Lakeside Announces Fiscal 2012 First Quarter Results

WELLAND, ON, Sept. 23, 2011 /CNW/ - Lakeside Steel Inc. (TSXV: LS) ("Lakeside" or the "Company") today reported its financial results for its fiscal 2012 first quarter ended June 30, 2011 ("Q1 2012").   Consistent with other TSX-V issuers, the Company had an additional 30 days within which to file its first interim financial statements after adoption of IFRS.  For Q1 2012 the Company's revenue was $53,027,946 which represents a decrease of $9,174,919 or 15% from revenue of $62,202,865 for the fiscal 2011 first quarter ended June 30, 2010 ("Q1 2011").

The Company's adjusted EBITDA was ($16,068) in Q1 2012, a decrease of $584,862 from adjusted EBITDA of $568,794 in Q1 2011. For Q1 2012, the Company's net loss was $1,093,059, an increase of $282,397 from a net loss of $810,662 for Q1 2011. The Company generated losses of $0.01 per share in both Q1 2012 and Q1 2011.

Profitability margins were negatively impacted by rapid increases in steel prices that occurred during this purchasing cycle, resulting in higher input costs. During Q1 2012, oil country tubular goods ("OCTG") customer demand for plain end pipe decreased due to capacity constraints among thermal and end-finishing processors. Given these constraints, customer demand for finished OCTG products increased. The quarter was also negatively impacted by an extended cyclical slow-down that the Canadian OCTG market typically experiences each spring.

Ron Bedard, President and Chief Operating Officer, commented: "The first quarter of this fiscal year has been both challenging and disappointing for the Company. The higher cost of steel, coupled with flat OCTG prices, resulted in margin erosion. The shift in customer demand towards thermal treated products demonstrates the need for the Company's thermal treatment facilities. Furthermore, the continued presence of low-cost overseas imports of plain end product led to a significant constraint in thermal treatment and end-finishing capacity in the market. The Company's vertical integration strategy is expected to alleviate these constraints for Lakeside.

The Company expects that its near-term financial results will continue to be negatively impacted until the Company reduces its inventory and realizes its vertical integration strategy. Upon completion of the new manufacturing mill and thermal and end-finishing facilities in Alabama, the Company will be in a stronger position to return to profitability".

About Lakeside Steel Inc.

Lakeside is a 2011 TSX Venture Exchange 50 company and the parent company of Lakeside Steel Corporation, Lakeside Steel Alabama Inc. and Lakeside Steel Texas Inc. Lakeside has operating facilities located in Welland, Ontario, and Corpus Christi, Texas, and three facilities currently being constructed in Thomasville, Alabama. Lakeside is a diversified steel pipe and tubing manufacturer with a focus on manufacturing and upgrading Oil Country Tubular Goods. Lakeside's list of customers includes large oil and gas end users as well as distributors across North America.

Lakeside Steel Alabama will be a diversified steel pipe manufacturer with end-finishing and heat treat capabilities strategically situated in the southern United States on successful completion of construction of the new facilities in Thomasville, Alabama. Construction of the Alabama facilities is currently underway.

This press release may contain forward-looking statements with respect to the Company, its operations, strategy, financial performance and condition. These statements generally can be identified by use of forward looking words such as "may", "will", "expect", "estimate", "anticipate", intends", "believe" or "continue" or the negative thereof or similar variations. The actual results and performance of the Company discussed herein could differ materially from those expressed or implied by such statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, competition, changes in government regulations and the factors described under "Risk Factors" in the Management's Discussion, and Analysis, Annual Information Form and Filing Statement of the Company which are available at www.sedar.com. The cautionary statements qualify all forward-looking statements attributable to the Company and persons acting on their behalf. Unless otherwise stated, all forward-looking statements speak only as of the date of this press release and the Company has no obligation to update such statements.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. Lakeside was recognized as a TSX Venture 50® company in 2010 and 2011. TSX Venture 50 is a trade-mark of TSX Inc. and is used under license.

SOURCE Lakeside Steel Inc.

For further information:

Ron Bedard 
President and Chief Operating Officer
Lakeside Steel Inc.
FAX:  (905)735-9069
e-mail: ron.bedard@lakesidesteelcorp.ca
      Ken Hunter 
Chief Financial Officer
Lakeside Steel Inc
FAX:  (905)735-9069
e-mail: ken.hunter@lakesidesteelcorp.ca

 

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