Strong growth and performance: continued success amidst
changing markets and economic challenges
Algoma Central Corporation (TSX: ALC) ("Algoma", the "Company")
today reported its results for the three and six months ended June
30, 2023. Algoma reported revenues during the 2023 second quarter
of $202,406, a 10% increase compared to the same period in 2022.
Net earnings for the 2023 second quarter were $33,144 compared to
$47,045 for the same period in 2022; earnings in 2022 included a
$10,563 gain from the sale of Station Mall. The Company reported
2023 second quarter EBITDA of $65,204 compared to $61,412 for the
same period in 2022. All amounts reported below are in thousands of
Canadian dollars, except for per share data and where the context
dictates otherwise.
"This year we have focused on driving long-term value for our
stakeholders by optimizing our diversified growth, while
maintaining our operating vigilance in changing markets," said
Gregg Ruhl, President and CEO of Algoma. "Historically, we know
shifting market demand and economic challenges have not stopped
Algoma's progress, but instead made us think differently in order
to adapt and effectively move our strategic plan forward. In the
second quarter, we advanced several incremental growth investments
demonstrating our ability to find and execute on attractive
opportunities to deploy capital,” continued Mr. Ruhl.
Financial Highlights: Second Quarter 2023 Compared to
2022
- Domestic Dry-Bulk segment revenue increased 27% to $126,584
compared to $99,288 in 2022, reflecting 17% higher volumes, which
drove a 24% increase in revenue days. Operating earnings increased
53% to $32,806 compared to $21,504 for the prior year, mainly
reflecting full fleet utilization this quarter, partially offset by
higher operating costs.
- Revenue for Product Tankers decreased 12% to $28,046 compared
to $31,923 in 2022. This was mainly driven by higher off-hire days
on two vessels which resulted in 7% fewer revenue days, and a
decrease in fuel cost recovery. Segment operating earnings
decreased to $1,078 compared to $3,683 in 2022, reflecting the
higher off-hire days and increased operating costs.
- Ocean Self-Unloaders segment revenue decreased 6% to $47,120
compared to $50,292 as a result of higher scheduled dry-dockings
driving 8% fewer revenue days, and lower fuel pass through charges.
Operating earnings decreased 28% to $8,003 compared to $11,139 in
2022, mainly as a result of dry-dockings and lower daily earning
rates.
- Global Short Sea Shipping segment equity earnings were $5,155
compared to $9,454 for the prior year; 2022 equity earnings include
a $4,782 gain on the sale of two vessels; excluding this gain,
earnings increased 10%. The higher earnings were driven by
increased earnings in the cement fleet due to the larger fleet size
this year and strong freight rates, partially offset by lower
earnings in the mini-bulker and handy fleets as a result of a
softening of freight rates and the smaller mini-bulker fleet this
year.
Consolidated Statement of
Earnings
Three Months Ended
Six Months Ended
For the periods ended June 30
2023
2022
2023
2022
(unaudited, in thousands of dollars,
except per share data)
Revenue
$
202,406
$
183,463
$
314,010
$
268,566
Operating expenses
(138,997
)
(125,615
)
(256,557
)
(212,173
)
Selling, general and administrative
(10,715
)
(8,767
)
(21,102
)
(17,178
)
Depreciation and amortization
(16,495
)
(17,000
)
(32,491
)
(33,745
)
Operating earnings
36,199
32,081
3,860
5,470
Interest expense
(5,123
)
(5,048
)
(10,248
)
(10,033
)
Interest income
573
28
1,538
39
Gain on sale of assets
(123
)
14,372
4,613
14,372
Foreign currency gain
3,619
2,097
3,989
1,490
35,145
43,530
3,752
11,338
Income tax recovery
(7,747
)
(8,947
)
1,717
1,210
Net earnings from investments in joint
ventures
5,746
12,462
8,035
14,926
Net earnings
$
33,144
$
47,045
$
13,504
$
27,474
Basic earnings per share
$
0.86
$
1.24
$
0.35
$
0.73
Diluted earnings per share
$
0.79
$
1.12
$
0.35
$
0.69
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 and six months ended June 30,
2023 and 2022 and presented herein:
Three Months Ended
Six Months Ended
For the periods ended June 30
2023
2022
2023
2022
Net earnings
$
33,144
$
47,045
$
13,504
$
27,474
Depreciation and amortization
21,201
22,993
42,148
44,548
Impairment reversal
—
(2,783
)
—
(2,783
)
Interest and taxes
14,289
15,126
10,232
10,498
Foreign exchange (gain)
(3,553
)
(1,815
)
(3,906
)
(1,293
)
Gain on sale of property
(25
)
(14,372
)
(25
)
(14,372
)
Gain on disposal of vessels
148
(4,782
)
(4,588
)
(4,780
)
EBITDA
$
65,204
$
61,412
$
57,365
$
59,292
Select Financial Performance by
Business Segment
Three Months Ended
Six Months Ended
For the periods ended June 30
2023
2022
2023
2022
Domestic Dry-Bulk
Revenue
$
126,584
$
99,288
$
161,083
$
123,876
Operating earnings (loss)
32,806
21,504
(838
)
(5,715
)
Product Tankers
Revenue
28,046
31,923
60,128
49,959
Operating earnings
1,078
3,683
2,223
2,125
Ocean Self-Unloaders
Revenue
47,120
50,292
91,505
90,613
Operating earnings
8,003
11,139
12,956
17,246
Corporate and Other
Revenue
656
1,960
1,294
4,118
Operating loss
(5,688
)
(4,245
)
(10,481
)
(8,186
)
The MD&A for the three and six months ended June 30, 2023
and 2022 includes further details. Full results for the three and
six months ended June 30, 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)
Looking ahead to the second half of 2023, typical seasonal
weakness in grain shipments and a soft market for export iron ore
has led to a brief summer layup on one vessel in the Domestic
Dry-Bulk segment. Full fleet utilization is expected to resume in
August and continue through the balance of the year, driven by
strong demand for vessel capacity. Recent weather conditions in the
Canadian prairies have resulted in some uncertainty about the 2023
grain harvest; however, demand in other sectors is expected to
offset any weakness in agricultural products. Customer demand in
the Product Tanker segment is projected to remain steady in the
second quarter, although energy markets remain volatile due to
ongoing hostilities in Europe. While vessel utilization is expected
to be robust, inflation is anticipated to continue to impact costs
going forward.
In our international businesses, vessel supply at the Ocean
Self-Unloader Pool level appears to be fairly well balanced for the
remainder of the year, although three Algoma vessels will be
dry-docked. The aggregate industry experienced an anticipated
volume decline in the second quarter, and the sector is expected to
continue facing challenges throughout the year; however, volumes in
other sectors are projected to remain steady. In our Global Short
Sea Shipping segment, we anticipate steady revenues from the cement
fleet, with strong fleet utilization. Rate pressure resulting from
ongoing global economic and geopolitical situations is expected to
impact the segment. Rate levels in the mini-bulker and handy-size
fleets are projected to be lower over the course of the year,
though volumes and utilization are not expected to be affected.
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, 442,395 Shares were
purchased and cancelled for a weighted average purchase price of
$15.25 for the six months ending June 30, 2023.
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 September 1, 2023 to shareholders of
record on August 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 and
six months ended June 30, 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 Central Corporation is a global provider of marine
transportation that owns and operates dry and liquid bulk carriers,
serving markets throughout the Great Lakes St. Lawrence Seaway and
internationally. Algoma is aiming to reach a carbon emissions
reduction target of 40% by 2030 and net zero by 2050 across all
business units with fuel efficient vessels, innovative technology,
and alternate fuels. Algoma truly is Your Marine Carrier of
Choice™. Learn more at algonet.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230804792038/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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