Steel Products Co. revenue rose 47.5% in the fourth quarter

Shares of Algoma Steel Group Inc. traded up 18% after the North American producer of light gauge sheet and rolled steel plate announced financial results for Q4/22 and fiscal year 22 which included a 112% year-over-year increase in consolidated revenue.

Canadian light steel producer Algoma Steel Group Inc. (ASTL:NASDAQ; ASTL:TSX), which manufactures hot-rolled and cold-rolled steel sheet and plate, announced its financial results for its fourth quarter and the full fiscal year 2022 ended March 31, 2022 .

The company said Q4/22 consolidated revenue increased 47.5% to C$941.8 million from C$638.5 million in Q4/21. Algoma Steel Group noted that volume shipments in the most recent quarterly period decreased to 547,217 tonnes from 621,843 tonnes in the corresponding quarter a year earlier.

The company said Q4/22 consolidated operating profit increased to C$310.6 million from C$130.0 million in Q4/21.

Algoma Steel Group reported net profit of C$242.9 million in Q4/22, compared to net profit of C$100.1 million in Q4/21. The company added that in Q4/22 it had an Adjusted EBITDA of C$334.4 million, compared to an Adjusted EBITDA of C$166.9 million in Q4/21.

The company reported that for EX/22, consolidated revenue increased by 112.0% to C$3,806.0 million, compared to C$1,794.9 million for EX/21. The company said total shipment volume in FY22 measured 2,297,159 tons, compared to 2,102,086 tons in FY21.

Algoma Steel said it posted consolidated operating profit of C$1,411.0 million and net income of C$857.7 million in fiscal 22, compared to C$84.8 million and C$76.1 million, respectively, in FY21.

The company said FY22 adjusted EBITDA improved to C$1,503.2 million from C$199.2 million in FY21.

Algoma Steel Groups Chief Executive Officer, Michael Garcia, said, “Our strong fiscal fourth quarter results capped off an incredible year at Algoma, one that delivered revenue, profitability and cash flow. record cash. a tumultuous year for the steel and commodity markets… Our transformational electric arc furnace project is progressing as planned towards a start-up in 2024, and we are announcing today the next phase of our capital allocation program with a substantial US$400 million tender offer that would represent approximately one-third of the current market capitalization.”

The company said that last November its board of directors approved the construction of two new state-of-the-art electric arc furnaces (EAFs) to replace its blast furnace and steelmaking operations at basic oxygen. Construction is on schedule and is expected to take approximately two years at a total cost of approximately C$700 million. When complete, the new, updated facility is expected to reduce annual carbon emissions by 70% and will be capable of producing approximately 3.7 million tonnes of raw steel per year, matching its downstream finishing capacity.

The company also said its board of directors has authorized a quarterly dividend payment of $0.05 per share on July 15, 2022 to shareholders of record as of June 27, 2022.

Algoma Steel offered forward guidance and said that for Q1/23 it expects adjusted EBITDA of C$335-355 million.

Algoma Steel Group is headquartered in Sault Ste. Marie, Ont., Canada and is a fully integrated producer of hot and cold rolled steel products. The company’s facilities currently have the capacity to produce approximately 2.8 million tonnes of crude steel annually. The company’s finished products are shipped to customers in Canada and the U.S. Midwest for use in the automotive, construction, defense, power, mining, rail, shipbuilding and manufacturing. Algoma submitted that “it is the only producer of steel plate in Canada and that its steel mill is one of the lowest cost producers of hot-rolled steel plate in North America.”

Algoma started Wednesday with a market capitalization of about US$885.4 million and about 112.1 million shares outstanding. Shares of ASTL opened 19% higher at US$9.40 (+US$1.50, +18.99%) from the previous day’s closing price of US$7.90. The stock traded between US$9.035 and US$9.735 per share and closed at US$9.45.

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