Algoma Central Corporation · TSX:ALC
Algoma Central — Shareholder Meeting (May 2018)
62 slides from Algoma Central's shareholder meeting presentation, May 4, 2018
Slide 1: Annual General and Special Meeting of Shareholders
ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS MAY 4, 2018 Short Sea Shipping is OUR BUSINESS 1
Slide 2: The Year in Review
THE YEAR IN REVIEW KEN BLOCH SOERENSEN, CEO Short Sea Shipping is OUR BUSINESS 2
Slide 3: 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 statement
Slide 4: Strong Focus on Shareholder Value
Strong Focus on Shareholder Value 24% Increase $17.00 $16.00 $15.00 $14.00 $13.00 $12.00 $11.00 $10.00 Short Sea Shipping is OUR BUSINESS 4
Slide 5: Outperformed TSX
Outperformed TSX 140% 130% 120% 110% ALC 100% TSX 90% 80% Short Sea Shipping is OUR BUSINESS 5
Slide 6: Analyst Coverage – More Expected
Analyst Coverage – More Expected David Tyerman, Cormark Securities Inc Anoop Prihar, GMP Securities L.P. Short Sea Shipping is OUR BUSINESS 6
Slide 7: Additional Tools - Dividends
Additional Tools - Dividends 43% Increase $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $- 01-Mar-17 01-Jun-17 01-Sep-17 01-Dec-17 01-Mar-18 01-Jun-18 Short Sea Shipping is OUR BUSINESS 7
Slide 8: 2017 Business Highlights
2017 Business Highlights Adjusted Managed EBITDA Revenue Revenue EPS 16% 44% 15% 32% Short Sea Shipping is OUR BUSINESS 8
Slide 9: Crew Achieved Safest Year on Record
Crew Achieved Safest Year on Record Lost Time Injuries 20 15 10 5 2013 2014 2015 2016 2017 Short Sea Shipping is OUR BUSINESS 9
Slide 10: Safety First – First In Safety
Safety First – First In Safety Short Sea Shipping is OUR BUSINESS 10
Slide 11: 2017 Business Highlights Continued
2017 Business Highlights Continued Revenue 16% 37% 4% 961% Domestic Dry-Bulk Product Tankers Ocean Self-Unloaders Global Short Sea Shipping Short Sea Shipping is OUR BUSINESS 11
Slide 12: A Year of Continued Prosperity
A Year of Continued Prosperity Short Sea Shipping is OUR BUSINESS 12
Slide 13: So Far So Good…& Expected to Stay
So Far So Good…& Expected to Stay • Domestic Dry-Bulk ahead • Tanker revenue remains of plan despite weather strong and well ahead of conditions. plan. • Global Short Sea • Ocean Self-Unloaders Shipping growth ahead of last year. continues. Short Sea Shipping is OUR BUSINESS 13
Slide 14: Domestic Dry-Bulk Outlook
Domestic Dry-Bulk Outlook • Fleet is fully booked • Export ore remains strong and grain forecasts remain positive • Multi-year contracts signed • Overall contract renewals are longer and at higher levels Short Sea Shipping is OUR BUSINESS 14
Slide 15: NovaAlgoma Cement Carriers Outlook
NovaAlgoma Cement Carriers Outlook • Global demand for cement expected to grow 5% per annum • Global infrastructure spending to reach 3.2 trillion US$ by 2030 • Demand expected to outstrip supply • Asia will remain driver of growth • North American growth expected to be higher than average Short Sea
Slide 16: Cement Fleet Development
Cement Fleet Development 2016 2017 2018 Short Sea Shipping is OUR BUSINESS 16
Slide 17: NovaAlgoma Short Sea Carriers Outlook
NovaAlgoma Short Sea Carriers Outlook • The momentum from 2017 continues with rates up 19% year-over-year. • Insignificant order book and aging fleet bodes well for improved supply/demand balance. • Vessel values already appreciated from our entry 12 months ago. Short Sea Shipping is OUR BUSINESS 17
Slide 18: Mini-bulker Fleet Development
Mini-bulker Fleet Development 2017 2018 Short Sea Shipping is OUR BUSINESS 18
Slide 19: Overall Algoma Fleet Development
Overall Algoma Fleet Development NOW 66 Vessels 2016 40 Vessels 2015 37 Vessels Short Sea Shipping is OUR BUSINESS 19
Slide 20: Fleet Strategy
Fleet Strategy • Continue our quest to be a cost leader • Domestic fleet renewal continues 1. Regulatory compliance 2. Manning levels 3. Fuel efficiency 4. Maintenance and repair cost 5. Lower than planned capital costs • DDB daily operating costs down 22% since 2015 • World Class Organisation • Tra
Slide 21: Bright Future Ahead
Bright Future Ahead Short Sea Shipping is OUR BUSINESS 21
Slide 22: Financial Review
FINANCIAL REVIEW PETER D. WINKLEY, CFO Short Sea Shipping is OUR BUSINESS 22
Slide 23: Strong Fiscal 2017
Strong Fiscal 2017 Consolidated Revenues 2017 2016 $- $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 Short Sea Shipping is OUR BUSINESS 23
Slide 24: Domestic Dry-Bulk Up 14%
Domestic Dry-Bulk Up 14% Domestic Dry-Bulk Revenues 2017 2016 $- $50 $100 $150 $200 $250 $300 Short Sea Shipping is OUR BUSINESS 24
Slide 25: Volumes up 10%
Volumes up 10% Domestic Dry-Bulk Volumes 2017 2016 - 5,000 10,000 15,000 20,000 25,000 Short Sea Shipping is OUR BUSINESS 25
Slide 26: Driven by Iron and Steel Customers
Driven by Iron and Steel Customers Domestic Dry-Bulk Trades in 2017 Other Agriculture Salt Iron & Steel Construction Short Sea Shipping is OUR BUSINESS 26
Slide 27: Fleet Utilization Rises to 98%
Fleet Utilization Rises to 98% 2016 Domestic Dry-Bulk 2017 Domestic Dry-Bulk Utilization Utilization Available Available Days Days Domestic Domestic Dry-Bulk Dry-Bulk Fleet Fleet Utilization Utilization Short Sea Shipping is OUR BUSINESS 27
Slide 28: Strong Tanker Demand
Strong Tanker Demand Tankers Revenues 2017 2016 $- $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 Short Sea Shipping is OUR BUSINESS 28
Slide 29: Charter Days Up
Charter Days Up Tanker Days in 2017 Chartered Days Fleet Days Short Sea Shipping is OUR BUSINESS 29
Slide 30: Ocean Self-Unloaders
Ocean Self-Unloaders Ocean Self-Unloaders 2017 2016 $- $10 $20 $30 $40 $50 $60 $70 $80 $90 Short Sea Shipping is OUR BUSINESS 30
Slide 31: Ocean Trades Improving
Ocean Trades Improving Ocean Trades in 2017 Other 6% Gypsum Coal 13% 32% Granite 13% Other Stone Limestone 15% 21% Short Sea Shipping is OUR BUSINESS 31
Slide 32: Increasingly Diversified Revenues
Increasingly Diversified Revenues Managed Revenues: 2017 2015 $465M 2016 $434M 2016 19% DDB 2017 $575M 3% Tankers 7% 2% 48% 2015 Ocean 15% 7% 20% Properties 12% 56% 15% GSS 15% 16% 65% Short Sea Shipping is OUR BUSINESS 32
Slide 33: EBITDA – Growing and Diversifying
EBITDA – Growing and Diversifying $120 Components of EBITDA $100 $80 Global Short Sea EBITDA Real Estate EBITDA $60 Ocean Self-Unloaders EBITDA Tankers EBITDA $40 Domestic Dry-Bulk EBITDA $20 $- 2016 2017 Short Sea Shipping is OUR BUSINESS 33
Slide 34: EBITDA – Growing and Diversifying
EBITDA – Growing and Diversifying $120 Components of EBITDA $100 $80 Global Short Sea EBITDA Real Estate EBITDA $60 Ocean Self-Unloaders EBITDA Tankers EBITDA $40 Domestic Dry-Bulk EBITDA $20 $- 2016 2017 Short Sea Shipping is OUR BUSINESS 34
Slide 35: EBITDA – Growing and Diversifying
EBITDA – Growing and Diversifying $120 Components of EBITDA $100 $80 Global Short Sea EBITDA Real Estate EBITDA $60 Ocean Self-Unloaders EBITDA Tankers EBITDA $40 Domestic Dry-Bulk EBITDA $20 $- 2016 2017 Short Sea Shipping is OUR BUSINESS 35
Slide 36: EBITDA – Growing and Diversifying
EBITDA – Growing and Diversifying $120 Components of EBITDA $100 $80 Global Short Sea EBITDA Real Estate EBITDA $60 Ocean Self-Unloaders EBITDA Tankers EBITDA $40 Domestic Dry-Bulk EBITDA $20 $- 2016 2017 Short Sea Shipping is OUR BUSINESS 36
Slide 37: EBITDA – Growing and Diversifying
EBITDA – Growing and Diversifying $120 Components of EBITDA $100 $80 Global Short Sea EBITDA Real Estate EBITDA $60 Ocean Self-Unloaders EBITDA Tankers EBITDA $40 Domestic Dry-Bulk EBITDA $20 $- 2016 2017 Short Sea Shipping is OUR BUSINESS 37
Slide 38: Profiting from Real Estate
Profiting from Real Estate • Properties Sold in 2017 - 9 • Proceeds in Year - $54 million • Gains in 2017 - $24 million Cumulative Proceeds > $100 million Short Sea Shipping is OUR BUSINESS 38
Slide 39: Station Mall Remains
Station Mall Remains Short Sea Shipping is OUR BUSINESS 39
Slide 40: Shoreside Restructuring
Shoreside Restructuring • Shoreside Headcount - 11 • Cost - $2.5 million • Annualized Savings - $3 million Short Sea Shipping is OUR BUSINESS 40
Slide 41: 2017 Earnings up 69%
2017 Earnings up 69% Net Earnings 2017 2016 $- $10 $20 $30 $40 $50 $60 Short Sea Shipping is OUR BUSINESS 41
Slide 42: Giving Back to Shareholders
Giving Back to Shareholders Dividends $0.45 $0.40 $0.35 $0.30 $0.25 $0.20 $0.15 $0.10 $0.05 $- 2016 2017 2018 Short Sea Shipping is OUR BUSINESS 42
Slide 43: Winter Season 2018
Winter Season 2018 Short Sea Shipping is OUR BUSINESS 43
Slide 44: Algowood - Goderich January 24
Algowood - Goderich January 24 Short Sea Shipping is OUR BUSINESS 44
Slide 45: Uljanik Contracts Renegotiated
Uljanik Contracts Renegotiated Short Sea Shipping is OUR BUSINESS 45
Slide 46: 2018 First Quarter
2018 First Quarter First Quarter Loss $- 2017 2018 $(5) $(10) $(15) $(20) $(25) Short Sea Shipping is OUR BUSINESS 46
Slide 47: Continued Strong Tanker Demand
Continued Strong Tanker Demand Tankers Dry-Bulk Revenues 2018 2017 $- $5.0 $10.0 $15.0 $20.0 $25.0 Short Sea Shipping is OUR BUSINESS 47
Slide 48: Tanker Earnings Recover
Tanker Earnings Recover Tankers Dry-Bulk EBITDA 2018 2017 $(1.5) $(1.0) $(0.5) $- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 Short Sea Shipping is OUR BUSINESS 48
Slide 49: Dry-Bulk Steady
Dry-Bulk Steady Domestic Dry-Bulk Revenues 2018 2017 $- $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 $20.0 Short Sea Shipping is OUR BUSINESS 49
Slide 50: Weather-Related Costs Affect Results
Weather-Related Costs Affect Results Domestic Dry-Bulk EBITDA 2018 2017 $(17.5) $(15.5) $(13.5) $(11.5) $(9.5) $(7.5) $(5.5) $(3.5) $(1.5) Short Sea Shipping is OUR BUSINESS 50
Slide 51: Ocean Self-Unloaders Up Slightly
Ocean Self-Unloaders Up Slightly Ocean Self-Unloaders Revenues 2018 2017 $- $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 $20.0 Short Sea Shipping is OUR BUSINESS 51
Slide 52: Ocean EBITDA Up Modestly
Ocean EBITDA Up Modestly Ocean Self-Unloaders EBITDA 2018 2017 $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 Short Sea Shipping is OUR BUSINESS 52
Slide 53: Global Short-Sea Shipping Revenues
Global Short-Sea Shipping Revenues Global Short-Sea Revenues 2018 2017 $- $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 Short Sea Shipping is OUR BUSINESS 53
Slide 54: Short Sea Fleet Triples
Short Sea Fleet Triples Owned Ships 2018 2017 - 5 10 15 20 25 30 35 Short Sea Shipping is OUR BUSINESS 54
Slide 55: Global Short-Sea EBITDA
Global Short-Sea EBITDA Global Short-Sea EBITDA 2018 2017 $- $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 $4.5 Short Sea Shipping is OUR BUSINESS 55
Slide 56: Algoma Innovator
Algoma Innovator Short Sea Shipping is OUR BUSINESS 56
Slide 57: Algoma Sault
Algoma Sault Short Sea Shipping is OUR BUSINESS 57
Slide 58: Algoma Buffalo
Algoma Buffalo Short Sea Shipping is OUR BUSINESS 58
Slide 59: Algoma Compass
Algoma Compass Short Sea Shipping is OUR BUSINESS 59
Slide 60: Outlook
Outlook • Volumes Strong – we are fully booked • DDB rates improving – contracting with improved earnings • GSSS experiencing firmer rates and strong demand Short Sea Shipping is OUR BUSINESS 60
Slide 61: Focused on Improving Returns
Focused on Improving Returns 10.0% Algoma's Return on Equity 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2014 2015 2016 2017 Algoma ROE Marine Money Industry ROE Short Sea Shipping is OUR BUSINESS 61
Slide 62: Short Sea Shipping is OUR BUSINESS
Short Sea Shipping is OUR BUSINESS 62