Today Algoma Steel Inc. (the “Company”) reported strong first quarter results for the fiscal quarter ended June 30, 2021, setting the stage for its parent company, Algoma Steel Group Inc. (“Algoma”) to become a public company later in 2021.
Unless otherwise specified, all amounts are in Canadian dollars.
In the first quarter of fiscal 2022, the Company earned a net income of $214 million, up from $114 million in the prior quarter and a $43 million loss in Q1 fiscal 2021.
The Company’s strong financial performance is primarily attributable to an improvement in shipment volume, strong steel demand and improved selling prices.
Shipments for the first quarter increased by 47% to 610,000 tons, compared to 416,000 tons in Q1 fiscal 2021, culminating in steel revenue of $765 million, up 124% from $423 million in the first quarter of fiscal 2021 and from $633 million in the prior year quarter.
The strong demand and realized pricing, as well as the Company’s focus on cost containment, contributed to $281 million of Adjusted EBITDA for the first quarter, up from $167 million in the prior quarter and $21 million in Q1 fiscal 2021. As described below, Adjusted EBITDA is a non-GAAP/IFRS measure of profitability that management uses as an indicator of the operational health of the business.
The Company’s Chief Executive Officer Michael McQuade remarked on the Company’s first quarter performance, “We believe that our ongoing focus on keeping our employees safe and developing a culture of continuous improvement, coupled with a steady stream of strategic investments in our operating facilities, improves our position across the steel cycle. The extended strength we see in the steel market positions us favorably for our pending return to public markets. In addition, last month’s announcement of the Government of Canada’s anticipated $420 million in support for our proposed transition to electric arc furnace (“EAF”) technology, together with up to US$306 million of new equity capital that may be provided by our merger with Legato Merger Corp. (“Legato”, NASDAQ: LEGO, LEGOU, LEGOW), is expected to make our sustainability transformation possible.”