Algoma Steel Group Inc.

Hello, and welcome to today's conference call to discuss Algoma Steel's fiscal fourth quarter and full year 2023 financial results. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. At this time, I'd like to hand the call over to Mike Maraca, Treasurer and Investor Relations Officer for Algoma. Mr. Maraca, please go ahead.

Good morning, everyone, and welcome to Algoma Steel Group Inc.' 's fourth quarter and full year fiscal 2023 earnings conference call. 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 marks. The slides for today's call can be found in the investor section of our corporate website. 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 also refer to the risks and assumptions outlined in Algoma Steel's fourth quarter fiscal 2023 management discussion and analysis. Please note that our financial statements are prepared using the US 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 3 and 12 months ended March 31st, 2023. 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, welcome, and thank you for joining Algoma Steel's earnings call to discuss our fiscal fourth quarter and full year results. 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. As disclosed last week, a subcontracting company performing specialized maintenance work at our site sustained a fatality of one of their employees, who succumbed to his injuries despite the prompt and professional response of Algoma's emergency services team and assistance from the Sault Ste. Marie Fire and Paramedic Service. This tragic loss of life has impacted us all at Algoma, and our prayers go out to the family, friends, and colleagues of the individual. Now turning to our results and highlights. Our fiscal 2023 was a very busy time at Algoma, one marked by volatile commodity prices, operational improvements to our plate mill, and exciting progress on our transformative electric arc furnace, or EAF, project. We overcame a challenging fiscal second and third quarter while commissioning phase one of our plate mill modernization project, followed by our plate and strip production returning to normal levels at the start of the new calendar year. Our results for the fiscal fourth quarter and our guidance for fiscal Q1 2024 reflect solid operational momentum, which we expect to continue throughout the fiscal year, even as activity ramps at our EAF project, which I will give additional color on in a moment. Relentless execution by the entire Algoma team helped overcome commodity price volatility and operational challenges to drive the strong results we achieved in our fiscal year. Those results included shipments of 2 million tons, revenues of almost $2.8 billion, adjusted EBITDA of $452.3 million, and cash generated by operating activities of $177 million. We recently strengthened our liquidity through an upsized and extended ABL facility, which when combined with cash on hand and strong cash flows we expect to deliver in fiscal 2024, positions us well to deliver on our goal of exceptional operations at our current facilities while advancing the later stages of our EAF project construction. Regarding phase two of our plate mill modernization project, I am pleased to report that the inline shear installation is currently progressing ahead of schedule, and the company expects to be able to begin increasing plate production in the third calendar quarter of 2023. This higher production will allow us to capture market opportunities and to build inventory ahead of the planned phase two hot mill outage to upgrade the hot mill drives currently scheduled in April of 2024. Now I'd like to spend a few minutes updating you on our progress and outlook for the transformational EAF project. The completion of this initiative will see a shift from roughly 2.8 million tons per year of liquid steel making capacity by conventional means today to employing dual electric arc furnaces that are designed for a combined annual liquid steel production throughput of 3.7 million tons. This increased output will match our expanded downstream finishing capacity as we increase our capacity at our plate mill, while simultaneously lowering our carbon emissions by approximately 70% when fully operational. We recently achieved two important milestones related to securing the power supply necessary to support dual furnace operations. First, we received conditional approval of the system impact assessment from Ontario's independent electricity system operator, confirming that we may connect our EAFs to the current 115 kilovolt electricity grid in Northern Ontario in combination with Algoma's onsite Lake Superior Power combined cycle natural gas power plant. This SIA was conducted by the IESO to gauge the impact of the project on the reliability of the Ontario grid for large-scale projects. Dedicated reliable electricity supply is critical to successful EAF operations, and the upgrades to support our project will take place in three phases. Phase 1 is comprised of the existing 115 kilovolt transmission connection, supplemented by LSP on-site generation. Phase 2A includes the development of a new local 230 kilovolt transmission line, providing access to more power on the current grid. And Phase 2B represents full power with the enhancement of the Northern Ontario electricity grid expected to be completed by 2030. Our second milestone was the successful on-time and on-budget installation of two new GE LM6000 turbines and all control systems at our Lake Superior power plant, which we expect to give us 115 megawatts of internally generated base load capacity, enabling us to start production at our EAF steel facility. Our original budget for the EAF project, set in 2020, was approximately $700 million Canadian, with an expected commissioning start date of calendar mid-2024. Our startup plan includes normal production from our existing steelmaking facility, while ramping up steel production from our EAFs in calendar 2025, followed by a complete switch to EAF production. The project advanced through fiscal 2023 with approximately 80% of the budgeted project costs contracted and the remainder uncontracted at the fiscal year end. As is typical for an undertaking of this scope, the remaining portion of project contracting was subject to achieving final detailed designs a milestone recently reached as expected. Not surprisingly, many of the inflationary and logistical factors that have weighed on large capital projects for other industrial companies since 2020 have come into play as we move into the next phase of this project. The company now estimates that the project will exceed its original budget by 125 to 175 million due to various emerging factors, including general market pressures impacting the cost of materials, along with higher costs for skilled labor and currency fluctuations. Additionally, supply chain disruptions with certain microprocessing chips is expected to delay the start of commissioning of the first furnace to calendar year end 2024. Management remains fully committed to addressing these challenges proactively to mitigate their impacts and to ensure the successful execution of this project. The company expects that the completion of the EAF project will be funded with cash on hand, cash generated through operations, and available borrowings under the company's existing, undrawn, and recently upsized and extended ABL credit facility. While the date for the start of commissioning has now moved to the end of the calendar year 2024, our revised startup plan will not materially impact shipping performance in calendar year 2025. These are busy times at our site in Sault Ste. Marie, and it's a testament to the execution by our team that we are able to operate our existing portfolio of assets normally without being operationally impacted by the advancing construction of this transformational project. Now I will pass it over to Rajat to go over our financial results for the quarter and the fiscal year. Rajat.