ALC Algoma Central Corp

Demand recovery and operational strength drives record results for the year

Algoma Central Corporation (TSX: ALC) today reported its results for the year ended December 31, 2021. Algoma delivered record fiscal 2021 results with revenues of $598,873, a 10% increase compared to 2020. The Company reported a 79% increase in net earnings and a 9% increase in EBITDA(1). All amounts reported below are in thousands of Canadian dollars, except for per share data and where the context dictates otherwise.

"Our business demonstrated true strength this year and as a result, we achieved a record year," said Gregg Ruhl, President and CEO of Algoma Central Corporation. "I am extremely proud of our team members as they continue to move us forward and meet demand while navigating through the challenges of this pandemic. We also had a record year in safety and reported the lowest number of lost time injuries in our history," Mr. Ruhl continued. "Recovery was a key theme this year as we saw the economy here in Canada and around the world steadily improve throughout 2021. Although we did not experience the same surge in grain cargoes this year, export iron ore and North American steel demand drove increased cargoes and higher average freight rates in our Domestic Dry-Bulk segment. In our Global Short Sea joint ventures, we saw significant market improvements after a tough downturn last year and our cement and mini-bulker fleets are performing well and generating excellent returns. Looking into 2022, Algoma is well-positioned for the upcoming navigation season as we anticipate growth in most sectors. We are prepared to strategically deploy capacity to mitigate the impact of lower grain cargoes caused by the drought in western Canada. As always, we will stay focused on providing stakeholder value by continuing to deliver long-term sustainable shipping solutions through investment in fleet renewal and innovative technologies that will maintain our position as Your Marine Carrier of ChoiceTM now and into the future." Mr. Ruhl concluded.

Financial Highlights: Full-year 2021 Compared to 2020

• Net earnings increase of 79% to $82,170 compared to $45,850. Basic earnings per share were $2.17 compared to $1.21 and diluted earnings per share were $2.01 compared to $1.19.
• Domestic Dry-Bulk segment revenue increased 18% to $338,661 compared to $286,156, reflecting higher fuel cost recoveries, significantly improved base freight rates in most sectors and a 2% increase in overall volumes. Operating earnings increased 39% to $64,970 compared to $46,752.
• The Global Short Sea Shipping segment net earnings increased 238% to $38,089 compared to $11,268. Revenue increased 6% to $263,953 compared to $247,881. Driving the increase were significant improvements in freight rates in the mini-bulker segment and steady demand in North American cement markets.
• The Ocean Self-Unloader segment revenue increased 17% to $156,294 compared to $134,109 as a result of a 7% increase in revenue days mainly due to fewer dry-dockings and our pro-rata share of the Pool being higher than normal this year. Operating earnings increased 57% to $29,503 compared to $18,791.
• Revenue for Product Tankers decreased 17% to $94,535 compared to $114,273. This was attributable to reductions in demand from our major customer and consequently a 22% decrease in revenue days. Operating earnings decreased 36% to $13,738 compared to $21,550.

Consolidated Statement of Earnings

 

For the years ended December 31

2021

2020

Revenue

$

598,873

 

$

545,660

 

Operating expenses

 

(402,967

)

 

(366,693

)

Selling, general and administrative

 

(32,551

)

 

(29,727

)

Other operating items

 

(2,196

)

 

—

 

Depreciation and amortization

 

(67,852

)

 

(75,154

)

Operating earnings

 

93,307

 

 

74,086

 

 

 

 

Interest expense

 

(20,733

)

 

(19,738

)

Interest income

 

81

 

 

238

 

Gain on sale of properties

 

1,596

 

 

5,621

 

Foreign currency gains

 

1,326

 

 

351

 

 

 

75,577

 

 

60,558

 

 

 

 

Income tax expense

 

(11,812

)

 

(9,503

)

Net earnings (loss) from investments in joint ventures

 

18,405

 

 

(5,205

)

 

 

 

Net Earnings

$

82,170

 

$

45,850

 

 

 

 

Basic earnings per share

$

2.17

 

$

1.21

 

Diluted earnings per share

$

2.01

 

$

1.19

 

 

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 years ended December 31, 2021 and 2020 and presented herein:

For the years ended December 31

2021

2020

Net earnings

$

82,170

 

$

45,850

 

Depreciation and amortization

 

83,241

 

 

91,998

 

Impairment provision

 

—

 

 

9,746

 

Interest and taxes

 

35,010

 

 

32,874

 

Foreign exchange gain

 

(1,491

)

 

(534

)

Other operating items

 

(3,379

)

 

—

 

Gain on disposal of assets

 

—

 

 

65

 

Gain on sale of property

 

(1,596

)

 

(5,621

)

Gain on sale of vessels

 

(4,972

)

 

(315

)

EBITDA

$

188,983

 

$

174,063

 

 

Select Financial Performance by Business Segment

For the periods ended December 31

2021

2020

Domestic Dry-Bulk

 

 

Revenue

$

338,661

 

$

286,156

 

Operating earnings

 

64,970

 

 

46,752

 

Product Tankers

 

 

Revenue

 

94,535

 

 

114,273

 

Operating earnings

 

13,738

 

 

21,550

 

Ocean Self-Unloaders

 

 

Revenue

 

156,294

 

 

134,109

 

Operating earnings

 

29,503

 

 

18,791

 

Corporate and Other

 

 

Revenue

 

9,383

 

 

11,122

 

Operating loss

 

(14,904

)

 

(13,007

)

 

The MD&A for the year ended December 31, 2021 includes further details. Full results for the year ended December 31, 2021 can be found on the Company’s website at www.algonet.com/investor-relations and on SEDAR at www.sedar.com.

2022 Business Outlook(2)

For 2022, we are expecting the demand for manufacturing and building materials to continue to trend upwards, and steady production and associated demand should result in salt volumes approximating normal levels. The impact of the drought in Western Canada will be a significant factor in our domestic trade but we are preparing for lower volumes with plans for strategic capacity deployment and maintaining tight control of operating costs.

The demand for petroleum products in 2022 is expected to be similar to 2021 as our customers continue to recover from the impact COVID-19 has had on the demand for wholesale petroleum products. We are ready to deploy additional capacity should restrictions ease and global travel begin to recover.

Market trends remain positive in our international segments as we begin 2022 and we are hopeful there will be a return to more normal aggregate volumes following the recent downturn in global infrastructure projects. Freight rates in our Ocean Self-Unloader segment and in our Global Short Sea joint ventures are likely to remain strong as market demand continues to steadily increase after COVID-19 related downturns.

Normal Course Issuer Bid

Effective March 19, 2021, 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 6, 2021 (the “NCIB”). No shares have been purchased to date under this NCIB.

The Company intends to renew its normal course issuer bid upon receipt of the required approvals from regulatory authorities.

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 March 1, 2022 to shareholders of record on February 15, 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 year ended December 31, 2021.

(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 2022 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.

About Algoma Central Corporation

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™.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220228005282/en/

Gregg A. Ruhl President & CEO 905-687-7890

Peter D. Winkley Chief Financial Officer 905-687-7897

Or visit www.algonet.com or www.sedar.com