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Tree Island Steel Announces First Quarter 2013 Results

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VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 05/10/13 -- Tree Island Steel Ltd. ("Tree Island Steel" or the "Company") (TSX: TSL)(TSX: TSL.DB) announced today its financial results for the three month period ended March 31, 2013(1).

For the three-month period ended March 31, 2013, Tree Island Steel's focus on profitability resulted in gross profit increasing to $4.2 million from $4.0 million, and gross profit per ton also improving to $153 per ton from $130 per ton in the same period in 2012, despite the lower revenues and sales volume. As a result of the Company's ongoing efforts and focus on cost management and operational efficiencies, EBITDA and EBITDA per ton increased to $1.8 million and $66, respectively compared to $1.7 million and $56 during the corresponding period in 2012. Revenues during the first quarter of 2013 decreased to $38.1 million versus $44.0 million and sales volumes decreased 9.9% resulting from our continued focus on profitable growth in the marketplace and a 4.0% reduction in revenue per ton from lower cost of steel.

"While revenues and sales volumes were lower in the quarter, I am pleased to see our focus on profitable growth demonstrate steady improvement in gross profit and EBITDA on a year-over-year basis," said Dale R. MacLean, President and CEO of Tree Island Steel. "While we continue to see price volatility in raw materials and selling prices, we are committed to maximize efficiencies and mitigate these factors by leveraging our brand, service and product quality while selling into end markets where we can achieve optimal returns now and in the future for the Company and our shareholders."

Amar S. Doman, Chairman of Tree Island Steel noted, "The first quarter results are a testament to the Company's ongoing focus on profitability. It is encouraging to see the Company generate improved profitability metrics on a consistent basis, which leads us to believe that our efforts are paying off in strengthening Tree Island Steel's foundation and growth platform."

Summary of Results ($000's except for tonnage Three Months Ended March 31and per unit amounts) 2013 2012---------------------------------------------------------------------------Sales Volumes - Tons(a) 27,601 30,618Sales $ 38,093 $ 43,997Cost of sales (33,137) (39,237)Depreciation (720) (768)---------------------------------------------------------------------------Gross profit 4,236 3,992Selling, general and administrative expenses (3,147) (3,032)---------------------------------------------------------------------------Operating income 1,089 960 Foreign exchange gain 26 309 Gain on sale of property, plant and equipment - 426 Changes in financial liabilities recognized at fair value 20 - Financing Expenses (1,439) (2,261)---------------------------------------------------------------------------Loss before income taxes (304) (566) Income tax recovery 167 148---------------------------------------------------------------------------Net loss (137) (418)---------------------------------------------------------------------------Operating income 1,089 960 Add back depreciation 720 768---------------------------------------------------------------------------EBITDA (2) 1,809 1,728--------------------------------------------------------------------------- Foreign exchange gain 26 309---------------------------------------------------------------------------EBITDA including foreign exchange 1,835 2,037---------------------------------------------------------------------------Net loss (137) (418)Add back significant non-cash itemsNon-cash financing expenses 654 1,404Non-cash (gain) loss on renegotiated debt - -Changes in financial liabilities recognized at fair value 20 -Deferred income tax recovery (179) (157)---------------------------------------------------------------------------Adjusted net income (b) 358 829------------------------------------------------------------------------------------------------------------------------------------------------------Per share / unit Net loss per share / unit - basic (0.01) (0.02) Net loss per share / unit - diluted (0.01) (0.02)------------------------------------------------------------------------------------------------------------------------------------------------------Per ton Gross profit per ton 153 130 EBITDA per ton 66 56--------------------------------------------------------------------------- As at As at March 31, December 31,Financial position 2013 2012--------------------------------------------------------------------------- Total assets $ 91,348 $ 81,102 Total non-current financial liabilities $ 29,553 $ 29,790---------------------------------------------------------------------------(a) Sales volumes exclude tons which were processed as part of tollingarrangements(b) See definition of EBITDA and Adjusted Net Income in footnote 2 to thepress release



About Tree Island Steel

Headquartered in Richmond, British Columbia, since 1964, Tree Island Steel, through its four operating facilities in Canada and the United States, produces wire products for a diverse range of industrial, residential construction, commercial construction, agricultural, and specialty applications. Its products include bright wire; a broad array of fasteners, including packaged, collated and bulk nails; stucco reinforcing products; concrete reinforcing mesh; fencing and other fabricated wire products. The Company markets these products under the Tree Island, Halsteel, K-Lath, Industrial Alloys, TI Wire, and Tough Strand and Select Brand names. Tree Island Steel also owns and operates a China-based company that assists the international sourcing of products.

Forward-Looking Statements

This press release includes forward-looking information with respect to Tree Island Steel including its business, operations and strategies, as well as financial performance and conditions. The use of forward-looking words such as, "may," "will," "expect" or similar variations generally identify such statements. Any statements that are contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Although management believes that expectations reflected in forward-looking statements are reasonable, such statements involve risks and uncertainties including risks and uncertainties discussed under the heading "Risk Factors" in the Company's most recent annual information form and management discussion and analysis.

The forward looking statements contained herein reflect management's current beliefs and are based upon certain assumptions that management believes to be reasonable based on the information currently available. By their very nature, forward looking statements involve inherent risks and uncertainties, both general and specific, and a number of factors could cause actual events or results to differ materially from the results discussed in the forward looking statements. In evaluating these statements, prospective investors should specifically consider various factors including the risks outlined in the Fund's most recent annual information form and management discussion and analysis which may cause actual results to differ materially from any forward looking statement. Such risks and uncertainties include, but are not limited to: general economic, market and business conditions, the cyclical nature of our business and demand for our products, financial condition of our customers, competition, volume and price pressure from import competition, deterioration in the Company's liquidity, disruption in the supply of raw materials, volatility in the costs of raw materials, significant exposure to the Western United States due to lack of geographic diversity, dependence on the construction industry, transportation costs, foreign exchange fluctuations, leverage and restrictive covenants, labour relations, trade actions, dependence on key personnel and skilled workers, reliance on key customers, intellectual property risks, energy costs, un-insured loss, credit risk, operating risk, management of growth, changes in tax, environmental and other legislation, and other risks and uncertainties set forth in our publicly filed materials.

This press release has been reviewed by the Company's Board of Directors and its Audit Committee, and contains information that is current as of the date of this press release, unless otherwise noted. Events occurring after that date could render the information contained herein inaccurate or misleading in a material respect. Readers are cautioned not to place undue reliance on this forward-looking information and management of the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise except as required by applicable securities laws.

(1) Please refer to our Q1 2013 MD&A for further information.(2) References made above to "EBITDA" are to operating profit plusdepreciation and references to "Adjusted Net Income" are to net income perIFRS adjusted for certain non-cash items including non-cash financingexpenses, changes in fair value of convertible instruments, and deferredincome tax recovery. EBITDA is a measure used by many investors to compareissuers on the basis of ability to generate cash flows from operations.Adjusted Net Income is a measure for investors to understand the impact ofsignificant non-cash items that affect our results from operations. NeitherEBITDA nor Adjusted Net Income are earnings measures recognized by IFRS anddo not have a standardized meaning prescribed by IFRS. We believe thatEBITDA and Adjusted Net Income are important supplemental measure inevaluating the Fund's performance. You are cautioned that EBITDA andAdjusted Net Income should not be construed as alternatives to net income orloss, determined in accordance with IFRS, or as indicators of performance.Our method of calculating EBITDA and Adjusted Net Income may differ frommethods used by other issuers and, accordingly, our EBITDA or Adjusted NetIncome may not be comparable to similar measures presented by other issuers.Tree Island Steel Ltd.CONSOLIDATED STATEMENT OF FINANCIAL POSITION(In thousands of Canadian dollars) March 31 December 31 2013 2012---------------------------------------------------------------------------AssetsCurrent Cash 2,569 2,371 Accounts receivable 21,616 11,984 Inventories 34,618 32,732 Prepaid expenses 1,108 2,200--------------------------------------------------------------------------- 59,911 49,287Property, plant and equipment 31,229 31,592Other non-current assets 208 223--------------------------------------------------------------------------- 91,348 81,102---------------------------------------------------------------------------LiabilitiesCurrent Senior Revolving Facility 16,981 10,785 Accounts payable and accrued liabilities 13,331 9,649 Income taxes payable 1,352 1,346 Other current liabilities 92 83 Fair value of convertible instruments 276 312 Current portion of long-term debt 1,774 1,748--------------------------------------------------------------------------- 33,806 23,923Convertible Debentures 15,471 15,634Senior Term Loan 4,167 4,292Long-term debt 9,705 9,639Finance Lease 72 87Other non-current liabilities 441 449Deferred income taxes 1,794 1,973--------------------------------------------------------------------------- 65,456 55,997---------------------------------------------------------------------------Shareholders' Equity 25,892 25,105--------------------------------------------------------------------------- 91,348 81,102---------------------------------------------------------------------------Tree Island Steel Ltd.CONSOLIDATED STATEMENT OF OPERATIONS(In thousands of Canadian dollars, except share / units and per-share /unit amounts) Three Months Ended March 31 2013 2012---------------------------------------------------------------------------Sales $ 38,093 $ 43,997Cost of goods sold 33,137 39,237Depreciation 720 768---------------------------------------------------------------------------Gross profit 4,236 3,992Selling, general and administrative expenses 3,147 3,032---------------------------------------------------------------------------Operating income 1,089 960Foreign exchange gain 26 309Gain on sale of property, plant and equipment - 426Changes in financial liabilities recognized at fair value 20 -Financing expenses (1,439) (2,261)---------------------------------------------------------------------------Loss before income taxes (304) (566)Income tax recovery 167 148---------------------------------------------------------------------------Net loss for the period $ (137) $ (418)---------------------------------------------------------------------------Net loss per share / unit Basic $ (0.01) $ (0.02) Diluted $ (0.01) $ (0.02)---------------------------------------------------------------------------Weighted-average number of shares / units Basic 23,113,661 22,337,889 Diluted 23,113,661 22,337,889---------------------------------------------------------------------------Tree Island Steel Ltd.CONSOLIDATED STATEMENT OF CASH FLOWS(In thousands of Canadian dollars) Three Months Ended March 31 2013 2012---------------------------------------------------------------------------Cash flows from operating activities Net loss for the year $ (137) $ (418) Adjustments for: Depreciation 720 768 Changes in financial liabilities recognized at fair value (20) - Gain on sale of property, plant and equipment - (426) Amortization and write-off of deferred financing 16 70 Net finance costs 1,423 2,191 Deferred income tax recovery (179) (157) Fair value change on Phantom Units - 22 Exchange revaluation on foreign denominated debt 226 (565) Working capital Adjustments: Accounts Receivable (9,526) (7,908) Inventories (1,648) (1,645) Accounts payable and accrued liabilities 3,595 916 Prepaid expenses 1,099 1,260 Income and other taxes 12 9 Other (268) 278---------------------------------------------------------------------------Net cash used in operating activities (4,688) (5,605)---------------------------------------------------------------------------Cash flows from investing activities Proceeds on disposal of property, plant and equipment - 470 Purchase of property, plant and equipment (215) (129)---------------------------------------------------------------------------Net cash (used in) provided by investing activities (215) 341---------------------------------------------------------------------------Cash flows from financing activities Repayment of Senior Term Loan (125) - Repayment of long-term debt (386) (598) Conversion of Warrants 171 - Interest paid (778) (857) Normal course issuer bid - (205) Advance on Senior Revolving Facility 6,196 6,354---------------------------------------------------------------------------Net cash provided by financing activities 5,078 4,694---------------------------------------------------------------------------Effect of exchange rate changes on cash 16 (14)---------------------------------------------------------------------------Increase (decrease) in cash 191 (584)Cash, beginning of period 2,371 3,852---------------------------------------------------------------------------Cash, end of period $ 2,562 $ 3,268---------------------------------------------------------------------------





Contacts:
Tree Island Steel Ltd.
Nancy Davies
Chief Financial Officer
(604) 523-4587
ndavies@treeisland.com
www.treeisland.com



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