International segments drive solid performance offsetting
impact of winter season on domestic dry-bulk business
Algoma Central Corporation (TSX: ALC) today reported its results
for the three months ended March 31, 2022. Revenues increased 10%
to $85,103, compared to $77,599 in 2021. The Company reported a 13%
improvement in net loss and a 68% improvement in EBITDA(1). 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.
"Our first quarter results confirms the strength of our
diversified business portfolio and the benefits of our growth in
international markets," said Gregg Ruhl, President and CEO of
Algoma Central Corporation. "Our Ocean Self-Unloader and Global
Short Sea fleets generated strong results this quarter. Both
segments are continuing to experience steady freight rates and we
are seeing improved customer demand in most sectors. Although the
majority of our domestic fleet was laid-up during the first
quarter, our teams were busy conducting our winter maintenance
program and preparing our fleet for the season. We also had some of
our domestic vessels running in parts of the system during the
first quarter and a shout out to those who weathered the elements
to ensure that essential cargo, like road salt, was delivered,"
concluded Mr. Ruhl.
Financial Highlights: First Quarter 2022 Compared to
2021
- Net loss improved 13% to $19,571 compared to $22,416. Basic and
diluted loss per share were $0.52 compared to $0.59.
- Global Short Sea Shipping segment equity earnings increased 73%
to $2,500 compared to $1,444. The earnings improvement was driven
by very strong charter rates realized in the mini-bulker
sector.
- The Ocean Self-Unloader segment revenue increased 24% to
$40,321 compared to $32,496 driven by higher fuel cost recoveries
and a 14% increase in revenue days due to fewer dry-dockings
compared to the first quarter of 2021. Operating earnings increased
40% to $6,108 compared to $4,369.
- Domestic Dry-Bulk segment revenue was essentially flat at
$24,588 compared to $24,552, reflecting similar year-over-year
revenue days. Operating loss improved 8% to $27,220 compared to
$29,686 driven by lower operating costs.
- Revenue for Product Tankers decreased 1% to $18,036 compared to
$18,217. This was due to the reduction in customer demand from our
major customer, offset by higher fuel cost recoveries. Operating
earnings decreased to a loss of $1,559 compared to earnings of $224
driven by a 7.5% reduction in revenue days and higher fuel
prices.
Consolidated Statement of Earnings
For the years ended December 31
2022
2021
Revenue
$
85,103
$
77,599
Operating expenses
(86,558
)
(81,289
)
Selling, general and administrative
(8,411
)
(8,510
)
Other operating item
—
300
Depreciation and amortization
(16,745
)
(17,493
)
Operating loss
(26,611
)
(29,393
)
Interest expense
(4,985
)
(5,317
)
Interest income
11
27
Foreign currency (loss) gain
(607
)
53
(32,192
)
(34,630
)
Income tax recovery
10,157
10,742
Net earnings from investments in joint
ventures
2,464
1,472
Net Loss
$
(19,571
)
$
(22,416
)
Basic loss per share
$
(0.52
)
$
(0.59
)
Diluted loss per share
$
(0.52
)
$
(0.59
)
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 earnings in accordance with GAAP to the
non-GAAP EBITDA measure for the three months ended March 31, 2022
and 2021 and presented herein:
EBITDA(1)
Three Months Ended
For the periods ended March 31
2022
2021
Net loss
$
(19,571
)
$
(22,416
)
Depreciation and amortization
21,554
21,270
Interest and taxes
(4,627
)
(4,787
)
Foreign exchange loss (gain)
522
(210
)
Other operating item
—
(300
)
Loss (gain) on sale of vessels
2
(208
)
EBITDA
$
(2,120
)
$
(6,651
)
Select Financial Performance by Business Segment
For the periods ended March 31
2022
2021
Domestic Dry-Bulk
Revenue
$
24,588
$
24,552
Operating loss
(27,220
)
(29,686
)
Product Tankers
Revenue
18,036
18,217
Operating (loss) earnings
(1,559
)
224
Ocean Self-Unloaders
Revenue
40,321
32,496
Operating earnings
6,108
4,369
Corporate and Other
Revenue
2,158
2,334
Operating loss
(3,940
)
(4,300
)
The MD&A for the three months ended March 31, 2022 and 2021
includes further details. Full results for the three months ended
March 31, 2022 and 2021 can be found on the Company’s website at
www.algonet.com/investor-relations or on SEDAR at
www.sedar.com.
2022 Business Outlook(2)
In the Domestic Dry-Bulk segment, the impact of the drought in
Western Canada is a significant factor in 2022. We currently expect
reduced grain volumes, at least until the 2022 fall harvest.
Reduced grain volumes will impact the efficiency of some of our
trade routes in the spring and summer and we have adjusted the pace
of our vessel fit-out schedule to match vessel capacity to customer
demand. In the near term, other commodities may also be affected by
changing global trading patterns, resulting primarily from the war
in Ukraine, and may cause some incremental demand from our
customers. We are preparing to be as nimble as possible to respond
to shifting customer requirements.
We expect Product Tanker utilization in 2022 to be similar to
2021 as our customers continue to recover from the impact that
COVID-19 has had on the demand for wholesale petroleum
products.
Vessel supply at the Pool level is fairly well balanced for the
remainder of the year. We are not currently expecting much impact
from the war in Ukraine on the Pool business, aside from the effect
of oil prices. Two Algoma vessels have significant dry-dockings
later in the year. We remain optimistic that cargo volumes will
grow gradually.
We are anticipating solid charter rates for the next quarter,
building on a very strong first quarter market for the mini-bulker
fleet, followed by gradual normalization over for the remainder of
2022. This outlook could change rapidly if global markets slow
considerably. The cement sector is expected to remain steady for
the 2022 season and we are expecting the third of three newly
acquired cement carriers to be delivered in late June. Two
handy-size bulk carriers will also join the handy-size fleet later
this year.
Normal Course Issuer Bid
Effective March 21, 2022, the Company renewed its normal course
issuer bid with the intention to purchase, through the facilities
of the TSX, up to 1,890,457 of its Common Shares ("Shares")
representing approximately 5% of the 37,800,943 Shares which were
issued and outstanding as at the close of business on March 9, 2022
(the “NCIB”). No shares have been purchased to date under this
NCIB.
Cash Dividends
The Company's Board of Directors have authorized payment of a
quarterly dividend to shareholders of $0.17 per common share. The
dividend will be paid on June 1, 2022 to shareholders of record on
May 18, 2022.
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, 2022.
(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 Waterway,
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 one 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 a
diversified portfolio of dry-bulk fleets serving customers
internationally. 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/20220503006390/en/
Gregg A. Ruhl President & CEO 905-687-7890
Peter D. Winkley Chief Financial Officer 905-687-7897
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