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‘Future of Algoma has never looked brighter,’ new CEO says

Consolidated revenue was $941.8 million, up 47.5 per cent from the same period last year

Michael Garcia, the new chief executive officer of Algoma Steel Inc., lauded an “incredible year” as he announced fiscal fourth-quarter results Tuesday night.

“Our strong results for the fiscal fourth quarter capped off an incredible year at Algoma, one that produced record revenues, profitability and cash flows,” Garcia said.

“Relentless execution by the entire team delivered these strong results across what was truly a tumultuous year for both steel and raw material markets.”

“It is through this hard work and dedication that we have positioned ourselves to drive additional value creation for our shareholders on two fronts simultaneously.”

“Our transformational electric arc furnace project is advancing as planned towards a 2024 startup, and today we are announcing the next phase of our capital allocation program with a US$400 million substantial issuer bid which would represent roughly a third of today’s market capitalization,” Garcia continued.

“I would like to personally thank Mike McQuade for his outstanding leadership over the critically important last three years at Algoma, and look forward to his continued mentorship and guidance in his continuing role as a member of the board.”

“The future for Algoma has never looked brighter, and I am honored to have been chosen to be at the helm during these exciting times,” Garcia said.

Garcia reported:

  • consolidated revenue of $941.8 million, up 47.5 per cent from $638.5 million in the prior-year quarter
  • consolidated income from operations of $310.6 million, compared to $130.0 million in the prior-year quarter
  • net income of $242.9 million, compared to $100.1 million in the prior-year quarter,
  • adjusted EBITDA of $334.4 million and adjusted EBITDA margin of 35.5 per cent, compared to $166.9 million and 26.1 per cent in the prior-year quarter
  • cash flows generated from operations of $443.8 million, compared to $133.9 million in the prior-year quarter
  • shipments of 547,217 tons, down from 621,843 tons in the prior-year quarter
  • paid first quarterly dividend of US$0.05/share
  • launched normal course issuer bid in March

Garcia, 57, started in his new position on June 1.

He’s worked in the pulp and paper, steel and aluminum industries.

He’s operated internationally, with stints in Asia and Africa.

He’s an operations guy, but he’s also a Harvard MBA who understands the marketing side of heavy manufacturing.

But Garcia has had to overcome some hard knocks on his way to becoming Algoma Steel’s chief executive officer.

Last year, for example, he was pushed out of his job heading Domtar Corp.’s paper-making operations as part of what the company described as a “management structure redesign.”

“As part of the business transformation, Michael Garcia’s position of president, pulp and paper division was eliminated from the organization effective Jan. 4, 2021 as part of the corporation’s move to a leaner, lower-cost management structure that is better suited to current needs,” Domtar said in a proxy statement filed with the US Securities Exchange Commission.

“Mr. Garcia was a valued employee, and the corporation is grateful to him for the important systemic improvements that he brought to the corporation during his tenure.”

“The corporation entered into a separation agreement and general release with Mr. Garcia on Jan. 19, 2021 in connection with his departure.”

Garcia is now joining a steel producer that, less than one year ago, was proposing returning to public markets with no women on either its board of directors or senior management team.

His social media posts, however, show a strong interest in increasing gender and racial diversity in leadership, often congratulating women and racialized persons appointed to corporate boards and management.

Garcia is a member of the Latino Corporate Directors Association.

He’s also strongly interested in hiring military veterans.

In a 2018 interview, Garcia referred to a lesson drilled into him during his army days: “No plan survives first contact with the enemy.”

That attitude can benefit anyone operating a piece of manufacturing machinery, he said.

“Sometimes when you open up a machine when you expect to find X, when in reality you find A,B or C.”

Military vets are better at dealing with things like volatility and uncertainty, Garcia told the Charlotte Business Journal.

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