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VANCOUVER, British Columbia, Canada – March 2, 2023 – Tree Island Steel (”Tree Island” or the ”Company”) (TSX: TSL) announced today its financial results for the year ended December 31, 2022.
For the three-month period ended December 31, 2022, revenues decreased by $8.8 million to $67.1 million, from the record revenue of $76.0 million in the same period in 2021, with lower demand due to customer inventory reductions amid easing supply chain constraints. The Canadian residential construction and industrial market segments, however, generated increased shipped volume compared to the same period in 2021, with higher sales in nails, stucco and multiple industrial wire products. Gross profit for the fourth quarter decreased to $8.3 million, from $17.3 million in the same period in 2021, impacted by tightened margins with reduced demand. Adjusted EBITDA amounted to $5.7 million, compared to $12.6 million during the same period in 2021 from lower gross profit.
For the year ended December 31, 2022, revenues increased by $36.6 million to $338.4 million compared to 2021. The increase is primarily due to pricing increases across all market segments despite lower volumes shipped in the agricultural, industrial and residential construction segments as customers realigned inventory positions, particularly in the latter part of 2022. Compared to prior year, however, we experienced higher shipped volumes in the commercial construction market segment, driven by increased construction sheets and structural mesh demand. Gross profit decreased to $65.3 million from $68.6 million, due to lower overall shipped volumes and tightened margins with reduced demand. The lower gross margins also resulted in an Adjusted EBITDA of $55.9 million, compared to $58.0 million during the same period in 2021.
On March 2, 2023 the Board of Directors declared a quarterly dividend of $0.03 per share and an additional $0.02 per share as a special dividend on the issued and outstanding Common Shares of the Company, payable on April 14, 2023 to holders of record at the close of business on March 31, 2023.
In the first quarter of 2023, the Company chose to exercise its early termination of the lease for the Etiwanda facility, which it sold in December 2021. Throughout fiscal 2022, Management reviewed options for relocation of the operations and equipment. As part of its ongoing activities to improve efficiencies, operating leverage and cost structure, the Company determined that the most attractive option was to relocate certain higher performing equipment to its other locations and to permanently close the Etiwanda operations in June 2023. Please see Section 4.2 in the Management Disclosure and Analysis for the year ended December 31, 2022.
“With ongoing economic volatility, we continue to remain cautious in our demand outlook for steel wire and wire products. However, we anticipate customer inventory restocking after prior quarter reductions to support an improvement in seasonal and project-related demand. In addition, we continue to closely manage inventory positions across our facilities, supporting our improved financial position achieved over the past few years,“ said Remy Stachowiak, President and COO of Tree Island Steel.
“We continue to focus on supporting our customer needs across our market segments and geographies, closely aligning production and inventories in this evolving business environment,” said Amar S. Doman, Executive Chair of Tree Island Steel.