Algoma Steel Group Inc.

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

Good morning, everyone, and welcome to Algoma Steel Group Inc.' 's third 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 Investor 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 inherit 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 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 to refer to the risks and assumptions outlined in Algoma Steel's third quarter fiscal 2024 management 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 and nine months ended December 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 and thank you for joining us to discuss our fiscal third quarter results. As is customary, I'll start by highlighting our top priority, the safety of our employees. At Algoma, we uphold an unwavering commitment to safety, which has resulted in a notable improvement to lost-time injury performance year-to-date. While our site remains bustling with activity, it's crucial to underscore the significance of safety, particularly as our EAF project progresses with increasing contractor involvement. We remain steadfast in our pursuit of zero workplace injuries. Next, I'll cover key events and milestones during our fiscal third quarter and subsequent to its end, as well as give an update on progress at our transformative EAF project. I will then turn the call over to Rajat for a deeper dive into the numbers and the discussion of our strong liquidity and balance sheet before closing with an update on market conditions. There are a few important things I would like to get across on this call. Our long-term strategy remains unchanged and on track, to successfully execute the transition to being one of North America's greenest producers of steel. Our results for the quarter were comfortably in line with our expectations. Our facilities are back online with a goal of reaching full production as quickly and safely as possible following the coke making utility structure collapse. And finally, the outlook for our end markets calls for an improvement in pricing relative to calendar year 2023. Now let me give you some additional color on those key themes. Our results for the fiscal third quarter of 2024 were in line with our previously disclosed guidance on both shipments and adjusted EBITDA, and we achieved year-over-year improvements in nearly all of our key metrics. As a reminder, our fiscal third quarter included major seasonal maintenance, which was completed as planned ahead of the winter months. Due to the lagging nature of our order book, Realized pricing in the quarter did not yet reflect the run-up in markets around the end of the UAW strike. That stronger pricing is expected to begin benefiting our financial results in the fiscal fourth quarter, which unfortunately will be largely offset by impacts related to the outage caused by the incident at our coke-making plant that I will discuss in more detail shortly. Our fiscal third quarter is typically a busy one in terms of seasonal maintenance, and this year was no exception. In totality, the work was completed as planned. We also built seasonal inventories per our normal practice going into the end of the calendar year. During the quarter, we made additional progress on phase two of our plate mill modernization project, including bringing the inline shear online and ramping up its production through the end of the year. We expect higher production levels of plate going forward, which will allow us to capture market opportunities and to build inventory ahead of the planned outages for the implementation of the final pieces of the modernization project. As a reminder, we have split the originally planned 40-day outage into two shorter-duration outages, with the first outage scheduled in April and the second outage planned for late calendar year 2024 to align with other planned maintenance activities, providing some efficiencies on downtime. Next, I'd like to update you on the progress during the quarter on our transformational electric arc or EAF project. The EAF will ultimately increase our throughput capacity by roughly a third from 2.8 million tons per year of liquid still making capacity by conventional means today to 3.7 million tons employing dual furnaces upon completion. The higher output will match our expanded downstream finishing capacity as we increase capacity at our plate mill. We will improve overall product mix and lower our carbon emissions by approximately 70% when fully operational. When factoring in the makeup of our power supply when we switch to EAF operations, we expect to be one of the greenest producers of steel in North America. During the quarter, cumulative investment in the EAF project reached $510 million. To date, we have committed contracts totaling approximately $750 million with approximately 7% tied to time and material contracts, while the balance is fixed price in nature. We expect to contract the majority of the remaining project elements by the end of the current quarter. This will significantly de-risk the EAF project budget as we progress towards our expected commissioning in late calendar year 2024. As a reminder, our startup plan continues to include normal production from our existing steelmaking facility while ramping up steel production from our EAFs in calendar year 2025, followed by a complete switch to EAF production. Before I hand it over to Rajat, let me give you an update on our operations currently. As we previously disclosed on January 20th and January 23rd, There was an incident at our coke making plant that involved the collapse of a structure supporting utilities piping. Thankfully, there were no injuries. But the event did impact several of the utilities that service the coke batteries and other facilities throughout the steelworks. Coke making operations were suspended at the time of the incident, and we were able to stabilize heat to all three batteries and resume partial coke production within 72 hours of the incident. When factoring in coke inventories on hand, the availability of third-party coke, and our partial production capabilities, we are able to satisfy all of our steelmaking raw material input needs, while at the same time pursuing a permanent repair plan for the plant. As we also disclosed previously at the time of the incident, we temporarily suspended blast furnace operations for safety reasons. The blast furnace experienced operational challenges upon initial restart due to unforeseen impacts related to the piping collapse. All necessary repairs to the blast furnace have been completed, and the furnace is gradually being brought back online. Usable hot metal is expected to be produced within the next seven days, with the return to full production anticipated within the next two weeks. Most importantly, we will undertake these recovery efforts with the safety of our employees and our community at the forefront. While doing this, we continue to advance the EAF project on schedule. I'd like to once again thank all of our employees for their hard work, dedication, and professionalism. Now I will pass the call over to Rajat to go over our financial results for the quarter. Rajat?