Algoma Steel Inc.’s (“Algoma Steel” or the “Company”) transformation journey is on track, as signaled today with the strong financial results reported for the fiscal year ended March 31, 2021.
Unless otherwise specified, all amounts are in Canadian dollars. For the fourth quarter, Algoma Steel reported a net income of $114 million, up from a loss of $73.5 million in the prior quarter and up from $19 million in the fourth quarter of fiscal 2020.
The strong performance for the year is attributable to both revenue and cost factors, as Algoma has controlled costs and solidified its financial and liquidity position while capitalizing on the strong demand for steel. Improving market dynamics, with higher selling prices and increased shipments favourably impacted revenues.
Shipments for the fourth quarter were 622,000 tons culminating in steel revenue of $633 million, up 50% from $421 million in the prior quarter and up 28% from $493 million in the fourth quarter of fiscal 2020.
Benefits realized from strategic investments in our operating facilities combined with continued cost containment initiatives resulted in EBITDA for the fourth quarter of $167 million and $199.2 million for the fiscal year ended March 31, 2021. EBITDA is a non-GAAP/IFRS measure of profitability, used by management asan indicator of the operational health of the business. On May 24th, 2021, the Company announced a definitive merger agreement between its Canadian parent company (“Algoma”) and Legato Merger Corp. (“Legato”, NASDAQ: LEGO, LEGOU, LEGOW), paving the way for a return to public markets.
The transaction, together with a concurrent private placement of shares, is expected to provide Algoma Steel with up to USD 306 million of new equity capital, giving the Company increased flexibility to continue with strategic and transformational investments in the business.
Algoma Steel’s Chief Executive Officer Michael McQuade remarked on the Company’s strengthening performance, “I attribute these results to the concerted efforts of our employees. Our continued focus on safety is demonstrated by our out performance of the lost-time injury rate for our industry and the fact that we have kept our workplace COVID-free. Together we have achieved substantial cost reductions over the year, all while increasing shipments of quality steel products to our customers. These results, together with the merger, position Algoma Steel for growth in pursuit of strategic initiatives in our sustainability transformation.”