Algoma Steel Group Inc.

Good day and welcome to today's conference call to discuss Algoma Steel Fiscal Second Quarter 2023 Financial Results. My name is LaTanya and I'm your operator for today's call. At this time, I'd like to turn and hand the call over to Mike Marrocker, Treasurer and Investor Relations Officer for Algoma. Mr. Marrocker, please go ahead, sir.

Good morning, everyone, and welcome to Algoma Steel Group, Inc.' 's earnings conference call for the fiscal second quarter ended September 30th, 2022. Leading today's call are Michael Garcia, our Chief Executive Officer, and Rajat Marwa, our Chief Financial Officer. As a reminder, this call is being recorded and will be made available for replay later today in the Investors section of Algoma Steel's corporate website at www.algoma.com. I would like to remind you that comments made on today's call may contain forward-looking statements within the meaning of applicable securities laws, which involve assumptions and inherent risks and uncertainties. Actual results may differ materially from statements made today. In addition, our financial statements are prepared in accordance with IFRS, which differs from US GAAP, and our discussion today includes references to certain non-IFRS financial measures. Last evening, we posted an earnings presentation to accompany today's prepared remarks. The slides for today's call can be found in the Investors section of our corporate websites. With that in mind, I would ask everyone on today's call to read the legal disclaimers on slide two of the accompanying earnings presentation and to also refer to the risks and assumptions outlined in Algoma Steel's financial statements and management's discussion analysis for the full year ended March 31st, 2022. Please note that our financial statements are prepared using the U.S. dollar as our functional currency and the Canadian dollar as our presentation currency. Our fiscal year runs from April 1st to March 31st and our financial statements have been prepared for the three months ended September 30, 2022. Please note, all amounts referred to on today's call are in Canadian dollars unless otherwise noted. Following our prepared remarks, we will conduct a question and answer session. I will now turn the call over to our Chief Executive Officer, Michael Garcia. Mike?

Thank you, Mike. Good morning, and thank you for joining us today. I will start my comments, as we always do, by addressing what truly matters most to us, the safety of our employees. At Algoma, we believe in safety without compromise, and our continued focus has resulted in substantial improvement over the last decade in our lost time injury frequency rate. That said, we are focused on continued diligence as we relentlessly pursue our goal of achieving zero workplace injuries. I'll cover events and milestones during the quarter and subsequent to its end. I will then turn the call over to Rajat for a deeper dive into the numbers before closing with thoughts on the current state of steel markets. Our performance in the fiscal second quarter was not up to the standards we strive to achieve at Algoma. It included a number of operational challenges, which we disclosed last month, including commissioning challenges at the plate mill, a fire at one of our two coal conveyors, COVID-related labor availability issues at our direct strip production complex, as well as overall steel price softness in the market. We are taking actions to get our operations on stronger footing and improve performance. Specifically, we are addressing the operational challenges themselves so we can return to full operating capacity. We continue to focus on cost control and working capital efficiency. to maximize margins and cash flow. We are maintaining our pace of investment in our EAF project to dramatically transform Algoma, driving enhanced capability and long-term sustainability. And most importantly, we continue to focus on safe operations for our employees, our customers, and the communities we serve. During the quarter, we continued the commissioning of phase one of our plate mill modernization project. Working through automation upgrades that will improve the quality and capability of Canada's only discrete plate mill. These automation challenges continue as we are outfitting our legacy plate mill with modern next generation process controls. Mechanically, all upgrades are complete and the remaining work is centered on the IT side related to automation. During the quarter, both our technical and business leaders visited the vendors facilities in Europe and met with their senior executive team here in Sault Ste. Marie to advance the plans for completing the commissioning and applying our learnings to phase two of the project. These efforts will continue in the calendar fourth quarter, and we believe the plate mill will remain around 80% utilization range until completion in early 2023. The second phase of the plate mill modernization project is currently scheduled to begin in the middle of next calendar year. we will be mindful of market conditions and other operational factors when we make the final decision to commence. At our direct strip production complex, or DSPC, production was lower than expected for the quarter. Our community was not immune to the impacts of COVID, and during the quarter, we experienced a concentrated outbreak, which impacted the DSPC. We are implementing various measures to address labor availability, including cross-training more employees to better handle an absenteeism event. In August, we experienced a fire at one of the coal conveyors that supplies two of our three Coke batteries. Fortunately, no one was injured. All repairs are complete, and we are operating the Coke ovens at capacity. The fire negatively impacted our ability to produce Coke internally during the quarter, forcing us to buy a third-party product, which unfavorably impacted cost and profitability. As we faced those operational challenges, we also had to deal with what has been a volatile overall market for steel and for raw material inputs, which impacted realized prices and costs. Our consolidated results included shipments of 435,000 tons, revenues of $599 million, and adjusted EBITDA of $83 million. During the quarter, we continued to advance construction of our transformative electric arc furnace project, which remains on budget and on time for our planned 2024 startup. We completed the next phase of our capital allocation program with a U.S. $400 million substantial issuer bid, which resulted in the successful repurchase of 41 million shares, or almost 28% of our issued and outstanding shares at the time of announcement. Following completion of the SIB, we were able to resume activity under our normal course issuer bid, or NCIB. During the quarter, we repurchased 1.5 million additional shares, and as of September 30th, Algoma has approximately 104 million common shares issued and outstanding. Early in the quarter, we reached agreements with both local chapters of the United Steelworkers that represent our hourly, technical, and frontline supervisory employees. We are pleased that these five-year agreements provide the company labor stability throughout our transformation to electric arc steelmaking. Now I will pass the call over to our Chief Financial Officer, Rajat Marwa, to go over the financial results for the quarter, closing with some thoughts on the markets. Rajat?