Company remains focused on investments in fleet improvements
and growing a diverse vessel portfolio
Algoma Central Corporation (TSX: ALC) ("Algoma", the "Company")
today reported its results for the three months ended March 31,
2023. Algoma reported revenues of $111,604, a 31% increase compared
to the same period in 2022. The Company reported a net loss of
$19,640 compared to a loss of $19,571 for the 2022 period. Due to
the closing of the canal system and the winter weather conditions
on the Great Lakes - St. Lawrence Seaway, the majority of the
Domestic Dry-Bulk fleet does not operate for most of the first
quarter. All amounts reported below are in thousands of Canadian
dollars, except for per share data and where the context dictates
otherwise.
"Algoma has proven year-over-year how resilient, adaptive and
reliable we are, and how we can continue to thrive through shifting
global markets," said Gregg Ruhl, President and CEO of Algoma.
"Maintenance and dry-dock spending increased year-over-year in the
first quarter, a reflection of our continued investments in the
safety, efficiency, and longevity of our fleet. With the 2023
navigation season well underway, our strong North American roots,
diverse vessel portfolio, and our expanding global presence will
continue to serve us well in the coming months. I look forward to
another busy year," continued Mr. Ruhl.
Financial Highlights: First Quarter 2023 Compared to
2022
- Net loss increased marginally to $19,640 compared to $19,571
last year and a basic loss per share of $0.51 compared to $0.52 in
2022.
- Revenue for Product Tankers increased 78% to $32,081 compared
to $18,036 in 2022. This was mainly driven by higher customer
demand, driving a 59% increase in revenue days. Segment operating
earnings increased to $1,144 compared to a loss of $1,559 in 2022,
reflecting the higher demand. Net earnings for the 2023 first
quarter include a $4,736 gain on the sale of two tanker
vessels.
- Domestic Dry-Bulk segment revenue increased 40% to $34,499
compared to $24,588 in 2022, reflecting 23% higher volumes, which
drove a 14% increase in revenue days. Operating loss increased 24%
to $33,643 compared to $27,220 for the prior year, mainly
reflecting increased winter maintenance expenditures.
- Ocean Self-Unloaders segment revenue increased 10% to $44,385
compared to $40,321 driven by higher freight rates across several
sectors and increased fuel cost recoveries, partially offset by
increased off-hire days due to dry-dockings. Operating earnings
decreased 19% to $4,952 compared to $6,108 in 2022, driven
primarily by increased operating costs as a result of the
dry-docking of two vessels during the period compared to none last
year.
- Global Short Sea Shipping segment equity earnings decreased 20%
to $1,998 compared to $2,500 for the prior year. Improved earnings
in the mini-bulker and handy-size segments was offset by increased
interest expense and a significant outage on one large cement
vessel, which took the vessel temporarily out of service during the
quarter.
Consolidated Statement of Earnings
For the periods ended March 31
2023
2022
(unaudited, in thousands of dollars,
except per share data)
Revenue
$
111,604
$
85,103
Operating expenses
(117,560)
(86,558)
Selling, general and administrative
(10,387)
(8,411)
Depreciation and amortization
(15,996)
(16,745)
Operating loss
(32,339)
(26,611)
Interest expense
(5,125)
(4,985)
Interest income
965
11
Gain on sale of vessels
4,736
—
Foreign currency gain (loss)
370
(607)
(31,393)
(32,192)
Income tax recovery
9,464
10,157
Net earnings from investments in joint
ventures
2,289
2,464
Net loss
$
(19,640)
$
(19,571)
Basic loss per share
$
(0.51)
$
(0.52)
Diluted loss per share
$
(0.51)
$
(0.52)
EBITDA(1)
The Company uses EBITDA as a measure of the cash generating
capacity of its businesses. The following table provides a
reconciliation of net loss in accordance with GAAP to the non-GAAP
EBITDA measure for the three months ended March 31, 2023 and 2022
and presented herein:
EBITDA(1)
For the periods ended March 31
2023
2022
Net loss
$
(19,640)
$
(19,571)
Depreciation and amortization
20,947
21,554
Interest and taxes
(4,057)
(4,627)
Foreign exchange (gain) loss
(353)
522
(Gain) loss on sale of vessels
(4,736)
2
EBITDA
$
(7,839)
$
(2,120)
Select Financial Performance by Business Segment
For the periods ended March 31
2023
2022
Domestic Dry-Bulk
Revenue
$
34,499
$
24,588
Operating loss
(33,643)
(27,220)
Product Tankers
Revenue
32,081
18,036
Operating earnings (loss)
1,144
(1,559)
Ocean Self-Unloaders
Revenue
44,385
40,321
Operating earnings
4,952
6,108
Corporate and Other
Revenue
639
2,158
Operating loss
(4,792)
(3,940)
The MD&A for the three months ended March 31, 2023 and 2022
includes further details. Full results for the three months ended
March 31, 2023 and 2022 can be found on the Company’s website at
www.algonet.com/investor-relations and on SEDAR at
www.sedar.com.
2023 Business Outlook(2)
Cargo demand in the Domestic Dry-Bulk segment heading into the
second quarter is expected to be relatively steady through April
and May, with some potential for minor softening in June, which is
typically the start of the slowest season for grain shipments.
Global iron ore prices do not currently support large additional
export volume through the Seaway, which is often used as a
replacement for grain during the summer months. In our Product
Tankers segment, we expect customer demand to be steady through
2023, although energy markets remain volatile due to on-going
hostilities in Europe. Vessel utilization is anticipated to be
strong and we expect the newly acquired Algoberta to commence
domestic operations early in the second quarter as seasonal demand
picks up.
In our international businesses, demand is expected to remain
steady with tight vessel supply at the Pool level in our Ocean
Self-Unloaders segment. Aggregate volumes are expected to continue
to be impacted by the closure of a quarry in Mexico and there is
some weakness expected in the US residential market, but overall
construction sector demand remains strong as infrastructure
projects are picking up. Five vessels in the Algoma fleet will be
dry docked in 2023 (there were no dry docks in 2022). In our Global
Short Sea Shipping joint venture, revenues from cement carriers are
expected to be steady in 2023, with fleet utilization at high
levels. On the other hand, mini-bulker and handy-size rates are
expected to be at more normal levels over the course of the year,
although volumes and utilization are not expected to be
affected.
We are expecting operating expenses to continue to be impacted
by inflation as increased costs work their way through our supply
chains and global fuel prices will likely remain higher than
normal, impacting both revenue and operating costs across all
segments. Overall, earnings could be negatively impacted in the
event of a prolonged recession and events in Ukraine and Europe can
significantly impact ocean freight rates, which may negatively
affect results in our global joint ventures.
Normal Course Issuer Bid
Effective March 21, 2023, the Company renewed its normal course
issuer bid (the "NCIB") with the intention to purchase, through the
facilities of the TSX, up to 1,926,915 of its Common Shares
("Shares") representing approximately 5% of the 38,538,301 Shares
which were issued and outstanding as at the close of business on
March 7, 2023. Under the current NCIB, 16,484 common shares were
purchased for the three months ending March 31, 2023.
Cash Dividends
Cash Dividends The Company's Board of Directors have authorized
payment of a quarterly dividend to shareholders of $0.18 per common
share. The dividend will be paid on June 1, 2023 to shareholders of
record on May 18, 2023.
Notes
(1) Use of Non-GAAP Measures
The Company uses several financial measures to assess its
performance including earnings before interest, income taxes,
depreciation, and amortization (EBITDA), free cash flow, return on
equity, and adjusted performance measures. Some of these measures
are not calculated in accordance with Generally Accepted Accounting
Principles (GAAP), which are based on International Financial
Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB), are not defined by GAAP, and do
not have standardized meanings that would ensure consistency and
comparability among companies using these measures. From
Management’s perspective, these non-GAAP measures are useful
measures of performance as they provide readers with a better
understanding of how management assesses performance. Further
information on Non-GAAP measures please refer to page 2 in the
Company's Management's Discussion and Analysis for the three months
ended March 31, 2023.
(2) Forward Looking Statements
Algoma Central Corporation’s public communications often include
written or oral forward-looking statements. Statements of this type
are included in this document and may be included in other filings
with Canadian securities regulators or in other communications. All
such statements are made pursuant to the safe harbour provisions of
any applicable Canadian securities legislation. Forward-looking
statements may involve, but are not limited to, comments with
respect to our objectives and priorities for 2023 and beyond, our
strategies or future actions, our targets, expectations for our
financial condition or share price and the results of or outlook
for our operations or for the Canadian, U.S. and global economies.
The words "may", "will", "would", "should", "could", "expects",
"plans", "intends", "trends", "indications", "anticipates",
"believes", "estimates", "predicts", "likely" or "potential" or the
negative or other variations of these words or other comparable
words or phrases, are intended to identify forward-looking
statements.
By their nature, forward-looking statements require us to make
assumptions and are subject to inherent risks and uncertainties.
There is significant risk that predictions, forecasts, conclusions
or projections will not prove to be accurate, that our assumptions
may not be correct and that actual results may differ materially
from such predictions, forecasts, conclusions or projections. We
caution readers of this document not to place undue reliance on our
forward-looking statements as a number of factors could cause
actual future results, conditions, actions or events to differ
materially from the targets, expectations, estimates or intentions
expressed in the forward-looking statements.
Algoma owns and operates the largest fleet of dry and liquid
bulk carriers operating on the Great Lakes - St. Lawrence Seaway,
including self-unloading dry-bulk carriers, gearless dry-bulk
carriers and product tankers. Since 2010 we have introduced 10 new
build vessels to our domestic dry-bulk fleet, with two under
construction and expected to arrive in 2024, making us the
youngest, most efficient and environmentally sustainable fleet on
the Great Lakes. Each new vessel reduces carbon emissions on
average by 40% versus the ship replaced. Algoma also owns ocean
self-unloading dry-bulk vessels operating in international markets
and a 50% interest in NovaAlgoma, which owns and operates the
world's largest fleet of pneumatic cement carriers and a global
fleet of mini-bulk vessels serving regional markets. Algoma truly
is Your Marine Carrier of Choice™. For more information about
Algoma, visit the Company's website at www.algonet.com.
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version on businesswire.com: https://www.businesswire.com/news/home/20230502006268/en/
Gregg A. Ruhl President & CEO 905-687-7890
Peter D. Winkley E.V.P. & Chief Financial Officer
905-687-7897
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