Algoma Steel Group Inc.

Hello, and welcome to today's conference call to discuss Algoma Steel's fiscal first quarter 2024 financial results. My name is Doug, and I'll be your operator for today's call. At this time, I'd like to hand the call over to Mike Moraka, Treasurer and Investor Relations Officer for Algoma. Mr. Moraka, please go ahead.

Good morning, everyone, and welcome to Algoma Steel Group Inc.' 's first quarter fiscal 2024 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 U.S. 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 also refer to the risks and assumptions outlined in Algoma Steel's first quarter fiscal 2024 management's discussion and analysis. 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 June 30th, 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.

Thank you, Mike. Good morning and thank you for joining us to discuss our fiscal first quarter results. As always, I will begin my remarks by addressing what truly matters most to us, the safety and well-being of everyone at Algoma Steel. During our last quarterly call, we updated you on the tragic fatality of a contract worker at Algoma Steel on June 15th. The Ministry of Labor was notified and attended the site to conduct its investigation, which remains ongoing. At Algoma, we believe in safety without compromise. And while our continued dedication has led to a significant improvement in our lost time injury frequency rate over the past decade, we remain committed to creating a safe, zero-injury workplace. Next, I'll cover the key events and milestones during our fiscal first quarter and subsequent to its end, as well as an update on the progress at our EAF project. I will then turn the call over to Rajat for a deeper dive into the numbers and a discussion of our strong liquidity and balance sheet before closing with an update on market conditions. Our results for fiscal first quarter of 2024 came in modestly ahead of our previously disclosed guidance for both shipments and adjusted EBITDA. Our shipments of 569,000 tons were up 5.9% versus the prior year period. Our results reflect a quarter of solid operational execution even in the face of commodity price volatility, and we expect that momentum to continue throughout the fiscal year as we work in parallel to advance the investment and activity at our EAF project. On our last call, we provided an update on the progress of phase two of our plate mill modernization project, including the inline shear installation, which is progressing ahead of schedule. I am pleased to report that the shear installation is now complete and we expect to begin cold commissioning this month with hot trials expected by the end of this quarter. We plan for higher plate production levels after commissioning. We are very excited about this given the continued robustness of our current plate market and the high price spread over hot road coil. This higher production level will allow us to capitalize on this market opportunity and to build inventory ahead of the planned phase two hot mill outage to upgrade the hot mill drives, currently scheduled for April of 2024. Next, I'd like to update you on our progress during the quarter on our transformational EAF project. This will ultimately increase our throughput capacity by roughly one-third. From 2.8 million tons per year of liquid steelmaking capacity today via the blast furnace route, to 3.7 million tons employing dual electric arc furnaces upon completion. The higher liquid steel output is expected to match our expanded downstream finishing capacity as we increase production at our plate mill. Importantly, this will improve overall product mix while simultaneously lowering our carbon emissions by approximately 70% when fully operational. During the quarter, EAF expenditures totaled $74 million, bringing cumulative spend as of June 30 to $341 million, or 40% of our expected total project cost, at the midpoint of our unchanged project budget. The construction of the main steelmaking building is progressing on schedule, and we expect to begin receiving key equipment from Daniele this quarter. We continue to make meaningful progress securing the remaining portion of expected project cost as bid packages continue to come in. Our expectations to begin commissioning in late calendar 2024 are also unchanged. Our startup plan continues to include 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. We said on the last call, and I would like to reiterate today, that we expect the completion of the EAF project will be funded through a number of existing capital resources, including cash on hand, cash generated through operations, a drawdown of excess working capital, and the capital resources already available to us, such as the federal SIF loans. Rajat will get into more details there, but given our strong balance sheet that includes no debt outside of government loans and with full availability under our ABL credit facility, our operations are well supported throughout this exciting transition. Through the quarter, we demonstrated consistent and reliable operations. There is also no shortage of excitement here on site in Sault Ste. Marie. As we see the EAF progressing rapidly, and the future of our company becoming reality. I'd like to once again thank all of our employees whose execution continues to deliver solid operational and financial results safely while simultaneously driving the EAF project forward. Now, I will pass the call over to Rajat to go over our financial results for the quarter and give more details on the expected funding of our capital expenditures.