Steel Products Co.s Revenues Roll 47.5% Higher in Q4

2022-06-16 15:22:11 By : Ms. Carrie Chan

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Algoma Steel Group Inc. shares traded 18% higher after the North American light gauge rolled steel sheet and plate products producer reported financial results for Q4/22 and FY/22 that featured a 112% YoY increase in consolidated revenue.

Canadian light gauge steel producer Algoma Steel Group Inc. (ASTL:NASDAQ; ASTL:TSX), which manufactures hot and cold rolled steel sheet and plate products,  announced financial results for its fourth quarter and full fiscal year of 2022 ended March 31, 2022.

The company reported that consolidated revenue in Q4/22 increased by 47.5% to CA$941.8 million, compared to CA$638.5 million in Q4/21. Algoma Steel Group noted that shipments by volume in the most recent quarterly period decreased to 547,217 tons, down from 621,843 tons during the corresponding quarter in the prior year.

The firm stated that consolidated income from operations in Q4/22 rose to CA$310.6 million, versus CA$130.0 million in Q4/21.

Algoma Steel Group advised that it posted net income of CA$242.9 million in Q4/22, compared to net income of CA$100.1 million in Q4/21. The company added that during Q4/22 it had adjusted EBITDA of CA$334.4 million, versus adjusted EBITDA of CA$166.9 million in Q4/21.

The company indicated that for FY/22 consolidated revenue increased by 112.0% to CA$3,806.0 million, compared to CA$1,794.9 million in FY/21. The firm listed that the total shipment volume during FY/22 measured 2,297,159 tons, which was up from 2,102,086 tons in FY/21.

Algoma Steel advised that it posted consolidated income from operations of CA$1,411.0 million and net income of CA$857.7 million in FY/22, versus CA$84.8 million and CA$76.1 million, respectively in FY/21.

The firm listed that FY/22 adjusted EBITDA improved to CA$1,503.2 million, compared to CA$199.2 million in FY/21.

Algoma Steel Groups CEO Michael Garcia stated, "Our strong results for the fiscal fourth quarter capped off an incredible year at Algoma, one that produced record revenues, profitability and cash flows. Relentless execution by the entire team delivered these strong results across what was truly a tumultuous year for both steel and raw material markets…Our transformational electric arc furnace project is advancing as planned towards a 2024 startup, and today we are announcing the next phase of our capital allocation program with a US$400 million substantial issuer bid which would represent roughly a third of today's market capitalization."

The company mentioned that last November its Board of Directors approved the construction of two new state-of-the-art electric arc furnaces (EAFs) to replace its blast furnace and basic oxygen steelmaking operations. Construction is on schedule and is expected to take about two years to complete at a total cost of around CA$700 million. When completed the new updated facility is forecasted to reduce annual carbon emissions by 70% and will be capable of producing about 3.7 million tons of raw steel annually matching its downstream finishing capacity.

The company also advised that its board of directors has authorized a quarterly dividend payment of US$0.05 per share on July 15, 2022, to shareholders of record as of June 27, 2022.

Algoma Steel offered some forward guidance and advised that for Q1/23 it expects adjusted EBITDA of CA$335-355 million.

Algoma Steel Group is headquartered in Sault Ste. Marie, Ont., Canada and is a fully integrated producer of hot and cold rolled steel products. The company's facilities currently have the capacity to produce approximately 2.8 million tons of raw steel each year. The firms end products are shipped to customers in Canada and U.S. Midwest for use throughout the automotive, construction, defense, energy, mining, rail, ship building and manufacturing sectors. Algoma claimed that "it is the only producer of plate steel products in Canada and that its mill is one of the lowest cost producers of hot rolled sheet steel in North America."

Algoma started the day Wednesday with a market cap of around US$885.4 million with approximately 112.1 million shares outstanding. ASTL shares opened 19% higher at US$9.40 (+US$1.50, +18.99%) over the previous day's US$7.90 closing price. The stock traded between US$9.035 and US$9.735 per share and closed at US$9.45.

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