Q4 2024 Algoma Steel Group Inc Earnings Call
Speaker Change: [music].
Operator: Greetings. Welcome to Algoma Steel Group Inc.'s full year fiscal 2024 earnings 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 telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Michael Moraca, Treasurer and Investor Relations Officer. Thank you. You may begin. Good morning.
Greetings and welcome to steel group incorporated full year fiscal 'twenty 'twenty four earnings 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.
Operator: Welcome to Agoma 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 forum presentation.
Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.
On your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to Micah Rocker 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.
Michael Moraca: I will now turn the conference over to Michael Moraca, Treasurer, Investor Relations Officer. Thank you. You may begin.
Michael Moraca: Good morning everyone and welcome to Algoma Steel Grp Inc's full year fiscal 2024 earnings conference call. Leading today's call are Michael Garcia, our Chief Executive Officer, and Rajat Marwah, our Chief Financial Officer.
Michael Moraca: Good morning, everyone, and welcome to Agoma Steel Group Binks Full Year Fiscal 2024 Earnings Conference Call. Leading today's call are Michael Garcia, our Chief Executive Officer, and Rajat Marwah, 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 Agoma Steel's corporate website at www.algoma.com.
Leading today's call are Michael Garcia, our Chief Executive Officer, and Roger <unk>, Our Chief Financial Officer.
Michael Moraca: 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 uncertainty. Actual results may differ materially from those made today.
Speaker Change: 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.
Michael Moraca: I would like to remind you that the comments made on today's call may contain forward-looking statements within the meaning of applicable securities laws, which involve assumptions and inherent risks in uncertainty. Actual results may differ materially from statements made today.
Speaker Change: 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.
Speaker Change: Actual results may differ materially from statements made today.
Michael Moraca: 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 investor section of our corporate website.
Michael Moraca: 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 2 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.
Speaker Change: In addition, our financial 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 <unk> financial measures.
Speaker Change: 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.
Michael Moraca: 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 Agoma Steel's fourth quarter fiscal 2024 management discussion analysis. Please note that our financial statements are prepared using the US 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.
Speaker Change: 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 2020 for management's discussion and analysis.
Michael Moraca: 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. Okay, Mike?
Speaker Change: Please note that our financial statements are prepared using the U S dollar as their functional currency and the Canadian dollar as our presentation currency.
Speaker Change: Our fiscal year runs from April 1st the March 31, and our statements have been prepared for the years ended March 31, 2024 at March 31 2023.
Speaker Change: 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.
Michael Moraca: Following our prepared remarks, we will conduct a question-and-answer session.
Michael Garcia: 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 positive activity, especially with the increasing contractor involvement in our EAS project, emphasizing safety is more crucial than ever.
Speaker Change: I would now like to turn the call over to our Chief Executive Officer, Michael Garcia.
Michael Dennis Garcia: 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.
Speaker Change: <unk>.
Mike: Thank you Mike Good morning, and thank you for joining us to discuss our fiscal fourth quarter and full year 2024 results.
Mike: Ensuring the safety of our employees is a core value and top priority for our company.
Speaker Change: This unwavering commitment led to significant improvements in our lost time injury performance during fiscal 2024 as.
Speaker Change: As our site continues to be a hub of activity, especially with the increasing contractor involvement and our E. F project, emphasizing safety more crucial than ever.
Michael Garcia: 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 Sue St. Marie, Aaron brings a wealth of experience and a strong background in fostering health and safety initiatives across Canada. Our expertise will be instrumental in our pursuit of zero workplace injuries.
Michael Dennis Garcia: Marie, Aaron 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 injury. 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.
Speaker Change: 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.
Speaker Change: Originally from Sue St. Marie Erin brings a wealth of experience and a strong background in fostering health and safety initiatives across Canada.
Erin: Her expertise will be instrumental in our pursuit of zero workplace injuries.
Michael Garcia: 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 EAS 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.
Michael Dennis Garcia: 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.
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 AAF project.
I will then turn the call over to Raj it 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.
Michael Garcia: There are a few important things 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 co-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.
Michael Dennis Garcia: Our primary operations are running normally following recovery from the utilities corridor collapse and completion of the plate mill work, 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.
Erin: There are a few important themes I would like to get across on this call.
Raj: 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.
Raj: Which was resolved and resulted in approximately 150000 tons of lost production.
Raj: Subsequent to the quarter end, we completed our planned upgrade related to the plate mill modernization projects. 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.
Michael Garcia: Our primary operations are running normally following recovery from the utility's quarter collapse and completion of the plate mill work, which we expect will result in sequentially higher shipments in fiscal Q1 of 2025 and further improvement in the quarters ahead.
Our primary operations are running normally following our 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.
Michael Garcia: 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 utility's quarter collapse at our co-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.
Raj: And finally, our long term strategy remains unchanged and on track to successfully execute our electric arc furnace project and transitioned to being one of the leading producers of Green steel in North America.
Raj: Now let me give you some additional color on those key themes are.
Michael Dennis Garcia: Our results for the fiscal fourth quarter of 2024 were in line with our previously disclosed guidance for both shipments and adjusted EBITDA. However, they reflected approximately 3 weeks of lost production related to the Utilities Corridor collapse at our Coke Making Facility and related blast furnace outages. 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.
Raj: Our results for the fiscal fourth quarter of 2024 were in line with our previously disclosed guidance for both shipments and adjusted EBITDA.
Raj: They reflected approximately three weeks of lost production related to the utilities corridor collapse at our coke, making facility and related blast furnace outage.
Raj: 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.
Michael Garcia: It also highlights the benefits we expect to realize as we ship from legacy blast furnace steel making 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.
Michael Dennis Garcia: It also highlights the benefits we expect to realize as we shift from legacy blast furnace steel making to state-of-the-art electric arc furnace operations starting next year. Somewhat offsetting the lost production in the quarter was higher prices. Due to the lag 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.
It also highlights the benefits, we expect to realize as we shift from legacy blast furnace steelmaking is state of the art electric arc furnace operations, starting next year.
Raj: Somewhat offsetting the lost production in the quarter was higher pricing.
Raj: 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.
Speaker Change: <unk> through our contract order book.
Michael Dennis Garcia: Subsequent to quarter end, we successfully completed the planned outage related to the modernization of our plate plant. 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.
Speaker Change: Subsequent to quarter end, we successfully completed the planned outage related to the modernization of our plate mill.
Speaker Change: Our team successfully installed new equipment across facility, which has achieved enhanced product quality and pave the way for higher plate shipments despite the.
Michael Garcia: 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 plan maintenance activities over the coming year, providing significant efficiencies on downtime.
Speaker Change: Facility being offline for three weeks our plate production in the fiscal first quarter of 2025 is expected to be approximately 65000 tons.
Speaker Change: That would be in line with past quarters that had no maintenance outage and indicative of the higher run rate, we expect going forward.
Michael Dennis Garcia: 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 during downtime. So what does that mean for performance?
Speaker Change: 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.
Speaker Change: We expect any remaining items to be addressed with other planned maintenance activities over the coming year, providing significant efficiencies on downtime.
Michael Garcia: So what does that mean for performance? In the upcoming quarter, we expect plate mill production to reach approximately 90,000 tons.
Speaker Change: So what does that mean for performance in the upcoming quarter, we expect plate mill production to reach approximately 90000 tonnes or 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.
Michael Dennis Garcia: 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 toward 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.
Speaker Change: Towards our expected annual run rate capacity of over 650000 net tons.
Michael Garcia: 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.
Speaker Change: As previously announced we have begun our exit from the wide coil market, which will be completed over the balance of the fiscal year.
Michael Dennis Garcia: 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.
Speaker Change: 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.
Michael Garcia: 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 steel making 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.
Michael Dennis Garcia: 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 our overall product mix and lower our carbon emissions by approximately 70% when fully operational.
Speaker Change: Next I'll give an update on our progress during the quarter on our transformational electric arc furnace or AAF project.
Speaker Change: The a S will ultimately increase our throughput capacity by roughly a third of.
Speaker Change: Wowing us to reach a shipping capacity of approximately 3 million tons utilizing our two state of the art electric arc furnaces.
Speaker Change: The higher output will match, our expanded downstream, finishing capacity, including increased capacity at our modernized plate mill.
Speaker Change: Transitioning to Eas steelmaking will improve overall product mix and lower our carbon emissions by approximately 70% when fully operational.
Michael Dennis Garcia: 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.
Speaker Change: When factoring in the makeup of our power supply when we switched to a F operations, we expect to be one of the greenest producers of steel in North America.
Michael Garcia: During the quarter, cumulative investment in the EAF project reached 563 million dollars. To date, we have committed contracts totaling approximately 800 million, with approximately 93% by the fixed price contracts. Progress today 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 steel making facility while ramping up steel production from our EAF in calendar 2025. Followed by a complete switch to EAF production.
Speaker Change: During the quarter cumulative investment in the EDF project reached $563 million.
Speaker Change: To date, we have committed contracts totaling approximately 800 million with approximately 93% tied to fixed price contracts.
Michael Dennis Garcia: 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 EAS production. In summary, the quarter was a challenging one operationally, and market conditions in the last several weeks have shown near-term softness.
Speaker Change: Progress to date on both the construction of the project and the contracted portion of work yet to be completed is significantly derisked. The project budget as we progress towards the expected start of commissioning in late calendar 2024.
Speaker Change: As a reminder, our startup plan continues to include normal production from our existing steelmaking facility, while ramping up steel production from our Eas in calendar 2025.
Speaker Change: By a complete switch to Eas production.
Michael Garcia: 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.
Speaker Change: In summary, the quarter was a challenging one operationally and market conditions. The last several weeks have shown near term softness.
Michael Dennis Garcia: 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?
But we are focused on what we can control operating our existing facilities safely.
Speaker Change: <unk> the important upgrades at our plate mill and advancing the EIF project on schedule and on budget.
Michael Garcia: 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.
Speaker Change: I'd like to once again, thank all of our employees for their hard work dedication and professionalism.
Speaker Change: Particularly their ability to rapidly and safely bring our facilities back to normal production levels during a challenging period.
Rajat Marwah: Now, I will pass the call over to Rajat to go over our financial results for the quarter. Rajat? Thanks, Mike.
Speaker Change: Now I will pass the call over to Roger to go over our financial results for the quarter Roger.
Rajat Marwah: Thanks, Mike. Good morning, and thank you all for joining the call.
Roger: Thanks, Mike Good morning, and thank you all for joining the call.
Rajat Marwah: Good morning, and thank you all for joining the call. As a reminder, all numbers are expressed in Canadian dollars unless otherwise noted. Our fourth quarter results included adjusted a bit of 41.5 million, which reflects an adjusted a bit of margin of 6.7 percent, and cash generated from operating activities of 121.2 million. We finished the quarter with a strong balance sheet, including 98 million dollars of cash and availability of 347 million under our revolving credit facility. Subsequent to the quarter end, we raised US$350 million in the form of high yield bonds, bearing interest at 9.125 percent.
Rajat Marwah: As a reminder, all numbers are expressed in Canadian dollars unless otherwise noted. Our fourth-quarter results included adjusted EBITDA of $41.5 million, which reflects an adjusted EBITDA margin of 6.7%, and cash generated from operating activities of $112.2 million. We finish the quarter with a strong balance sheet, including $98 million of cash and availability of $347 million under our revolving credit facility. Subsequent to the quarter end, we raised US $350 million in the form of high-yield bonds bearing interest at 9.125%.
Roger: As a reminder, all numbers are expressed in Canadian dollars unless otherwise noted.
Roger: Our fourth quarter results included adjusted EBITDA of $41 5 million pets.
Roger: Which reflect an adjusted EBITDA margin of six 7% and.
Roger: And cash generated from operating activities of $121 2 million.
Roger: We finished the quarter with a strong balance sheet, including $98 million of cash and availability of $347 million under our revolving credit facility.
Roger: Subsequent to the quarter end, we raised USD $350 million in the form of high yield bonds bidding interest at 9.1% to 5%.
Rajat Marwah: Mike provided details earlier on the co-making corridor collapse. From a financial perspective, we estimate the resultant outage negatively impacted caught metal production in the quarter by approximately 150,000 tons and reduced adjusted a bit by approximately 120 to 130 million. We have been working closely with our insurance providers and adjusters as they complete their assessments, but we do expect to recover a significant amount of the losses. The amount and timing of these recoveries is still to be determined.
Rajat Marwah: Mike provided details earlier on the coke making corridor collapse. From a financial perspective, we estimate the resultant outage negatively impacted hot metal production in the quarter by approximately 150,000 tons and reduced adjusted EBITDA by approximately $120 to $130 million. They have been working closely with our insurance providers and adjusters as they complete their assessments, and while we do expect to recover a significant amount of the loss, the amount and timing of these recoveries are still to be determined. Now, let me dive into the key drivers of our performance.
Mike provided details earlier on the Coke, making Colorado collapse from a financial perspective, we estimate the resulting outage negatively impacted.
Speaker Change: Metal production in the quarter by approximately 150000 tons.
Speaker Change: And reduced adjusted EBITDA by approximately $120 million to $130 million.
Speaker Change: They have been working closely with our insurance providers and adjusters as they complete their assessments.
Speaker Change: While we do expect to recover a significant amount of the losses.
Speaker Change: The amount and timing of these recoveries are still to be determined.
Rajat Marwah: Now, let me dive into the key drivers of our performance. We shipped 451,000 tons in the quarter, down 21.1 percent versus the prior year quarter. The decrease in shipments were largely attributable to the utility corridor collapse at our co-making facility that resulted in the shutdown of a blast furnace that Mike previously discussed. This was offset somewhat by producing and shipping some products from available inventories of slabs and finished goods. Let's say the realization average 1260 per ton, up 18.2 percent versus the prior year period. The increase versus the prior year level reflects the lagging effect of our order book and the strong pricing around the ending of calendar year.
Speaker Change: Now, let me dive into the key drivers of outperformance.
Rajat Marwah: We shipped 451,000 tons in the quarter, down 21.1% versus the prior year quarter. The decrease in shipments was largely attributable to the utility corridor collapse at a coke making facility that resulted in the shutdown of a blast furnace that Mike previously discussed. This was offset somewhat by producing and shipping some products from available inventories of slabs and finished goods. Net sales realization averaged 1260 per ton, up 18.2% versus the prior year period.
Speaker Change: We shipped 451000 tons in the quarter down 21, 1% versus the prior year quarter.
Speaker Change: The decrease in shipments were largely attributable to the utility coal to collapse.
Speaker Change: Coke, making facility that resulted in the shutdown of our blast furnace that Mike previously discussed.
Speaker Change: This was offset somewhat by producing and shipping some product from available inventory in the slabs and finished goods.
Speaker Change: That says realization averaged <unk> 60 per ton up 18, 2% versus the prior year period.
Rajat Marwah: The increase versus the prior year level reflects the lagging effect of our order book and the strong pricing around the ending of the calendar year. Plate pricing continued to enjoy a significant premium relative to hot-rolled coil during the quarter, driven by resilient demand.
The increase versus the prior year level reflects the lagging effect of our order book and the strong pricing around the ending of calendar year.
Rajat Marwah: Late pricing continued to enjoy a significant premium relative to heart-rolled coil during the quarter, driven by resilient demand. This resulted in steel revenue of 568 million in the quarter, down 6.7 percent versus the prior year period.
Speaker Change: Great pricing continued to enjoy a significant premium relative to hot rolled coil during the quarter driven by resilient demand.
Rajat Marwah: This resulted in steel revenue of $568 million in the quarter, down 6.7% versus the prior year period. On the cost side, Algoma's cost per ton of steel products sold averaged $11.82 in the quarter, up 21.1% versus the prior year period. The main drivers of the increase versus the prior year period include lower volumes, the cost of replacing internally produced coke with purchased coke, and higher natural gas.
This resulted in steel revenue of 568 million in the quarter down six 7% versus the prior year period.
Rajat Marwah: On the cost side, Algoma's cost per ton of steel products sold average 1182 in the quarter, up 211 percent versus the prior year period. The main drivers of the increase versus the prior year period include lower volumes, the cost of replacing internally produced coke with purchased coke, and high natural gas. Cash flow from operations total 121 million for the quarter, up from 95 million in the prior year period. The main driver of cash flow in the quarter was a net change in non-cash working capital. Inventories at fiscal year end were 8 to 8 million, down from 886 million at the end of the fiscal third quarter.
On the cost side, although most cost per ton of steel products sold average 11 years during the quarter.
Speaker Change: 21, 1% versus the prior year period.
Speaker Change: The main drivers of the increase versus the prior year period include lower volumes the cost of replacing internally produce coke with purchased Coke and high natural gas.
Rajat Marwah: Cash flow from operations totaled $121 million for the quarter, up from $95 million in the prior year period. The main driver of cash flow in the quarter was a net change in non-cash working capital. Inventories at fiscal year-end were $808 million, down from $886 million at the end of the fiscal third quarter. Looking at Assessor's Code 2024 Foliar Results
Speaker Change: Cash flow from operations totaled $121 million for the quarter.
Speaker Change: Up from 95 million in the prior year period.
Speaker Change: The main driver of cash flow in the quarter with a net change in noncash working capital.
Speaker Change: Inventories at fiscal yearend was <unk> 8 million down from $886 million at the end of the fiscal third quarter.
Rajat Marwah: Looking at our fiscal 2024 full year results, we ship 2.1 million tons per year, up 4.1% as compared to the prior year. Let's say the realization average 1220 per ton, down 4.1% versus the prior year, reflective of soft market condition on average across the fiscal year. This resulted in steel revenue of 2.5 billion, relatively flat year over year. On the cost side, Algoma's cost of steel products sold average 2018 per ton for the year and increase of 1.5% over the prior year. The main drivers of this increase were higher purchase coqueous, higher natural gas use, and labor cost, which more than offset the higher shipments.
Speaker Change: Looking at our fiscal 2020 for full year results.
Rajat Marwah: We shipped 2.1 million tons for the year, up 4.1% as compared to the prior year. Net sales realisation averaged 1220 per tonne, down 4.1% versus the prior year, reflective of soft market conditions on average across the fiscal year. This resulted in steel revenue of $2.5 billion, relatively flat year over year. On the cost side, Algoma's cost of steel products sold averaged $1,018 per ton for the year, an increase of 1.5% over the prior year.
Speaker Change: We shipped $2 1 million tons for the year up four 1% as compared to the prior year.
Speaker Change: Net sales realization average 12 20 per ton down four 1%.
As the prior year.
Speaker Change: Reflective of soft market condition on average across the fiscal year.
Speaker Change: This is altered and steal revenue of $2 5 billion relatively flat year over year.
Speaker Change: On the cost side, although most cost of steel products sold average closing 18 per ton for the year, an increase of one 5% over the prior year.
Rajat Marwah: The main drivers of this increase were higher purchase coke use, higher natural gas use, and labor costs, which more than offset the higher shipments. Adjusted EBITDA for the full year was $313 million, representing an adjusted EBITDA margin of 11.2%, compared to adjusted EBITDA of $452 million and an adjusted EBITDA margin of 16.3% in fiscal 2023. The decrease was primarily attributable to lower price realizations and higher costs, which more than offset hireship.
Speaker Change: The main drivers of this increase were higher purchase call queues.
Speaker Change: Natural gas use and labor cost, which more than offset the higher shipments.
Rajat Marwah: Adjusted a beta for the full year was 313 million, representing an adjusted a beta margin of 11.2% compared to adjusted a beta of 452 million and an adjusted a beta margin of 16.3% in fiscal 2023. The decrease was primarily attributable to lower price realizations and higher cost, which more than offset higher shipments. Cash flow from operating activities for fiscal 2024 was 295 million, up from 177 million in fiscal 2023. The increase year over year was primarily due to the net change in non-cash working capital, partially offset by the decrease in operating income. Working capital decreased from 875 million at the end of fiscal 2023 to 830 million at the end of fiscal 2024.
Speaker Change: EBITDA for the full year was $313 million, representing an adjusted EBITDA margin of 11, 2%.
Speaker Change: Compared to adjusted EBITDA of 452 million and an adjusted EBITDA margin of 16, 3% in fiscal 2023.
Speaker Change: The decrease was primarily attributable to lower price realizations, and higher cost, which more than offset higher shipments.
Rajat Marwah: Cash flow from operating activities for fiscal 2024 was $295 million, up from $177 million in fiscal 2023. The increase year-over-year was primarily due to the net change in non-cash working capital, partially offset by the decrease in operating income. Working capital decreased from $875 million at the end of fiscal 2023 to $830 million at the end of fiscal 2024. We initially expected to release a higher amount of working capital during the period.
Speaker Change: Cash flow from operating activities for fiscal 2024 was $2 95 million up from $177 million in fiscal 2023.
Speaker Change: The increase year over year was primarily due to the net change in noncash working capital partially offset by the decrease in operating income.
Speaker Change: Working capital decreased from $875 million at the end of fiscal 2023 to <unk> 30 million at the end of fiscal 2024.
Rajat Marwah: We initially expected to release a higher amount of working capital during the period. As I mentioned on the last call, we released lower amounts on account of the unplanned outage in the quarter. We remain focused on driving down working capital levels and continue to expect a release of at least 100 million in fiscal 2025.
Speaker Change: We initially expected to release, a higher amount of working capital during the period.
Rajat Marwah: However, as I mentioned on the last call, we released lower amounts on account of the unplanned outage in the quarter. We remain focused on driving down working capital levels and continue to expect a release of at least 100 million in fiscal 2025. Now I'll touch on the financing activity we completed in early April. Our indirect wholly-owned subsidiary ASI issued an aggregate US $350 million of 9.125% senior-secured second-dean notes due in April 2029.
Speaker Change: As I mentioned on the last call. It really is lower amount on account of the unplanned outage in the quarter.
Speaker Change: We remain focused on driving down working capital levels and continue to expect a release of at least $100 million in fiscal 2025.
Rajat Marwah: Now I will touch on the financing activity we completed in early April. Our indirect holiday-owned subsidiary ASI issued an aggregate US $350 million of 9.125% in senior secured second-debt notes due in April 2029. This move enhanced the strength and flexibility of our balance sheet. The successful issuance reflects the positive view that credit investors have of our company and their confidence in our strategic direction and financial stability. All told, the cash on hand, unrun capacity available on our ABL revolver at fiscal year-end, plus the additions of the proceeds from the issuance of these notes, represents over 900 million of liquidity.
Now I'll touch on the financing activity, we completed in early April.
Speaker Change: Our indirect wholly owned subsidiary ESI issued and aggregate U S $350 million of nine 1% to 5% senior secured second lien notes due in April 2029.
Rajat Marwah: This move enhanced the strength and flexibility of our balance sheet. The successful issuance reflects the positive view that credit investors have of our company and their confidence in our strategic direction and financial stability. All told, the cash-on-hand, undrawn capacity available on our ABL revolver at fiscal year-end, plus the additions of the proceeds from the issuance of these notes, represents over 900 million of liquidity. Now, turning to our outlook for the first quarter of fiscal 2025.
This move enhance the strength and flexibility of our balance sheet.
Speaker Change: The successful issuance reflects the positive view that investors have for our company and their confidence in our strategic direction and financial stability.
Speaker Change: All told the cash on hand, undrawn capacity available on our ABL revolver at fiscal year end plus the additions of the proceeds from the issuance of these notes represents over $900 million of liquidity.
Rajat Marwah: Now turning to our outlook for the first quarter of fiscal 2025 based on our operations to date in the quarter, our order book, and our expectations for shipments to the end of the month. We expected to deliver solid fiscal first quarter adjusted a bit in a range of 30 to 40 million and total shipments of steel of 500 to 510,000 tons.
Rajat Marwah: Based on our operations to date in the quarter, our order book, and our expectations for shipments to the end of the month, we expect to deliver solid fiscal first quarter adjusted EBITDA in a range of 30-40 million and total shipments of steel of 500-510,000 tons. I'd now like to turn the call back over to our CEO, Michael Garcia, for closing comments.
Speaker Change: Now turning to our outlook for the first quarter of fiscal 2025.
Speaker Change: Based on our operations to date in the quarter.
Speaker Change: Our order book and our expectations for shipments for the end of the month.
Speaker Change: To deliver solid fiscal first quarter adjusted EBITDA in a range of $30 million to $40 million and total shipments of steel for 500 to 510000 tons.
Michael Garcia: I'd now like to turn the call back over to a CEO, Michael Garcia, for closing comments. Mike. Thanks, Rajat. Looking at the state of the North American steel market, prices have been volatile year to date. Since the beginning of January, index pricing for US Midwest, domestic hot-rolled coil has fallen approximately $400 US per ton. Current market weakness reflects ample spot supply, short lead times, economic uncertainty, and buyers being cautious into the seasonally slower summer buying season. As I said previously, we are focused on what we can control, operating our facilities safely to best capture market opportunities as they arise.
Speaker Change: I'd now like to turn the call back over to our CEO, Michael Garcia for closing comments Mike.
Speaker Change: Mike.
Thanks Roger.
Michael Dennis Garcia: Looking at the state of the North American steel market, prices have been volatile year to date. Since the beginning of January, index pricing for U.S. Midwest domestic hot-rolled coil has fallen approximately $400 U.S. per ton.
Speaker Change: Looking at the state of the North American steel market prices have been volatile year to date.
Speaker Change: Since the beginning of January index pricing for U S. Midwest domestic hot rolled coil have fallen approximately $400 U S per ton.
Michael Dennis Garcia: Current market weakness reflects ample spot supply, short lead times, economic uncertainty, and buyers being cautious into the seasonally slower summer buying season. As I said previously, we are focused on what we can control, operating our facilities safely to best capture market opportunities as they arise. Our results are supported by the fact that plate pricing continues to demonstrate a significant premium as overall demand for plate products remains high. This, in turn, continues to benefit our average price realizations, especially as we see higher production levels from the plate mill following the most recent planned outage and upgrade.
Speaker Change: Market weakness reflects ample spot supply short lead times, economic uncertainty and buyers being cautious into the seasonally slower summer buying season.
Speaker Change: As I said previously.
Speaker Change: We are focused on what we can control.
Speaker Change: Operating our facilities safely to best capture market opportunities as they arise.
Michael Garcia: Our results are supported by the fact that plate pricing continues to demonstrate a significant premium as overall demand for plate products remains high. This in turn continues to benefit our average price realizations, especially as we see higher production levels from the plate mill, following the most recent planned outage and upgrade.
Speaker Change: Our results are supported by the fact that plate pricing continues to demonstrate a significant premium as overall demand for plate products remains high.
Speaker Change: In turn continues to benefit our average price realizations, especially as we see higher production levels from the plate mill. Following the most recent planned outage and upgrade.
Michael Garcia: The next several quarters represent an exciting time in the story of Algoma, as we continue to execute work towards the start of commissioning of our transformative EAF project by year end. This will usher in the next phase of our company that defines the future of Algoma, provides a foundation for long-term value creation for our stakeholders, and solidifies our leadership position at the forefront of green steel production in North America.
Michael Dennis Garcia: The next several quarters represent an exciting time in the story of Algoma as we continue to execute work towards the start of the commissioning of our transformative EAF project by year end. This will usher in the next phase of our company that defines the future of Algoma, provides the foundation for long-term value creation for our stakeholders, and solidifies our leadership position at the forefront of green steel production in North America. Thank you very much for your continued interest in Algoma Steel. At this point, we would be happy to take your questions. Operator, please give the instructions for the Q&A session.
Speaker Change: The next several quarters represent an exciting time in the story of Algoma as we continued to execute work towards the start of commissioning of our transformative Eas project by year end.
Speaker Change: This will usher in the next phase of our company that define the future of Algoma provides the foundation for long term value creation for our stakeholders and solidifies our leadership position at the forefront of Green steel production in North America.
Michael Garcia: Thank you very much for your continued interest in Algoma Steel.
Speaker Change: You very much for your continued interest in Algoma steel at this point, we would be happy to take your questions.
Operator: At this point, we would be happy to take your questions.
Operator: Operator, please give the instructions for the Q&A session. Thank you. 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.
Operator: Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from David Ocampo with Cormark Securities. Please proceed.
Speaker Change: Operator, please give the instructions for the Q&A session.
Speaker Change: Thank you if he 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 if he would like to remove your question from the queue and for participants using speaker equipment may be necessary to pick up your handset before pressing the star.
Operator: You may press star two if you would like to remove your question from the queue, and for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: He is our first question is from David Ocampo with Caremark Securities. Please proceed.
David Ocampo: Our first question is from David Ocampo with Core Mark Securities. Please proceed. Thanks. Thanks for taking my questions, everyone. I guess my first one's just on shipments for the June quarter. I mean, that's running below the normal run rate, even though plate shipments seem pretty solid at 65,000 times. Just curious what the lower volumes are attributed to, is it mainly just weaker industry conditions, or is there some other factors that are contributing to that?
David Ocampo: Thanks, thanks for taking my questions, everyone. I guess my first one's just on shipments for the June quarter. I mean, that's running below the normal run rate, even though plate shipments seem pretty solid at 65,000 tons. Just curious what the lower volumes are attributed to. Is it mainly just weaker industry conditions, or are there some other factors that are contributing to that?
David Ocampo: Hi, Thanks, Thanks for taking my questions everyone I.
David Ocampo: I guess my first one is just on shipments for the June quarter, I mean, that's running below the normal run rate, even though late shipments seem pretty solid at about 65000 tons. Just curious what the lower volumes are attributed to is it is it mainly just weaker industry conditions or some other factors that are contributing to that.
Michael Garcia: David, nice to talk to you. You're absolutely right; it's a touch lower, but normally when we take such kind of outages, which is the 20-day outage that we took for the plate mill, and the ramp up, we normally lose around 50,000 to 60,000 tons both from the plate mill as well as the strip mill attached to it. Normally, our shipment should be below 500, but the plate mill really came back solid after the outage and recovered some of those losses. We will be in the 500 to 510 range, but the main reason for that is the outage that we took, which it's normally 20 days, and the ramp up takes a little bit longer.
Rajat Marwah: Hi David, nice to talk to you. You're absolutely right, it's a touch lower. But normally when we take such kinds of outages, which is the 20 day outage that we took for the plate mill, you know, it's normally 20 days and the ramp up takes a little bit longer.
David Ocampo: Hi, David Nice to talk to you.
David Ocampo:
Speaker Change: No you're absolutely right, it's a touch lower.
Speaker Change: But normally when we take such kind of outages, which is the 20 day outage that we took for the plate mill.
Speaker Change: And the ramp up the normally lose around 50 to 60000 tons, both from the plate mill as well as the strip mill attached to it. So so so normally our shipment should be below 500, but the <unk> really came back solid after the outage in and recovered some of that some of.
Speaker Change: That will also so so he will be in the 500 to 510 range, but the main the main reason for that is the outage that we took which you know its normally 20 days and the ramp up takes a little bit longer.
Rajat Marwah: Again, that's very helpful there Rajat. And then maybe for you as well, just on the CapEx in the quarter, I think it was close to $120 million, and $50 of that went to the EAF. Curious what the other $70 million was attributable to. Did some of that CapEx leak into the with Coke Evans that you guys had to repair?
Speaker Change: Okay. That's very helpful. There and then.
Michael Garcia: I think it was close to $120 million, and 50 of that went to the E.A.F. Curious what the other $70 million was attributable to some of that Katbax leak into the co-cathons that you guys had to repair? Yeah, you're absolutely right. That's the Katbax that's related to the co-cathons and some of the blast furnace issues. It's all because of the co-cathons collapse, the utility corridor, and we are discussing the insurance providers on that aspect as well, which will be recovered once it's settled, and it will probably come into the following year, this year, 2025 fiscal.
Speaker Change: Maybe for you as well just on the Capex in the quarter I think it was close to 120 million and 50 of about one two to the Eos <unk>.
Speaker Change: The other 70 million was attributable to that something about the cap.
Speaker Change: Capex leak into the with Coke ovens that you guys had to repair.
Rajat Marwah: Yeah, you're absolutely right. That's the CAPEX that's related to the COCOA and some of the blast furnace issues. It's all because of the COCOA collapse, the utility corridor. And we are discussing with the insurance providers on that aspect as well, so it will be recovered once it's settled, and it'll probably come into the following year, this year, 2025.
Speaker Change: Yeah, you're absolutely right. That's that's the Capex, that's that's related to the cocoa and then some of the.
Speaker Change: Some of the blast furnace issues, it's all because of the cocoa and collapse.
Speaker Change: Utility corridor and we.
Speaker Change: Discussing that the insurance providers on that aspect as well, so which will be recovered once its settled and it will probably come into the following quarter falling yet this year 2025 fiscal.
Michael Garcia: Okay, so the Katbax potential recovery from insurance providers, that's on top of $120 to $130 million of lossy, but that you guys are trying to call back? That's correct.
David Ocampo: Okay, so the CapEx potential recovery from insurance providers, that's on top of the $120 to $130 million of lost EBITDA that you guys are trying to call back? Okay, and then just one last one for me before I hand the call over.
Speaker Change: Okay. So the capex potential recovery from insurance providers.
Speaker Change: On top of the $120 million to $130 million of loss EBITDA that you guys are trying to call back.
Speaker Change: That's correct.
David Ocampo: Okay, and then just a last one for me before I hand the call over. I mean, you guys are nearing the completion of your E.A.F. project. So just curious, when we think about the range of outcomes for the total cost, what are the risks that are still out there that would push you guys above the top end of your guidance? And then on the flip side, what would cause you guys to come in closer to that 825 number, just given that 800 million does appear to be locked in that contract prices already?
Okay, and then just a last one for me before I hand, the call over I mean, you guys are nearing the completion of your AAF project.
Michael Dennis Garcia: I mean, you guys are nearing the completion of your EAF project, so I was just curious when we think about the range of outcomes for the total cost. What are the risks that are still out there that would push you guys above the top end of your guidance? And then, on the flip side, what would cause you guys to come in closer to that 825 number, just given that $800 million does appear to be locked in at contract prices already?
Speaker Change: Just curious when we think about the range of outcomes for the total costs. What are the risks that are still out there that would push you guys above the top end of your guidance and then on the flip side, what would cause you guys to come in closer to that 825 number just given that our $800 million appear to be locked in a contract prices already.
Michael Garcia: Hi, David. This is Mike. Really, we've substantially de-risked the project in terms of schedule and budget, given what we're sitting right now. There's always risk around weather delays, any labor disruptions. We don't see any of those right now that we are concerned about. A small, probably under 10, probably under 8% of the work is being done on time and materials. So there would theoretically be a risk that the time of materials exceeds the placeholders we have in there right now are assumptions of where they'll come in, but again, that's less than 10% of our intended total spend.
Michael Dennis Garcia: Hi David. This is Mike.
Michael Moraca: Hi, David This is Mike.
Michael Dennis Garcia: Really, we've substantially de-risked the project in terms of schedule and budget, given where we're sitting right now. There's always risk around, weather delays, any labor disruptions. But we don't see any of those right now that we are concerned about.
Michael Moraca: Really we've we've substantially derisked the project in terms of schedule and budget, given where we're sitting right now.
Speaker Change: Uh huh.
Speaker Change: There is always risk around.
Weather delays.
Speaker Change: Any labor disruptions, we don't we don't see any of those right now that we are concerned about.
Speaker Change: A small probably under <unk>.
Michael Dennis Garcia: 10, probably under 8% of the work is being done on time and materials, so there would theoretically be a risk that the time and materials exceeds the placeholders we have in there. Right now, our assumptions of where they'll come in, but again, that's less than 10% of our intended total spend, so we don't see that as a significant risk on the flip side in terms of potential for bringing it in under that range between 825 and 875. Again, because most of the work is contracted out. There's not a lot of upside to be captured there.
Ken: Ken probably under 8% of the of the work is being done on time and materials.
Speaker Change: So there would.
Speaker Change: Theoretically be a risk that the time and materials exceeds the.
Speaker Change: The placeholders, we have in there right now our assumptions of where they'll come in but again thats less than 10% of the <unk>.
Speaker Change: Of our intended a total spend so we don't see that as a significant risk.
Michael Garcia: So we don't see that as a significant risk on the flip side in terms of potential for bringing it in under that range between 825 and 875. Again, because most of the work is contracted, there's not a lot of upside to be captured there. There could be some efficiencies that we identify that would allow us to gain a little bit on some of the time and material work. And then we have a handful of contracts still to award on the remaining scope of work. There's probably only two contracts of moderate to significant size, one being the material handling system and fire protection.
On the flipside in terms of.
Potential for bringing it in under that range between <unk> 25, and <unk> 75.
Speaker Change: Again, because most of the work is contracted.
Speaker Change: There's not a lot of upside to be captured.
Michael Dennis Garcia: There could be some efficiencies that we identify that would allow us to gain a little bit on some of the time and material work. And then we have a handful of contracts still to award on the remaining scope of work. There are probably only two contracts of moderate to significant size, one being the material handling system and the second one being the fire protection system. So the team is spending a lot of time working with the contractor base to give them the right engineering package to be able to bid on both those pieces of work. We feel good about where they're going to come in, but again, we won't know until the actual contracts are awarded. Does that help? Yeah, and I guess the best thing
Speaker Change: There there could be some efficiencies that we identify that would allow us to to.
Speaker Change: To gain a little bit on some of the time and material work.
Speaker Change: And then we have a handful of contracts still to award on the remaining.
Speaker Change: Scope of work, there's probably only two.
Speaker Change: Contracts of.
Speaker Change: Moderate to significant size, one being the material handling system and.
Speaker Change: Fire protect and the second one being the fire protection system. So the team is spending a lot of time working with the contractor base too.
David Ocampo: So the team is spending a lot of time working with the contractor base to give them the right engineering package to be able to... to bid on both those pieces of work. We feel good about where they're going to come in, but again, we won't know until the actual contracts are awarded. Does that help? Yeah, and I guess those two pieces of contracts that are left to be awarded. Is that $25 million or $50 million, or what's the order of a magnitude that needs to be contracted still? I don't have the number for you right now.
Speaker Change: Give them the right engineering package to be able to to bid on both those pieces of work we feel good about whether they're going to come in but again, we won't know until the actual contracts or are awarded does that help.
David Ocampo: Yeah, and I guess those two pieces of contracts that are left to be awarded, are they $25 million or $50 million, or what's the order of magnitude that needs to be awarded?
Speaker Change: Yeah, and I guess those two pieces of the contracts that are left to be award is that 25 or $50 million or what's the order of magnitude that needs to be contracted still.
Speaker Change: Okay.
Michael Dennis Garcia: I don't have the number for you right now, but I can talk to the team and maybe get something for you.
Speaker Change: I don't have the number for you right now I can I can talk to the team and maybe get something for you.
Michael Garcia: I can talk to the team and maybe get something for you.
David Ocampo: Okay, that's helpful. I'll hand the call over. Thanks a lot. Thank you.
David Ocampo: Okay, that's all. I'll hand the call over. Thanks a lot. Thank you.
Speaker Change: Okay. That's helpful I'll hand, the call over thanks a lot.
Speaker Change: Thank you.
Operator: As a reminder, just start one on your telephone keypad.
Operator: As a reminder, it is star one on your telephone keypad. If you would like to ask a question, we will pause for a brief moment to pull for any final questions. Our next question is from Ian Giles with Stiefel. Please proceed.
Speaker Change: As a reminder, this star one on your telephone keypad, if he would like to ask a question we will pause for a brief moment to poll for any final questions.
Operator: If you would like to ask a question, we will pose for a brief moment to pull for any final questions.
Ian Diles: Our next question is from Ian Diles.
Speaker Change: Our next question is from Ian Giles with Stifel. Please proceed.
Michael Garcia: With Steve Fowell, please proceed. Good morning, everyone. As we get closer to the start-up of the EAF, is there any update you can provide around the Scrop Strategy and where you think you're at on that front as it could be a potential pinch point? Sure. As we've shared before, our methodology or mechanism for sourcing scrap for the EAFs will be through our joint venture that we formed at the beginning of this project with Triple M Metals. That joint venture has been operationalized. It's staffed. The members of Triple M or ATM, Algoma, Triple M is the name of the venture.
Good morning, everyone.
Speaker Change: Good morning, Ian.
Speaker Change: Yes.
Ian Brooks Gillies: Could you, as we get closer to the start-up of the EAF, is there any update you can provide around the scrap strategy and where you think you're at on that front as it could be a potential pinch point?
Ian Brooks Gillies: Could you as we get closer to the startup of the a F. Could you is there any update you can provide around the scrap strategy and where you think youre out on on that front.
Speaker Change: As it could be a potential pinch point.
Michael Dennis Garcia: Sure. As we've shared before, our methodology or mechanism for sourcing scrap for the EAFs will be through our joint venture that we formed at the beginning of this project with Triple M Metals. That joint venture has been operationalized. It's staffed, the members of Triple M or ATM, Algoma. Triple M is the name of the venture.
Speaker Change: Sure so as we've shared with floor.
Speaker Change: Our methodology or mechanism for sourcing scrap for the EE apps will be through our joint venture that we formed at the beginning of this project with Triple in metals that joint venture has been operationalized.
Speaker Change: It's it's staffed.
Speaker Change: The members of Triple M or ATM Algoma.
Speaker Change: Our triple aim.
Speaker Change: Is the name of the.
Speaker Change: The venture they've been out in the market are discussing with future and current scrap suppliers that will be buying from so they've spent a lot of work in.
Michael Garcia: They've been out in the market discussing with future and current scrap suppliers that will be buying from. So they've spent a lot of work in the market. We know who will be buying scrap from. We know how we'll be moving it to Sue St. Marie. We spent a lot of time on the supply chain, making sure we have efficient logistics on rail, truck, and across the Great Lakes. The joint venture is currently buying scrap for our ongoing operations. It's not near the magnitude of the scrap. We'll be buying in the future, but we do buy scrap for our basic oxygen furnace steel-making shop right now.
Michael Dennis Garcia: They've been out in the market, discussing with future and current scrap suppliers that we'll be buying from. So they've done a lot of work in the market. We know who we'll be buying scrap from. We know how we'll be moving it to Sault Ste. Marie.
Speaker Change: In the market, we know who will be buying scrap from we know how we'll be moving it to sue St. Mary We spent a lot of time on the supply chain.
Michael Dennis Garcia: We've spent a lot of time on the supply chain, making sure we have efficient logistics on rail, truck, and across the Great Lakes. The joint venture is currently buying scrap for our ongoing operations. It's not near the magnitude of the scrap we'll be buying in the future, but we do buy scrap for our basic oxygen furnace steelmaking shop right now. So we feel good about understanding the scrap market, who we'll be buying from, but again, we won't be buying those large quantities until further down the ramp-up curve in the latter half of calendar year 2025. So it's hard to predict exactly what the market will look like or feel like at any given time.
Speaker Change: Aching share we have efficient logistics on rail truck and across the great Lakes.
Speaker Change: The joint venture is currently buying scrap for our ongoing operations it's not.
Near the magnitude of the scrap will be buying in the future, but we do buy.
Speaker Change: By scrap for our basic oxygen furnace steelmaking shop right now.
So we we feel good about.
Michael Garcia: We feel good about understanding the scrap market. Who will be buying from? But again, we won't be buying those large quantities till further down the ramp-up curve in the latter half of calendar year 2025. So it's hard to predict exactly what the market will look like or feel like at that time.
Speaker Change: Understanding the scrap market, who will be buying from.
Speaker Change: But again, we wont be buying those large quantities till further.
Speaker Change: Further down the ramp up curve in the latter half of calendar year 2025, So it's hard to predict exactly what the market will look like or feel like at that time.
Michael Dennis Garcia: Okay, that's helpful. On the plate side, the ramps obviously can be pretty material over the next, call it four to six quarters. Can you talk a little bit more about how your commercial team is capturing market share, or intends to capture market share there because play price has been quite weak in recent weeks?
Michael Garcia: Okay, that's helpful. On the plate side, the ramps obviously can be pretty material over the next four to six quarters. Can you talk a little bit more about how your commercial team is capturing market share or intense capture market share there? Because the plate price has been quite weak in recent weeks. Sure. So the whole team is really delighted about our plate offering now. We've made substantial improvements in surface quality and flatness and dimensional tolerance with the improvements we've made in the plate mill over the last two years. We have made substantial improvement in the delivery performance of our plate over the last 18 to 24 months or so.
Speaker Change: Okay. That's.
Speaker Change: That's helpful.
Speaker Change: On the on the plate side are the ramps, obviously can be pretty material over the next call. It four to six quarters.
Speaker Change: Can you talk a little bit more about how your commercial team is capturing market share in terms to koppers capture market share there because.
Speaker Change: I mean play price has been quite weak in recent weeks.
Michael Dennis Garcia: Sure, so the whole team is really delighted about our plate offering now. We've made substantial improvements in surface quality and flatness, and dimensional tolerance with the improvements we've made in the plate mill over the last two years. We have made substantial improvements in the delivery performance of our plate over the last 18 months or so, and I think with those two combinations, the commercial team has a stronger selling proposition to our current and potential plate mill customers.
Speaker Change: Sure. So you know.
Speaker Change: The whole team is really delighted about our plate offering now we've made substantial.
Speaker Change: <unk> in surface quality and flatness.
Speaker Change: <unk> flatness and dimensional tolerance with the improvements we've made in the plate mill over the last two years.
Speaker Change: We have made substantial improvement in the delivery performance of our plate over the last 18 months or so.
Michael Garcia: And I think with those two combinations, the commercial team has a stronger selling proposition to our current and potential plate mill customers. We actually had a grand opening of our plate mill modernization here in Sue St. Maria earlier this week, and we had around 25 plate customers. Here in the mill, we toured them through the new facility; they got to meet the crews, they got to see the product, they got to see the new assets in place and running. And so, from this point, it's having those one-on-one conversations with our plate customer base and potential plate customers.
Speaker Change: And I think with those two combinations the commercial team has a stronger selling proposition to our current and potential plate mill customers.
Michael Dennis Garcia: We actually had the grand opening of our plate mill modernization here in Sault Ste. Marie earlier this week, and we had around 25 plate customers here in the mill. We toured them through the new facility, and they got to meet the crews. They got to see the new product, and they had one-on-one conversations with our plate customer base and potential plate customers, some of them who were, frankly, historical customers of plate in the past and, for whatever reason, we haven't had a big position with over the last five or 10 years.
Speaker Change: We actually had a a.
Grand opening of our plate mill modernization here in Sault Saint <unk> earlier, this week and we we had around 25 plate customers here in the mill, we toured them through the new facility. They got to meet the crews they got to see the product they got to see the new.
Speaker Change: Assets in place and running and so from this point, it's having those.
Speaker Change: One on one conversations with our plate.
Speaker Change: <unk> customer base and potential plate customers some of them, who were frankly historical customers of play in the past.
Michael Garcia: Some of them who were frankly historical customers of plate in the past and for whatever reason we haven't had a big position with over the last five or ten years. So it's that type of selling, understanding the customer needs, understanding what the customer wants, and how they win in their marketplace and with their customers. And just doing that type of work with the customers to either grow our share of wallet with the existing customers or establish a position with customers where we aren't yet established.
Speaker Change: And for whatever reason, we haven't had a big position with over the last five or 10 years. So it's that type of selling understanding the customer needs understanding what the customer wants and how they win in their marketplace and with their customers and just doing the that type of work with the customer.
Michael Dennis Garcia: So it's that type of selling, understanding the customer needs, understanding what the customer wants, and how they win in their marketplace and with their customers, and just doing that type of work with the customers to either grow our share of wallet with existing customers or establish a position with customers where we aren't yet established.
Speaker Change: Two.
Speaker Change: Either grow our share of wallet with existing customers or establish a position with customers, where we arent yet established.
Ian Brooks Gillies: Okay, that's helpful. With that, I'll turn it back over.
Michael Garcia: Okay, that's helpful. Without, we'll turn back over.
Speaker Change: Okay. That's helpful with that I'll turn it back over.
Michael Garcia: Thanks, Ian.
Ian Brooks Gillies: Thanks Ian.
Operator: Our next question is from Katja Jancic with BMO Capital Markets. Please proceed.
Katja Jancic: Our next question is from Katja Jancic with BMO Capital Markets. Please proceed. Hi, thank you for taking my questions. Maybe starting off on the capex for fiscal year 25, can you provide an update on what the total expected capex is going to be? Sure. So our normal maintenance capex, as usual, will be in the range of $120 million, probably on the higher end considering where the legacy assets are. Our EF capex should be roughly $250-$70 million for the fiscal 2025, and this is all without any recovery from the government. And yeah, I think those will be the two substantial ones that you will see in the fiscal 2020 2025.
Speaker Change: Our next question is from Joe Janssen with BMO capital markets. Please proceed.
Katja Jancic: Hi, thank you for taking my questions. Maybe starting off on the CAPEX for fiscal year 25, can you provide an update on what the total expected CAPEX is going to be?
Joe Janssen: Hi, Thank you for taking my questions, maybe starting off on the Capex for fiscal year 'twenty. Five can you provide an update what the total expected capex is going to be.
Rajat Marwah: Sure. So, you know, our normal maintenance gap... As usual, we'll be in the range of $100 to $120 million, probably on the higher end, considering where the, you know, where the legacy assets are. You know, our EAF, CAPEX, should be roughly $250-$270 million for the fiscal 2025, and this is all without any recovery from the government, and yeah, I think those will be the two substantial ones that you will see in the fiscal 2020-2025.
Joe Janssen: Sure.
You know our normal maintenance capex.
Speaker Change: As usual will be in the range of 100 $220 million.
Speaker Change: Probably on the on the higher end.
Speaker Change: So doing where the.
Speaker Change: The legacy assets are.
Speaker Change: Yes capex.
Speaker Change: Should be roughly 250 $270 million for the for the fiscal 2025 and this is all without any recovery from the government.
Speaker Change: And yes, I think those those will be the two substantial one stacked deck you will see in the fiscal 2020.
Speaker Change: 2025.
Michael Garcia: Is there still any incremental from the coke ovens that's going to steal into? Yeah, there will be incremental on the coke oven related, but all of that will be, you know, offset by the recovery that we'll see during the year and some more to offset the ones that we have spent in this year. So, so that should offset each other once we finalize, but the, but you know those things are yet to be finalized. The amount that probably will be spending will be in the 30 odd million dollar range, 30 to 40 on the coke side during the year.
Is there still an incremental from D. A coke ovens, that's going to spill into.
Rajat Marwah: Yeah, there will be incremental on the coke oven related costs, but all of that will be, you know, will be offset by the recovery that we'll see during the year and some more to offset the ones that we have already spent this year. So that should offset each other once we finalize. But those things are yet to be finalized. The amount that probably we'll be spending will be in the 30-odd million dollar range, 30 to 40 on the Coke side during the year. So if no recovery happens, that is what, in addition, you'll see. But the discussions with the insurers are going on about that.
Speaker Change: Yeah, there will be the next week.
Speaker Change: Yes, there will be incremental on the coke oven.
Speaker Change: Related but all of that will be you know will be offset by the recovery that we can see during the year and some more to offset the the ones that we have spent in this year. So.
Speaker Change: So that should offset each other once we finalize but the but you know those things are yet to be finalized.
Speaker Change: The amount that probably will be spending will be in the 30 odd million dollar range 30 to 40 on the on the Cork site.
Michael Garcia: So if no recovery happens, that is what in addition you'll see, but the discussions with the insurers are going on on that side. Okay, and then maybe on the volume side currently, what is the normalized volume you think for quarter you can reach in a more normalized.
During the year. So there's no recovery Hudson's that does work. In addition, you'll see but the discussions with the insurers are going on on that side.
Rajat Marwah: Okay, and then maybe on the volume side. Currently, what is the normalized volume you think per quarter you can reach in a more normalized way?
Speaker Change: Okay, and then maybe on the volume side.
Speaker Change: Currently what is the normalized volume you're seeing for a quarter you can reach.
Speaker Change: More normalize environment.
Rajat Marwah: Yeah, you know, we've always said 550 is a normal that we will reach, and that's what we benchmark against, and that should start improving once the EF stabilizes. And again, that's all considering where our primary operations are. So that's what we feel is more normal over the next couple of quarters. And as I said, as we stabilize the EF, we will start seeing the increase happen.
Michael Garcia: and David Ocampo. We've always said 550 is a normal that we will reach, and that's what we benchmark against. That should start improving once the EF stabilizes, and again, that's all considering where our primary operations are. So, that's what we feel as a more normal over the next couple of quarters, and as we stabilize the EF, we will start seeing the increase happening. And maybe on that, how quickly do you think you can ramp up the EF for how quickly can it stabilize? Katja, this is Mike, so the EF will begin producing on the first EF EF deal in the first calendar quarter of 2025.
Speaker Change: Yep.
Speaker Change: We've always said 550 is a normal that we build for each and that's what the benchmark against them and that should start improving once the ear stabilizes.
Speaker Change: And again, that's all considering that our.
Speaker Change: Primary operations are so so that's that's what we feel is a more normal over the next couple of quarters and as we as I said as we stabilize the if you will start seeing seeing the increase happening.
Michael Dennis Garcia: And maybe on that, how quickly do you think you can ramp up the EIF, or how quickly can it stabilize?
Speaker Change: And maybe on that how quickly do you think you can ramp up the yeah, yeah for how quickly can it stabilized.
Michael Dennis Garcia: Katja, this is Mike. So the EAF will begin producing its first EAF steel in the first calendar quarter of 2025. Commissioning is actually going to start before the end of this year, but we don't expect to be striking an arc and making heats until the first calendar quarter of 2025. Like all startups, it will be deliberate and a lot of work for the startup team, but we have all the crews identified. We have training going on.
Michael Moraca: Yes, Katja this is Mike so, yes, we will begin producing.
Michael Moraca: Producing on the first D E F F steel in the first calendar quarter of of 2025 commissioning is actually going to start before the end of this year, but we don't expect to be striking in our can making heats until the first calendar quarter of 2025.
Michael Garcia: Commissioning is actually going to start before the end of this year, but we don't expect to be striking an arc and making heats until the first calendar quarter of 2025. You know, like all startups, it will be deliberate and a lot of work for the startup team, but we have all the crews identified, we have training going on, we have a production plan, and we expect to see volume on those EAS ramp up through the balance of 2025. We'll share that, you know, at the appropriate time, but frankly, we're cautious of overcommitting or overstretching on exactly how much metal we'll be making out of EAS, especially in the first half of 2025. And that's why we plan to continue to run our current still-making assets and flow path at full production as we move into 2025 and through the balance of that year.
Michael Moraca: Like all startups it will it will be.
Speaker Change: Deliberate and.
Speaker Change: A lot of work for the startup team, but we have all the crews identified we have training going on we have a production plan.
Speaker Change: Uh huh.
Michael Dennis Garcia: We have a production plan, and we expect to see volume on those EAS ramp up through the balance of 2025, and we'll share that at the appropriate time. We're cautious of overcommitting or over stretching on exactly how much metal we'll be making out of those EAS, especially in the first half of 2025. And that's why we plan to continue to run our current steelmaking assets and flow path at full production as we move into 2025 and through the balance of that year.
Speaker Change: And we expect to see volume on those Eas ramp up through the balance of 2025, but and we'll share that at the appropriate time, but frankly, its where were we.
Speaker Change: We're not we're cautious of over committing are overstretching on exactly how much metal will be making out of those eas FERC, especially in the first half of 2025 and that's why we plan to continue to run our current steelmaking.
Speaker Change: Assets and flow path at full production.
Speaker Change: As we move into 2025.
Speaker Change: And through the balance of that year.
Katja Jancic: Okay, so just to confirm, during the startup, basically the blast furnace will operate as usual or as normal, so it should be reaching normal production levels, in other words, 550, let's say, per quarter. Correct, we don't want to take a large any dip in quarterly shipments during that startup year because it's a startup year. Okay, maybe just one more if I may, Mike. I think you said this quarter or in the first quarter the plate production is about 55,000 tons, and did I understand correctly next quarter it should go to 90. Correct. Okay, thank you.
Michael Dennis Garcia: Okay, so just to confirm, during startup, basically, the blast furnace will operate as usual or as normal, so it should be reaching normal production levels. In other words, $5.50, let's say, per quarter.
Speaker Change #100: Okay. So just to confirm during the startup basically the blast furnaces will operate as usual are as normal so.
Speaker Change #101: It could be reaching normal production levels in other words 550, let's say per quarter.
Michael Dennis Garcia: Correct. We don't want to take a large, any dip in quarterly shipments during that startup year because it's a startup year.
Speaker Change #102: Correct, we don't want to take a large any dip in quarterly shipments during that startup year, because it's a startup year.
Katja Jancic: Okay, maybe just one more, if I may. Mike, I think you said... This quarter, or in the first quarter, the plate production is about 65,000 tons, and, did I understand correctly, next quarter it should go to 90?
Katja Jancic: Okay, maybe just one more if I...
Speaker Change #102: Okay, maybe just one more if I may Mike I think you said.
Speaker Change #102: This quarter or in the first quarter.
Speaker Change #103: He played production is about 65000 tons and did I understand correctly next quarter. It should you go to 90.
Speaker Change #102: Correct.
Speaker Change #104: Okay. Thank you.
Michael Moraca: At this time, there are no further questions. I would like to turn the conference back over to management for closing remarks. Thank you again for your participation in our full year fiscal 2024 earnings conference call and your continued interest in Elgoma Steele. We look forward to updating you on our results and progress when we report our fiscal first quarter results, scheduled for August. Thank you.
Michael Dennis Garcia: At this time, there are no further questions. I would like to turn the conference back over to management for closing remarks.
Speaker Change #105: At this time there are no further questions I would like to turn the conference back over to management for closing remarks.
Speaker Change #105: Okay.
Michael Dennis Garcia: Thank you again for your participation in our full year fiscal 2024 earnings conference call and your continued interest in Algoma Steel. We look forward to updating you on our results and progress when we report our fiscal first quarter results, scheduled for August.
Speaker Change #106: Thank you again for your participation or full year fiscal 2024 earnings conference call and your continued interest in Algoma steel, we look forward to updating you on our results and progress when we report our fiscal first quarter results scheduled for August. Thank you.
Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.
Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your part.
Operator: Thank you. Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation. Thank you for watching!
Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
Speaker Change #106: Mhm.
Speaker Change #106: Yeah.
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Speaker Change #106: Yeah.
Speaker Change #106: Yeah.
Speaker Change #106: [music].
Speaker Change #106: Okay.
Speaker Change #106: [music].
Okay.
Speaker Change #106: Okay.
Speaker Change #106: Yeah.
Speaker Change #106:
Speaker Change #106: [music].
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Speaker Change #106: Yeah.
Speaker Change #106: [music].
Speaker Change #106: Okay.
Speaker Change #106: [music].
Speaker Change #106: Yes.
Speaker Change #106: [music].
Speaker Change #106: Yeah.
Speaker Change #106: Okay.
Speaker Change #106: [music].
Okay.
Speaker Change #106: Okay.