Q4 2022 Algoma Steel Group Inc Earnings Call
Greetings and welcome to Algoma Steel Group, Inc. Fourth quarter 2022 earnings conference call. At this time all participants are in 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 touch.
Allophone keypad as a reminder, this conference is being recorded I would now like to turn this conference over to your host Mr. Michael Maracay, Treasurer and Investor Relations Officer. Thank you. Sir you may begin your presentation at this time.
Everyone and welcome to Algoma Steel group Inc's fourth quarter fiscal 2022 earnings conference call, leading today's call are Michael Mcquade, Our former Chief Executive Officer, and current Board member Michael Garcia, Our New Chief Executive Officer, and Roger 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 steals corporate web site at Www Dot Algoma dotcom.
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.
In addition, our statements are prepared in accordance with I F. R S, which differs from U S. GAAP and our discussion today includes references to certain non I F. R. S 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 to also refer to the risks and assumptions outlined in Algoma.
Steel's fourth quarter fiscal 2022, managements discussion and analysis.
Please note that our financial statements are prepared in the U S dollar as their functional currency and the Canadian dollar as our presentation currency our fiscal year runs from April one to March 31st in our financial statements have been prepared for the three and 12 months ended March 31st 2022.
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 former Chief Executive Officer, and current Board member Michael Mcquade, Mike.
Thank you Mike Good morning, welcome and thank you for joining Algoma Steel's earnings call for our fourth fiscal quarter and full year ended March 31, 2022.
I will start my comments as we always too by addressing what truly matters most to us.
Safety of our employees.
In Oklahoma, we believe in safety without compromise and our continued focus has resulted in substantial improvement over the last decade, and our lost time injury frequency rate.
I'm proud to say that our fiscal year 2022 was all Gomez safest year ever.
The safety of our employees is our top priority at Oklahoma and I commend our entire team for their collective success and continued diligence as we relentlessly pursue our goal of achieving zero workplace injuries.
Before getting into my specific comments.
I'd like to express my gratitude to the entire alcoholic family and all of our stakeholders for their trust and support during my tenure as CEO over the last three and a half years.
Transformational milestones, we achieved will chart, a new course for Oklahoma steel and while we certainly did not come without challenges. These years have been some of the most rewarding of my career.
As I move into the next phase of my life, I am, leaving with a tremendous amount of confidence as I hand, the reins to Mike Garcia and I know he will be a great steward of this company.
I'll go in the future has never been brighter and I look forward to continued participation via my role on the board.
Our fiscal 2022 marked a time of profound change for the company and for the industry and our outstanding results during that period put us in an enviable position of having options on capital allocation.
We told you last quarter that prudent financial management means focusing on the cash that we have not cash that we expect to realize at some point in the future.
We've put an exceptional amount of work.
Achieving the enviable balance sheet, we have today.
We remain laser focused on creating long term value for our shareholders through a combination of prudent financial management transformative capital investment and safe and efficient operations of our facilities.
Steel markets are cyclical and pricing can be highly volatile as evidenced by what we've seen over the last several quarters.
Which is why I'm, particularly proud of the foundational building blocks, we have put in place that will make us successful throughout the steel cycle.
Relentless execution by the entire Algoma team drove the strong results, we achieved in our fiscal year.
Those results, including shipments of $2 3 million tonnes.
Revenues of $3 $8 billion, adjusted EBITDA of $1 $5 billion and cash generated by operating activities of $1.2 billion and positioned us to drive long term value creation on two fronts simultaneously.
On the capital return side last night, we announced a new 400 million U S substantial issuer bid or <unk>.
Over and above our existing normal course, issuer bid and our regular quarterly dividend.
<unk> has the potential to represent share repurchases of approximately one third of our current market cap.
We are proud of our continued commitment to return capital to shareholders as a results warrant.
All against the backdrop of advancing and completing our transformative E F project.
On that front construction is advancing as expected with regard to time and budget.
Subsequent to quarter end, the province of Ontario announced the Northern Ontario Energy advantage program.
This program supports industrial electricity customers in northern Ontario, and gives security and visibility into their long term needs and was significant and our decision to pursue electric arc furnace steelmaking.
Materials clean energy grid is known as one of the lowest carbon emitting power supplies across North America.
When combined with our transition to E. F. We intend to become one of the leading producers of Green steel in North America.
Given how major of milestone it is in the life of our company I'd like to give you. A quick reminder of why we're so excited about the <unk> project.
The project entails dual furnaces that are designed for a combined annual raw steel production.
Throughput of $3 7 million tonnes matching our downstream finishing capacity.
It will lower our carbon emissions by approximately 70% when fully operational.
The two apps are expected to come online in 2024, followed by a continued transition away from blast furnace steel production has increased power supply becomes available from the grid with the support of the provincial government.
Project will fundamentally transform who we are how we operate positioning the company as a next generation steelmaker focused on sustainability and poised to be successful across all phases of the steel market cycle.
It's a testament to the execution by our team during unprecedented times that we're able to operate our existing portfolio of assets normally without being operationally impacted by the construction of a transformational project.
All while being able to return meaningful capital to shareholders.
As I said before it's an exciting time and a bright future for Algoma.
Now I'll pass the call over to Roger to go over the strong financial results for the quarter and the fiscal year before our new CEO , Mike Garcia closes out our prepared remarks or is it.
Thanks, Mike Good morning, and thank you all for joining the call.
Our fiscal fourth quarter results continue to demonstrate the impressive cash generating potential of illegal.
I remind you again that all numbers unexpressed in Canadian dollars unless otherwise noted.
Our quarterly results were highlighted by net income of $242 9 million.
Adjusted EBITDA of $334 4 million, which reflects an adjusted EBITDA margin of 35, 5%.
Cash generated from operating activities of $443 8 million.
We finished the quarter with $915 million of unrestricted cash.
And remain Undrawn on our revolving credit facility.
You will recall last quarter, we fully repaid all 358 million U S of outstanding senior secured long term debt.
As a result, the only remaining long term debt on our balance sheet isn't the foremost government loans linked to our capital projects.
Diving into the key drivers of outperformance.
We shipped 547000 net tons in the quarter down, 1% sequentially and 12% as compared to the prior year quarter.
As previous as we previously announced.
Shipments were lower than we expected due to various issues outside of our operations, including increased slowdowns at customers Love.
Just sticking with supply chain constraints and COVID-19 related challenges.
Net sales realization averaged 608 booked on.
Down, 12% sequentially, but up 71% versus the prior year period.
The increase versus the prior year level reflects the positive impact of our contract order book as higher log prices flow through the revenues.
This resulted in steel revenue of $880 million in the quarter down 13% sequentially, but up 50% versus the same quarter of last year.
On the cost side I'll go months cost of goods sold average 99 per ton in the quarter flat on a sequential basis and up 45% over the period year prior year period.
The main drivers of this increase versus the prior year period includes commodity price increases for select raw material inputs increased employee based profit sharing as it is.
Salt of our historic performance.
Higher SG&A cost related to being a public company.
Looking at our fiscal 2022 full year results, we shipped $2 3 million Nick done for the year up 9% as compared to the prior to you.
Net sales realization averaged $15 45 per ton up one 1% for the prior year.
This was altered in steel revenue of $3 5 billion up 120% versus last year.
On the cost side I'll go months cost of goods sold average $894 per ton for the year, an increase of 29% over the prior year.
The main drivers of this increase versus the prior year period again include commodity price increases for select raw material inputs increased employee based profit sharing and higher SG&A costs related to being a public company.
Our fiscal year 2022 was highlighted by record adjusted EBITDA and cash generation.
As Mike described earlier positioned us to add another layer of our capital allocation story two D. S. I B, we announced in our release last night.
Armed with a fortress balance sheet and strong cash generation being profile.
We're well positioned to continue evaluating all options around capital allocation.
Now turning to our outlook for the first quarter steel prices have come off from their most recent highs that coincided with the stock of the Russian invasion of Ukraine.
But remains at attractive levels still well above plus mid cycles.
Based on our operations to date and the cargo.
Order book and our expectations for end market through the end of this month, we expect to deliver a strong fiscal quarter first fiscal quarter of adjusted EBITDA in the range of $3 35 to $3 $55 million.
This EBITDA guidance include as previously disclosed the impact of a planned one month plate mill modernization outage that is currently in the commissioning stage.
I would now like to turn the call over to our new CEO , Michael Garcia to provide further color on current market conditions, and a balanced and disciplined approach to capital allocation.
Mike.
Thanks for shot let me start by saying how excited I am to have joined the Algoma team and to thank Mike Mcquade for stellar leadership throughout the last three and a half years.
Look forward to ongoing Mentorship and guidance from Mike through his continuing position on our board of directors.
Looking at the state of the North American steel market today pricing levels in the fiscal fourth quarter saw dramatic spike to near record levels for the second time in the last two years largely as a result of the Russian invasion of Ukraine.
Since the beginning of April those prices have come off from those highs and are showing signs of stabilizing at levels still historically higher than any point prior to 2021 and approximately double mid cycle pricing.
We expect pricing to find a near term equilibrium and.
And we remain optimistic about where that level should shake out supported by the fundamentals we continue to see in the market and in our order book.
We have a diverse customer base that provides selling opportunities across Canada and the U S. Traditionally servicing roughly 150 customers in a calendar year.
We target a high percentage of contract sales and currently sell approximately 65% of our steel on contract.
These volume commitments provide stability to our order book and operations and the lagging price mechanics helped to smooth some of the volatility experienced when prices shift up or down quickly.
We sell a wide range of offerings that include plate products, which currently enjoy a price premium of approximately 675 U S dollars per ton as compared to hot rolled coil.
We have always maintained that investments in our plate mill should service well given we are Canada's only producer and heat treater of discrete plate products.
Our modernization project remains on track with the first phase wrapping up and going through hot commissioning of the new equipment and phase two work planned for completion during the calendar fourth quarter.
Despite the economic uncertainties being seen across industries and around the globe, we have a number of reasons to believe.
Near and intermediate term pricing will remain at attractive levels.
These potential positive factors include underlying strong demand in the automotive construction.
Oil and gas and other steel intensive industries as well as controls on imports.
We remain well positioned today to benefit from these favorable market conditions operationally.
Even as we execute the construction of the AAF project.
Now, let me talk about our capital allocation policy.
As you heard from Mike Mcquade, our primary focus is on delivering prudent financial discipline and operational excellence to ensure our ability to execute our AAF project.
Assuring the next phase of our company that provides the foundation for long term value creation for our stakeholders.
That endeavor defines the future of Algoma and solidifies our leadership position at the forefront of Green steel production in North America.
We are proud that even as we transition to a low cost green steel company. The steps, we have taken to strengthen the balance sheet and to position our operation to benefit from strong market pricing also have afforded us the opportunity to return capital to shareholders on three fronts.
Our five U S per share regular quarterly dividend.
Our normal course issuer bid program.
And our 400 million U S substantial issuer bid announced last night.
My view is consistent with the boards and that we expect to be a significant generator of free cash over the long term.
And we will continuously evaluate our capital allocation policy with the board.
Mike Mcquade stated approach was to live within our means not to spend money, we didn't have or expect to realize down the line and I am happy to echo those sentiments.
In my first two weeks at Algoma I had been immersing myself across the business meeting people and Familiarizing myself with the specifics of our operations Prost.
Processes and approach.
A prior among our team in the business shines through in their attitudes and their desire to do what's best for Algoma and all of our stakeholders.
Well the only just getting started my first thoughts are really about opportunity.
I feel we have tremendous potential to build upon our strong foundation I commend the steps taken and the results achieved over the past several years to build on a platform on which we can grow from.
I'm confident that my extensive management background and experience specifically in large construction projects and do you have operations will help further our team's efforts.
The fiscal fourth quarter was a strong end to a very exciting year at Algoma that included our return to the public markets. The retirement of our senior secured debt.
The start of our transformative EIF project.
Achievement of historically strong financial results the commencement of a robust capital allocation program.
And most importantly, our continued legacy of safety for our employees.
As I take the reins be assured that we will continue our relentless focus on safe reliable and efficient operations of our existing facilities to enjoy the benefits of strong markets, even as we advance the dual eas facilities, a generational investment designed to forever change how steel is manufactured in <unk>.
St Mary, while making our business greener.
More competitive and more resilient.
We will continue to build upon this and position algoma as a compelling value proposition for all of our stakeholders.
Thank you very much for your continued interest in Algoma steel.
We look forward to what the future holds.
At this point, we would be happy to take your questions opt.
Operator, please give the instructions for our Q&A session.
At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two term move your question from the queue for participants using speaker equipment.
Sir please pick up your handset before pressing the Sarky one moment, while we poll for questions.
Our first question comes from the line of David Gagliano with BMO Capital markets. You May proceed with your question.
Alright, Thanks for taking my questions first of all thank you congratulations on the transition at the top and on the solid results in the.
Another significant S I b.
I have a just really basic some operating questions first some near term questions.
First of all on the volumes for the upcoming quarter within embedded in the EBITDA Guide can you give us a break down on the volume expectations embedded in that guide and the mix of hot rolled and plate for the for the upcoming quarter. That's my first question.
[laughter].
So David Thanks.
Thanks for your compliment I think it was if it was a great quarter.
And a good outcome.
Based on capital allocation so.
So on the guidance.
I think you're absolutely right. The the numbers are part of the overall guidance that we're giving in and what we are providing is a bit of it is more important than meaningful for the market and.
You know you would like to just go and provide the EBITDA number.
And not the volume.
Yes.
Okay.
Alright.
Got it.
The only other I would add sorry, David is that we have a one month outage on.
On the plate mill that we had said last time and that is something thats, finishing off yet in the in the commissioning phase right now.
Okay.
Switching over to the E L F.
And what was the Capex for the year, yes in the March end quarter, and if you could just talk us through the process.
Of applying for the government refunds how.
How much when et cetera et cetera.
Sure So we spend roughly.
8% to 9% of the of the Capex by the March quarter.
So that's that's the spending expecting to spend as we said earlier, a 50% to 60% in this in this year this fiscal year, which is running.
From a process perspective.
It's a it's a reimbursement mccann has them there you spend the money in and you then apply for a for a reimbursement and you'll get get the money back and normally there's a quarter lag.
From venue when you spend it when you really get the money.
Okay and then just my last question is is the 700 million expected total spend for the project because that's still a reasonable assumption given the.
Obviously, the inflationary pressures out there et cetera et cetera.
Hi, David This is Mike Garcia, Yes, that's still our current estimate.
Alright, well thanks for the answers, thanks, and now I'll turn it over somebody else.
Our next question comes from the line of David Ocampo with core Mark Securities. You May proceed with your question.
Hi, Thanks, good morning, everyone.
Just wanted to circle back on the on the government funding in the last quarter. You guys mentioned that are a piece of that I think the.
The strategic investment fund portion, but the other piece.
Would ratchet down by a third for every dollar that you are putting out the door and so how much do you guys think that you'll get out of that totaled $420 million that you guys were alluding to in the past.
So it's so youre right. Its a it will go down by one third based on the allocation of capital.
Toward shareholder so that will include the dividend that we are that we are paying on a quarterly basis include the NCI.
And the number is disclosed how much in CIB has happened and it will be subject to the.
So it'd be pick up so if it is $400 million back one third of pen 400 U S. One third of it will be will be contract. So so when you take a if everything everything gets executed as planned for.
For the rest of the year most of the most of the CIB alone will not be available.
Yeah.
David. This is this is Mike I would say that's an exciting store.
Story because of the compelling value of the S. I b. So we're really excited about the strong cash flows that we're generating and all of the SCB was or the CIB I'm sure I'm sorry, he was very attractive.
We really believe about have faith in the CIB that we're executing.
Okay. That's helpful. And then on your Capex I know you guys announced a number of contracts.
How much of the $700 million is now locked in that I'm presuming it it could be even at a fixed rate. So a breakdown on that would be pretty helpful.
Sure. So we have a lockdown.
Over.
60% up to $760 65 per cent of the of the Capex.
And the balance is open.
Of these still have most of the contingency available so our contingency is.
You know the percentage has grown.
From when we talked last time offered only 25% to over 30%. So so it's over.
Over 60% locked up and the balances are still getting done.
Okay. That's helpful and I may be jumping the gun here do you guys have any update on on the upcoming employee agreement for as much as you can disclose at this time.
Hi, David Yes, you are correct that we are currently in discussions with the union both unions about the upcoming.
Employee agreement the current one expires at the end of July .
Without being able to share any specifics I can tell you that we are engaged with product in productive conversations and.
Would remind everybody that we haven't experienced a work stoppage here at Algoma in 30 plus years. So we expect to continue productive conversations in the weeks to come.
Okay. That's my my questions I'll hand, the line over.
So much guys.
Thanks, David.
Our next question comes from the line of.
I know pre Haar with capital you May proceed with your question.
Good morning, just back to the Capex on the quarter for a second of the $19 million. You guys spent can you give us a rough breakdown in dollar terms, how much was the plate mill and how much was the definition.
Most of it.
The plate mill is not much plate mill is getting spent this.
This quarter.
So it will be it will be the E S.
Well the majority of that was a yes.
That's absolutely right.
Okay.
And then just back to your previous comments when you were giving a breakdown of the contingency remaining.
Just want to make sure I understand the math you said you have about 30% left so does that mean.
About 30% of the 700, that's remaining is that the way I should be thinking about the buffer you have remaining in your spend.
So it's 30% of the remaining Capex AR, that's not contracted yet so so as I said, 60% plus.
Plus has been contracted for on budget.
And much of the contingency is not being used so we are in a stage where the balance has a huge contingency available which is over 30%.
So I'm a little confused when you say, 30% 30% of what.
30% of the 40% remaining to spend out of 700.
Gotcha, Okay great.
Thank you that was it for me.
Okay.
Our next question comes from the line of.
Bob Sharp with Beacon Securities You May proceed with your question.
Good morning, guys, just a quick one.
And on the on the oil spill incident, if Uh huh.
Any color on that are you guys expecting maybe insurance to cover some of that.
And how has it been discussions with the authorities on the potential funds are on that front if any.
Yeah.
Thank you Mark.
We have had discussions with our insurance carriers.
I can't share anything yet about what the final determination would be.
And.
We also don't have any color around what the.
Potential fines, maybe or the size of those fines.
It was a very disappointing.
Incident, and I would say that the source of the spill was safely contained.
And all of the appropriate officials were notified and we're working through all the next steps required.
And that's really all I can share right now.
For the question.
No problem. Thank you I appreciate that and then maybe back on the contingency front. So just remind US again, what was the total percentage of the contingency.
And how much of your spend from that contingency.
So we've not.
It was 12, 5% of the total project and we have not spent much of that contingency.
So much of that contingency is available and that represents over 30% of the remaining spend.
Which is let's say, 40% of the 700 remaining.
Perfect.
Well I had to within the budget that's great to hear thanks, guys.
Our next question comes from the line of Alexander Jackson with RBC Capital markets. You May proceed with your question.
Yeah. Thanks, guys for taking my question I was just curious on costs. What you guys are seeing quarter over quarter from last quarter to the current and where you might be scaling any pressures.
And if there's any offsetting impacts that.
That might be might.
Might be coming into play as well thank you.
Oh sure.
From <unk> perspective, the pressure continues due to the you know the.
Inflationary increase in all commodities, whether its a refractory alloys.
Natural gas, where it sits right now power. So we expect to have the same pressure continuing in this quarter as well.
The only other point I would make which I've made earlier as well that the.
Coal will start impacting us from this quarter onwards, 200 dollar increase.
On the coal pricing year over year based on the contracts that we have done.
Which is still much much better than where the coal market is currently so so we will see cost pressure continuing in this quarter as well.
And and the only other thing to point out is that we have this downtime on the on the plate and strip malls and that definitely.
No.
It will affect the the working capital side.
As we will be producing.
Have you seen more in progress material and keeping it on the floor.
Got it that's helpful. And then maybe just one follow up on the $100 per ton of coal increase are you able to quantify a dollar per ton impact on your or dollar per tonne steel impact on your operating costs from that increase specifically.
That's roughly 50% to 55% of the calls that goes to cost.
Okay.
Okay, so at $50 per ton increase.
Her time scale basically from Nicole <unk>.
Yes.
Thanks, very much guys. That's all for me.
Thanks, Alex.
Our next question comes from the line of Kirk look go with Imperial Capital You May proceed with your question.
Hello, everyone and.
Congratulations to Michael leaving.
Goldman are great in great shape.
Got it.
Thank you Alex Thanks, Kurt I'm sorry.
With respect to the substantial issuer bid can you.
Maybe provide a little bit of background as to how you sized it and and.
And more specifically do you think it cleans up.
Is it big enough to clean up any overhang in the shares.
Sure. So so from a sizing perspective.
Go back to the principles that are Mike and Mike talked about which is living within our means.
Allocating cash that we have generated not that we will be generating in the future. So we looked at how much cashes.
As at March end.
Looked at how much we need to spend to Derisk, our es Capex, which is which is what we are pursuing keeping cash for operations and the balance of the AR.
Using to allocate to the best use possible and considering considering where the where the stock is and as you mentioned overhang.
We are buying back buying back the stock. So that's that's how the number came about as far as overhang is concerned.
It's a little.
Difficult to say.
Weather.
This will take.
Take care of all of the overhang.
Okay.
Got it. Thank you that's helpful.
You mentioned that you have.
Seeing strong demand across a number of your end markets.
Auto construction oil and gas can you break that down a little bit maybe give us some color by end market and most specifically what you're seeing in auto.
Okay.
Hi, Kurt this is Mike.
Don't have a lot of details of it for you other than I think part of it is even though particular supply chains maybe.
It may be struggling in some of these industries.
Industries for instance, auto is a perfect example, with with some of their.
Issues that they are facing in order to produce more units.
As we look at the fundamental demand for for those industries products.
We remain pretty bullish on what that looks like.
I'm talking in the Auto example of the demand the unmet demand for automobiles by consumers and you can see that in there.
The order books for new cars as well as the healthiness of the used car market. So.
We continue to try to look beyond our customers into their markets and their demand and that helps inform our current.
Optimistic view of several of these fundamental markets that are important to our steel demand does that help.
It does thank you very much.
Can you talk about how far out you are taking orders.
Oh, yes.
So our order book is is roughly six weeks, which I would characterize as more in line with our traditional lead times versus where we were a few months ago.
Okay. Thank you and.
Lastly, the downtime that youre taking.
How how much.
Time does that buy you do you can you get to the <unk>.
Completion of the of the new facility before you have to take more downtime like that.
The old mill.
All of this so this downtime that we're taking which is a you know a month long downtime on the plate mill is to finish off the <unk>.
Great to the plate mill from quality perspective.
And we will be taking another downtime towards end of the year to increase the volume. So this is part of our plate mill modernization project, where we are.
We are going into different end markets by improving the quality and then improving volume as well to go to 700000 tons. So so another downtime taking later this year and then than we are.
David on the on the placement side.
No Theres no other.
Specific upgrades.
Contemplated at this point in time.
Great. Thank you very much.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
One moment, while we poll for questions.
Our next question comes from the line of.
David Gagliano with BMO capital markets. You May proceed with your question.
Hi, Thanks, I just have a couple of quick follow ups first of all on the on the six week lead times that are the.
The average between.
Hot roll coil, and plate and and and and if so can you break down the difference between the two in terms of lead times right now. It is my first question.
David It's the average.
For right.
I really can't share anything beyond that.
But it's roughly the average of our order book.
Okay. Okay, and then just one clarification I apologize I might have missed it but I thought there was mention in terms of the interplay between.
No the forgivable part of the SIF flown in the S side B.
Can you explain if that Dutch auction happens obviously, assuming it does.
How does that affect the the syphilis.
So so it does not affect the <unk> loan.
That loan will be drawn as we go along it only affects the CIB loan and you know as Mike mentioned that loan is.
Something that.
Contemplative, there's kind of a situation where there is small cash cutting generated and getting used where the loan is not supposed to be drawn. So so it only affects the CIB loan the 220 million Canadian it does not affect the cellphone.
Okay Alright.
Alright, that's fine I appreciate it thanks.
Thanks.
Our next question comes from the line of Ahmad shop with Beacon Securities. You May proceed with your question.
Yes, just a follow up on the fleet modernization project so.
It looks like it's set to complete by November So what should we expect you Paul.
Following the qualification with customers to start ramping.
Ramping up the shipments from the added volume.
The added volume really.
Will depend on the excess steel that comes or the additional steel that comes with the EIF project I think the current improvements and investments we're making in the plate mill in these two phases.
Really allows us to to address our quality position in the market and an offer.
Quality plate that was a challenge for us before in terms of of a level mis and other and the scaling of the plate. So we're really excited about the.
Quality of the play we're going to be able to bring to the market.
With this modernization project and we're already seeing early indications of the profit of the quality jump, we're making even though we're very much still in ramp up from.
The most recent outage.
But the the excess or the additional volume of plate.
Well really that opportunity really comes with the excess or the additional steel.
Perfect. Thank you for the clarification.
Okay.
Ladies and gentlemen, we have reached the end of today's question and answer session I would like to turn this call back over to Mr. Michael Garcia for closing remarks.
Thank you Laura and thank you again for your participation in our fourth quarter fiscal 2022 earnings conference call and for your continued interest in Algoma steel.
We look forward to updating you on our results and progress when we report our fiscal fourth quarter results later this summer.
Yes.
Yes.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and enjoy the rest of your day.
Okay.
[music].
Yes.
Okay.
Yes.
[music].
Yes.
[music].
Yes.
[music].
Okay.
[music].
Hum.
[music].