Algoma Central Corporation 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.
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 months ended March 31, 2022 and 2021 and presented herein:
2022 Business Outlook
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.
