Algoma Steel Group Inc. delivered first-quarter results that demurely exceeded projections, chief executive officer Michael Garcia said after the close of markets Thursday.
"Thanks to the dedicated efforts of our employees, we delivered results that were modestly ahead of our previously disclosed outlook," Garcia said in a news release that announced consolidated revenue of $827.2 million during the fiscal first quarter ended June 30.
That compared to $934.1 million in the same period last year.
Consolidated income from operations was $164.3 million, down from $328.9 million in the prior-year quarter.
Garcia also announced that work on the company's game-changing electric arc furnaces (EAFs) is still on track with commissioning expected at the end of 2024.
"We... made substantial progress on our transformative EAF project, deploying the next $74 million in the quarter to bring the cumulative total invested at June 30, 2023, to $341 million, or roughly 40 per cent of the total expected cost, funded from existing excess cash from operations, as well as draws on committed project loan facilities," Garcia said.
"We expect to fund the remainder of the project with a combination of cash on hand, availability under our federal Strategic Innovation Fund (SIF) loan, drawdown of excess working capital, and expected cash flows from operations. We are uniquely positioned to simultaneously deliver strong financial results from our existing portfolio while advancing towards EAF commissioning, expected at the end of 2024,” the CEO said.
Other highlights, as reported by the Sault steelmaker:
- net income of $130.9 million, compared to $301.4 million in last year's fiscal first quarter
- adjusted EBITDA (a key measure of profitability) of $191.2 million and adjusted EBITDA margin of 23.1 per cent, compared to $357.7 million and 38.3 per cent during the same period last year
- cash flows generated from operations were $163.9 million, compared to $276.6 million in the prior-year quarter
- shipments of 569,433 tons, compared to 537,524 tons in the same period in 2022
- average realized price of steel net of freight and non-steel revenue was $1,323 per ton, compared to $1,632 per ton in the prior-year quarter
- cost per ton of steel products sold was $950, compared to $920 in the prior-year quarter
- company declared a quarterly dividend of US$0.05 on each common share outstanding, payable on Sept. 29 to holders of record of common shares of the corporation as of the close of business on Aug. 25
The significant drop in income from operations was explained in a company news release as "primarily due to a decrease in the selling price of steel, higher costs due to increases in the purchase price of key inputs such as metallurgical coke, coal and ore pellets and higher usage of purchased coke."
"Net income in the first quarter was $130.9 million, compared to net income of $301.4 million in the prior-year quarter," the company said, adding: "The decrease was driven primarily by the factors described above under income from operations."