Slide 1: A Strategic Review: Double Double in Ten
ALGOMA DoubleCENTRAL DoubleCin Ten ORPORATION A Strategic INVESTOR Review PRESENTATION Algoma Central Corporation MARCH Board 2018 Of Directors Sept 9th, 2015
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements in this document about our current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements. Forward-looking statements
Slide 3: Algoma Central Corporation
Algoma Central Corporation • The largest owner and operator of dry and liquid bulk carriers on the Lakes • A Canadian shipowner since 1900 – Interests in 66 vessels globally plus 9 construction/conversions • 2,000 employees • Fiscal 2017 Results: - Revenue - $451million - EBITDA - $102million • List
Slide 4: Investment Thesis
Investment Thesis Leader in Our Markets – This is Sustainable History of Performance in a Variety of Markets Diversified, Dependable Customer Base Well Capitalized to Pursue Growth Investing in Future Opportunities Internationally Strong History of Dividends 4 Short Sea Shipping is OUR BUSINESS
Slide 5: Our Vision
Our Vision Growing our position as the carrier of choice for bulk commodities in the Great Lakes – St. Lawrence Waterway to become a leader in short sea shipping globally. • We are already a dominant participant in Lakes business and the market is unlikely to grow at a pace that is faster than GDP •
Slide 6: Implementing Our Strategy
Implementing Our Strategy • Cost Leadership – Reduce age of fleet • 19 when completed compared to 45 without renewal – Securing lowest capital cost per tonne of capacity • Longer lives and higher capacity = 50% lower cost than our last round of new vessels – Targeting lowest operating cost per tonne
Slide 7: Implementing Our Strategy
Implementing Our Strategy • Expanding into global markets – Building a strong business in fragmented global short-sea shipping • Revenues in 2017 of $223M – Becoming “big enough to matter” in these markets • Already second largest cement carrier – More than just a “tonnage provider” • Focus is contr
Slide 8: Not Just Another Shipping Company
Not Just Another Shipping Company • Cyclicality is lower – Contracts are long-term; barriers to entry domestically • Domestic markets provides stability – Diversity of commodities, steady cash flow – Tankers and Ocean Pool have secure market positions • Regional and market diversification – Cement –
Slide 9: Returns Compared to Industry
Returns Compared to Industry Algoma has been in the top quintile of Marine Money’s Financial Strength Rankings for the last 6 years Source: Marine Money Annual Ratings 9 Short Sea Shipping is OUR BUSINESS
Slide 10: The Shipping Continuum
The Shipping Continuum Tonnage Industrial Shipping Ship Manager Provider Shipping Platform Chief Trait Owns 100% of Owns or bare-boats Owns a portion of Owns no tonnage tonnage all tonnage the tonnage Control of fleet Permanent but Permanent Permanent for Limited to and by assets delegated owned por
Slide 11: Drivers of Returns
Drivers of Returns • Domestic Dry-Bulk – Freight volumes and rates per tonne – Direct operating expenses per day – Trade-off of new vessel capex versus maintenance on older vessels • Product Tankers – Fleet availability and customer demand – Direct operating expenses per day 11 Short Sea Shipping is
Slide 12: Drivers of Returns
Drivers of Returns • Ocean Self-Unloaders – Days available to the Pool – Overall commercial margin of the Pool – Direct operating expense per day 12 Short Sea Shipping is OUR BUSINESS
Slide 13: Drivers of Returns
Drivers of Returns • NovaAlgoma Cement Carriers (NACC) – Contract charter rates – Direct operating expense per day – Cost of funds • NovaAlgoma Short-Sea Carriers (NASC) – Freight rates and volumes – Cost of non-owned capacity – Operating and financing costs of owned ships 13 Short Sea Shipping is O
Slide 14: Highlights of 2017
Highlights of 2017 • 7 new vessels added to domestic fleet with another to come in early 2018 • Growth in NovaAlgoma Cement Carriers – 13 vessels and now #2 in the world in this market • Created NovaAlgoma Short-Sea Carriers (NASC) to focus on short-sea mini-bulkers • Completed sale of real estate w
Slide 15: Growing Cash Flow and Earnings
Growing Cash Flow and Earnings 15 Short Sea Shipping is OUR BUSINESS
Slide 16: Increasingly Diversified Revenues
Increasingly Diversified Revenues Managed Revenues: 2015: $465M 2016: $434M 2017: $575M 16 Short Sea Shipping is OUR BUSINESS
Slide 17: Driving Improved EBITDA
Driving Improved EBITDA EBITDA: 2015: $79M 2016: $89M 2017: $102M 17 Short Sea Shipping is OUR BUSINESS
Slide 18: Growing from a Strong Financial Base
Growing from a Strong Financial Base Balance Sheet Highlights 2015 2016 2017 Cash 210,562 130,039 68,860 Net Working Capital (excl. debt) 304,916 162,947 81,679 Total Assets 988,805 1,036,013 1,100,290 Net Debt 33,434 110,516 223,144 Total Equity 618,610 641,550 660,460 Book Value Per Share $ 15.90
Slide 19: Our Strategy for Global Growth
Our Strategy for Global Growth Grow into international short-sea markets where we can add value. Target Market Features: • Opportunities for self-unloader or specialized applications to serve as feeder services between shallow draft ports and major seaports. • Opportunities to consolidate small regi
Slide 20: Setting the Scene: World Trade – Global Marine Trends 2030
Setting the Scene World Trade – Global Marine Trends 2030 Global Trade will at least double in the next 20 Years 10 20 Billion Billion Tonnes Tonnes 2010 2030 20 Short Sea Shipping is OUR BUSINESS
Slide 21: Short Sea Shipping Expected to Grow
Short Sea Shipping Expected to Grow Total Main Drivers: • Demography (Growing Population, Urbanization) • Rise of Trade Blocks (EU, NAFTA, ASEAN, UNASUR) • Geography (Europe, Oceania, S.E. Asia) • Lack of Infrastructure (India, Indonesia, Philippines, S.America, Africa) • Environment (“Green” Transp
Slide 22: Growing Through Partnership
Growing Through Partnership NovaAlgoma NovaAlgoma Cement Carriers (NACC): Short-Sea Carriers (NASC): • Pneumatic cement carriers • Leverage client relationships servicing global manufacturers • Leverage existing business • Typically time charter based and contacts /partnerships under long term contr
Slide 23: Aging Global Cement Fleet
Aging Global Cement Fleet • Total cement carrier fleet (>2,000dwt): 320 vessel • Average fleet age: 25 year • Average age of scrapping: 33 years Illustrative Vessel in Global Fleet NACC Star in Nice, France 23 Short Sea Shipping is OUR BUSINESS
Slide 24: NACC is Now #2 Globally
NACC is Now #2 Globally Others 197,419 dwt 212,791 D 18 Vessels 16 Vessels Avg. Age 43 Yrs Avg. Age 15 Years Baltrader, 44,159 dwt, NACC/NMC 10 vessels, 19 years 95,272 Dwt 11 Vessels Avg. Age 7 Years, Eureka 47,001 Dwt 9 Vessels Avg. Age 33 Yrs______—— source: Howe Robinson Cement Desk, Howe Robins
Slide 25: Strong Global Footprint
Strong Global Footprint NACC POROS NACC TORONTO NACC ALICUDI NACC QUEBEC NACC STAR NACC ITACA NACC PROCIDA NACC PANAREA NACC VIVARA NACC NAPOLI NACC VEGA NACC VALBELLA NACC CAPRI 25
Slide 26: Growing Through Partnership
Growing Through Partnership NovaAlgoma NovaAlgoma Cement Carriers (NACC): Short-Sea Carriers (NASC): • Pneumatic cement carriers • Leverage client relationships servicing global manufacturers • Leverage existing business • Typically time charter based and contacts /partnerships under long term contr
Slide 27: Growing Global Footprint
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Slide 28: NovaAlgoma - The Next Two Years
NovaAlgoma - The Next Two Years • Algoma and Nova Marine will focus attention on growing the organizations’ strengths and capabilities • Establish dedicated staff and offices to lead market development • Short-term, the focus for NASC is the Caribbean and for NACC it is North and South America. • An
Slide 29: Analyst Coverage
Analyst Coverage • David Tyerman, Cormark Securities Inc. • Anoop Prihar, GMP Securities L.P. 29 Short Sea Shipping is OUR BUSINESS
Slide 30: Questions?
Double Double in Ten A Strategic Review Q UESTIONS? Algoma Central Corporation Board Of Directors Sept 9th, 2015