/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE
SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES/
Stelco Holdings Inc. first quarter 2019 highlights
include:
- Q1 2019 revenue of $517
million, up 7%, compared to Q1 2018
- Q1 2019 net income of $43
million, up 48%, compared to Q1 2018
- Q1 2019 adjusted EBITDA* of $63
million and adjusted EBITDA per ton* of $103
- Q1 2019 tariff adjusted EBITDA* of $76 million, up 10% from $69 million in Q1 2018
- Q1 2019 tariff adjusted EBITDA margins* of 15%
- Company declares a regular quarterly dividend of
$0.10 per share
HAMILTON, ON, May 1, 2019
/CNW/ - Stelco Holdings Inc. ("Stelco Holdings" or the
"Company"), (TSX: STLC), a low cost, integrated and
independent steelmaker with one of the newest and most
technologically advanced integrated steelmaking facilities in
North America, today announced
financial results of the Company for the three months ended
March 31, 2019.
Stelco Holdings Inc. Highlights:
Selected Financial Information:
(in millions except
volume, per share and nt figures)
|
Q1
2019
|
Q1 2018
|
Change
|
Q4 2018
|
Change
|
Revenue
($)
|
517
|
482
|
7 %
|
648
|
(20)%
|
Operating income
($)
|
44
|
58
|
(24)%
|
118
|
(63)%
|
Net income
($)
|
43
|
29
|
48 %
|
110
|
(61)%
|
Adjusted net income
($)*
|
47
|
50
|
(10)%
|
100
|
(55)%
|
Net income per common
share (diluted) ($)
|
0.48
|
0.33
|
45 %
|
1.23
|
(61)%
|
Adjusted net income
per common share (diluted) ($)*
|
0.53
|
0.56
|
(5)%
|
1.13
|
(53)%
|
Average selling price
per nt ($)*
|
827
|
762
|
9 %
|
917
|
(10)%
|
Shipping volume* (in
thousands of nt)
|
612
|
613
|
— %
|
673
|
(9)%
|
Adjusted EBITDA
($)*
|
63
|
69
|
(9)%
|
144
|
(56)%
|
Tariff Adjusted
EBITDA ($)*
|
76
|
69
|
10 %
|
167
|
(54)%
|
Adjusted EBITDA per
nt ($)*
|
103
|
113
|
(9)%
|
214
|
(52)%
|
Tariff Adjusted
EBITDA per nt ($)*
|
124
|
113
|
10 %
|
248
|
(50)%
|
*
|
See "Non-IFRS
measures" for a description of certain Non-IFRS measures used in
this Press Release and "Non-IFRS Measures Reconciliation"
below.
Q1 2018 per net ton comparative figures have been restated to
conform to the current period's presentation applying steel revenue
only.
|
"In the first quarter of 2019, we continued to demonstrate the
benefits of our tactical flexibility business model by delivering
year-over-year improvements in revenue, tariff adjusted EBITDA and
tariff adjusted EBITDA per net ton," said David Cheney, Stelco's Chief Executive Officer.
"As we look forward, demand from most of our key end markets
remains stable and we are utilizing our logistics infrastructure to
continue to expand our market footprint."
"I am pleased to report significant progress on a number of key
initiatives. The installation of our state-of-the-art batch
annealing equipment, a $35 million
investment which we announced in Q4 2017, is on schedule and we
have booked our first orders of fully-processed cold-rolled
material for delivery in June. Additionally, we have captured
valuable OEM and tier 1 auto accounts and we intend to continue to
push hard in that end market for continued and sustained growth as
we leverage the investments we have made in the galvanizing and hot
strip mill to service that higher margin end market. We have
progressed on a number of projects that will improve our cost
structure and overall efficiency. In July, we plan to begin work to
upgrade our Lake Erie coke
batteries which we anticipate could result in up to an additional
100,000 tons of coke that we can sell in the very profitable
merchant coke market. We are nearing a final decision on choosing
our partner for our co-generation power plant to serve the
Lake Erie facility which we
believe will generate approximately $20
million in annual cost savings with limited capital
investment.
"We are also starting to generate income from the surplus land
at our facilities. To that end, we have signed a long-term lease
with a new tenant for a currently unused industrial building at our
Hamilton site at a rate
that averages approximately $10
per square foot, and we are in active discussions with more
potential tenants. We also continue to return value to our
shareholders as our Board has approved the regular dividend of
$0.10 per share. We ended the quarter
with no financial debt, $285 million
in cash and $577 million in total
liquidity. To capitalize on market opportunities and our strong
financial position, our Executive Chairman, Alan Kestenbaum, is leading efforts to actively
evaluate a number of strategic and accretive M&A opportunities
that have started to emerge. Overall, we are optimistic for the
future as Stelco is extremely well positioned to deliver attractive
organic and inorganic growth," concluded Cheney.
First Quarter 2019 Financial Review:
Compared to Q1 2018
Q1 2019 revenue increased $35
million, or 7%, from $482
million in Q1 2018, primarily due to a 9% improvement in
average steel selling prices from $762/nt in Q1 2018 to $827/nt in Q1 2019. Shipping volumes remained
flat at 612 thousand nt in Q1 2019 compared to 613 thousand nt in
Q1 2018.
Operating income decreased by $14
million, or 24%, from $58
million in Q1 2018, mainly due to higher cost of sales of
$47 million and selling, general and
administrative expenses of $2
million, partly offset by an increase in revenue during Q1
2019. Cost of sales includes raw material and conversion costs,
depreciation, freight and tariffs associated with inventory sold
during the period.
Finance costs decreased by $13
million, or 81%, from $16
million in Q1 2018, due to an $11
million gross remeasurement recovery on our employee benefit
commitment due to a change in timing of estimated cash flows and
future funding requirements, $6
million related to the period-over-period impact of foreign
exchange translation on U.S. dollar denominated working capital and
$1 million lower accretion on lease
obligations, partly offset by $3
million increase in interest on loans and borrowings and
$2 million higher accretion expense
associated with our employee benefit commitment obligation.
Finance and other income improved by $13
million, from a loss of $10
million in Q1 2018. During Q1 2018, the Company entered into
commodity-based swaps as part of a strategy to mitigate Stelco's
exposure to hot-rolled coil steel market price fluctuations in
anticipation of certain slab purchases from a third party, which
did not occur. These swap contracts matured and settled during
May 2018, with the Company realizing
a loss of $10 million. Stelco did not
enter these contracts for trading or speculative purposes.
Net income for the quarter was $43
million, up from $29 million
in the first quarter of 2018, which benefited from $13 million lower finance costs, $13 million gross increase in finance and other
income, $3 million lower
restructuring costs, partly offset by lower gross profit of
$12 million and higher selling,
general and administrative expenses of $2
million. Adjusted net income decreased $3 million year-over-year, from $50 million in Q1 2018 to $47 million in Q1 2019. The decrease was impacted
by tariff costs of $13 million
incurred in Q1 2019, compared to nil tariff costs incurred during
Q1 2018.
Adjusted EBITDA in Q1 2019 totaled $63
million, a decrease of $6
million from adjusted EBITDA of $69
million in Q1 2018. Tariff adjusted EBITDA was $76 million in Q1 2019, up from $69 million in Q1 2018, which reflects the
increase in revenue from the higher average price of steel, partly
offset by higher cost of sales.
Compared to Q4 2018
Revenue decreased 20%, from $648
million in Q4 2018 to $517
million in Q1 2019, which reflects a 9% decrease in steel
shipping volumes, from 673 thousand nt in Q4 2018 to 612 thousand
nt in Q1 2019 and a 10% decrease in average selling price, from
$917/nt in Q4 2018 to $827/nt in Q1 2019, as well as lower non- steel
sales. Operating income decreased to $44
million in Q1 2019, down 63% from Q4 2018 operating income
of $118 million. Adjusted EBITDA
decreased to $63 million, down 56%
from Q4 2018 adjusted EBITDA of $144
million, primarily due to lower average selling prices,
lower shipping volumes realized and higher cost of sales, partially
offset by lower tariff costs. Tariff costs decreased from
$23 million in Q4 2018 to
$13 million in Q1 2019, as the
Company continued to focus its sales on the Canadian market.
Summary of Net Tons Shipped by Product:
(in thousands
of nt)
|
Tons Shipped by
Product
|
Q1
2019
|
Q1 2018
|
Change
|
Q4 2018
|
Change
|
Hot-rolled
|
517
|
491
|
5%
|
553
|
(7)%
|
Coated
|
66
|
84
|
(21)%
|
79
|
(16)%
|
Cold-rolled
|
4
|
15
|
(73)%
|
10
|
(60)%
|
Other
|
25
|
23
|
9%
|
31
|
(19)%
|
Total
|
612
|
613
|
—%
|
673
|
(9)%
|
|
Shipments by
Product (%)
|
|
|
|
|
|
Hot-rolled
|
84%
|
80%
|
|
82%
|
|
Coated
|
11%
|
14%
|
|
12%
|
|
Cold-rolled
|
1%
|
2%
|
|
1%
|
|
Other
|
4%
|
4%
|
|
5%
|
|
Total
|
100%
|
100%
|
|
100%
|
|
Statement of Financial Position and Liquidity:
On a consolidated basis, Stelco Holdings ended Q1 2019 with
total liquidity of $577 million,
including cash and cash equivalents of $285
million and $292 million of
borrowing capacity under its ABL revolver, which remains 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
|
March 31,
2019
|
December 31,
2018
|
ASSETS
|
|
|
Cash and cash
equivalents
|
285
|
438
|
Trade and other
receivables
|
265
|
252
|
Inventories
|
346
|
468
|
Total current
assets
|
921
|
1,194
|
Total
assets
|
1,439
|
1,655
|
|
|
|
LIABILITIES
|
|
|
Trade and other
payables
|
285
|
436
|
Total current
liabilities
|
428
|
579
|
Total non-current
liabilities
|
509
|
508
|
Total
liabilities
|
937
|
1,087
|
|
|
|
Total
equity
|
502
|
568
|
Stelco Holdings and its subsidiaries ended Q1 2019 with current
assets of $921 million, which
exceeded current liabilities of $428
million by $493 million.
Stelco Holdings' liabilities include $586
million of obligations to independent pension and OPEB
trusts, which includes $473 million
of employee benefit commitments and $113
million under a mortgage note payable associated with the
June 2018 land purchase. Long term
liabilities of $509 million as at
March 31, 2019 includes $484 million of obligations to independent
pension and OPEB trusts. Stelco Holdings' consolidated equity
totaled $502 million as at
March 31, 2019.
Declaration of Quarterly Dividend
Stelco's Board of Directors approved the payment of a regular
quarterly dividend of $0.10 per share
will be paid on May 31, 2019, to
shareholders of record as of the close of business on May 27, 2019.
The regular quarterly dividend has 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
quarterly results tomorrow, Thursday, May 2,
2019 at 9:00 a.m. ET. To
access the call, please dial 1-888-390-0605 or 1-416-764-8609 and
reference "Stelco". 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 90 days. A telephonic replay of the
conference call will also be available from 12:00 p.m. ET on May 2,
2019 until 11:59 p.m. ET on
May 16, 2019 by dialing
1-888-390-0541 or 1-416-764-8677 and using the pin number
538971.
Consolidated Financial Statements and Management's Discussion
and Analysis
The Company's unaudited interim condensed consolidated
financial statements for the period ended March 31, 2019, and Management's Discussion &
Analysis thereon are available under the Company's profile on SEDAR
at www.sedar.com.
Please note that we have streamlined financial reporting
starting in Q1 2019 by eliminating voluntary public financial
reporting for our operating company, Stelco Inc. After the IPO in
late 2017, and throughout 2018, Stelco Holdings Inc. did not have
full prior period comparative information because it did not exist
as a legal entity until September, 2017. As a result, we
voluntarily filed financial statements and MD&A for our
operating company, Stelco Inc., which did have prior period
comparative information. Now that Stelco Holdings Inc. has prior
period comparative balances for all of 2018, we have discontinued
voluntary filing of Stelco Inc. financial statements and
MD&A.
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'',
''tariff adjusted EBITDA'', ''tariff adjusted EBITDA per nt'',
''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 March 31, 2019 available under the Company's
profile on SEDAR at www.sedar.com.
Key Assumptions Underlying Our Planned Lake Erie Coke Battery
Upgrade and Co-Generation Plant Opportunity:
The estimated additional production of coke resulting from a
planned coke battery upgrade at our Lake
Erie facility referenced in this press release is based on a
number of assumptions, including, but not limited to, the following
material assumptions:
- the Company's ability to successfully complete the coke battery
upgrade on time, within budget and in accordance with the required
technical specifications;
- expectations regarding the production and quality of additional
coke, resulting from the planned upgrade of the coke battery at our
Lake Erie facility;
- the Company's ability to produce sufficient volumes and quality
of coke to meet its internal consumption requirements;
and
- the Company's ability to sell any such additional coke at
favorable rates in the merchant coke market.
The estimated annual cost savings resulting from the potential
construction of a co-generation power plant to serve our
Lake Erie facility referenced in
this press release is based on a number of assumptions, including,
but not limited to, the following material assumptions:
- the Company's ability to enter into a definitive agreement with
a third-party development partner to engineer, procure and design a
co-generation power plant at our Lake
Erie facility on terms acceptable to the Company;
- the Company's ability to obtain the applicable regulatory
approvals required to develop a co-generation facility at our
Lake Erie facility;
- the Company's ability to secure publicly available grant
funding on terms acceptable to the Company;
- expectations regarding the current and future prices of
electricity in the Province of Ontario;
- expectations regarding the Company's current and future
production levels at our Lake Erie
facility; and
- expectorations regarding the actual cost of constructing the
co-generation power plant and the annual costs associated with
maintaining the plant being within the range currently estimated by
management of the Company.
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'', "nearing", ''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'', "will
result", "will improve", "continue to", "started to", ''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, statements concerning the
Company's expectations on increased margins and profitability,
exposure to tariffs, the expected results from the Company's
participation in higher margin segments of the steel industry,
expectations concerning our coke battery upgrade, expectations
concerning mergers and acquisition opportunities, expectations
regarding maximizing shareholder returns and expectations regarding
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, rules, and
regulations, including international trade regulations;
expectations that demand from our key end markets will remain
stable; our ability to utilize our logistics infrastructure to
expand our market footprint; our ability to complete the
installation of our batch annealing equipment on schedule; our
ability to leverage the investments we have made in the galvanizing
and hot strip mill to service a high margin end market;
expectations that our capital projects will improve our cost
structure and overall efficiency; expectations regarding the
additional production of coke resulting from our planned upgrade to
the Lake Erie coke batteries; our
ability to sell excess coke product at favorable rates in the
merchant coke market; our ability to partner with a third party to
develop a co-generation facility on favorable terms, and
expectations that any such project will result in significant
annual cost savings for the Company without having to incur
significant capital expenditures; our ability to enter into
favorable lease arrangements with various tenants with respect to
the surplus land at our facilities and expectations that the
Company will be able to generate material income from such lands;
expectations regarding strategic and accretive M&A
opportunities; expectations regarding future actions to maximize
shareholder returns and profitability; expectations regarding our
position to deliver organic and inorganic growth; 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 dated February 15, 2019 and the Company's MD&A for
the period ended March 31, 2019
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 Consolidated Financial Statements and MD&A for the
period ended March 31, 2019, which is
available on the Company's website and on SEDAR
(www.sedar.com).
Stelco Holdings Inc.
Consolidated statements of
income
(unaudited)
|
Three months ended
March 31,
|
(millions of Canadian
dollars)
|
2019
|
2018
|
Revenue from sale of
goods
|
$
|
517
|
$
|
482
|
Cost of goods
sold
|
459
|
412
|
Gross
profit
|
58
|
70
|
Selling, general and
administrative expenses
|
14
|
12
|
Operating
income
|
44
|
58
|
|
|
|
Other income
(loss) and (expenses)
|
|
|
Finance
costs
|
(3)
|
(16)
|
Finance and other
income (loss)
|
3
|
(10)
|
Restructuring and
other costs
|
—
|
(3)
|
Share of loss from
joint ventures
|
(1)
|
—
|
Income before income
taxes
|
43
|
29
|
Income tax
expense
|
—
|
—
|
Net
income
|
$
|
43
|
$
|
29
|
Stelco Holdings Inc.
Consolidated balance sheets
(unaudited)
As at
|
March 31,
2019
|
December 31,
2018
|
ASSETS
|
|
|
Current
assets
|
|
|
Cash and cash
equivalents
|
$
|
285
|
$
|
438
|
Restricted
cash
|
9
|
8
|
Trade and other
receivables
|
265
|
252
|
Inventories
|
346
|
468
|
Prepaid
expenses
|
16
|
28
|
Total current
assets
|
$
|
921
|
$
|
1,194
|
|
|
|
Non-current
assets
|
|
|
Property, plant and
equipment, net
|
506
|
448
|
Intangible
assets
|
7
|
7
|
Investment in joint
ventures
|
5
|
6
|
Total non-current
assets
|
$
|
518
|
$
|
461
|
Total
assets
|
$
|
1,439
|
$
|
1,655
|
|
|
|
LIABILITIES
|
|
|
Current
liabilities
|
|
|
Trade and other
payables
|
$
|
285
|
$
|
436
|
Other
liabilities
|
41
|
40
|
Obligations to
independent employee trusts
|
102
|
103
|
Total current
liabilities
|
$
|
428
|
$
|
579
|
|
|
|
Non-current
liabilities
|
|
|
Provisions
|
5
|
5
|
Pension
benefits
|
3
|
2
|
Other
liabilities
|
17
|
13
|
Obligations to
independent employee trusts
|
484
|
488
|
Total non-current
liabilities
|
$
|
509
|
$
|
508
|
Total
liabilities
|
$
|
937
|
$
|
1,087
|
|
|
|
EQUITY
|
|
|
Common
shares
|
512
|
512
|
Treasury
shares
|
—
|
(1)
|
Retained earnings
(deficit)
|
(10)
|
57
|
Total
equity
|
$
|
502
|
$
|
568
|
Total liabilities
and equity
|
$
|
1,439
|
$
|
1,655
|
Non-IFRS Measures Results
The following table provide
a reconciliation of net income to adjusted net income for the
period indicated:
|
Three months ended
March 31,
|
(millions of Canadian
dollars, except where otherwise noted)
|
2019
|
2018
|
Net
income
|
$
|
43
|
$
|
29
|
Add
back/(Deduct):
|
|
|
Remeasurement of
employee benefit commitment 1
|
|
(7)
|
|
4
|
Separation costs
related to USS support services 2
|
|
5
|
|
4
|
Carbon tax expense
3
|
|
3
|
|
—
|
Share-based
compensation 4
|
|
2
|
|
—
|
Property related idle
costs included in cost of goods sold 5
|
|
1
|
|
—
|
Loss from
commodity-based swaps
|
|
—
|
|
10
|
Restructuring
costs
|
|
—
|
|
3
|
Adjusted net
income
|
$
|
47
|
$
|
50
|
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
|
Represents a non-cash
carbon tax provision for the period, connected to Stelco's
estimated requirements under the Greenhouse Gas Pollution Pricing
Act (Federal
Backstop) for industrial facilities with greenhouse gas emissions.
Actual cash payments related to the carbon taxes, if any, are not
expected to occur until the year 2020 at
the earliest.
|
4
|
Share-based
compensation consists of costs connected with share options awarded
to certain members of the Company's executive senior leadership
team during the
period.
|
5
|
Includes utility
costs incurred by Stelco for non-operating and idled assets
acquired from the Land Vehicle on June 5, 2018.
|
The following table provides a reconciliation of net income to
each of adjusted EBITDA and tariff adjusted EBITDA for the period
indicated:
|
Three months ended
March 31,
|
(millions of Canadian
dollars, except where otherwise noted)
|
2019
|
2018
|
Net
income
|
$
|
43
|
$
|
29
|
Add
back/(Deduct):
|
|
|
Finance
income
|
(2)
|
—
|
Depreciation
|
8
|
7
|
Finance
costs
|
3
|
16
|
Separation costs
related to USS support services 1
|
5
|
4
|
Carbon tax expense
2
|
3
|
—
|
Share-based
compensation 3
|
2
|
—
|
Property related idle
costs included in cost of goods sold 4
|
1
|
—
|
Loss from
commodity-based swaps
|
—
|
10
|
Restructuring
costs
|
—
|
3
|
Adjusted
EBITDA
|
$
|
63
|
$
|
69
|
Tariff related costs
5
|
13
|
—
|
Tariff adjusted
EBITDA
|
$
|
76
|
$
|
69
|
|
|
|
Percentage of
total revenue:
|
|
|
Adjusted
EBITDA
|
12%
|
14%
|
Tariff Adjusted
EBITDA
|
15%
|
14%
|
1
|
Includes ERP
implementation costs associated with the process of separating from
USS, management fees and shared services arrangement
costs.
|
2
|
Represents a non-cash
carbon tax provision for the period, connected to Stelco's
estimated requirements under the Greenhouse Gas Pollution Pricing
Act (Federal
Backstop) for industrial facilities with greenhouse gas emissions.
Actual cash payments related to the carbon taxes, if any, are not
expected to occur until the year 2020 at
the earliest.
|
3
|
Share-based
compensation consists of costs connected with share options awarded
to certain members of the Company's executive senior leadership
team during the
period.
|
4
|
Includes utility
costs incurred by Stelco for non-operating and idled assets
acquired from the Land Vehicle on June 5, 2018.
|
5
|
Includes tariff and
tariff related costs connected with U.S. bound steel
shipments.
|
SOURCE Stelco