Algoma Steel Group Inc. (NASDAQ: ASTL; TSX: ASTL) (“Algoma” or “the
Company”), a leading Canadian producer of hot and cold rolled steel
sheet and plate products, today provided guidance for its fiscal
fourth quarter 2022.
Fiscal fourth quarter 2022 shipments are
expected to be in a range of 540,000 to 550,000 tons, and Adjusted
EBITDA is expected to be in a range of CAD$310 million to CAD$320
million.
The slight sequential decrease in expected
shipments and, to a lesser extent production levels, as compared to
the fiscal third quarter 2022 is largely due to challenges across
the logistics supply chain and COVID-related impacts. The fourth
quarter outlook includes the impact of the work stoppage at
Canadian Pacific Railway that began March 20, 2022. While there
have been subsequent positive announcements regarding the
resolution of this labor disruption, some adverse impact is
expected as the Company had made preparations to mitigate against a
potentially prolonged outage. Additionally, Algoma expects to end
the quarter with above average work in process and finished goods
inventories to fulfill deferred shipments in future periods. The
Company continues to generate significant cash flow and remains
confident in its cash generating potential in fiscal 2023 and
beyond.
Shareholder Returns Update
As previously announced, on March 1, 2022 the
Toronto Stock Exchange approved the Company’s intention to make a
normal course issuer bid (“NCIB”) for a portion of its common
shares as opportunities arise from time to time, allowing the
Company to repurchase up to approximately 7.4 million shares during
the period of March 3, 2022 to March 2, 2023. On March 31, 2022,
the Company is scheduled to make its first quarterly dividend
payment of US$0.05 per common share for shareholders of record at
market close on February 28, 2022. Based on its consistently strong
financial performance, Algoma continues to evaluate a range of
value enhancing initiatives to generate attractive long-term
returns for stakeholders.
Cautionary Statement Regarding
Forward-Looking Statements
This news release contains “forward-looking
information” under applicable Canadian securities legislation and
“forward-looking statements” within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 (collectively, “forward
looking statements”), including statements regarding Algoma’s
production and Adjusted EBITDA guidance, status of work in process
and finished goods inventories, Algoma’s ability to generate cash
flow in fiscal 2023 and beyond and Algoma’s intention to make a
NCIB. These forward-looking statements generally are identified by
the words “believe,” “project,” “expect,” “anticipate,” “estimate,”
“intend,” “strategy,” “future,” “opportunity,” “plan,” “pipeline,”
“may,” “should,” “will,” “would,” “will be,” “will continue,” “will
likely result,” and similar expressions. Forward-looking statements
are predictions, projections and other statements about future
events that are based on current expectations and assumptions. Many
factors could cause actual future events to differ materially from
the forward-looking statements in this document. Readers should
also consider the other risks and uncertainties set forth in the
section entitled “Risk Factors” and “Cautionary Note Regarding
Forward-Looking Statements” in Algoma’s public filings, including
the registration statement on Form F-1 filed by Algoma with the
Securities and Exchange Commission and the prospectus filed with
the Ontario Securities Commission. Forward-looking statements speak
only as of the date they are made. Readers are cautioned not to put
undue reliance on forward-looking statements, and Algoma assumes no
obligation and does not intend to update or revise these
forward-looking statements, whether as a result of new information,
future events, or otherwise.
Non-IFRS Financial
Measures
To supplement our financial statements, which
are prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board
(“IFRS”), we use certain non-IFRS measures to evaluate
the performance of Algoma. These terms do not have any standardized
meaning prescribed within IFRS and, therefore, may not be
comparable to similar measures presented by other companies.
Rather, these measures are provided as additional information to
complement those IFRS measures by providing a further understanding
of our financial performance from management’s perspective.
Accordingly, they should not be considered in isolation nor as a
substitute for analysis of our financial information reported under
IFRS.
Adjusted EBITDA, as we define it, refers to net
(loss) income before amortization of property, plant, equipment and
amortization of intangible assets, finance costs, interest on
pension and other post-employment benefit obligations, income
taxes, restructuring costs, impairment reserve, foreign exchange
loss (gain), finance income, carbon tax, share based compensation
related to performance share units and business combination
adjustments. Adjusted EBITDA is not intended to represent cash flow
from operations, as defined by IFRS, and should not be considered
as alternatives to net earnings, cash flow from operations, or any
other measure of performance prescribed by IFRS. Adjusted EBITDA,
as we define and use it, may not be comparable to Adjusted EBITDA
as defined and used by other companies. We consider Adjusted EBITDA
to be a meaningful measure to assess our operating performance in
addition to IFRS measures. It is included herein because we believe
it can be useful in measuring our operating performance and our
ability to expand our business and provide management and investors
with additional information for comparison of our operating results
across different time periods and to the operating results of other
companies. Adjusted EBITDA is also used by analysts and our lenders
as a measure of our financial performance. However, Adjusted EBITDA
has limitations as analytical tools and should not be considered in
isolation from, or as alternatives to, net income, cash flow from
operations or other data prepared in accordance with IFRS. Because
of these limitations, Adjusted EBITDA should not be considered as a
measure of discretionary cash available to invest in business
growth or to reduce indebtedness. We compensate for these
limitations by relying primarily on our IFRS results using Adjusted
EBITDA only as a supplement to such results.
About Algoma Steel Inc.
Based in Sault Ste. Marie, Ontario, Canada,
Algoma is a fully integrated producer of hot and cold rolled steel
products including sheet and plate. With a current raw steel
production capacity of an estimated 2.8 million tons per year,
Algoma’s size and diverse capabilities enable it to deliver
responsive, customer-driven product solutions straight from the
ladle to direct applications in the automotive, construction,
energy, defense, and manufacturing sectors. Algoma is a key
supplier of steel products to customers in Canada and Midwest USA
and is the only producer of plate steel products in Canada. The
Company’s mill is one of the lowest cost producers of hot rolled
sheet steel (HRC) in North America owing in part to its
state-of-the-art Direct Strip Production Complex (“DSPC”), which is
the newest thin slab caster in North America with direct coupling
to a basic oxygen furnace (BOF) melt shop.
Algoma has achieved several meaningful
improvements over the last several years that are expected to
result in enhanced long-term profitability for the business. Algoma
has upgraded its DSPC facility and recently installed its No. 2
Ladle Metallurgy Furnace. Additionally, the Company has cost
cutting initiatives underway and is in the process of modernizing
its plate mill facilities.
Today Algoma is on a transformation journey,
investing in its people and processes, optimizing and modernizing
to secure a sustainable future. Our customer focus, growing
capability and courage to meet the industry’s challenges head-on,
position us firmly as your partner in steel.
For more information, please
contact:
Michael MoracaTreasurer & Investor
Relations OfficerAlgoma Steel Group Inc.Phone: 705.945.3300E-mail:
IR@algoma.com
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