Home Impact producer Algoma Steel provides guidance for the fourth quarter of 2022

Algoma Steel provides guidance for the fourth quarter of 2022


SAULT STE. MARIE, Ontario, March 23, 2022 (GLOBE NEWSWIRE) — Algoma Steel Group Inc. (NASDAQ:ASTL; TSX:ASTL) (“Algoma” or “the Company”), a leading Canadian producer of hot-rolled steel and cold and plate products, today provided guidance for its fiscal fourth quarter 2022.

Fiscal 2022 fourth quarter shipments are expected to be between 540,000 and 550,000 tonnes, and adjusted EBITDA is expected to be between C$310 and 320 million.

The slight sequential decline in expected shipments and, to a lesser extent, production levels, compared to the third fiscal quarter of 2022, is largely due to logistics supply chain challenges and COVID-related impacts. The fourth quarter outlook includes the impact of the work stoppage at Canadian Pacific Railway which began on March 20, 2022. While there have been subsequent positive announcements regarding the resolution of this work stoppage, some Adverse effects are expected, as the Company had prepared to mitigate against a potentially prolonged outage. In addition, Algoma expects to end the quarter with above-average work-in-progress and finished-goods inventories to accommodate delayed shipments in future periods. The Company continues to generate strong cash flow and remains confident in its cash generation potential in fiscal 2023 and beyond.

Shareholder Feedback 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 and as opportunities arise, allowing the Company to repurchase up to approximately 7.4 million shares during the period from March 3, 2022 to March 2, 2023. On March 31, 2022, the Company is expected to make its first quarterly dividend payment of US$0.05 per common share to shareholders of record at the close of trading on February 28, 2022. Based on its continued strong financial performance, Algoma continues to evaluate a range of development initiatives. value enhancement to generate attractive long-term returns for stakeholders.

Caution Regarding Forward-Looking Statements

This press release contains “forward-looking information” under applicable Canadian securities laws and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”), including including statements regarding Algoma’s production. and forecasts of adjusted EBITDA, the status of work in progress and finished goods inventory, Algoma’s ability to generate cash flow in fiscal 2023 and beyond and Algoma’s intention to make a public takeover bid. These forward-looking statements are generally identified by the words “believe”, “project”, “expect”, “anticipate”, “estimate”, “intend”, “strategy”, “future”, “opportunity “, “plan,” “pipeline,” “may,” “should,” “will,” “would,” “will,” “continue,” “probably 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 contained herein. Readers should also consider the other risks and uncertainties set forth in the section titled “Risk Factors” and “Caution Regarding Forward-Looking Statements” in Algoma’s public filings, including the Form Registration Statement. 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 place undue reliance on forward-looking statements, and Algoma undertakes no obligation and does not intend to update or revise such 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 assess Algoma’s performance. These terms do not have any standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. Rather, these measures are provided as supplemental information to supplement the IFRS measures by providing a better understanding of our financial performance from a management perspective. Accordingly, they should not be considered in isolation or as a substitute for the analysis of our financial information presented in accordance with IFRS.

Adjusted EBITDA, as we define it, refers to net income before depreciation of property, plant and equipment and amortization of intangible assets, finance costs, interest on pension obligations and other post-employment benefits, taxes on earnings, restructuring costs, impairment reserve, foreign exchange loss (gain), finance income, carbon tax, equity 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 an alternative to net profit, 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 here because we believe it may be useful in measuring our operating performance and our ability to grow our business and to provide management and investors with additional information to compare our operating results over different periods and with 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 an analytical tool and should not be considered in isolation or as an alternative to net income, cash flow from operations or other data prepared in accordance with IFRS. Due to these limitations, Adjusted EBITDA should not be viewed 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 results under IFRS using Adjusted EBITDA only to supplement those 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 current crude steel production capacity of approximately 2.8 million tonnes per year, the size and diversity of Algoma’s capabilities allow it to deliver responsive, customer-focused product solutions straight from the pocket. from casting 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 the US Midwest and is the only producer of steel plate in Canada. The Company’s plant is one of the lowest cost producers of hot-rolled (HRC) steel plate in North America, thanks in part to its Direct Strip Production Complex (“DSPC”) at state-of-the-art technology, which is the newest thin slab color in North America with direct coupling to a Basic Oxygen Furnace (BOF) smelter.

Algoma has made several significant improvements over the past few years that should translate into better long-term profitability for the business. Algoma has upgraded its DSPC facility and recently installed its No. 2 Ladle Metallurgy Furnace. In addition, the Company has ongoing cost reduction initiatives and is in the process of upgrading its plate rolling facilities.

Today, Algoma is on a journey of transformation, investing in its people and processes, optimizing and modernizing to ensure a sustainable future. Our customer focus, growing capacity and courage to meet industry challenges firmly positions us as your partner in steel.

For more information please contact:

Michael Moraca
Treasurer & Head of Investor Relations
Algoma Steel Group Inc.
Phone: 705.945.3300
Email: [email protected]