Stelco Holdings Inc.

Welcome to the Stelco Holdings Inc. Second Quarter 2022 Earnings Call. My name is Ruby and I will be your moderator for today's call. If you would like to ask a question during the presentation, please press start, followed by one on your telephone keypad. I will now hand over to Mr. Trevor Havis, Vice President of Corporate Affairs at Stelco to begin.

Thank you, Operator. Good morning, everyone, and welcome to Stelco's Quarterly Earnings Conference Calls. Speaking on the call today to discuss our results for the second quarter of 2022 will be Alan Kastenbaum, our Executive Chairman and Chief Executive Officer, and Paul Schurzer, our Chief Financial Officer. Yesterday, after the market closed, we issued a press release overviewing Stelco's financial results for the second quarter of 2022. This press release, along with the company's financial statements and management's discussion and analysis, have been posted on CDAR and on our Investor Relations website at investors.stelco.com. We've provided a link to the presentation referenced on today's call on our website as well. I'd like to inform everyone that comments made on today's call may contain forward-looking statements which involve assumptions which have inherent risks and uncertainties. Actual results may differ materially from these statements made today, so do not place undue reliance upon them. SELCO management disclaims any obligation to update forward-looking statements except as required by law. With that in mind, I would ask everyone on today's call to read the legal disclaimers on page two of the accompanying earnings presentation and also to refer to the risks and assumptions outlined in Stelco's public disclosures. In particular, the second quarter 2022 management's discussion and analysis sections referring to forward-looking information and risks and uncertainties, as well as our filings with securities commissions in Canada. The appendix for our presentation and the non-IFRS performance measures and review of non-IFRS measures of our MD&A provide definitions and reconciliations of the non-IFRS measures that we use today. Please also note that all dollar figures referred to on today's call will be in Canadian dollars, unless otherwise noted. Following today's prepared remarks, Alan and Paul will be taking questions. To maximize efficiency, we'd ask that all participants who would like to ask a question please limit themselves to one question and one follow-up question before re-queuing. With that, I'd now like to turn the call over to Alan.

Thank you, Trevor, and good morning, everyone. The second quarter of 2022 was very busy and productive for Stelco. We have continued to deliver upon our commitments to shareholders with several major milestones achieved. The first one is the completion of the construction and the startup of our 65-megawatt cogeneration facility at Lake Evie Works. that will see us continue to improve on our industry-leading low-cost structure, avoid to a large extent significant increases in energy costs others are experiencing, and reducing our overall carbon footprint. Additionally, during the quarter, we completed a strategic transaction for Stelco that unlocked the value of the Hamilton land through the $518 million sale of those lands. we entered into a long-term lease that will keep Stelco operating in the community it has called for over 110 years. Operationally, we were able to deliver $464 million in adjusted EBITDA and maintain our place as the industry leader with 45% adjusted EBITDA margin. To show how impressive that is, the combined U.S. and Canadian industry average for all other reporting steelmakers, was below 30% for the quarter. Moreover, it is our sixth consecutive quarter leading the industry in adjusted EBITDA margin. We also saw growth in all of our financial metrics over the previous quarter, including revenue, operating income, and net income, despite a modest reduction in the average selling price in Q2. We have so far in the first six months of this year generated $866 million in adjusted EBITDA, bringing the total adjusted EBITDA for the trailing 12 months to over $2.3 billion. All of these measures have contributed to our business being in a position to continue our tradition of returning capital to our shareholders, with whom our senior management team remains closely aligned. We have demonstrated this with what is now over $1.1 billion of capital return to shareholders since our IPO in 2017. In July, we also announced our offer to return up to an additional $1 billion, $50 million to our shareholders through a substantial issuer bid. Today, we are furthering our commitment by announcing a $0.30 per share dividend for this quarter. This has positioned Stelco as the leader amongst publicly traded steelmakers across North America with respect to capital returns to shareholders relative to market capitalization. The unprecedented alignment of our management team with our shareholder base continues to be a source of unique strength for our company. Unfortunately, however, we live in a world where past success is not what we as management nor our investors gauge us on, but rather our future performance. Early in the second quarter, we experienced and continue to see a significant shift in the market with a sharp reversal in pricing trends, that has seen the benchmark CRU pricing decline by more than 45% from the recent peak in late April. On top of deteriorating pricing and demand, our business is being challenged with strong headwinds, including inflationary pressures on some of our key inputs, such as natural gas, coal, and alloys. We are concerned about this double hit of higher costs and lower prices and are looking at how we can address these challenges. While we have been through troughs before, The particular combination of this double whammy makes this time somewhat different. Also, as I'm sure you are all aware, we are in the midst of labor negotiations with our valued employees. We will not be addressing this on this conference call, nor will we respond to any questions on this topic. We consider these discussions with our employees as confidential, and we respect the financial well-being of both the company and our employees, and we believe that keeping the discussions in the family is in the best interest of both the company and our valued employees. With that, I will turn to Paul and ask that he provide some additional comments regarding our financial performance.