Michael Garcia, the Company’s Chief Executive Officer, commented, “As previously disclosed, early in the quarter our operations were impacted by a utility corridor collapse at our coke-making facility that resulted in a blast furnace shutdown. It was thanks to the decisive and professional actions taken by the entire team that we were able to bring steel production back to near normal production levels in approximately three weeks. Additionally, following the quarter’s end, our team successfully completed the planned upgrade related to the second phase of our plate mill modernization project. This upgrade is now operational and has already resulted in increased plate output, which is expected to enhance our financial performance for years to come.”
Rajat Marwah, the Company’s Chief Financial Officer, added, “During the quarter we issued an aggregate of US$350.0 million of 9.125% Senior Secured Second Lien Notes, enhancing the strength and flexibility of our balance sheet. This successful issuance reflects the positive view that credit investors have of our company and their confidence in our strategic direction and financial stability.”
Mr. Garcia concluded, “Fiscal 2025 marks a pivotal and exciting period for Algoma. We remain on track with our transformative Electric Arc Furnace project and expect to begin commissioning activities by the end of calendar 2024, heralding a new era for our company. This transition will position Algoma as one of the greenest steel producers in North America, while simultaneously delivering long-term value to all our stakeholders.”
Fourth quarter revenue totaled $620.6 million, compared to $677.4 million in the prior year quarter. As compared with the prior year quarter, steel revenue was $568.1 million, compared to $609.2 million, and revenue per ton of steel sold was $1,376, compared to $1,185.
Income from operations was $3.1 million, compared to $21.7 million in the prior-year quarter. The year over year decrease was primarily due to decreased steel production, higher purchased coke use and higher natural gas use related to the January 20, 2024 collapse of a structural corridor carrying various utilities crucial for the coke oven battery and blast furnace operations.
Net income in the fourth quarter was $26.8 million, compared to a net loss of $20.4 million in the prior-year quarter. The improvement was driven primarily by the factors described above under income from operations.
Adjusted EBITDA in the fourth quarter was $41.5 million, compared with $47.9 million for the prior-year quarter. This resulted in an Adjusted EBITDA margin of 6.7%. Average realized price of steel net of freight and non-steel revenue was $1,260 per ton, compared to $1,066 per ton in the prior-year quarter. Cost per ton of steel products sold was $1,091, compared to $934 in the prior-year quarter. Shipments for the fourth quarter decreased by 21.1% to 450,966 tons, compared to 571,647 tons in the prior-year quarter. See “Non-IFRS Measures” below for an explanation of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.
Revenue for fiscal year 2024 totaled $2,795.8 million, compared to $2,778.5 million the prior year. Steel revenue for fiscal year 2024 was $2,545.3 million, compared to $2,550.1 million the prior year, and revenue per ton of steel sold was $1,341, compared to $1,387 the prior year.
Income from operations for fiscal year 2024 was $167.3 million, compared to $290.5 million the prior year. The year over year decrease was primarily due to increased cost of sales due to higher purchased coke use, higher natural gas use and labour costs. This was partially offset by increased revenue driven by increased steel shipment volume.
Net income for fiscal year 2024 was $105.2 million, compared to $298.5 million the prior year. The year over year decrease was driven primarily by the factors described above in respect of income from operations.
Adjusted EBITDA for fiscal year 2024 was $312.7 million, compared with $452.3 million for the prior year. This resulted in an Adjusted EBITDA margin of 11.2%. Average realized price of steel net of freight and non-steel revenue for fiscal year 2024 was $1,220 per ton, compared to $1,273 per ton in the prior year. Cost per ton of steel products sold for fiscal year 2024 was $1,018, compared to $1,004 in the prior year. Shipments for fiscal year 2024 increased by 4.1% to 2,085,465 tons, compared to 2,002,715 tons in the prior year. See “Non-IFRS Measures” below for an explanation of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA.
Electric Arc Furnace
In November 2021, the Company’s Board of Directors (the “Board”) authorized the Company to construct two new state of the art electric arc furnaces (“EAF”) to replace its existing blast furnace and basic oxygen steelmaking operations. The project continues to advance, with approximately $800 million of the budgeted project cost contracted. The Company continues to expect the project budget to be $825 million to $875 million, and that the completion of the EAF project will be funded with cash-on-hand, cash generated through operations, and available borrowings under the Company’s existing undrawn credit facility.
Following the transformation to EAF steelmaking, Algoma’s facility is anticipated to have an annual raw steel production capacity of approximately 3.7 million tons, matching its downstream finishing capacity, which is expected to reduce the Company’s annual carbon emissions by approximately 70%.
Blast Furnace Outage
As previously disclosed, in January 2024 the Company experienced an unplanned outage at its blast furnace in connection with a utility corridor collapse at its coke-making facility. Management estimates the resultant outage negatively impacted hot metal production in the quarter by approximately 150,000 tons and reduced Adjusted EBITDA by approximately $120 – $130 million. Algoma has been working closely with relevant insurance providers as they complete assessments. The amount and timing of any potential recoveries under these insurance policies are still to be determined.
Plate Mill Modernization Project
Subsequent to quarter-end, the Company successfully completed a planned upgrade related to the modernization of its plate facility. The upgrade to the mill is now substantially complete, and the operations and commercial teams are focused on ramping up the production and sales of plate products, putting the Company on a path towards our expected annual run rate capacity of over 650,000 NT.
Senior Secured Second Lien Notes
On April 5, 2024, the Company’s indirect wholly-owned subsidiary and operating company, Algoma Steel Inc. (“ASI”), issued an aggregate of US$350.0 million of 9.125% Senior Secured Second Lien Notes due April 15, 2029 (the “Notes”). ASI intends to use the net proceeds from the offering of the Notes for general corporate purposes, adding strength and flexibility to its balance sheet.
Quarterly Dividend
The Board has declared a regular quarterly dividend in the amount of US$0.05 on each common share outstanding, payable on July 19, 2024 to holders of record of common shares of the Corporation as of the close of business on July 2, 2024. This dividend is designated as an “eligible dividend” for Canadian income tax purposes.
The public wants to see a detailed list of anyone and everyone that has their fingers in this pie that they call Algoma Steel. Why is this such a tightly held secret that they will not disclose to the media despite being queried multiple times?
Most likely because there are many of the same filthy rich scoundrels involved as previously, and a few more that don’t want their names brought to the light of day for everyone to see.
People have a right to know who is responsible for polluting their town, who it is that are making people sick from ingesting all of the daily poison output in the air and the water that they drink, that they continue to get away with because of the greedy government allowing this over polluting to go on and on at the expense of everyone’s health.