Algoma Central Corporation Announces Operating Results for the First Quarter and a 14% Dividend Increase

(TSX : ALC)

ST. CATHARINES, ON, May 5, 2017 /CNW/ - Algoma Central Corporation ("Algoma") – www.algonet.com, a leading provider of marine transportation services, today announced its results for the quarter ended March 31, 2017.

First quarter highlights include (all amounts in C$000s, except for per share data and unless otherwise noted):

  • A 16% reduction in the net loss for the first quarter to $19.1 million compared to a net loss in the first quarter of 2016 of $22.9 million, excluding the impact of an unusual $16.2 million gain on settlement of refund guarantees in 2016. Results for the first quarter typically reflect a loss due to the reduced level of shipping activity during the winter and the timing of maintenance spending.
  • Revenue for Domestic Dry-Bulk was up 58% and the segment loss was reduced 42% (excluding the impact of the refund guarantees in 2016) compared to the prior year as the mild but wet winter resulted in a 16% increase in volumes, particularly in salt, which had increased usage due to the frequent freeze/thaw cycle.
  • Revenues for Product Tankers were up 37% and fleet utilization was higher than the prior year as customer volumes were above those of fiscal 2016. The loss for the segment was higher by $923 compared to last year due to dry-dock spending in 2017 and the impact of 2016 dry-dockings on depreciation expense, as well as discounted rates applied under an amended service agreement with a major customer.
  • Earnings for Ocean Self-Unloaders were down 76% reflecting a 35% reduction in Pool earnings and a change in the number of vessels generating earnings in our Marbulk joint venture. During fiscal 2016, Marbulk had two vessels generating earnings in the first quarter compared to none in 2017. A dry-docking of the Marbulk-owned Venture occurred during the 2017 first quarter and Marbulk retired the Eastern Power in April last year.
  • We completed the acqusition and fit-out of the Algoma Strongfield and the vessel departed China for Canada at the beginning of April.
  • The NovaAlgoma Cement Carriers fleet comprised nine operating vessels at the end of the first quarter compared to three at the end of March 2016. Earnings from this joint venture were $666 compared to $490 in 2016.
  • Reduced Corporate overhead by 18% with a focus on cutting discretionary spending.

"Our fiscal 2017 first quarter results reflect a sustainable improvement in Domestic Dry-Bulk earnings partially offset by some weakness in Ocean Self-Unloaders," said Ken Bloch Soerensen, President and CEO of Algoma. "Corporate initiatives to expand in global short sea shipping are bearing fruit, with increased earnings from NovaAlgoma Cement Carriers and the creation of NovaAlgoma Short-Sea Carriers shortly after the end of the quarter," Mr. Soerensen continued.

The net loss from continuing operations for the quarter, which excludes income from our discontinued real estate business, was $20,147 compared to $7,959 for 2016. Earnings for 2016 include a gain of $16,196 from the settlement of certain refund guarantees. Excluding this item, the 2016 loss was $24,155.

Earnings from the discontinued real estate business were $1,042 compared to $1,264 last year. Five of the 14 properties slated for sale were disposed of over the course of fiscal 2016. Marketing of the balance of the properties is in process.

Results from operations for the first quarter were as follows:



Three Months



 Ended March 31



2017

2016







Revenues 












Domestic Dry-Bulk 


$

18,401

$

11,659

Product Tankers 



11,681


8,515

Ocean Self-Unloaders 



18,657


20,303



$

48,739

$

40,477









Three Months



Ended March 31



2017

2016







Operating (loss) earnings net of income tax 












Domestic Dry-Bulk 


$

(15,008)

$

(27,715)

Unrealized loss of foreign currency exchange contracts 



(1,003)


-

Gain on shipbuilding contracts 



-


16,196




(16,011)


(11,519)







Product Tankers 



(2,431)


(1,508)

Ocean Self-Unloaders 



1,723


7,268

Global Short Sea Shipping 



666


490

Corporate 



(2,660)


(3,243)







Segment loss 



(18,713)


(8,512)







Not specifically identifiable to segments: 







Net loss on foreign currency translation



(1,293)


(25)


Interest expense



(1,167)


(2,936)


Interest income



277


487


Income tax recovery



749


3,027







Net loss from continuing operations 



(20,147)


(7,959)

Net earnings from discontinued operations 



1,042


1,264







Net loss 


$

(19,105)

$

(6,695)







Basic and Diluted (Loss) Earnings per Share 







Continuing operations


$

(0.52)

$

(0.20)


Discontinuing operations



0.03


0.03









$

(0.49)

$

(0.17)

 

Cash Dividends

The Board of Directors has declared a cash dividend of $0.08 per common share to be paid on June 1, 2017 to shareholders of record on May 18, 2017. This reflects a 14% increase in the dividend rate.

About Algoma Central

Algoma Central Corporation operates the largest Canadian flag fleet of dry and liquid bulk carriers on the Great Lakes - St. Lawrence Waterway, including self-unloading dry-bulk carriers, gearless dry bulk carriers and product tankers. Algoma also owns ocean self-unloading vessels operating in international markets. Algoma provides ship management services for other ship owners. The Company is expanding into global dry-bulk markets with investments in businesses specializing in pneumatic cement carrying vessels and in short-sea dry-bulk shipping.

SOURCE Algoma Central Corporation

For further information: Ken Bloch Soerensen, President and CEO, +1 905-687-7885; Peter D. Winkley, CPA, CA, Vice President, Finance and CFO, +1 905-687-7897

RELATED LINKS
http://www.algonet.com

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