Algoma Steel today announced its financial results for the quarter ended June 30, 2000
25 July 2000
Algoma Steel today announced its financial results for the quarter ended June 30, 2000
SAULT STE. MARIE, ONTARIO - Algoma Steel today announced its financial results for the quarter ended June 30, 2000.
Financial Highlights
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1999 2000
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Q2 Q3 Q4 Q1 Q2
-- -- -- -- --
($ millions except per share data)
Sales $295.9 $264.0 $266.0 $303.6 $304.6
EBITDA(1) $0.5 $14.1 $25.3 $30.8 $42.2
Income (Loss)
Before Taxes $(36.7) $(23.3) $(11.6) $(8.4) $ 2.2
Net Income/
(Loss) $(26.9) $(16.8) $ (7.9) $(9.0) $ 1.1
Net Income/
(Loss)
Per Share $(0.51) $(0.32) $(0.15) $(0.17) $0.02
Weighted average
shares
outstanding
(millions) 52.72 52.85 52.97 53.08 53.20
Per Ton Shipped
---------------
Revenue $518 $528 $537 $541 $575
EBITDA(1) $1 $28 $51 $55 $80
(1) Earnings before interest, taxes, depreciation and
amortization.
Steel Shipments (000's of net tons)
-----------------------------------
1999 2000
------------------------- -------------
Q2 Q3 Q4 Q1 Q2
-- -- -- -- --
Sheet 426 391 408 455 422
Plate 110 106 83 101 106
Structurals 21 - - - -
Tubulars 14 3 4 5 2
--- --- --- --- ---
Total 571 500 495 561 530
--- --- --- --- ---
SummaryA net profit of $1.1 million or $0.02 per share was earned in the second quarter. This compares to a first quarter loss of $9.0 million or $0.17 per share and a net loss of $26.9 million or $0.51 per share in the second quarter of 1999.
Financial and Operating Results
Income from operations in the quarter was $23.8 million versus $12.4 million in the first quarter. Steel shipments in the quarter were 530,000 tons versus 561,000 tons in the first quarter. Total production on the Direct Strip Production Complex in the second quarter was 323,000 tons compared to 294,000 tons in the first quarter. New production records were set on the facility in both May and June.
Cash flow from operations before changes in working capital in the quarter was $23.0 million, compared to $13.7 million in the first quarter. The improvement was due to a combination of higher prices and lower operating costs.
Unused availability from the banking facility was $109 million at June 30 compared to $92 million at March 31.
The Company has entered into definitive agreements with a Canadian subsidiary of Siderca S.A. of Argentina for the long-term lease of the Company's seamless tubular facilities. Siderca S.A. is part of the global DST group which is one of the world's largest seamless tubular producers. These agreements are expected to take effect in September upon the clearance of corporate and regulatory requirements.
Trade
In June, the Canadian International Trade Tribunal determined that dumped carbon steel plate from Brazil, Finland, India, Indonesia, Thailand and the Ukraine and subsidized plate from India, Indonesia and Thailand have caused material injury to the domestic industry. As a result, dumping margins averaging almost 40%, issued by Canada Customs and Revenue Agency in February, will now be applied to plate imports from these countries.
The Company continues to be concerned about the high levels of unjustifiably traded imports of steel entering the North American market from offshore producers. Imports of hot rolled sheet entering Canada are up dramatically from the same period in 1999 and are contributing to the recent pricing pressures. Consideration is being given to the filing of an anti-dumping complaint against several countries.
Outlook
There has been some deterioration in market conditions in the third quarter due, in part, to inventory reductions by the service centres and the high levels of imported steel. This is contributing to lower selling prices for sheet and plate in the third quarter. However, underlying North American demand for steel products is still strong and, as well, offshore steel markets appear to be improving.
A. ADAM H. EARL JOUDRIE PRESIDENT AND CHAIRMAN OF THE BOARD CHIEF EXECUTIVE OFFICER Sault Ste. Marie, Ontario July 25, 2000
Algoma Steel Inc.
2000 Second Quarter Report
Unaudited - Expressed in Canadian dollars
Consolidated Statements of Income (Loss) and Retained Earnings
Three months ended Six months ended
June 30 June 30
2000 1999 2000 1999
-------- -------- -------- --------
(millions of dollars)
Sales $ 304.6 $ 295.9 $ 608.2 $ 591.6
-------- -------- -------- --------
Cost of sales 252.3 285.3 515.7 574.7
Administrative and
selling expense 10.1 10.1 19.5 20.4
Depreciation and
amortization 18.4 15.9 36.8 31.4
-------- -------- -------- --------
280.8 311.3 572.0 626.5
-------- -------- -------- --------
Income (loss) from
operations 23.8 (15.4) 36.2 (34.9)
Net financial expense 21.6 21.3 42.4 43.3
-------- -------- -------- --------
Income (loss) before
income taxes 2.2 (36.7) (6.2) (78.2)
Provision for income taxes
- current 0.7 0.8 1.3 1.7
- deferred 0.4 (10.6) 0.4 (22.5)
-------- -------- -------- --------
1.1 (9.8) 1.7 (20.8)
-------- -------- -------- --------
Net income (loss) $ 1.1 $ (26.9) $ (7.9) $ (57.4)
-------- -------- -------- --------
-------- -------- -------- --------
Net income (loss) per
common share $ 0.02 $ (0.51) $ (0.15) $ (1.09)
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average common
shares outstanding
- millions 53.20 52.72 53.14 52.68
-------- -------- -------- --------
-------- -------- -------- --------
Retained earnings
Balance, beginning
of period $ 179.7 $ 199.9 $ 148.4 $ 230.4
Net income (loss) 1.1 (26.9) (7.9) (57.4)
Pension and income tax
adjustment (Note 1) - - 40.3 -
-------- -------- -------- --------
Balance, end of
period $ 180.8 $ 173.0 $ 180.8 $ 173.0
-------- -------- -------- --------
-------- -------- -------- --------
Operations
(thousands of net tons)
Raw steel production 626 588 1,235 1,195
-------- -------- -------- --------
-------- -------- -------- --------
Steel shipments 530 571 1,091 1,093
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-------- -------- -------- --------
Algoma Steel Inc.
2000 Second Quarter Report
Unaudited - Expressed in Canadian dollars
Consolidated Statements of Financial Position
As at June 30
-----------------------
2000 1999
--------- ---------
(millions of dollars)
Current assets
Accounts receivable $ 200.6 $ 173.4
Income and other taxes recoverable - 13.1
Inventories 304.2 283.3
Prepaid expenses 2.9 3.3
--------- ---------
507.7 473.1
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Other assets
Fixed assets, net 871.4 893.3
Unamortized blast furnace lining 21.3 28.3
Future income tax asset 51.3 -
Deferred charges 35.4 37.5
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979.4 959.1
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Total assets $ 1,487.1 $ 1,432.2
--------- ---------
--------- ---------
Current liabilities
Bank indebtedness $ 92.8 $ 61.8
Accounts payable and accrued liabilities 186.6 188.0
Income and other taxes payable 8.0 -
Current portion of long-term debt 0.9 3.9
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288.3 253.7
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Other liabilities
Long-term debt 486.7 477.7
Accrued pension liability and
post-employment benefit obligation 424.8 380.7
Future income tax liability - 41.5
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911.5 899.9
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Shareholders' equity
Common shares 187.6 186.7
Shareholders' deficiency on restructuring (81.1) (81.1)
Retained earnings 180.8 173.0
--------- ---------
287.3 278.6
--------- ---------
Total liabilities and shareholders' equity $ 1,487.1 $ 1,432.2
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--------- ---------
Algoma Steel Inc.
2000 Second Quarter Report
Unaudited - Expressed in Canadian dollars
Consolidated Statements of Cash Flow
Three months ended Six months ended
June 30 June 30
2000 1999 2000 1999
-------- -------- -------- --------
(millions of dollars)
Cash provided by (used in)
Operating activities
Cash from operations $ 23.0 $ (14.7) $ 36.7 $ (34.7)
Decrease (increase) in
operating working
capital (0.9) 43.7 (41.2) 33.8
-------- -------- -------- --------
22.1 29.0 (4.5) (0.9)
-------- -------- -------- --------
Investing activities
Net additions to fixed
assets (11.5) (7.3) (24.3) (15.5)
Deposits in escrow - 0.9 - 0.9
-------- -------- -------- --------
(11.5) (6.4) (24.3) (14.6)
-------- -------- -------- --------
Financing activities
Repayment of long-term
debt (0.1) (0.3) (0.3) (1.2)
Common share proceeds 0.4 0.3 0.5 0.4
Increase (decrease) in bank
indebtedness (10.9) (22.6) 29.1 16.6
Financing expenses - - (0.5) (0.3)
-------- -------- -------- --------
(10.6) (22.6) 28.8 15.5
-------- -------- -------- --------
Cash
Change during period - - - -
Balance, beginning of
period - - - -
-------- -------- -------- --------
Balance, end of period $ - $ - $ - $ -
-------- -------- -------- --------
-------- -------- -------- --------
Note 1. Effective January 1, 2000 the Corporation adopted the Canadian Institute of Chartered Accountants' new accounting standards for accounting for income taxes and accounting for pension and other post-employment benefits. These had the effect of recording future tax benefits of prior year losses of $80.3 million and adding to post-employment obligations in the amount of $40 million. The changes were applied retroactively and resulted in a net $40.3 million increase to retained earnings on January 1, 2000.