS") and do not have a standardized meaning prescribed by IFRS.
These measures are not recognized measures under 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 share", ''adjusted EBITDA'',
''adjusted EBITDA per nt'', ''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 period ended
June 30, 2018 available under the
Company's profile on SEDAR at www.sedar.com.
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, budgets, operations, financial
results, taxes, dividend policy, 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'', ''scheduled'', ''estimates'',
''outlook'', ''forecasts'', ''projection'', ''prospects'',
''strategy'', ''intends'', ''anticipates'', ''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 news release includes our
advancement of strategic initiatives, annualized shipping volumes,
enhancing value from underutilized assets, and the declaration of a
dividend. 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 our ability to source
raw materials and other inputs; our ability to supply to new
customers and markets; our ability to effectively manage costs; our
ability to attract and retain key personnel and skilled labour; our
ability to obtain and maintain existing financing on acceptable
terms; currency exchange and interest rates; the impact of
competition; changes in laws, rule, and regulations, including
international trade regulations; and growth in steel markets and
industry trends, as well as those set out in this press release,
are material factors made in preparing the forward-looking
information and management's expectations contained in this press
release.
Such forward-looking information is subject to known and unknown
risks, uncertainties, assumptions and other factors that may cause
the actual results, level of activity, performance or achievements
to be materially different from those expressed or implied by such
forward-looking information, including: North American and global
steel overcapacity; imports and trade remedies; competition from
other producers, imports or alternative materials; and the
availability and cost of inputs placing downward pressure on steel
prices or increasing our costs; as well as those described in the
Company's annual information form and the Company's MD&A for
the period ended June 30, 2018
available under the Company's profile on SEDAR at
www.sedar.com.
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 news release,
and are subject to change after such date. Stelco Holdings
disclaims any intention or obligation or undertaking to update
publicly or revise any forward-looking statements, whether written
or oral, whether as a result of new information, future events or
otherwise, except as required by law.
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 and
Stelco Inc.'s Consolidated Financial Statements and MD&A for
the period ended June 30, 2018, which
is available on the Company's website and on SEDAR
(www.sedar.com).
Stelco Inc.
Consolidated statements of income
(loss)
(unaudited)
|
Three months
ended
June 30,
|
Six months
ended
June 30,
|
(millions of Canadian
dollars)
|
2018
|
2017
|
2018
|
2017
|
Revenue from sale of
goods
|
$
|
711
|
$
|
427
|
$
|
1,193
|
$
|
813
|
Cost of goods
sold
|
536
|
362
|
950
|
702
|
Gross
profit
|
175
|
65
|
243
|
111
|
Selling, general and
administrative expenses
|
14
|
40
|
25
|
50
|
Operating
income
|
161
|
25
|
218
|
61
|
|
|
|
|
|
Other income
(loss) and (expenses)
|
|
|
|
|
Finance
costs
|
(170)
|
(71)
|
(186)
|
(121)
|
Finance and other
income (loss)
|
-
|
(1)
|
(10)
|
4
|
Restructuring
costs
|
(2)
|
(24)
|
(5)
|
(32)
|
Share of loss of
joint ventures
|
(1)
|
(1)
|
(1)
|
(1)
|
Gain on emergence
from CCAA
|
-
|
3,665
|
-
|
3,665
|
Income (loss)
before income taxes
|
(12)
|
3,593
|
16
|
3,576
|
Income tax
expense
|
-
|
-
|
-
|
-
|
Net income
(loss)
|
$
|
(12)
|
$
|
3,593
|
$
|
16
|
$
|
3,576
|
Stelco Holdings Inc.
Consolidated statements of
income (loss)
(unaudited)
(millions of Canadian
dollars)
|
Three months
ended June 30,
2018
|
Six months
ended June 30,
2018
|
Revenue from sale of
goods
|
$
|
711
|
$
|
1,193
|
Cost of goods
sold
|
534
|
946
|
Gross
profit
|
177
|
247
|
Selling, general and
administrative expenses
|
15
|
27
|
Operating
income
|
162
|
220
|
|
|
|
Other loss and
expenses
|
|
|
|
Finance
costs
|
(170)
|
(186)
|
|
Other loss
|
-
|
(10)
|
|
Restructuring and
other costs
|
(2)
|
(5)
|
|
Share of loss of
joint ventures
|
(1)
|
(1)
|
Income (loss)
before income taxes
|
(11)
|
18
|
Income tax
expense
|
-
|
-
|
Net income
(loss)
|
$
|
(11)
|
$
|
18
|
Stelco Inc.
Consolidated balance sheets
(unaudited)
As at
|
June 30,
2018
|
December 31,
2017
|
ASSETS
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
233
|
$
|
45
|
|
Restricted
cash
|
10
|
12
|
|
Trade and other
receivables
|
263
|
203
|
|
Inventories
|
380
|
448
|
|
Prepaid
expenses
|
21
|
18
|
Total current
assets
|
$
|
907
|
$
|
726
|
|
|
|
Non-current
assets
|
|
|
|
Property, plant and
equipment, net
|
404
|
305
|
|
Investment in joint
ventures
|
6
|
4
|
Total non-current
assets
|
$
|
410
|
$
|
309
|
Total
assets
|
$
|
1,317
|
$
|
1,035
|
|
|
|
LIABILITIES
|
|
|
Current
liabilities
|
|
|
|
Trade and other
payables
|
$
|
329
|
$
|
310
|
|
Other
liabilities
|
35
|
33
|
|
Obligations to
independent employee trusts
|
117
|
32
|
Total current
liabilities
|
$
|
481
|
$
|
375
|
|
|
|
Non-current
liabilities
|
|
|
|
Provisions
|
6
|
5
|
|
Pension
benefits
|
1
|
-
|
|
Other
liabilities
|
12
|
34
|
|
Obligations to
independent employee trusts
|
489
|
312
|
Total non-current
liabilities
|
$
|
508
|
$
|
351
|
Total
liabilities
|
$
|
989
|
$
|
726
|
|
|
|
EQUITY
|
|
|
|
Common
shares
|
2,325
|
2,325
|
|
Contributed
surplus
|
500
|
500
|
|
Retained
deficit
|
(2,497)
|
(2,516)
|
Total
equity
|
$
|
328
|
$
|
309
|
Total liabilities
and equity
|
$
|
1,317
|
$
|
1,035
|
Stelco Holdings Inc.
Consolidated balance sheets
(unaudited)
As at
|
June 30,
2018
|
December 31,
2017
|
ASSETS
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
$
|
421
|
$
|
250
|
|
Restricted
cash
|
10
|
12
|
|
Trade and other
receivables
|
263
|
204
|
|
Inventories
|
380
|
448
|
|
Prepaid
expenses
|
22
|
18
|
Total current
assets
|
$
|
1,096
|
$
|
932
|
|
|
|
Non-current
assets
|
|
|
|
Property, plant and
equipment, net
|
382
|
279
|
|
Intangible
assets
|
7
|
7
|
|
Investment in joint
ventures
|
7
|
5
|
Total non-current
assets
|
$
|
396
|
$
|
291
|
Total
assets
|
$
|
1,492
|
$
|
1,223
|
|
|
|
LIABILITIES
|
|
|
Current
liabilities
|
|
|
|
Trade and other
payables
|
$
|
332
|
$
|
309
|
|
Other
liabilities
|
35
|
33
|
|
Obligations to
independent employee trusts
|
117
|
32
|
Total current
liabilities
|
$
|
484
|
$
|
374
|
|
|
|
Non-current
liabilities
|
|
|
|
Provisions
|
6
|
5
|
|
Pension
benefits
|
1
|
-
|
|
Other
liabilities
|
12
|
35
|
|
Obligations to
independent employee trusts
|
489
|
312
|
Total non-current
liabilities
|
$
|
508
|
$
|
352
|
Total
liabilities
|
$
|
992
|
$
|
726
|
|
|
|
EQUITY
|
|
|
|
Common
shares
|
512
|
512
|
|
Retained
deficit
|
(12)
|
(15)
|
Total
equity
|
$
|
500
|
$
|
497
|
Total liabilities
and equity
|
$
|
1,492
|
$
|
1,223
|
Non-IFRS Measures Results
The following tables provide a reconciliation of net income
(loss) to adjusted net income (loss) for the periods indicated:
Stelco Inc.
|
Three months
ended June 30,
|
Six months
ended
June 30,
|
(millions of Canadian
dollars, except where otherwise noted)
|
2018
|
2017
|
2018
|
2017
|
Net income
(loss)
|
$
|
(12)
|
$
|
3,593
|
$
|
16
|
$
|
3,576
|
Add
back/(Deduct):
|
|
|
|
0
|
|
Remeasurement of
employee benefit commitment1
|
157
|
-
|
161
|
-
|
|
Separation costs
related to USS support services2
|
6
|
16
|
10
|
20
|
|
Restructuring
costs3
|
2
|
24
|
5
|
32
|
|
Realized loss from
commodity based swaps
|
-
|
-
|
10
|
-
|
|
Acquisition related
costs4
|
-
|
18
|
-
|
18
|
|
Provision on pension
and other post-employment benefits5
|
-
|
11
|
-
|
24
|
|
Gain related to
emergence from CCAA6
|
-
|
(3,665)
|
-
|
(3,665)
|
Adjusted net
income (loss)
|
$
|
153
|
$
|
(3)
|
$
|
202
|
$
|
5
|
|
|
|
|
|
|
|
|
|
1.
|
Remeasurement of
employee benefit commitment for change in the timing of estimated
cash flows and future funding requirements.
|
2.
|
Includes ERP
implementation costs associated with the process of separating from
USS, management fees and shared services arrangement
costs.
|
3.
|
Restructuring
expenses relates to the CCAA proceedings, which primarily included
legal fees, financial advisor fees, court-appointed monitor fees,
interim financing fees and other related restructuring expenses.
The Company implemented its CCAA plan on June 30, 2017.
|
4.
|
Acquisition costs
related to the purchase of Stelco Inc. by Bedrock.
|
5.
|
Represents difference
between total cash funding obligation for pensions and
OPEBs.
|
6.
|
Represents the gain
from the implementation of the CCAA plan on June 30,
2017.
|
Stelco Holdings Inc.
(millions of Canadian
dollars, except where otherwise noted)
|
Three months
ended June 30,
2018
|
Six months
ended June 30,
2018
|
Net income
(loss)
|
$
|
(11)
|
$
|
18
|
Add
back/(Deduct):
|
|
|
|
Remeasurement of
employee benefit commitment1
|
157
|
161
|
|
Separation costs
related to USS support services2
|
6
|
10
|
|
Restructuring
costs3
|
2
|
5
|
|
Realized loss from
commodity based swaps
|
-
|
10
|
Adjusted net
income
|
$
|
154
|
$
|
204
|
|
|
|
1.
|
Remeasurement of
employee benefit commitment for change in the timing of estimated
cash flows and future funding requirements.
|
2.
|
Includes ERP
implementation costs associated with the process of separating from
USS, management fees and shared services arrangement
costs.
|
3.
|
Restructuring
expenses relates to the CCAA proceedings, which primarily included
legal fees and other related restructuring expenses. The Company
implemented its CCAA plan on June 30, 2017.
|
The following tables provide a reconciliation of net income
(loss) to adjusted EBITDA for the periods indicated:
Stelco Inc.
|
Three months
ended June 30,
|
Six months
ended June 30,
|
(millions of Canadian
dollars, except where otherwise noted)
|
2018
|
2017
|
2018
|
2017
|
Net income
(loss)
|
$
|
(12)
|
$
|
3,593
|
$
|
16
|
$
|
3,576
|
Add
back/(Deduct):
|
|
|
|
|
|
Finance
costs
|
170
|
71
|
186
|
121
|
|
Depreciation
|
9
|
8
|
18
|
15
|
|
Separation costs
related to USS support services1
|
6
|
16
|
10
|
20
|
|
Restructuring
costs2
|
2
|
24
|
5
|
32
|
|
Realized loss from
commodity based swaps
|
-
|
-
|
10
|
-
|
|
Finance
income
|
-
|
-
|
-
|
(1)
|
|
Acquisition related
costs
|
-
|
18
|
-
|
18
|
|
Provision on pension
and other post-employment benefits3
|
-
|
11
|
-
|
24
|
|
Gain related to
emergence from CCAA4
|
-
|
(3,665)
|
-
|
(3,665)
|
Adjusted
EBITDA
|
$
|
175
|
$
|
76
|
$
|
245
|
$
|
140
|
Adjusted EBITDA as
a percentage of total revenue
|
25%
|
18%
|
21%
|
17%
|
|
|
|
|
|
1.
|
Includes ERP
implementation costs associated with the process of separating from
USS, management fees and shared services arrangement
costs.
|
2.
|
Restructuring
expenses relates to the CCAA proceedings, which primarily included
legal fees, financial advisor fees, court-appointed monitor fees,
interim financing fees and other related restructuring expenses.
The Company implemented its CCAA plan on June 30, 2017.
|
3.
|
Represents difference
between total cash funding obligation for pensions and OPEBs and
amount already reflected in EBITDA.
|
4.
|
Represents the gain
from the implementation of the CCAA plan on June 30,
2017.
|
Stelco Holdings Inc.
(millions of Canadian
dollars, except where otherwise noted)
|
Three months
ended June 30,
2018
|
Six months
ended June 30,
2018
|
Net income
(loss)
|
$
|
(11)
|
$
|
18
|
Add
back/(Deduct):
|
|
|
|
Finance
costs
|
170
|
186
|
|
Depreciation
|
7
|
14
|
|
Separation costs
related to USS support services1
|
6
|
10
|
|
Restructuring
costs2
|
2
|
5
|
|
Realized loss from
commodity based swaps
|
-
|
10
|
Adjusted
EBITDA
|
$
|
174
|
$
|
243
|
Adjusted EBITDA as
a percentage of total revenue
|
24%
|
20%
|
|
|
|
1.
|
Includes ERP
implementation costs associated with the process of separating from
USS, management fees and shared services arrangement
costs.
|
2.
|
Restructuring
expenses relates to the CCAA proceedings, which primarily included
legal fees and other related restructuring expenses. The Company
implemented its CCAA plan on June 30, 2017.
|
SOURCE Stelco