Algoma Central Corporation Reports Financial Results for the 2024 Second Quarter
Changing environments across key industrial sectors contributes to challenging quarter but outlook remains positive
"Algoma encountered a challenging second quarter, but there are encouraging indications that volumes and margins will improve in the second half of the year," said
Financial Highlights: Second Quarter 2024 Compared to Second Quarter 2023
-
Domestic Dry-Bulk segment revenue decreased 18% to
$103,931 compared to$126,584 in 2023, as lower volumes drove a 21% decrease in revenue days. Operating earnings decreased 51% to$15,924 compared to$32,806 in 2023.
-
Revenue for Product Tankers increased 20% to
$33,600 compared to$28,046 in 2023, driven by higher rates on new vessels and an 8% increase in revenue days. The segment had an operating loss of$1,604 compared to earnings of$1,078 in 2023, reflecting higher costs to prepare the fleet for full deployment in the second half of 2024, including increased costs to bring one vessel into Canadian service and additional crew onboarding and training.
-
Ocean Self-Unloaders segment revenue decreased 9% to
$42,818 compared to$47,120 . Revenue for 2024 has returned to normal levels after 2023 revenues reflected a higher pro-rata share of the Pool as a result of unplanned outages affecting non-Algoma-owned vessels. Operating earnings decreased 21% to$6,361 compared to$8,003 in 2023.
-
Global Short Sea Shipping segment equity earnings increased 19% to$6,156 compared to$5,155 for the prior year. Higher earnings were driven by steady rates and an increase in vessels in the cement fleet. Earnings for 2024 include a$812 gain on the sale of a vessel.
-
During the first quarter of 2023, the Algoma Hansa and the Algonorth were sold, resulting in a
$4,588 gain that is reflected in the 2023 year-to-date earnings.
Consolidated Statement of Earnings
|
Three Months Ended |
Six Months Ended |
||||||||||
For the periods ended |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
(unaudited, in thousands of dollars, except per share data) |
|
|
|
|
||||||||
Revenue |
$ |
180,968 |
|
$ |
202,406 |
|
$ |
290,182 |
|
$ |
314,010 |
|
Operating expenses |
|
(136,740 |
) |
|
(138,997 |
) |
|
(245,738 |
) |
|
(256,557 |
) |
Selling, general and administrative expenses |
|
(10,182 |
) |
|
(10,715 |
) |
|
(21,823 |
) |
|
(21,102 |
) |
Depreciation and amortization |
|
(18,122 |
) |
|
(16,495 |
) |
|
(35,250 |
) |
|
(32,491 |
) |
Operating earnings (loss) |
|
15,924 |
|
|
36,199 |
|
|
(12,629 |
) |
|
3,860 |
|
|
|
|
|
|
||||||||
Interest expense |
|
(5,227 |
) |
|
(5,123 |
) |
|
(9,886 |
) |
|
(10,248 |
) |
Interest income |
|
581 |
|
|
573 |
|
|
1,489 |
|
|
1,538 |
|
Gain (loss) on sale of assets |
|
57 |
|
|
(123 |
) |
|
421 |
|
|
4,613 |
|
Foreign exchange gain (loss) |
|
(291 |
) |
|
3,619 |
|
|
(168 |
) |
|
3,989 |
|
|
|
11,044 |
|
|
35,145 |
|
|
(20,773 |
) |
|
3,752 |
|
|
|
|
|
|
||||||||
Income tax recovery (expense) |
|
(606 |
) |
|
(7,747 |
) |
|
10,407 |
|
|
1,717 |
|
Net earnings from investments in joint ventures |
|
7,026 |
|
|
5,746 |
|
|
10,577 |
|
|
8,035 |
|
|
|
|
|
|
||||||||
Net earnings |
$ |
17,464 |
|
$ |
33,144 |
|
$ |
211 |
|
$ |
13,504 |
|
|
|
|
|
|
||||||||
Basic earnings per share |
$ |
0.44 |
|
$ |
0.86 |
|
$ |
0.01 |
|
$ |
0.35 |
|
Diluted earnings per share |
$ |
0.44 |
|
$ |
0.79 |
|
$ |
0.01 |
|
$ |
0.35 |
|
EBITDA
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
|
Three Months Ended |
Six Months Ended |
||||||||||
For the periods ended |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Net earnings |
$ |
17,464 |
|
$ |
33,144 |
|
$ |
211 |
|
$ |
13,504 |
|
Depreciation and amortization |
|
23,616 |
|
|
21,201 |
|
|
45,946 |
|
|
42,148 |
|
Interest and tax recovery |
|
8,434 |
|
|
14,289 |
|
|
2,676 |
|
|
10,232 |
|
Foreign exchange (gain) loss |
|
322 |
|
|
(3,553 |
) |
|
489 |
|
|
(3,906 |
) |
Net (gain) loss on sale of assets |
|
(869 |
) |
|
123 |
|
|
(1,218 |
) |
|
(4,613 |
) |
EBITDA (1) |
$ |
48,967 |
|
$ |
65,204 |
|
$ |
48,104 |
|
$ |
57,365 |
|
Select Financial Performance by Business Segment
|
Three Months Ended |
Six Months Ended |
||||||||||
For the periods ended |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
Domestic Dry-Bulk |
|
|
|
|
||||||||
Revenue |
$ |
103,931 |
|
$ |
126,584 |
|
$ |
135,005 |
|
$ |
161,083 |
|
Operating loss |
|
15,924 |
|
|
32,806 |
|
|
(19,692 |
) |
|
(838 |
) |
Product Tankers |
|
|
|
|
||||||||
Revenue |
|
33,600 |
|
|
28,046 |
|
|
67,646 |
|
|
60,128 |
|
Operating earnings |
|
(1,604 |
) |
|
1,078 |
|
|
2,373 |
|
|
2,223 |
|
Ocean Self-Unloaders |
|
|
|
|
||||||||
Revenue |
|
42,818 |
|
|
47,120 |
|
|
86,018 |
|
|
91,505 |
|
Operating earnings |
|
6,361 |
|
|
8,003 |
|
|
14,717 |
|
|
12,956 |
|
Corporate and Other |
|
|
|
|
||||||||
Revenue |
|
619 |
|
|
656 |
|
|
1,513 |
|
|
1,294 |
|
Operating loss |
|
(4,757 |
) |
|
(5,688 |
) |
|
(10,027 |
) |
|
(10,481 |
) |
The MD&A for the three and six months ended
2024 Business Outlook(2)
Looking ahead in the Domestic Dry-Bulk segment, we expect a continued soft demand for de-icing salt for the balance of the year. Weaker prices for export iron ore and construction raw materials are also expected to continue to constrain cargo volumes. There are positive indicators that domestic iron ore volumes will improve and a strong seasonal increase in grain shipments is expected due to improved soil moisture levels creating the potential for a large 2024 grain crop, leading to the deployment of three additional vessels that are currently in temporary lay-up.
In the Product Tanker segment, we expect steady customer demand in 2024, supporting strong vessel utilization for those vessels trading under Canadian flag. In January, the Company acquired two 2009-built, 16,600 dwt product tankers from Norway’s
In the Ocean Self-Unloaders segment, vessel utilization is expected to improve for the second half of 2024 with substantially fewer dry-dockings compared to 2023. Volumes are expected to improve modestly for the remainder of the year. Two out of the three newbuild kamsarmax-based ocean self-unloader orders are scheduled to begin construction this year.
In our
Normal Course Issuer Bid
Effective
Cash Dividends
The Company's Board of Directors authorized payment of a quarterly dividend to shareholders of
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
(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 2024 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,
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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240802906731/en/
President & CEO
905-687-7890
E.V.P. & Chief Financial Officer
905-687-7897
Source: