Stelco Holdings Inc. Reports Second Quarter 2022 Results

HAMILTON, Ontario - 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, announced financial results of the Company for the three and six months ended June 30, 2022. Stelco Holdings is the 100% owner of Stelco Inc. ('Stelco'), the operating company.

Alan Kestenbaum, Executive Chairman and Chief Executive Officer said, 'Over the course of an eventful second quarter for Stelco, we fulfilled several commitments to our shareholders by unlocking the value of the Hamilton lands thus completing another critical component of our strategic capital plan. At the same time, we were able to capitalize on a resurgence in pricing during the very early part of the quarter to deliver $464 million in Adjusted EBITDA and remain the industry leader with a 45% Adjusted EBITDA margin.'

'The sale of the Hamilton lands was a strategic transaction for Stelco and our shareholders that will keep Stelco operating in the community we have called home for over 100 years,' continued Kestenbaum. 'In addition to the $1.1 billion of capital we have returned to shareholders since our IPO in 2017, we are now offering to return up to an additional $1 billion to our shareholders through our recently announced Substantial Issuer Bid.'

'While our ongoing commitment to reducing our costs and our strategic investments have positioned Stelco to continue to operate profitably despite deteriorating market conditions, we are faced now with even stronger headwinds, including the sharply negative reversal in pricing trends that began early in the quarter with benchmark CRU pricing declining by over 40% since the recent peak in late-April and inflationary pressures on some of our key inputs such as natural gas, coal and alloys. Of course, we will work tirelessly to mitigate and overcome some of these challenges,' concluded Kestenbaum.

'The second quarter began with a continuation of the pricing and volume recovery we experienced at the end of Q1, however the market reversed course early in the quarter, and we were met with softening demand and substantially deteriorating pricing,' said Paul Scherzer, Chief Financial Officer. 'Accordingly, we are reiterating our guidance for the third and fourth quarters of 2022. It is expected that Adjusted EBITDA in Q3 will be materially below the Q2 level, and further weakening is expected in our Q4 results. This assumes that the lower prices and shorter lead-times being experienced currently fully impact results and prevail through the remainder of 2022.'

'Our commitment to effectively deploying our capital and delivering returns to shareholders will continue with a $0.30 per share dividend this quarter,' continued Scherzer. 'We are confident that even after the completion of our SIB, our balance sheet strength will enable us to weather the anticipated weaker second half of 2022.'

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 news 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 period ended June 30, 2022 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, acquisition, opportunities, 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', 'goal', '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: statements regarding Stelco's continued operation in Hamilton; expectations that we will be able to successfully adapt to changing market conditions and succeed across all points of the market cycle; expectations that we will continue to operate the business as one of the lowest-cost integrated steel producers in North America; our advancement of strategic initiatives and our intention to continue making strategic investments in our business; expectations regarding achieving a lower cost operating structure; expectations that the strength of our balance sheet will enable us to weather any market deterioration experienced during the second half of 2022 regardless of any change to our balance sheet as a result of the substantial issuer bid; expectations that margins will be under pressure in the second half of 2022 due to lower pricing and inflationary pressure on costs inputs and reduced demand; and the benefits of strategic investments to improve efficiency and lower costs.

Contact:

Investor

Paul D. Scherzer

Chief Financial Officer

T: [phone]

E: [e-mail]

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