Tree Island Steel Announces Q1 2017 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 4, 2017) -

Q1 2017 Financial Highlights1
	Volumes increased by 14.7% to 51,336 tons
	Revenues increased by 1.3% to $63.0 million
	Gross profit amounted to $7.5 million
	EBITDA earned was $4.2 million
1 Please refer to our Q1 2017 MD&A for further information.

Tree Island Steel Ltd. ("Tree Island" or the "Company") (TSX:TSL) announced today its financial results for the three-month period ended March 31, 2017.

For the three-month period ended March 31, 2017, revenues were $63.0 million versus $62.2 million during the corresponding period in 2016, with an increase in volumes of 14.7% in the quarter. Expected increases in demand and business activity in our end markets during the quarter resulted in revenues and volumes increasing when compared to the same period last year despite the reduction in sales from the Stainless product lines, which were divested in Q3 2016. Gross profit for the three months was $7.5 million versus $11.0 million during the same period in 2016 on account of rising raw material input costs relative to the same time last year. As a result of this rapid rise in input costs, the spread between raw material prices and selling prices narrowed and gross profit margin in the quarter was 11.9% compared to 17.7% in the same period last year. The lower gross profit margin resulted in EBITDA for the quarter amounting to $4.2 million, compared to $6.7 million during the same period in 2016.

"As noted in our previous communications, we anticipated that gross margins would be compressed in the early part of this year as a result of the rapid increase in raw materials prices experienced by our industry in the latter part of 2016. This quarter we introduced a series of intended price increases to better off set this rise in raw material input costs, resulting in market prices for our finished goods moving upwards in the quarter and continuing into the following quarter," said Dale R. MacLean, President and CEO. "We are encouraged by the support of our customers as confirmed by the increased volumes during the quarter, notwithstanding these necessary price increases, and we will continue to transition price adjustments into the market to counteract the inflationary raw material input costs as necessary. We remain confident in our long term plans and will continue to move forward with increased planned production investments in the United States and Canadian operations, expanding our resources in the appropriate areas to continue to grow our business."

"We continue to address and adapt to market conditions in a manner that is consistent with our long‐term plan and will continue to act deliberately and responsibly to maintain growth momentum that is consistent with the past several years with price discipline as a key part of our core focus," said Amar S. Doman, Chairman of Tree Island Steel Ltd.

Summary of Results
($'000 unless otherwise stated)

			Three Months Ended
			March 31,
			2017		2016
Revenue			63,040		62,240
	Cost of sales		(54,729)		(50,404)
	Depreciation		(816)		(826)
Gross profit			7,495		11,010
	Selling, general and administrative expenses		(4,221)		(4,882)
Operating income			3,274		6,128
	Foreign exchange gain (loss)		97		(240)
	Gain (loss) on sale of property, plant and equipment		(47)		-
	Other expenses		-		-
	Changes in financial liabilities recognized at fair value		10		450
	Financing expenses		(711)		(716)
Income before income taxes			2,623		5,622
	Income tax (expense) recovery		(873)		(393)
Net income (loss)			1,750		5,229
Operating Income			3,274		6,128
	Add back depreciation		816		826
	Foreign exchange gain (loss)		97		(240)
EBITDA2			4,187		6,714
Net income per share			0.06		0.17
Dividends per share			0.02		0.02
Sales volume (tons)3			51,336		44,768
Gross profit per ton ($/ton)			146		246
EBITDA per ton ($/ton)			82		150
Financial Position as at:			December 31, 2016
Total Assets					137,455
Total non-current financial liabilities					19,090
2 See definition of EBITDA and Adjusted Net Income in Section 2 NON-IFRS MEASURES of the 2017 MD&A.
3 Sales volume excludes tons which were processed as part of tolling arrangements.

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.