Research Note - Algoma Central Corporation (ALC:TSX,$16.71|BUY $25.00 TARGET) - Update To FY22 Revenue And EBITDA Forecast

We are updating our expectations for FY22 and FY23 to reflect the most recent outlooks provided in ALC’s recent quarterly release. We are projecting better than previously anticipated revenues and EBITDA across all business segments; these updated projections reflect strong demand and demand outlooks presented by ALC in the Q3/22 release. 

 

Domestic Dry Bulk – We are now expecting DDB Q4/22 revenue to come in at $128.8M vs. our previous estimate of $102.5M, and $116M Q3/22. FY/22 segment revenue is expected to come in at $368.6M vs. $342.3M previous. Q4/22 EBITDA is now expected to come in at $41.2M vs. our previous estimate of $32.8M, and $37.0M Q3/22. FY/23 segment revenue is now expected at $369.7M, and FY/23 EBITDA is expected at $88.7M. These updates reflect the full utilization of the DDB fleet with the additional two vessels brought into service towards the end of Q3/22.

 

Product Tankers – We are now expecting PT Q4/22 revenue to come in at $33.0M vs. our previous estimate of $26.3M, and $32.7M Q3/22. FY/22 segment revenue is expected to come in at $115.7M vs. $109.2M previous. Q4/22 EBITDA is now expected to come in at $9.9M vs. our previous estimate of $7.9M, and $9.6M Q3/22. FY/23 segment revenue is now expected at $118.0M, and FY/23 EBITDA is expected at $30.7M. PT saw 100% utilization through Q3/22 and continued strong demand outlook has been provided by ALC in their Q3/22 earnings release.

 

Ocean Self-unloaders – We are now expecting OSU Q4/22 revenue to come in at $57.0M vs. our previous estimate of $51.8M, and $49.9M Q3/22. FY/22 segment revenue is expected to come in at $197.6M vs. $192.4M previous. Q4/22 EBITDA is now expected to come in at $18.8M vs. our previous estimate of $17.1M, and $14.6M Q3/22. FY/23 segment revenue is now expected at $207.6M, and FY/23 EBITDA is expected at $72.7M. OSU saw 100% fleet utilization through Q3/22 and continued strong demand outlook has been provided by ALC in their Q3/22 earnings release.

 

Global Short Sea Shipping – We are maintaining our GSS forecast for Q4/22 revenue of $68.6M and updating our Q4/22 ALC share of EBITDA to $14.1M vs. our previous estimate of $10.3M. This update reflects clarity on operating expenses as a percentage of revenue. We see fleet rates maintaining pace from Q3/22 to finish the year. FY/22 ALC share of EBITDA is now forecast to be $49.0M. FY/23 segment revenue is expected to come in at $278.7M, and FY/23 EBITDA is now expected to come in at $50.2M vs. our previous estimate of $39.0M. 

 

Consolidated Revenues and EBITDA – We are forecasting consolidated Q4/22 revenue of $219.4M vs. our previous estimate of $181.4M, and Q3/22 revenue of $199.3M. We are forecasting FY/22 revenue of $687.3M vs. our previous estimate of $649.3. We estimate Q4/22 adjusted EBITDA of $84.6M vs. our previous forecast of $68.8M. We estimate FY/22 EBITDA of vs. our previous forecast of $201.7M. We estimate FY/23 EBITDA of $245.4 vs. our previous estimate of $207.2M.


20221110- M Partners - ALC - Q4 forecast Update
.pdf
Download PDF • 220KB