Stelco Holdings Inc. Reports Third Quarter 2022 Results and Announces a $3 per Share Special Dividend and A 40% Increase of Its Regular Quarterly Dividend to $0.42 per Share

HAMILTON - 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 and nine months ended September 30, 2022.

Stelco Holdings is the 100% owner of Stelco Inc. ('Stelco'), the operating company.

Third Quarter 2022 Financial Review

Compared to Q3 2021

Q3 2022 revenue decreased $508 million, or 38%, from $1,354 million in Q3 2021, primarily due to a 36% decrease in Average Selling Price per net ton, a 3% decrease in Shipping Volumes, and lower non-steel sales of $21 million. The Average Selling Price of our steel products decreased from $1,808 per nt in Q3 2021 to $1,162 per nt in Q3 2022. Our Shipping Volumes decreased 24 thousand nt to 686 thousand nt from 710 thousand nt in Q3 2021.

The Company realized operating income of $217 million for the quarter, compared to $770 million in Q3 2021, a decrease of $553 million consisting of a decline in revenue of $508 million, an increase in cost of goods sold of $41 million, and higher selling, general and administrative expenses of $4 million.

Finance costs decreased by $9 million, from $26 million in Q3 2021 to $17 million in Q3 2022, due to the following: $12 million related to the period-over-period impact of foreign exchange translation on U.S. dollar denominated working capital during the period, $3 million decrease from the remeasurement impact from our employee benefit commitment obligation in Q3 2021, and $3 million lower accretion expense associated with our employee benefit commitment obligation, partly offset by $6 million higher accretion expense related to lease and other related obligations and a $2 million increase in interest on loans and borrowing.

The Company realized net income of $158 million for the quarter, compared to $614 million in the third quarter of 2021, a decrease of $456 million primarily due to the following: $553 million decrease in operating income, and $38 million change in deferred taxes, partly offset by $103 million decrease in current tax expense, $22 million change in finance income and other losses, $9 million in lower finance costs, and $1 million increase in share of income from joint ventures. Adjusted Net Income totaled $163 million in Q3 2022, a change of $466 million from $629 million in Q3 2021.

Adjusted EBITDA in Q3 2022 totaled $245 million, a decrease of $542 million from $787 million in Q3 2021, which mostly reflects a decrease in Average Selling Price per net ton and higher cost of goods sold.

Compared to Q2 2022

Q3 2022 revenue decreased $191 million, or 18%, from $1,037 million in Q2 2022, primarily due to 20% lower Average Selling Price per net ton, partly offset by a 1% increase in Shipping Volumes, from 677 thousand nt in Q2 2022 to 686 thousand nt in Q3 2022. Non-steel sales decreased $4 million, from $53 million in Q2 2022 to $49 million during Q3 2022.

The Company realized operating income of $217 million in Q3 2022 compared to $440 million in Q2 2022, and Adjusted EBITDA of $245 million compared to $464 million during Q2 2022, which mostly reflects lower Average Selling Price per net ton and higher cost of goods sold, partly offset by an increase in Shipping Volumes.

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.

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: 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; expectations that our upgraded coke battery and our electricity cogeneration facility will provide us with opportunities to improve productivity and reduce our costs and carbon footprint; expectations that we will continue to experience a challenging market environment during the fourth quarter of 2022; expectations that the strength of our balance sheet will enable us to weather the current market environment in addition to any further market deterioration; expectations regarding achieving a lower cost operating structure; expectations that margins will be under pressure in the second half of 2022 due to lower pricing and inflationary pressure on cost inputs and reduced demand and expectations that our business is well positioned to make the necessary strategic investments to improve efficiency, lower costs, secure our long-term viability and ensure that shareholders benefit from our success.

Contact:

Paul D. Scherzer

Tel: [phone]

Email: [e-mail]

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