ALC Algoma Central Corp

Algoma Central Corporation (“Algoma” or “the Company”) (TSX: ALC), a leading provider of marine transportation services, today announced its results for the year ended December 31, 2020. (All amounts reported below are in thousands of Canadian dollars, except for per share data and where the context dictates otherwise.)

Algoma is reporting very strong financial results for 2020, a year in which a global pandemic introduced a number of economic and operating challenges. As a marine transportation company and a provider of critical marine infrastructure, the Company is a key link in our customers' supply chains. Algoma, along with others in the industry, was deemed an essential service and the Company operated throughout the pandemic. In the face of these unprecedented operating conditions, the Company delivered a 16% increase in EBITDA, and a 92% increase in earnings per share (29% increase on an adjusted basis - see Management's Discussion and Analysis).

Fiscal 2020 business highlights include:

• A favourable mix of trades coupled with strong freight rates drove higher results in the Domestic Dry-Bulk segment. The segment experienced increased volumes in the higher margin grain and salt sectors, while volumes in the iron ore and construction materials sectors were lower than the prior year.
• The Product Tanker segment experienced strong utilization for movements of products from the Great Lakes to the east coast, despite a decline in retail fuel consumption that resulted from the reductions in air travel and personal vehicle use in the spring and summer.
• In the Ocean Self-Unloader segment, five dry-dockings were undertaken successfully during the year, despite facing challenges associated with the COVID-19 pandemic, and tight cost control enabled the company to partially offset the impact of weakness in volumes shipped.
• The Company completed a refinancing of its senior secured credit facilities in December in advance of mid-2021 scheduled maturities, securing long-dated debt on highly favourable terms.
• The Company’s Board of Directors authorized payment of a Special Dividend to shareholders of $2.65 per common share as a result of the re-financing mentioned above. The dividend was paid on January 12, 2021 to shareholders of record on December 28, 2020.

EBITDA, which includes our share of joint venture EBITDA, for the year ended December 31, 2020 was $174,063 an increase of 16% or $23,543, compared to the prior year. EBITDA is determined as follows:

For the periods ended December 31

 

2020

2019

Net earnings

 

$

45,850

 

 

$

24,159

 

 

Depreciation and amortization

 

91,998

 

 

85,623

 

 

Interest and taxes

 

32,874

 

 

29,905

 

 

Foreign exchange (gain) loss

 

(534)

 

 

1,770

 

 

Impairment provision

 

9,746

 

 

15,970

 

 

Gain on disposal of assets

 

(5,871)

 

 

(6,907)

 

 

EBITDA

 

$

174,063

 

 

$

150,520

 

 

"When I reflect on the year here at Algoma, the resiliency of the Algoma team always comes first to my mind,” said Gregg Ruhl, President and CEO of Algoma Central Corporation. "Our teams, both shipboard and shoreside, have had to pivot and adapt countless times this year and I couldn’t be more proud of the hard work, dedication and strength demonstrated by everyone in the Algoma family,” continued Mr. Ruhl. "We reacted to the COVID-19 pandemic early in March and we were able to respond quickly to address the needs of our customers and, as a result, we experienced very strong financial results. Although the year came with its challenges, we successfully deployed our fleet to meet new market demand and we did this all while maintaining our commitment to providing safe, efficient and reliable transportation of essential goods both domestically and around the world.”

Outlook

The steady improvement in volumes over the latter part of 2020 in the Domestic Dry-Bulk segment is expected to be sustained into 2021. Salt products are expected to continue to grow, offsetting a return of grain volumes to more normal levels and shortfalls in other commodities compared to historic levels. The Product Tanker segment is very dependent on progress in re-opening the economy and the country and particularly how this impacts air and vehicle traffic. The current expectation for Product Tankers is for reduced revenue days compared to 2020, when we benefited from logistics decisions taken by our main customer that we do not expect to be repeated in the coming year. The Ocean Self-Unloader business should benefit from an increase in on-hire days now that the heavy dry-docking calendar is behind us and Pool volumes are expected to continue a slow recovery over the course of 2021.

We expect the cost environment to be more difficult in 2021 as the Company makes significant investments in training and developing its next generation of shipboard employees. In addition, maintenance and lay-up spending is expected to rise, partially reflecting the impact of the 2020 decisions to defer spending, as well as dry-dockings that are required for certain domestic vessels.

For the periods ended December 31

 

2020

2019

 

 

 

 

Revenue

 

$

545,660

 

 

$

567,908

 

 

Operating expenses

 

(366,693)

 

 

(408,240)

 

 

Selling, general and administrative

 

(29,727)

 

 

(31,283)

 

 

Depreciation and amortization

 

(75,154)

 

 

(70,015)

 

 

Operating earnings

 

74,086

 

 

58,370

 

 

 

 

 

 

Interest expense

 

(19,738)

 

 

(19,860)

 

 

Interest income

 

238

 

 

1,167

 

 

Gain on sale of property

 

5,621

 

 

—

 

 

Foreign currency gain (loss)

 

351

 

 

(886)

 

 

 

 

60,558

 

 

38,791

 

 

 

 

 

 

Income tax expense

 

(9,503)

 

 

(5,109)

 

 

Net loss from investments in joint ventures

 

(5,205)

 

 

(9,523)

 

 

 

 

 

 

Net Earnings

 

$

45,850

 

 

$

24,159

 

 

 

 

 

 

Basic earnings per share

 

$

1.21

 

 

$

0.63

 

 

Diluted earnings per share

 

$

1.19

 

 

$

0.63

 

 

For the periods ended December 31

 

2020

2019

 

Domestic Dry-Bulk

 

 

 

 

Revenue

 

$

286,156

 

$

281,680

 

 

Operating earnings

 

46,752

 

33,435

 

 

Product Tankers

 

 

 

 

Revenue

 

114,273

 

141,912

 

 

Operating earnings

 

21,550

 

19,899

 

 

Ocean Self-Unloaders

 

 

 

 

Revenue

 

134,109

 

131,425

 

 

Operating earnings

 

18,791

 

18,673

 

 

Corporate and Other

 

 

 

 

Revenue

 

11,122

 

12,891

 

 

Operating loss

 

(13,007)

 

(13,637)

 

 

The MD&A for the year ended December 31, 2020 includes further details. Full results for the year ended December 31, 2020 can be found on the Company’s website at www.algonet.com/investor-relations and on SEDAR at www.sedar.com.

Normal Course Issuer Bid

On March 19, 2020, 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 37,809,143 Shares which were issued and outstanding as at the close of business on March 4, 2020 (the “NCIB”). The Company bought 23,600 shares under NCIBs in 2020.

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 has authorized payment of a quarterly dividend to shareholders of $0.17 per common share, an increase of $0.04 per common share. The dividend will be paid on March 1, 2021 to shareholders of record on February 15, 2021.

Use of Non-GAAP Measures

There are measures included in this press release that do not have a standardized meaning under generally accepted accounting principles (GAAP). The Company includes these measures because it believes certain investors use these measures as a means of assessing financial performance. EBITDA is a non-GAAP measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. Please refer to the Management’s Discussions and Analysis for the year ended December 31, 2020 for further information regarding non-GAAP measures.

About Algoma Central

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, cement carriers, and product tankers. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210226005292/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