A LGOMA C ENTRAL Double Double in Ten A Strategic Review C ORPORATION Algoma Central Corporation D ECEMBER 2015 Board Of Directors Sept 9th, 2015
Ken Soere rensen Pre reside ident nt & Chief Executive cutive Offi fice cer Pet eter er Winkl kley Vice Pre reside ident, nt, Fi Fina nanc nce & & Chief Fi Financial ncial Offic ficer 2
For orward ard Lo Look okin ing g Sta Statements ements 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 are based on estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable in the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, The purpose of the forward-looking statements is to provide the reader with a description of management's expectations regarding the Company's financial performance and may not be appropriate for other purposes; readers should not place undue reliance on forward-looking statements made herein, recognizing that all such forward looking information is based on assumptions about the future that may not ultimately be born out and are subject to many risks and uncertainties, including those listed above. Furthermore, unless otherwise stated, the forward-looking statements contained in this document are made as of the date of hereof (unless stated to be as of an earlier date), and we have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this document are expressly qualified by this cautionary statement. Management approved the forward looking financial information as of December 8, 2015. ALL AMOUN OUNTS IN C$ MILLION IONS EXC XCEPT EPT PER R SHARE RE AMOUN OUNTS, , UNLES ESS NOTED ED Short Sea Shipping is OUR BUSINESS 3
Alg lgom oma a Central ntral Corpora orporation tion • The e largest est own wner er and oper erat ator or of Canadian adian flagged ged vessel sels • A C A Canad adian an sh shipo powne ner si since ce 1900 00 • Cur urrently rently: : − Owns s and operates es 18 18 self-un unloading oading and 6 gearless ess Lakers − Owns s and operates es 6 Product ct Tankers − Manages ages 4 vess ssel els s for ot other er owners − One owned by G3 (former CWB) is part of Algoma’s commercial fleet − Ac Acti tive e new buildin ing g program am for fleet t renewal al Short Sea Shipping is OUR BUSINESS 4
Alg lgom oma a Central ntral Corpora orporation tion • Listed ed on TSX X – AL ALC and d AL ALC. C.DB • Cur urrent rent divide idend nd of 7¢ qua uarter erly ly • Shares res out utsta tand nding ng – 38,913,7 3,733 33 • Ap Approximat ximately ely 75% contr trolled led by the Jackman kman Fami mily ly Short Sea Shipping is OUR BUSINESS 5
Alg lgom oma a Central ntral Corpora orporation tion Why Invest in Domestic Shipping? Short Sea Shipping is OUR BUSINESS 6
Gr Great at La Lakes es – St St. . Lawren Lawrence ce For over 200 years the 100 ports on the Waterway have linked domestic suppliers and markets, connecting with 40 highways and 30 rail systems and ultimately with world markets Short Sea Shipping is OUR BUSINESS 7 7
In In Chal allenging lenging Con onditi ditions ons Short Sea Shipping is OUR BUSINESS 8 8
Mar arine ine Con onnects nects 100 Gr Great Lakes s Ports s and Docks 9 Short Sea Shipping is OUR BUSINESS 9
And Mar arine ine Deliv liver ers Grains from Western Canada and US for export • • Iron ore and coal from US for export • Import ore to center of the country Aggregates, potash, limestone, cement, coal, and salt within the system • • Petroleum products within the system between refiners and distribution networks The he System m moves es 164 4 mill llion ion tonn nnes es of cargo o ever ery y year Short Sea Shipping is OUR BUSINESS 10 10
And Mar arine ine is is Mor ore e Ef Effic icien ient Short Sea Shipping is OUR BUSINESS 11 11 11
Alg lgom oma a Central ntral Corpora orporation tion VISION Growi wing ng our ur po posit itio ion n as as t the e car arrie rier r of choice oice for r bulk k commodit mmoditie ies in in the e Grea eat Lakes es – St. Lawren ence ce Water erway y to bec ecom ome e a lea eade der in in short t sea ea ship ippi ping ng gl global ally ly. Wh Why ? The int nter ernational national markets ts offers s some me compell ellin ing g oppor ortuniti tunities es to leverage rage our core stren rengt gths Short Sea Shipping is OUR BUSINESS 12 12
Setting ting the e Scen cene World Trade – Global Marine Trends 2030 Global Trade will at least double in the next 20 Years 20 20 10 10 Billion ion Billion ion Tonnes es Tonnes es 2010 2030 Short Sea Shipping is OUR BUSINESS 13 13
From rom Fra ragme gmentatio ntation n to Globa bal Collabo boration ration • Meeting ing fut uture ure infras astructure tructure need eds − Impr mproved ed connecti ectivit ity − Clear ar & consis sistent nt regulat ation ion global ally • Financin ancing g growth wth − Ac Access cess to finan ance ce − New money − Creati tion on of larger and more transpa sparen ent t shippi ping ng entiti ties es • En Ensure ure steady ady sup upply y of com ompe petent ent and wel ell trained ned staff f (at sea and ashore) ore) • Raise se profil ile e and image ge of the e industry, , in Canada da and globa ball lly Short Sea Shipping is OUR BUSINESS 14 14
Alg lgom oma a Central ntral Corpora orporation tion The Gre reat t Lakes short-se sea a shipp pping g compa pany Tri rip times es • − Shorter r than n int ntern rnati tiona nal trips ps with h less s time me in open wat water ers • Load / Un Unload ad − More material rial to overall voya yage − Port delays s can have signi nifi fica cant nt impact mpact on voya yage P&L − Integ egrati ration n with h cust stomer ers' ' supply pply chains ns Feeder er service ice for export t – bound nd products cts • • Trans-ship ippi ping ng But the Great Lakes industry faces challenges: slow growth and old ships Short Sea Shipping is OUR BUSINESS 15 15
The Age gein ing g Gr Great at La Lakes es Flee leet 45 40 35 30 25 20 15 10 5 0 Self- Barge - Self- Barge - Dry- Barge - Self- Unloading Product Bulker Unloading Bulk Tanker Unloader Crane Tanker Vessel Avg. Age 42.6 41.9 34.6 40.6 38.9 22.1 21.6 Short Sea Shipping is OUR BUSINESS 16 16
Fle leet t Rene newal al Prio iorit rity A Substantial Investment … Algoma a has invest sted d $450 million ion to date and has contracts acts for 7 more vessels Short Sea Shipping is OUR BUSINESS 17 17
Fle leet t Rene newal al … leads to a very different age profile Short Sea Shipping is OUR BUSINESS 18 18
Fle leet t Rene newal al in in Im Impor ortant ant Why? Profita tabilit ility • − New ships ps carry more yet et cost t less s to operate − Mainten enan ance ce is a major expen ense se for older er ships ps Investment estment of $60 million llion for an Equino uinox x Class ass ship p can generat erate after er-tax tax return eturns s of 10% or more Short Sea Shipping is OUR BUSINESS 19 19
Fle leet t Rene newal al is is Im Impor ortan ant Other factors Safet ety • − Newer ships s are safer er ships ps • Regulat ulator ory − Older r ships ps canno not t be adapt pted ed to meet et new envi viron onme ment ntal regulat ation ions s and the rules s will only get et strict cter er Desirabil irabilit ity • − To attract act crew the indust stry must t provide de a modern ern work envir ironme nment nt − Cust stomer omers s feel age of ships ps ultim imatel ely imp mpact acts s service ice Short Sea Shipping is OUR BUSINESS 20 20
Alg lgom oma a Eq Equin inox x Cla lass ss Important to Algoma’s Sustainable Future Gre reene ner • − 45% more fuel efficient icient per ton/km /km − 45% less s GHG per ton/km /km − 97% less s SOx and the first st certif ifie ied mari rine e exhaust ust gas scrubbe rubber r on the Lakes es More Profit itable able • − Larger capaci acity ty − Fuel econo nomy − Fewer crew − Lower maint nten enan ance ce Short Sea Shipping is OUR BUSINESS 21 21
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