Algoma Steel Group Inc.

Greetings. Welcome to Agama Steel Group Incorporated Full Year Fiscal 2024 Earnings Call. At this time, all participants are in the 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. Please note this conference is being recorded. I will now turn the conference over to Michael Morocco, Treasurer, Investor Relations Officer. Thank you. You may begin.

Good morning, everyone, and welcome to Algoma Steel Group, Inc.' 's full-year 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 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 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 statements have been prepared for the years ended March 31st, 2024 and 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 would now like to 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 fourth quarter and full year 2024 results. Ensuring the safety of our employees is a core value and top priority for our company. This unwavering commitment led to significant improvements in our lost time injury performance during fiscal 2024. As our site continues to be a hub of activity, especially with the increasing contractor involvement in our EAF project, emphasizing safety is more crucial than ever. We are pleased to announce the addition of Aaron Oliver as our new Vice President of Health and Safety. This is a new position on our leadership team, reporting directly to myself. Originally from Sault Ste. Marie, Erin brings a wealth of experience and a strong background in fostering health and safety initiatives across Canada. Her expertise will be instrumental in our pursuit of zero workplace injuries. Next, I'll cover key events and milestones during our fiscal fourth quarter and subsequent to its end, as well as give an update on progress at our transformational 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. There are a few important themes I would like to get across on this call. Our results for the quarter were adversely impacted by previously disclosed operational challenges related to the coke making utility structure collapse and subsequent blast furnace outage in January. which was resolved and resulted in approximately 150,000 tons of lost production. Subsequent to the quarter end, we completed our planned upgrade related to the plate mill modernization project. The upgrades to the mill are now substantially complete and production from the plate mill is already running as expected, with operations and commercial teams focused on increasing production and sales of plate products. Our primary operations are running normally following recovery from the utilities corridor collapse and completion of the plate millwork, which we expect will result in sequentially higher shipments in fiscal Q1 of 2025 and further improvement in the quarters ahead. And finally, our long-term strategy remains unchanged and on track. to successfully execute our electric arc furnace project and transition to being one of the leading producers of green steel in North America. Now let me give you some additional color on those key themes. Our results for the fiscal fourth quarter of 2024 were in line with our previously disclosed guidance for both shipments and adjusted EBITDA. They reflected approximately three weeks of lost production related to the utilities corridor collapse at our coke making facility and related blast furnace outage. That outage highlighted the challenges of operating facilities that in some cases are over 70 years old, but also put on full display the professionalism and expertise of our workforce and their ability to rapidly recover from that incident. It also highlights the benefits we expect to realize as we shift from legacy blast furnace steelmaking to state-of-the-art electric arc furnace operations starting next year. Somewhat offsetting the lost production in the quarter was higher pricing. Due to the lagging nature of our order book, realized pricing in the quarter reflected higher index pricing from the end of calendar year 2023, flowing through our contract order book. Subsequent to quarter end, we successfully completed the planned outage related to the modernization of our plate mill. Our team successfully installed new equipment across the facility. which has achieved enhanced product quality and paved the way for higher plate shipments. Despite the facility being offline for three weeks, our plate production in the fiscal first quarter of 2025 is expected to be approximately 65,000 tons. That would be in line with past quarters that had no maintenance outage, and indicative of the higher run rate we expect going forward. On a very positive note, the team was able to accelerate additional work during the outage, and the vast majority of the modernization project at the facility is now substantially complete. We expect any remaining items to be addressed with other planned maintenance activities over the coming year, providing significant efficiencies on downtime. So what does that mean for performance? In the upcoming quarter, we expect plate mill production to reach approximately 90,000 tons. Our operations and commercial teams are focused on ramping up production and sales of plate products over the balance of the fiscal year, putting us on a path towards our expected annual run rate capacity of over 650,000 net tons. As previously announced, we have begun our exit from the wide coil market, which will be completed over the balance of the fiscal year. This strategic shift will allow us to prioritize plate production and sales. taking advantage of our position as Canada's only discrete producer of plate products, resulting in a more favorable product mix that is expected to drive meaningful margin enhancement. With the blast furnace recovered from the unplanned outage in the quarter and the plate mill upgrade complete, our operations are running normally, and we expect solid production levels in the second half of calendar 2024. Next, I'll give an update on our progress during the quarter on our transformational electric arc furnace, or EAF, project. The EAFs will ultimately increase our throughput capacity by roughly a third, allowing us to reach a shipping capacity of approximately 3 million tons, utilizing our two state-of-the-art electric arc furnaces. The higher output will match our expanded downstream finishing capacity, including increased capacity at our modernized plate mill. Transitioning to EAF steelmaking 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 $563 million. To date, we have committed contracts totaling approximately $800 million, with approximately 93% tied to fixed price contracts. Progress to date on both the construction of the project and the contracted portion of work yet to be completed has significantly de-risked the project budget as we progress towards the expected start of commissioning in late calendar 2024. As a reminder, our startup plan continues to include normal production from our existing steelmaking facility while ramping up steel production from our EAF in calendar 2025, followed by a complete switch to EAF production. In summary, the quarter was a challenging one operationally, and market conditions the last several weeks have shown near-term softness. But we are focused on what we can control, operating our existing facilities safely, completing the important upgrades at our plate mill, and advancing the EAF project on schedule and on budget. I'd like to once again thank all of our employees for their hard work, dedication, and professionalism, particularly their ability to rapidly and safely bring our facilities back to normal production levels during a challenging period. Now, I will pass the call over to Rajat to go over our financial results for the quarter. Rajat?