HAMILTON, Ontario--(BUSINESS WIRE)--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 and year ended December 31, 2023. Stelco Holdings is the 100% owner of Stelco Inc. (“Stelco”), the operating company.
Selected Financial Information
(in millions Canadian dollars, except volume, per share and net tons (nt) figures) |
Q4 2023 |
Q4 2022 |
Change |
Q3 2023 |
Change |
2023 |
2022 |
Change |
Revenue ($) |
613 |
674 |
(9%) |
776 |
(21%) |
2,917 |
3,463 |
(16%) |
Operating income (loss) ($) |
(16) |
47 |
NM |
121 |
NM |
309 |
1,085 |
(72%) |
Net income (loss) ($) |
(25) |
23 |
NM |
68 |
NM |
149 |
997 |
(85%) |
Adjusted Net Income ($) * |
9 |
32 |
(72%) |
76 |
(88%) |
218 |
819 |
(73%) |
|
|
|
|
|
|
|
|
|
Net income (loss) per common share (diluted) ($) |
(0.45) |
0.39 |
NM |
1.23 |
NM |
2.70 |
14.64 |
(82%) |
Adjusted Net Income per common share (diluted) ($) * |
0.16 |
0.55 |
(71%) |
1.38 |
(88%) |
3.95 |
12.02 |
(67%) |
|
|
|
|
|
|
|
|
|
Average Selling Price per nt ($) * |
941 |
963 |
(2%) |
1,083 |
(13%) |
1,051 |
1,261 |
(17%) |
Shipping Volume (in thousands of nt) * |
609 |
670 |
(9%) |
661 |
(8%) |
2,618 |
2,627 |
—% |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA ($) * |
51 |
82 |
(38%) |
153 |
(67%) |
484 |
1,193 |
(59%) |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per nt ($) * |
84 |
122 |
(31%) |
231 |
(64%) |
185 |
454 |
(59%) |
* See "Non-IFRS measures" for a description of certain Non-IFRS measures used in this Press Release and “Non-IFRS Measures Reconciliation” below. |
||||||||
NM - Not Meaningful |
||||||||
“Our fourth quarter results were down over the previous quarter, but we do expect improved margins in Q1 and into Q2 2024, as we begin to realize the higher market pricing that we saw in the latter part of 2023,” said Alan Kestenbaum, Executive Chairman and Chief Executive Officer. “We remain optimistic that market demand will stay strong and that the fundamental strength we have built into our business will allow us to continue to generate cash and in turn deliver positive results that benefit our shareholders. Further to our commitment to effectively deploy capital, we are launching a normal course issuer bid that will allow the Company to purchase up to 3,344,684 common shares. We are also pleased to increase our regular quarterly dividend by almost 20% to 50 cents per share.”
“Our Average Selling Price declined 13% quarter-over-quarter which, combined with a scheduled maintenance outage that had an impact on our shipments for the fourth quarter, led to a decline in Adjusted EBITDA to $51 million and Adjusted Net Income of $9 million,” said Paul Scherzer, Chief Financial Officer. “Despite the impact of pricing and the challenging market conditions that we faced throughout 2023, the business was able to generate $484 million in Adjusted EBITDA and pay $258 million in dividends, and we ended the year with $645 million of cash and no borrowings under our revolving credit facility.”
“Entering Q1 2024, we anticipate a return to Shipping Volume of approximately 625 thousand to 675 thousand net tons and an improvement in Adjusted EBITDA due to the realization of more favourable pricing witnessed through much of the fourth quarter,” continued Scherzer. “Overall, we are pleased with what we were able to accomplish through 2023 and anticipate a continuation of our successful track record of delivering positive results and strong returns for all our stakeholders.”
Fourth Quarter 2023 Financial Review
Compared to Q4 2022
Q4 2023 revenue decreased $61 million, or 9%, from $674 million in Q4 2022 to $613 million in Q4 2023, primarily due to a 9% decline in Shipping Volume and a 2% decrease in Average Selling Price per net ton. Our Shipping Volume decreased 61 thousand nt to 609 thousand nt from 670 thousand nt in Q4 2022. The Average Selling Price of our steel products decreased from $963 per nt in Q4 2022 to $941 per nt in Q4 2023. Also impacting revenue were non-steel sales which increased to $40 million in Q4 2023, from $29 million in Q4 2022.
The Company realized an operating loss of $16 million for the quarter, compared to operating income of $47 million in Q4 2022, a decrease of $63 million consisting of a decline in revenue of $61 million and higher selling, general and administrative expenses of $17 million, partly offset by a decrease in cost of goods sold of $15 million.
Finance costs decreased by $8 million, from $26 million in Q4 2022 to $18 million in Q4 2023, primarily due to the following: $10 million connected to the period-over-period impact of foreign exchange translation on U.S. dollar denominated working capital and $3 million lower accretion expense associated with our employee benefit commitment obligation, partly offset by a $3 million change related to the gross remeasurement impact from our employee benefit commitment obligation and a $2 million increase in inventory monetization arrangement finance charges.
The Company realized a net loss of $25 million for the quarter, compared to net income of $23 million in the fourth quarter of 2022, a change of $48 million primarily due to the following: $63 million decrease in operating income, $10 million decline in finance and other income, and $7 million decrease in current tax recovery, partly offset by $21 million in lower deferred taxes, an $8 million decrease in finance costs, and $2 million share of income from joint ventures. Adjusted Net Income totaled $9 million in Q4 2023, a decrease of $23 million from $32 million in Q4 2022.
Adjusted EBITDA in Q4 2023 totaled $51 million, a decrease of $31 million from $82 million in Q4 2022, which mostly reflects a decline in Average Selling Price per net ton and the impact of lower Shipping Volume.
Compared to Q3 2023
Q4 2023 revenue decreased $163 million, or 21%, from $776 million in Q3 2023 to $613 million in Q4, 2023, primarily due to a 13% decline in Average Selling Price per net ton and an 8% decrease in Shipping Volume. The Average Selling Price of our steel products declined from $1,083 per nt in Q3 2023 to $941 per nt in Q4 2023. Our Shipping Volume decreased from 661 thousand nt in Q3 2023 to 609 thousand nt in Q4 2023. Non-steel sales decreased by $20 million, from $60 million in Q3 2023 to $40 million during Q4 2023.
The Company realized an operating loss of $16 million in Q4 2023 compared to operating income of $121 million in Q3 2023, and Adjusted EBITDA of $51 million compared to $153 million during Q3 2023, which mostly reflects the impact from a decrease in Average Selling Price per net ton and lower Shipping Volume.
Full Year 2023 Financial Review
Revenue for 2023 decreased $546 million, or 16%, to $2,917 million in 2023 from $3,463 million in 2022, primarily due to a 17% decline in Average Selling Price per net ton and lower Shipping Volume. The Average Selling Price for our steel products decreased from $1,261 per nt in 2022 to $1,051 per nt in 2023. Shipping Volume decreased from 2,627 thousand nt in 2022 to 2,618 thousand nt in 2023. Non-steel sales increased $16 million, from $150 million in 2022 to $166 million in 2023.
Operating income for the year decreased $776 million, from $1,085 million in 2022 to $309 million in 2023, consisting of a decrease in revenue of $546 million, higher cost of goods sold of $214 million and an increase in selling, general and administrative expenses of $16 million during 2023.
Finance costs increased $32 million, from $78 million in 2022 to $110 million in 2023, due to the following: $14 million increase in inventory monetization arrangement finance charges, $13 million higher accretion expense related to lease and other related obligations, $10 million connected to the period-over-period impact of foreign exchange translation on U.S. dollar denominated working capital during the period, $5 million remeasurement charge related to a lease related obligation, $2 million increase in interest on the asset-based lending facility, and $2 million increase in receivables purchase agreement finance charges, partly offset by $12 million lower accretion expense associated with our employee benefit commitment obligation and $1 million related to the gross remeasurement impact from our employee benefit commitment obligation.
Net income for the year was $149 million, compared to $997 million in 2022, a decrease of $848 million primarily due to the following: $776 million decrease in operating income, $260 million gain on sale of land and buildings in 2022, and $32 million in higher finance costs, partly offset by $160 million decrease in current tax expense, $53 million lower deferred tax expense, $4 million decrease in other costs, and $2 million increase in finance and other income. Adjusted Net Income decreased $601 million period-over-period, from $819 million in 2022 to $218 million in 2023.
Adjusted EBITDA in 2023 totaled $484 million, a decrease of $709 million, from $1,193 million in 2022, which mostly reflects a decrease in Average Selling Price per net ton and an increase in cost of goods sold during the period.
Summary of Net Tons Shipped by Product
(in thousands of nt)
Tons Shipped by Product |
Q4 2023 |
Q4 2022 |
Change |
Q3 2023 |
Change |
2023 |
2022 |
Change |
Hot-rolled |
421 |
480 |
(12%) |
471 |
(11%) |
1,879 |
1,881 |
—% |
Coated |
82 |
80 |
3% |
95 |
(14%) |
361 |
345 |
5% |
Cold-rolled |
49 |
56 |
(13%) |
51 |
(4%) |
207 |
192 |
8% |
Other 1 |
57 |
54 |
6% |
44 |
30% |
171 |
209 |
(18%) |
Total |
609 |
670 |
(9%) |
661 |
(8%) |
2,618 |
2,627 |
—% |
|
|
|
|
|
|
|
|
|
Shipments by Product (%) |
|
|
|
|
|
|
|
|
Hot-rolled |
69% |
72% |
|
71% |
|
72% |
72% |
|
Coated |
13% |
12% |
|
14% |
|
14% |
13% |
|
Cold-rolled |
8% |
8% |
|
8% |
|
8% |
7% |
|
Other 1 |
10% |
8% |
|
7% |
|
6% |
8% |
|
Total |
100% |
100% |
|
100% |
|
100% |
100% |
|
1 Includes other steel products: pig iron and non-prime steel sales. |
||||||||
Statement of Financial Position and Liquidity
On a consolidated basis, the Company ended the period with total liquidity of $839 million, comprised of cash of $645 million and $194 million of availability under its revolving credit facility as at December 31, 2023. The following table shows selected information regarding the consolidated balance sheet as at the noted dates:
(millions of Canadian dollars) |
|
|
||
As at |
December 31, 2023 |
December 31, 2022 |
||
ASSETS |
|
|
||
Cash |
645 |
809 |
||
Trade and other receivables |
185 |
147 |
||
Inventories |
832 |
789 |
||
Total current assets |
1,696 |
1,796 |
||
|
|
|
||
Property, plant and equipment, net |
1,263 |
1,199 |
||
Deferred tax asset |
3 |
2 |
||
Total non-current assets |
1,369 |
1,335 |
||
Total assets |
3,065 |
3,131 |
||
|
|
|
||
LIABILITIES |
|
|
||
Trade and other payables |
780 |
663 |
||
Other liabilities |
73 |
83 |
||
Asset-based lending facility |
15 |
15 |
||
Income taxes payable |
2 |
2 |
||
Obligations to independent employee trusts |
45 |
143 |
||
Total current liabilities |
915 |
906 |
||
|
|
|
||
Other liabilities |
429 |
404 |
||
Asset-based lending facility |
38 |
54 |
||
Deferred tax liability |
58 |
18 |
||
Obligations to independent employee trusts |
298 |
315 |
||
Total non-current liabilities |
854 |
820 |
||
Total liabilities |
1,769 |
1,726 |
||
|
|
|
||
Total equity |
1,296 |
1,405 |
Stelco Holdings and its subsidiaries ended Q4 2023 with current assets of $1,696 million, which exceeded current liabilities of $915 million by $781 million. Non-current assets include the derivative asset representing the fair value of Stelco's option to purchase a 25% ownership interest in the Minntac mine. Stelco Holdings' liabilities include $343 million of obligations to independent pension and OPEB trusts, which includes $239 million of employee benefit commitments and $104 million under a mortgage note payable associated with the June 2018 land purchase. Non-current liabilities of $854 million as at December 31, 2023 include $298 million of the aforementioned obligations to independent pension and OPEB trusts, as well as property and power generating equipment lease and other related obligations. Stelco Holdings' consolidated equity totaled $1,296 million at December 31, 2023. Total equity is calculated after giving effect to $258 million of common share dividends declared and paid and $149 million of comprehensive income for the year ended December 31, 2023.
Normal Course Issuer Bid
The Company has received approval from the Toronto Stock Exchange (“TSX”) to commence a normal course issuer bid (“NCIB”). Stelco Holdings intends to purchase up to 3,344,684 common shares pursuant to the NCIB. The NCIB will commence on February 28, 2024 and end on February 27, 2025, or such earlier date as Stelco may complete its purchases pursuant to the notice of intention filed with the TSX.
The maximum number of common shares that may be repurchased for cancellation under the NCIB represents approximately 10% of the Company’s public float as of February 21, 2024, as calculated in accordance with the rules of the TSX. As of February 21, 2024, the Company had 55,128,694 common shares issued and outstanding. The average daily trading volume for the six months ended January 31, 2024 (“ADTV”), calculated in accordance with the rules of the TSX for purposes of the NCIB, was 214,539 common shares. Under the rules of the TSX, Stelco is entitled to repurchase, during each trading day, up to 25% of the ADTV, or 56,634 common shares (excluding purchases made pursuant to the block purchase exception), through the TSX.
The board of directors of the Company believes that the underlying value of the Company may not be reflected in the market price of the common shares from time to time and that, accordingly, the purchase of common shares will increase the proportionate interest in the Company of, and be advantageous to, all remaining shareholders of Stelco Holdings.
Repurchases will be made through the facilities of the TSX as well as through other designated exchanges and alternative trading systems in Canada in accordance with applicable regulatory requirements. The price paid for such repurchased shares will be the market price of such shares at the time of acquisition or such other price as may be permitted by the TSX. All common shares repurchased under the NCIB will be cancelled. The actual number of shares and timing of the repurchases under the NCIB will be determined by the Company.
The Company’s most recent normal course issuer bid (the “2023 NCIB”) commenced on February 28, 2023. Stelco Holdings is entitled to purchase up to 3,344,284 common shares pursuant to the 2023 NCIB, which expires on February 27, 2024. To date, no purchases have been made under the 2023 NCIB.
Declaration of Quarterly Dividend
Stelco Holdings' Board of Directors approved the payment of a regular quarterly dividend of $0.50 per common share which will be paid on March 7, 2024, to shareholders of record as of the close of business on March 1, 2024.
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 results on Thursday, February 22, 2024 at 9:00 a.m. ET. To access the call, please dial 1-833-950-0062 or 1-226-828-7575 and use access code 937274. The conference call will also be webcasted live on the Investor Relations section of Stelco’s web site at http://investors.stelco.com. A presentation that will accompany the conference call will be made 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 12:00 p.m. ET on February 22, 2024 until 11:59 p.m. ET on March 7, 2024 by dialing 1-866-813-9403 or 1-929-458-6194 and using the access code 276832.
Consolidated Financial Statements and Management’s Discussion and Analysis
The Company’s consolidated financial statements for the year ended December 31, 2023, and Management’s Discussion & Analysis thereon are available under the Company’s profile on SEDAR+ at www.sedarplus.ca.
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, as well as pig iron and metallurgical coke. With first-rate gauge, crown, and shape control, as well as uniform through-coil mechanical properties, our steel products are supplied to customers in the construction, automotive, energy, appliance, and pipe and tube industries across Canada and the United States as well as to a variety of steel service centres, which are distributors of steel products. At Stelco, we understand the importance of our business reflecting the communities we serve and are committed to diversity and inclusion as a core part of our workplace culture, in part, through active participation in the BlackNorth Initiative.
Non-IFRS Measures
This press release refers to certain non-IFRS measures that are not recognized under International Financial Reporting Standards ("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 common share," "Adjusted EBITDA," "Adjusted EBITDA per nt," "Average 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 year ended December 31, 2023 available under the Company’s profile on SEDAR+ at www.sedarplus.ca.
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, acquisitions, opportunities, budgets, operations, financial results, taxes, dividend policy, Average Selling Prices, Shipping Volume, Adjusted EBITDA margins, 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", "goal", "scheduled", "estimates", "outlook", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates" or "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 press release includes: statements regarding expected higher market pricing for steel; statements regarding expected continued strong market demand for steel; statements regarding future cash generation and delivering positive results and strong returns to stakeholders; expectations regarding expected Shipping Volume and Adjusted EBITDA in the first quarter of 2024 and improved Adjusted EBITDA margins during the first and second quarters of 2024; statements regarding our dividend policy; statements regarding the NCIB and that any purchase of common shares by the Company thereunder will result in a proportionate interest in the Company of, and be advantageous to, all remaining shareholders.
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 the utilization of and access to our production capacity; capital expenditures associated with accessing such production capacity; the ongoing impact of global conflicts on the international supply chain and economy overall; the impact of China's economic performance; the impact from government infrastructure spending globally; the impact of central banks' policy responses to global price inflation; the impact from inflationary cost pressures from energy prices and certain other high demand commodities; upgrades to our facilities and equipment; our research and development activities associated with advanced steel grades; impacts from higher interest rates; our ability to manage future costs relating to environmental compliance without such costs having a material adverse effect on our financial position; expectations that any increase in production capacity will not be affected by applicable environmental requirements, including air emissions requirements; our ability to source raw materials and other inputs at competitive rates; our ability to supply to new and existing 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 environmental and international trade regulations; our ability to effectively mitigate the impact of any labour disputes; 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.
Key Assumptions Underlying our Q1 2024 Shipping Volume Estimates and Adjusted EBITDA Estimates and H1 2024 Adjusted EBITDA Margins
The estimates with respect to our Shipping Volumes and Adjusted EBITDA during the first quarter of 2024 and Adjusted EBITDA margins during the first half of 2024 referenced in this press release are based on a number of assumptions in addition to the foregoing assumptions, including, but not limited to, the following material assumptions: the Company’s ability to continue to access the U.S. market without any adverse trade restrictions; no significant legal or regulatory developments, no adverse changes in economic conditions, or macro changes in the competitive environment affecting our business activities; upgrades to existing facilities remaining on schedule and on budget and their anticipated effect on revenue and costs being fully realized; the Company’s ability to attract new customers and further develop and maintain existing customers; currency exchange and interest rates not having an adverse impact on steel demand; the impact of competition; and growth in steel markets and industry trends.
We believe that our performance and our ability to achieve these shipments during the first quarter of 2024 depend on a number of material factors including: (i) growth in global demand; (ii) steel production capacity curtailments in China; (iii) continued fair trade practices, particularly with respect to the North American market; (iv) higher interest rates and inflation not having an adverse impact on steel demand; and (v) stable supply and demand fundamentals in the rest of the world. These factors are also subject to a number of inherent risks, challenges and assumptions.
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 press 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 year ended December 31, 2023, which is available on the Company’s website and on SEDAR+ (www.sedarplus.ca).
Stelco Holdings Inc.
Consolidated Statements of Income
|
Three months ended December 31, |
Years ended December 31, |
|||||||||||||
(millions of Canadian dollars) |
2023 |
2022 |
2023 |
2022 |
|||||||||||
Revenue from sale of goods |
$ |
613 |
|
$ |
674 |
|
$ |
2,917 |
|
$ |
3,463 |
|
|||
Cost of goods sold |
|
586 |
|
|
601 |
|
|
2,517 |
|
|
2,303 |
|
|||
Gross profit |
|
27 |
|
|
73 |
|
|
400 |
|
|
1,160 |
|
|||
|
|
|
|
|
|||||||||||
Selling, general and administrative expenses |
|
43 |
|
|
26 |
|
|
91 |
|
|
75 |
|
|||
Operating income (loss) |
|
(16 |
) |
|
47 |
|
|
309 |
|
|
1,085 |
|
|||
|
|
|
|
|
|||||||||||
Finance costs |
|
(18 |
) |
|
(26 |
) |
|
(110 |
) |
|
(78 |
) |
|||
Other costs |
|
(2 |
) |
|
(3 |
) |
|
(11 |
) |
|
(15 |
) |
|||
Finance and other income |
|
— |
|
|
10 |
|
|
9 |
|
|
7 |
|
|||
Share of income from joint ventures |
|
2 |
|
|
— |
|
|
2 |
|
|
1 |
|
|||
Gain on sale of land and buildings |
|
— |
|
|
— |
|
|
— |
|
|
260 |
|
|||
Income (Loss) before income taxes |
|
(34 |
) |
|
28 |
|
|
199 |
|
|
1,260 |
|
|||
|
|
|
|
|
|||||||||||
Current income tax expense (recovery) |
|
(19 |
) |
|
(26 |
) |
|
11 |
|
|
171 |
|
|||
Deferred income tax expense |
|
10 |
|
|
31 |
|
|
39 |
|
|
92 |
|
|||
Net income (loss) |
$ |
(25 |
) |
$ |
23 |
|
$ |
149 |
|
$ |
997 |
|
|||
Stelco Holdings Inc.
Consolidated Balance Sheets
(millions of Canadian dollars)
As at |
December 31, 2023 |
December 31, 2022 |
||||
ASSETS |
|
|
||||
Current assets |
|
|
||||
Cash |
$ |
645 |
$ |
809 |
||
Restricted cash |
|
10 |
|
9 |
||
Trade and other receivables |
|
185 |
|
147 |
||
Inventories |
|
832 |
|
789 |
||
Prepaid expenses and deposits |
|
24 |
|
42 |
||
Total current assets |
$ |
1,696 |
$ |
1,796 |
||
|
|
|
||||
Non-current assets |
|
|
||||
Derivative asset |
|
71 |
|
108 |
||
Property, plant and equipment, net |
|
1,263 |
|
1,199 |
||
Intangible assets |
|
13 |
|
8 |
||
Investment in joint ventures |
|
19 |
|
18 |
||
Deferred tax asset |
|
3 |
|
2 |
||
Total non-current assets |
$ |
1,369 |
$ |
1,335 |
||
Total assets |
$ |
3,065 |
$ |
3,131 |
||
|
|
|
||||
LIABILITIES |
|
|
||||
Current liabilities |
|
|
||||
Trade and other payables |
$ |
780 |
$ |
663 |
||
Other liabilities |
|
73 |
|
83 |
||
Asset-based lending facility |
|
15 |
|
15 |
||
Income taxes payable |
|
2 |
|
2 |
||
Obligations to independent employee trusts |
|
45 |
|
143 |
||
Total current liabilities |
$ |
915 |
$ |
906 |
||
|
|
|
||||
Non-current liabilities |
|
|
||||
Provisions |
|
18 |
|
18 |
||
Pension benefits |
|
13 |
|
11 |
||
Other liabilities |
|
429 |
|
404 |
||
Asset-based lending facility |
|
38 |
|
54 |
||
Deferred tax liability |
|
58 |
|
18 |
||
Obligations to independent employee trusts |
|
298 |
|
315 |
||
Total non-current liabilities |
$ |
854 |
$ |
820 |
||
Total liabilities |
$ |
1,769 |
$ |
1,726 |
||
|
|
|
||||
EQUITY |
|
|
||||
Common shares |
|
318 |
|
318 |
||
Retained earnings |
|
978 |
|
1,087 |
||
Total equity |
$ |
1,296 |
$ |
1,405 |
||
Total liabilities and equity |
$ |
3,065 |
$ |
3,131 |
||
Non-IFRS Measures Reconciliation
The following table provides a reconciliation of net income (loss) to Adjusted Net Income for the periods indicated:
|
Three months ended December 31, |
Years ended December 31, |
||||||||||||||
(millions of Canadian dollars) |
2023 |
2022 |
2023 |
2022 |
||||||||||||
Net income (loss) |
$ |
(25 |
) |
$ |
23 |
|
$ |
149 |
|
$ |
997 |
|
||||
Add back (Deduct) following items: |
|
|
|
|
||||||||||||
Share-based compensation 1 |
|
27 |
|
|
7 |
|
|
39 |
|
|
13 |
|
||||
Loss (Gain) on derivative asset |
|
11 |
|
|
3 |
|
|
37 |
|
|
18 |
|
||||
Other costs 2 |
|
2 |
|
|
3 |
|
|
11 |
|
|
15 |
|
||||
Transaction-based and other corporate-related costs |
|
5 |
|
|
2 |
|
|
8 |
|
|
4 |
|
||||
Remeasurement of employee benefit commitment 3 |
|
— |
|
|
(3 |
) |
|
(3 |
) |
|
(2 |
) |
||||
Gain on sale of land and buildings |
|
— |
|
|
— |
|
|
— |
|
|
(260 |
) |
||||
Total adjusted items before tax |
|
45 |
|
|
12 |
|
|
92 |
|
|
(212 |
) |
||||
Tax impact of above items |
|
(11 |
) |
|
(3 |
) |
|
(23 |
) |
|
34 |
|
||||
Total adjusted items after tax |
|
34 |
|
|
9 |
|
|
69 |
|
|
(178 |
) |
||||
Adjusted Net Income |
$ |
9 |
|
$ |
32 |
|
$ |
218 |
|
$ |
819 |
|
||||
1. Share-based compensation consists of costs connected with the Company's Total Shareholder Return Based Incentive Program and other share-based compensation plans. |
||||||||||||||||
2. Other costs includes the write-down of certain capital projects that are no longer being pursued by the Company, representing aborted construction in progress costs without future benefit to Stelco, as well as demolition and other costs not connected to the Company’s ongoing integrated steelmaking operations. |
||||||||||||||||
3. Remeasurement of employee benefit commitment for change in the timing of projected cash flows and future funding requirements. |
||||||||||||||||
The following table provides a reconciliation of net income (loss) to Adjusted EBITDA for the periods indicated:
(millions of Canadian dollars, except where otherwise noted) |
Three months ended December 31, |
Years ended December 31, |
||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
Net income (loss) |
$ |
(25 |
) |
$ |
23 |
|
$ |
149 |
|
$ |
997 |
|
||||
Add back (Deduct) following items: |
|
|
|
|
||||||||||||
Depreciation |
|
32 |
|
|
26 |
|
|
124 |
|
|
90 |
|
||||
Finance costs |
|
18 |
|
|
26 |
|
|
110 |
|
|
78 |
|
||||
Income tax expense (recovery): |
|
|
|
|
||||||||||||
Current |
|
(19 |
) |
|
(26 |
) |
|
11 |
|
|
171 |
|
||||
Deferred |
|
10 |
|
|
31 |
|
|
39 |
|
|
92 |
|
||||
Finance income and other |
|
(10 |
) |
|
(13 |
) |
|
(44 |
) |
|
(25 |
) |
||||
Share-based compensation 1 |
|
27 |
|
|
7 |
|
|
39 |
|
|
13 |
|
||||
Loss (Gain) on derivative asset |
|
11 |
|
|
3 |
|
|
37 |
|
|
18 |
|
||||
Other costs 2 |
|
2 |
|
|
3 |
|
|
11 |
|
|
15 |
|
||||
Transaction-based and other corporate-related costs |
|
5 |
|
|
2 |
|
|
8 |
|
|
4 |
|
||||
Gain on sale of land and buildings |
|
— |
|
|
— |
|
|
— |
|
|
(260 |
) |
||||
Adjusted EBITDA |
$ |
51 |
|
$ |
82 |
|
$ |
484 |
|
$ |
1,193 |
|
||||
|
|
|
|
|
||||||||||||
Adjusted EBITDA as a percentage of total revenue |
|
8 |
% |
|
12 |
% |
|
17 |
% |
|
34 |
% |
||||
1. Share-based compensation consists of costs connected with the Company's Total Shareholder Return Based Incentive Program and other share-based compensation plans. |
||||||||||||||||
| 2. Other costs includes the write-down of certain capital projects that are no longer being pursued by the Company, representing aborted construction in progress costs without future benefit to Stelco, as well as demolition and other costs not connected to the Company’s ongoing steelmaking operations. | ||||||||||||||||
