Q3 2025 Algoma Steel Inc Earnings Call
Speaker #3: Please stand by . Greetings and welcome to the Algoma Steel Group , Inc. . Third quarter 2020 Earnings Call . At this time , all participants are in a listen only mode .
Operator: Greetings and welcome to the Algoma Steel Group Inc. Third Quarter 2025 Earnings Call. At this time all participants are in the listen only mode. A question and answer session will follow the formal presentation being recorded. It is now my pleasure to introduce Michael Morocco, Vice President, Corporate Development and Treasurer. Please go ahead sir.
Speaker #3: A question and answer session will follow the formal presentation . If . Being recorded . It is now my pleasure to introduce Michael Moroka , vice President and Corporate Development and Treasurer .
Speaker #3: Please go ahead , sir .
Speaker #4: Good morning , everyone , and welcome to Algoma Steel Group Inc. Third quarter 2025 Earnings Conference Call . Leading today's call are Michael Garcia , our chief .
Michael Morocco: Good morning everyone and welcome to Algoma Steel Group Inc.'s third quarter 2025 earnings conference call. Leading today's call are Michael Garcia, our Chief Executive Officer. 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'd like to remind everyone that comments made on today's call may contain forward-looking statements within the meaning of applicable securities laws, which involve assumptions and inherent risks and uncertainties. Actual results may differ materially from statements made today. In addition, our financial statements are prepared in accordance with IFRS, which differs from U.S. GAAP, and our discussion today includes references to certain non-IFRS financial measures. Last evening we posted an earnings presentation to accompany today's prepared remarks. The slides for today's call can be found in the Investors section of our corporate website.
Speaker #4: Is being recorded and will be made available for replay later today in the investors section of Algoma Steel's corporate website at WW . I'd like to remind everyone 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 #4: Actual results may differ statements made today . In addition , our financial statements are prepared in accordance with IFRS , which differs from US GAAP and our discussion today includes references to certain non IFRS financial measures .
Speaker #4: 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 .
Speaker #4: With that in mind, I would ask everyone on today's call to read the legal disclaimers on slide two of the accompanying earnings presentation and to also refer to the risks and assumptions outlined in Algoma's third quarter 2025 Management's Discussion and Analysis.
Michael Morocco: 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 to also refer to the risks and assumptions outlined in Algoma's third quarter 2025 Management's Discussion and Analysis. Our financial statements are prepared using the U.S. Dollar as our functional currency and the Canadian Dollar as our presentation currency. All amounts referred to on today's call are in Canadian Dollars unless otherwise noted. Following our prepared remarks, we will conduct a Q&A session. I will now turn the call over to Chief Executive Officer Michael Garcia.
Speaker #4: Our Financial statements are prepared using the US dollar as our functional currency and the Canadian dollar as our presentation currency . All materially from amounts referred to on today's call are in Canadian dollars unless otherwise noted .
Speaker #4: Following our prepared remarks , we will conduct a Q&A session . I will now turn the call over to Chief Executive Officer Michael Garcia .
Speaker #4: Mike .
Michael Garcia: Good morning everyone and thank you for joining us today. As we do each quarter, I'll begin with safety. Our commitment to workplace safety remains at the core of everything we do. I'm pleased to report that we maintained our strong safety performance this quarter, building on the improvements we achieved throughout 2024. With EAF Unit 1 ramping up and our accelerated transition to electric arc furnace steelmaking underway, we continue to prioritize the health and well-being of our workforce during this pivotal transformation. Before diving into the details, I want to highlight three important themes. First, the U.S. 50% tariffs have effectively closed that market to us, driving lower shipments and higher production cost as we've pivoted our entire go-to-market strategy.
Speaker #5: Good morning , everyone , and thank you for joining us today . As we do each quarter , I'll begin with safety . Our commitment to workplace safety remains at the core of everything we do .
Speaker #5: I'm pleased to report that we maintained our strong safety performance this quarter , building on the improvements we achieved throughout 2020 . For with EAF unit one ramping up and our accelerated transition to electric arc furnace steelmaking underway .
Speaker #5: We continue to prioritize the health and well-being of our workforce during this pivotal transformation. Before diving into the details, I want to highlight three important themes.
Speaker #5: First , the US 50% tariffs have effectively closed that market to us , driving lower shipments and higher production costs . As we've pivoted our entire go to market strategy .
Speaker #5: Second , we've secured the capital to strengthen our liquidity through 500 million in government support and an expanded US 375 million ABL facility , extending our liquidity runway so that we can develop opportunities to diversify the business .
Michael Garcia: Second, we've secured the capital to strengthen our liquidity through $500 million in government support and an expanded US $375 million asset-based lending (ABL) facility, extending our liquidity runway so that we can develop opportunities to diversify the business. Third, we have embarked on an operational pivot, accelerating our EAF transformation and focusing on products for the domestic market with the goal of significantly reducing our cash burn. The steel industry is experiencing significant disruption. The 50% U.S. tariffs implemented in June have effectively made that market no longer viable for Canadian steel producers, completely undermining our historically successful cross-border business model. These trade disruptions are reverberating globally, forcing producers worldwide to seek alternative markets while macroeconomic uncertainty compounds the headwinds facing our industry. Our third quarter performance was in line with our previously disclosed guidance across both shipment volumes and adjusted EBITDA metrics.
Speaker #5: Third , we have embarked on an operational pivot , accelerating our EAF transformation and focusing on products for the domestic market with the goal of significantly reducing our cash burn .
Speaker #5: The steel industry is experiencing significant disruption . The 50% US tariffs implemented in June have effectively made that market no longer viable for Canadian steel producers , completely undermining our historically successful cross-border business model .
Speaker #5: These trade disruptions are reverberating globally, forcing producers worldwide to seek alternative markets while macroeconomic uncertainty compounds the headwinds facing our industry. Our third quarter performance was in line with our previously disclosed guidance across both shipment volumes and adjusted EBITDA metrics.
Speaker #5: As expected , we experienced lower shipment volumes and realized pricing as well as elevated cost pressures resulting in year over year declines in both revenues and adjusted EBITDA .
Michael Garcia: As expected, we experienced lower shipment volumes and realized pricing as well as elevated cost pressures, resulting in year-over-year declines in both revenues and adjusted EBITDA. A bright spot continues to be our fully modernized plate mill. Plate shipments totaled approximately 97,000 tons, roughly in line with the 103,000 tons in the prior quarter. Despite taking a planned 2-week outage during the quarter, we expect Q4 plate production to increase sequentially as we capitalize on our position as Canada's only discrete plate producer. Turning to our electric arc furnace project, the foundation of our future, I'm pleased to report continued progress since achieving first arc and first steel production in early July. Commissioning and ramp up activities for Unit One have progressed in line with expectations.
Speaker #5: A bright spot continues to be our fully modernized plate mill plate shipments totaled approximately 97,000 tons , roughly in line with the 103,000 tonnes in the prior quarter .
Speaker #5: Despite taking a planned two week outage during the quarter , we expect Q4 plate production to increase sequentially as we capitalize on our position as Canada's only discrete plate producer .
Speaker #5: Turning to our electric arc furnace project , the foundation of our future . I'm pleased to report , continued progress since achieving first arc and first steel production in early July .
Speaker #5: Commissioning and ramp up activities for unit one have progressed in line with expectations . The furnace and associated melt shop assets have demonstrated stable and reliable performance , achieving quality metrics across a broad range of plate and hot rolled coil product grades .
Michael Garcia: The furnace and associated melt shop assets have demonstrated stable and reliable performance, achieving quality metrics across a broad range of plate and hot rolled coil product grades. The Q1 power system and other critical process components continue to perform as designed, supporting consistent metallurgical quality and process control. As of September 30, 2025, cumulative investment for the EAF project was $910 million, including $30 million during the third quarter. All material aspects of the project have been contracted and we continue to expect final aggregate cost of completion will be approximately $987 million. We have announced a number of decisive actions to strengthen our balance sheet and liquidity, including $500 million of federal and provincial loan facilities. Rather than covering each in detail, I'll ask Rajat to take you through the specific steps and their impact on our financial flexibility later in the call.
Speaker #5: The Q1 power system and other critical process components continue to perform as designed , supporting consistent metallurgical quality and process control . As of September 30th , 2025 , cumulative investment for the EAF project was $910 million , including 30 million during the third quarter .
Speaker #5: All material aspects of the been contracted , and we continue to expect final aggregate cost of completion will be approximately 987 million . We have announced a number of decisive actions to strengthen our balance sheet and liquidity , including $500 million of federal and provincial loan facilities , rather than covering each and detail .
Speaker #5: I'll ask Aerojet to take you through the specific steps and their impact on our financial flexibility later in the call . This government support directly addresses the sustained tariff environment that has forced us to reimagine our operating strategy .
Michael Garcia: This government support directly addresses the sustained tariff environment that has forced us to reimagine our operating strategy. We are accelerating retirement of our blast furnace and coke oven operations as we ramp up EAF production through 2025 and 2026. We're strategically refocusing production on as rolled and heat treated plate products along with select coil products primarily for sale in the Canadian market. We are uniquely positioned as Canada's only discrete plate producer and this strategy aligns our production with domestic demand while reducing exposure to volatile and oversupplied coil markets. Our focus aligns with infrastructure, construction, and renewable energy growth sectors, preserving Algoma Steel Group Inc.'s relevance by supporting national industrial priorities. We remain focused on extending our liquidity runway to develop new opportunities, including advancing our energy strategy and pursuing product diversification initiatives.
Speaker #5: We are accelerating retirement of our blast furnace and coke oven operations as we ramp up EAF production through 2025 and 2026 . We're strategically refocusing production on as rolled and heat treated plate products , along with select coil products primarily for sale in the Canadian market .
Speaker #5: We are uniquely positioned as Canada's only discrete plate producer , and this strategy aligns our production with domestic demand . While reducing exposure to volatile and oversupplied coil markets .
Speaker #5: Our focus aligns with infrastructure construction and renewable energy growth sectors, preserving Algoma's relevance by supporting national industrial priorities. We remain focused on extending our liquidity runway to develop new opportunities, including advancing our energy strategy and pursuing product diversification initiatives rather than competing as a commodity producer in a tariff.
Michael Garcia: Rather than competing as a commodity producer in a tariff-distorted global market, we are positioning Algoma Steel Group Inc. as a premium Canadian supplier of essential steel products. This repositioning achieves three outcomes. We supply Canadian industries with high quality plate products needed for infrastructure, manufacturing, and defense. We create operational stability that supports continued investment aligned with Canada's industrial needs, and we reinforce our role as a critical partner in Canada's industrial and defense capabilities. By concentrating on higher value specialized products, we can strengthen customer partnerships and optimize margins. Combined with government support, this strategy positions Algoma Steel Group Inc. not just to withstand current conditions, but to emerge as a stronger, more focused company. In short, we are evolving from a cross-border commodity producer to a Canadian-focused steel supplier with lower cost, lower emissions, and greater resiliency. This transformation strengthens both Algoma Steel Group Inc.
Speaker #5: Distorted global market . We are positioning Algoma as a premium Canadian supplier of essential steel products . This repositioning achieves three outcomes . We supply Canadian industries with high quality plate products needed for infrastructure , manufacturing and defense .
Speaker #5: We create operational stability that supports continued investment aligned with Canada's industrial needs. We reinforce our role as a critical partner in Canada's industrial and defense capabilities by concentrating on higher value, specialized products. This strategy enables us to strengthen customer partnerships and optimize margins, combined with government support.
Speaker #5: This strategy positions Algoma not just to withstand current conditions , but to emerge as a stronger , more focused company . In short , we are evolving from a cross-border commodity producer to a Canadian focused steel supplier with lower cost , lower emissions and greater resiliency .
Speaker #5: This transformation strengthens both Algoma and Canada's industrial future . Now , I'd like to take a moment on a more personal note . As announced last evening , I will be retiring at the end of this year from Algoma Steel , concluding what has been an extraordinary journey with Algoma .
Michael Garcia: and Canada's industrial future. Now I'd like to take a moment on a more personal note. As announced last evening, I will be retiring at the end of this year from Algoma Steel Group Inc., concluding what has been an extraordinary journey with Algoma. I want to congratulate Rajat Marwah on his appointment as CEO effective January 1, 2026, and Michael Morocco on his promotion to Chief Financial Officer. Rajat has been a trusted partner throughout our transformation. His leadership in finance, strategy, and stakeholder engagement has been instrumental in securing the foundation we've built together, and I know Michael will bring the same discipline and strategic insight to the CFO role as he has demonstrated leading our integrated business planning and capital markets efforts.
Speaker #5: I want to congratulate Rajat Marwah on his appointment as CEO , effective January 1st , 2026 , and Michael Moraca on his promotion to Chief Financial Officer .
Speaker #5: Rajat has been a trusted partner throughout our transformation . His leadership in finance , strategy and stakeholder engagement has been instrumental in securing the foundation we've built together , and I know Michael will bring the same discipline and strategic insight to the CFO role as he has demonstrated leading our integrated business planning and capital markets efforts .
Speaker #5: I'm proud of how far this company has come and confident that the management team under Rajat's leadership will continue to strengthen Algoma's position as a Canadian leader in sustainable steelmaking.
Michael Garcia: I'm proud of how far this company has come and confident that the management team under Rajat's leadership will continue to strengthen Algoma Steel Group Inc.'s position as a Canadian leader in sustainable steelmaking. I would like to pass it over to you, Rajat, to cover the financials and for closing remarks.
Speaker #5: I would like to pass it over to you , Rajat , to cover the financials and for closing remarks . Thanks , Mike .
Rajat Marwah: Thanks Mike. Good morning everyone. First, I want to express my deep appreciation for Mike's leadership. His vision and discipline have guided Algoma Steel Group Inc. through one of the most significant transformations in our history. The foundation he built strategically, operationally, and culturally positions us for long-term success. Talking about the results for the third quarter, adjusted EBITDA was a loss of $87.1 million. For the quarter, tariff expense totaled $90 million, and we estimate Canadian sales prices were approximately 40% lower on account of tariffs, resulting in lower revenue of approximately $32 million. Cash used in operating activities was $117.3 million. We finished the quarter with $337 million of liquidity. We shipped 419,000 net tons in the quarter, a decline of 12.7% versus the prior year.
Speaker #6: Good .
Speaker #5: Morning everyone . First .
Speaker #6: I want to express my deep appreciation for Mike's leadership , his vision and discipline have guided Algoma through one of the most significant transformations in our history .
Speaker #6: The foundation he built strategically , operationally and culturally positions us for long term success . Talking about the results for the third quarter , adjusted EBITA was a loss of $87.1 million for the quarter .
Speaker #6: Tariffs , expense totaled 90 million , and we estimate Canadian sales prices were approximately 40% lower on account of tariffs , resulting in lower revenue of approximately 32 million .
Speaker #6: Cash used in operating activities was 117.3 million . We finished the quarter with 337 million of liquidity . We shipped 419,000 net tons in the quarter , a decline of 12.7% versus the prior year quarter .
Rajat Marwah: Lower steel shipments were the result of weakening market conditions, particularly due to Section 232 tariffs, which impacted the company's export sales and resulted in oversupply of the Canadian market. At reduced transactional pricing, net sales realization averaged $1,129 per ton compared to $1,036 per ton in the prior year period. The increase versus the prior year level reflects improvements in value-added product mix as a proportion of sales, which more than offset weaker market conditions. Plate prices continued to enjoy a premium relative to hot rolled coils during the quarter. This resulted in sale revenue of $473 million in the quarter, down 12.2% versus the prior year period. On the cost side, Algoma Steel Group Inc.'s cost per ton of steel products sold averaged $1,282 in the quarter, up 24.2% versus the prior year period.
Speaker #6: Lower steel shipment was the result of weakening market conditions , particularly due to section 232 tariffs , which impacted the company's export sales and resulted in oversupply of the Canadian market .
Speaker #6: At reduced transactional pricing . Net sales realization averaged 1129 per tonne , compared to 1036 per ton in the prior year period . The increase versus the prior year level reflects improvements in value added product mix as a proportion of sales , which more than offset weaker market conditions .
Speaker #6: Plate prices continues to enjoy a premium relative to hot rolled coil during the quarter . This resulted in sales revenue of 473 million in the quarter , down 12.2% versus the prior year period .
Speaker #6: On the cost side , Algoma's cost per tonne of steel products sold averaged 1282 in the quarter , up 24.2% versus the prior year period starting March 12th .
Rajat Marwah: Starting March 12, the company was subject to a 25% tariff on outbound steel shipments to the U.S., which increased to 50% in June. For the third quarter, tariff costs were $90 million or $214 per ton, which was included in cost of sales. Excluding the impact of tariff, cost of sales was only 3.6% higher versus the prior year period despite a 20% lower shipping volume and a higher mix of plate sales for the period. We will continue to focus and drive down the cost of sales as we make our strategic pivot to focus primarily on plate and selected coil products. Net loss in the third quarter was $485.1 million compared to a net loss of $106.6 million in the prior year quarter. The increase in net loss was driven primarily by the $503 million non-cash impairment loss as of September 30, 2025.
Speaker #6: The company was subject to 25% tariff on outbound steel shipments to the United States , which increased to 50% in June . For the third quarter , tariffs cost were 90 million , or 214 per ton , which was included in cost of sales excluding the impact of tariff cost of sales was only 3.6% higher versus the prior year period , despite a 20% lower shipping volume and a higher mix of plate sales for the period .
Speaker #6: We will continue to focus and drive down the cost of sales as we make our strategic pivot to focus primarily on plate and selected coil products .
Speaker #6: Net loss in the third quarter was 485.1 million , compared to a net loss of 106.6 million in the prior year quarter . The increase in net loss was driven primarily by the $503 million non-cash impairment loss as of September 30th , 2025 .
Speaker #6: The company identified two impairment indicators its market capitalization falling below the carrying value of its net assets and the impact of US section 232 tariffs .
Rajat Marwah: The company identified two impairment indicators, its market capitalization falling below the carrying value of its net assets and the impact of U.S. Section 232 tariffs. Accordingly, an impairment test was performed to assess whether the recoverable amount of the cash generating unit exceeded its carrying value, which resulted in the non-cash impairment loss. Cash used in operations totaled $117 million for the quarter compared to cash generated by operations of $26 million in the prior year period. Inventories ended the quarter at $790 million, up approximately $54 million from the second quarter, reflecting a physical build in raw materials and finished goods, partially offset by a $14.8 million non-cash write down of inventories to net realizable value.
Speaker #6: Accordingly, an impairment test was performed to assess whether the recoverable amount of the cash-generating unit exceeded its carrying value, which resulted in a non-cash impairment loss.
Speaker #6: Cash used in operations totaled 117 million for the quarter , compared to cash generated by operations of 26 million in the prior year period .
Speaker #6: Inventories ended the quarter at 790 million , up approximately 54 million from the second quarter , reflecting a physical build and raw materials and finished goods , partially offset by a 14.8 million non-cash write down of inventories to net realizable value .
Speaker #6: Looking ahead , we expect a significant inventory drawdown beginning in the fourth quarter and accelerating through 2026 as we exit the blast furnace and coke oven operations and transition to a far more efficient EAF based supply chain .
Rajat Marwah: Looking ahead, we expect a significant inventory drawdown beginning in the fourth quarter and accelerating through 2026 as we exit the blast furnace and coke oven operations and transition to a far more efficient EAF-based supply chain. As Mike mentioned, we have announced a number of decisive actions to strengthen our balance sheet and liquidity. We increased our ABL credit facility from $300 million to $375 million with Export Development Canada joining as a new lender. More significantly, late last month we announced a binding term sheet securing $500 million in liquidity support from the Governments of Canada and Ontario. We want to thank the government for their efforts in supporting Canadian industry, and we feel this package reflects their confidence in Algoma Steel Group Inc.'s strategic importance to Canada's industrial base.
Speaker #6: As Mike mentioned , we have announced a number of decisive actions to strengthen our balance sheet and liquidity . We increased our ABL credit facility from US 300 million to US 375 million , with export Development Canada joining as a new lender .
Speaker #6: More significantly . Late last month , we announced binding term sheet securing 500 million in liquidity support from the governments of Canada and Ontario .
Speaker #6: We want to thank the government for their efforts in supporting Canadian industry , and we feel this package reflects their confidence in Algoma's strategic importance to Canada's industrial base .
Speaker #6: The financing includes $400 million from the federal Large Enterprise Tariff Loan Facility and $100 million from the province of Ontario, consisting of a $100,000,003 third lien secured tranche and a $400 million unsecured tranche with 6.77 million share purchase warrants.
Rajat Marwah: The financing includes $400 million from the Federal Large Enterprise Tariff Loan Facility and $100 million from the Province of Ontario, consisting of a $100 million third lien secured tranche and a $400 million unsecured tranche with 6.77 million share purchase warrants at $11.08 per share. The facility carries a seven-year term at Quora plus 200 basis points, stepping up after year three by 200 basis points annually. A combination of our strategic operational pivot, liquidity support, working capital efficiency improvements, and continued effort on driving down cost is expected to extend our liquidity runway well into the future as we look to capture opportunities and diversify the business. In closing, as we look ahead, our direction is clear. Complete the EAF ramp up, pursue diversification opportunities, and continue building on the strength of our exceptional team. The past several months have brought unprecedented trade disruption.
Speaker #6: At 11.08 per share . The facility carries a seven year term at 200 basis points . Stepping up after year three by 200 basis points annually .
Speaker #6: A combination of our strategic operational pivot, liquidity support, working capital efficiency improvements, and continued effort on driving down cost is expected to extend our liquidity runway well into the future.
Speaker #6: As we look to capture opportunities and diversify the business in closing , as we look ahead , our direction is clear . Complete the F ramp up , pursue diversification , opportunities and continue building on the strength of our exceptional team .
Speaker #6: The past several months have brought unprecedented trade disruption , but through it all , our people have maintained exemplary safety , performance and advanced the commissioning of unit one .
Rajat Marwah: Through it all, our people have maintained exemplary safety performance and advanced the commissioning of EAF unit 1. We have taken decisive action to secure our future. The $500 million in government liquidity facilities, together with our expanded $375 million ABL facility, provide the resources and flexibility to complete this transformation with confidence. These arrangements reflect a shared commitment between Algoma Steel Group Inc. and our government partners to preserve critical domestic steel capacity and industry resilience. By pivoting to become a domestically focused, high value steel producer anchored in plate and specialty products, we are creating a stronger, more resilient enterprise aligned with Canada's long term economic and defense priorities. Our accelerated EAF transition is central to that vision, positioning Algoma Steel Group Inc. as one of North America's lowest cost and most sustainable producers.
Speaker #6: We have taken decisive action to secure our future . The $500 million in government liquidity facilities , together with our expanded US 375 million ABL facility , provide the resources and flexibility to complete this transformation with confidence .
Speaker #6: These arrangements reflect a shared commitment between Algoma and our government partners to preserve critical domestic steel capacity and industry resilience by pivoting to become a domestically focused , high value steel producer anchored in plate and speciality products .
Speaker #6: We are creating a stronger , more resilient enterprise aligned with Canada's long term economic and defense priorities . Our accelerated year of transition is central to that vision .
Speaker #6: Positioning Algoma as one of the North America's lowest cost and most sustainable producers . While near trade uncertainty will remain . We are building a company that is leaner , more focused and more competitive when markets normalize , we expect to emerge stronger with improved margins and advanced cost structure and deeper alignment with national priorities .
Rajat Marwah: While near term trade uncertainty will remain, we are building a company that is leaner, more focused, and more competitive. When markets normalize, we expect to emerge stronger with improved margins, an advanced cost structure, and deeper alignment with national priorities. To our employees, thank you for your dedication and adaptability. To our government and financial partners, thank you for your confidence. To our shareholders and customers, thank you for your continued support as we execute this pivotal transformation. The work we are doing today is preserving and modernizing a strategic national asset and laying the foundation for enduring value creation. We remain focused, disciplined, and confident in the path ahead. Thank you very much for your continued interest in Algoma Steel Group Inc. At this point, we would be happy to take your questions. Operator, please give the instructions for Q&A.
Speaker #6: To our employees , thank you for your dedication and adaptability to our government and financial partners . Thank you for your confidence and to our shareholders and customers .
Speaker #6: Thank you for your continued support as we execute this pivotal transformation . The work we are doing today is preserving and modernizing a strategic national asset and laying the foundation for enduring value creation .
Speaker #6: We remain focused, disciplined, and confident in the path ahead. Thank you very much for your continued interest in Algoma Steel. At this point, we would be happy to take your questions.
Speaker #6: Operator . Please give the instructions for Q&A .
Speaker #3: Thank you . We will now be conducting a question and answer session . If you would like to ask a question , please press star one on your telephone keypad .
Operator: Thank you. We will now be conducting a question and answer session. 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 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment while we poll for questions. Our first question will be from Ian Gillies with Stifel.
Speaker #3: A confirmation tone will indicate your line is in the question queue. You may press *2 to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.
Speaker #3: One moment while we pull for questions . And our first question , we'll hear from Ian Gillies with with Stifel .
Speaker #7: Morning , everyone .
Ian Gillies: Morning, everyone.
Speaker #6: Hey .
Rajat Marwah: Hey, Ian.
Speaker #5: Morning , Ian .
Michael Garcia: Morning, Ian.
Ian Gillies: Ian, in the event we remain in this tariff environment that is 50%, could you maybe just outline where you think the production profile ends up in 2026 and whether you think you can be at EBITDA break even in that scenario. I think that would be helpful.
Speaker #7: In the event we remain in this tariff environment , i.e. 50% . Could you maybe just outline where you think the production profile ends up in 2026 ?
Speaker #7: And whether you think you can be at EBITDA break even in that scenario ? And I think that would be helpful .
Speaker #5: Sure . This is Mike . I'll start and then and then hand it over to to Rajat . Obviously our original intention was to get to full production .
Michael Garcia: Sure. This is Mike. I'll start and then hand it over to Rajat. Obviously our original intention was to get to full production on the EAF at the end of 2026, initial part of 2027. Because of what's happened to our business model with the 50% tariffs and the market dynamics, we've seen clearly that the right choice in front of us now is to execute a transition to full EAF production basically a year early. That's going to give us the best ability to deal with the current environment. We are accelerating and pushing on that transition as we speak and we need to execute it in the coming months and ramp up EAF as quick as possible because that will put us at the lowest cost, most flexible cost position and it matches the available business we have right now.
Speaker #5: On the EAF at the end of of 2026 . Initial part of 2027 . Because of what's happened in to our our business model with the 50% tariffs and the the market dynamics , we've seen clearly that the the right choice in front of us now is to execute a transition to full EAF production .
Speaker #5: Basically a year early . That's going to give us the best ability to deal with the current environment . So we are accelerating and pushing on that transition as we speak .
Speaker #5: And we need to execute it in in the coming months . And ramp up EAF as quick as possible , because that'll put us at the lowest cost , most flexible cost position , and it matches the available business we have right now .
Speaker #5: So as far as the specifics to your question of of the ramp up and where we would reach EBITDA positive or EBITDA neutral , I'll let Raj address that .
Michael Garcia: As far as the specifics to your question of the ramp up and where we would reach EBITDA positive or EBITDA neutral, I'll let Raj address that.
Speaker #6: Thanks , Mike . So as Mike mentioned , now we are looking at accelerating it . Our market in the US is practically close to us , closed and what remains is in Canada .
Rajat Marwah: Thanks, Mike.
Rajat Marwah: As Mike mentioned, now we are looking at accelerating it. Our market in the U.S. is practically closed to us, and what remains is in Canada. We have our plate mill being the only plate producer in Canada. We are taking advantage of that and trying to ship as much plate as we can in Canada. The market on the plate side itself is weaker. With all the projects being announced, that definitely will help the market to get stronger. From the way we look at it, for next year we will not be selling our 50% portion into the U.S. and we will be maintaining our share in Canada for plate and coil.
Speaker #6: We have our we have our plate mill being the only plate producer in Canada . We are taking advantage of that and trying to ship as much plate as we can in Canada , the market on the plate side itself is weaker with with all the projects being announced that definitely will help the market to get stronger .
Speaker #6: So from the way we look at it for next year , we will we will not be selling our 50% portion into the US and we'll be maintaining our share in Canada for plate and and coil .
Speaker #6: So that from numbers perspective , could be as close as 1 million to 1.2 million tonnes for the year . If situation remains the way it is without taking any upside on investments coming into Canada on the plate side , defense side , infrastructure side .
Rajat Marwah: From a numbers perspective, that could be as close as 1 million to 1.2 million tonnes for the year if the situation remains the way it is, without taking any upside on investments coming into Canada on the plate side, defense side, infrastructure side. That is where we see it going. From a beta perspective, once the transition is fully complete, which probably will take three to six months after the shutdown of the blast furnace, with all the cost moving into the P&L, we see that we start getting pretty close to a better breakeven in those volumes. We will be making money. On the plate side, coil is still stretched with 50% tariff and the market in Canada is broken from that perspective because coil is being sold at 40% lower than the CRU, which is not making money for anybody.
Speaker #6: So that's that's where we see it going . And and from a better perspective , once all the , you know , once the transition is fully complete , which probably will take 3 to 6 months after the shutdown of the blast furnace with all the cost moving into the PNL , we see that we start getting pretty close to a better breakeven in in those volumes , we will be making money on the plate side .
Speaker #6: Coiled coil is still stretched with 50% tariff and the market in Canada is broken . From that perspective , because coil is being sold at 40% lower than the Cru , which is not making money for anybody .
Speaker #6: So that's that's how we see it at a very high level .
Rajat Marwah: That is how we see it, Ian, at a very high level.
Speaker #5: Okay .
Speaker #7: That's helpful . And just one quick one on the plate before I follow on to one other separate question , the plate production was down a little bit sequentially from Q2 to Q3 .
Ian Gillies: That's helpful. Just one quick one on the plate before I follow on to one other separate question. The plate production was down a little bit sequentially from Q2 to Q3. Is that just a function of reorienting demand? You expect that to maybe start rising, whether it be in Q4 or Q1 next year.
Speaker #7: Is that just a function of reorienting demand ? And you expect that to maybe start rising , whether it be in Q4 or Q1 next year ?
Speaker #5: I think that's a big part of it . Ian . Another part of it was we did have more maintenance days in the outage .
Michael Garcia: I think that's a big part of it, Ian. Another part of it is we did have more maintenance days in the outage in the quarter. Taking the maintenance, the difference in the amount of maintenance days in the two quarters, they were roughly the same. Practically speaking, we're running our plate mill at full production, other than the days we need to take for maintenance, and the actual mix of the different type of plate products, how much heat treat is in there will affect the total volume numbers.
Speaker #5: I mean , in the quarter . So taking the the maintenance , the difference in the amount of maintenance days in the two quarters , they were roughly the same .
Speaker #5: But practically speaking , we're running our our plate mill at at full production . Other than the days we need to take for maintenance and and the actual mix of the different type of plate products , how much heat treat is in there will affect the total volume numbers .
Speaker #7: Understood and next question . I'm just curious what I guess capital infusions you'd expect to get in the next year , year or so .
Ian Gillies: Understood. Next question. I'm just curious what, I guess, capital infusions you'd expect to get in the next year or so as it pertains to insurance proceeds, where I believe there's still a bit left to come, government grants. I'm just curious if there's anything that could potentially come in on the tax side as well, just given losses incurred.
Speaker #7: As it pertains to insurance proceeds , where I believe there's still a bit left to come . Government grants and then I'm just curious if there's anything that could potentially come in on the tax side as well , just given losses incurred .
Speaker #6: Sure . I'll ask Michael Moraca to take that question .
Rajat Marwah: Sure.
Rajat Marwah: I'll ask Michael Morocco to take that question.
Speaker #4: Yeah . Hey , Ian , look on the insurance side . We we do expect to somewhere between 30 and 50 million more to come as we adjudicate through the claim .
Michael Garcia: Yeah.
Michael Morocco: Hey, Ian, look, on the insurance side, we do expect to, you know, somewhere between $30 million and $50 million more to come as we adjudicate through the claim. There are some other related cash flow items that you've hit on. We will have a significant working capital release over the next 12 months as we move to the EAF supply chain. It will be quite significant, I think, you know, we'll see something north of $150 million, some in that range on the working capital side. As you alluded to, we will see some tax refunds as we really start to collect on the taxes that we paid in 2022 and have had, obviously, some net operating losses through the last little bit. Those are the big movers on the cash flow front.
Speaker #4: And then there is some other related cash flow items that you've hit on . We will have a significant working capital release over the next 12 months as we move to the EAF supply chain .
Speaker #4: It will be quite significant . I think . You know , we'll see something north of 100 , 150 , some in that range on the working capital side .
Speaker #4: And then , as you alluded to , we will see some some tax refunds as we really start to collect on the taxes that we paid in 2022 .
Speaker #4: And have had obviously some net operating losses through the last little bit . So those are the big movers on the cash flow front .
Speaker #6: Yeah . And and that's we see most of it coming next year . Some of it in the first half , some in the second half depending upon timing .
Rajat Marwah: Yeah, that's.
Rajat Marwah: We see most of it coming next year, some of it in the first half, some in the second half, depending upon timing. There will be a big amount of inflow that will happen both.
Speaker #6: But there will be a big amount of inflow that will happen both or on all three fronts . But big coming from working capital release as well as taxes coming in and from working capital perspective .
Rajat Marwah: On.
Rajat Marwah: All three fronts, big coming from working capital release as well as taxes coming in. From working capital perspective, we did mention earlier that there will be $100 million release happening this next year as we transition to EAF. We expect that to happen more than that because we'll be running at lower levels. We should see, as Mike mentioned, $150 million odd of reduction from the working capital and over $100 million or.
Speaker #6: You know , we did mention earlier that there will be a 100 million release happening this next year as we transition to AIF we expect that to happen .
Speaker #6: And , and more than that , because we'll be running at lower levels . So so we should see , you know , as Mike mentioned , 150 odd million dollars of reduction from the from the working capital and over 100 million or so coming from taxes .
Rajat Marwah: Coming from taxes.
Speaker #7: Perfect . That's helpful . That's helpful . I'll turn it back over for now .
Ian Gillies: Perfect, that's helpful. I'll turn it back over for now.
Speaker #6: Thanks .
Rajat Marwah: Thanks.
Speaker #3: And our next question we'll hear from James McArdle with RBC Capital Markets .
Operator: Our next question, we'll hear from James McGarragle with RBC Capital Markets.
Speaker #4: Hey .
Speaker #8: Thanks for having me on . And , Mike , I wishing you all the best going forward . And then Roger and Mike , congrats on the new roles .
James McGarragle: Hey, thanks for having me on. I'm Mike, wishing you all the best going forward. Roger and Mike, congrats on the new roles. I just wanted to follow up on some of the commentary you made on cash flow. Those numbers were into 2026, I believe. Can you just give us an updated CapEx number and an updated net working capital number for what we can expect into Q4?
Speaker #8: I just wanted to follow up on the some of the commentary you made on Cash Flow . So those numbers were into 2026 .
Speaker #8: I believe. But then, can you just give us an updated CapEx number and an updated net working capital number for what we can expect into Q4?
Speaker #6: Sure . So on the on the working capital side , we normally build working capital in the last quarter , and it's primarily on the inventory side .
Rajat Marwah: Sure.
Rajat Marwah: On the working capital side, we normally build working capital in the last quarter, and it's primarily on the inventory side. We will not see any build happening on the inventory side in the last quarter. We'll probably see some release coming on the inventories, and there will be other movements happening between receivables and others. The big part of our change normally quarter over quarter in the last quarter, calendar quarter, is inventories. The release that we are seeing of $100–$150 million will include some release coming in the last quarter. On the CapEx side, we will see the CapEx coming down as we go into next year as the blast furnace and coke batteries shut down. We normally spend around $40 million in those facilities, so that in the maintenance CapEx will come down and will get further optimized during next year and the year after.
Speaker #6: So we will not see any build happening on the inventory side in the last quarter . We'll probably see some release coming on the inventories and and there will be , you know , other movements happening between receivables and others .
Speaker #6: But the big part of our change normally quarter over quarter in the last quarter calendar quarter is , is inventories . So the release that we are seeing of hundred , 150 million will include some release coming in the last quarter .
Speaker #6: And on the CapEx side , we will see , you know , the CapEx coming down as we go into next year as the blast furnace and coke batteries shut down .
Speaker #6: We normally spend around 40 odd million dollars in those facilities so that in the maintenance CapEx will come down and will get further optimized during during next year and year after .
Speaker #8: Yeah , thanks for the color . And then it's one of to follow up on one of the initial comments and the initial questions that were asked , you know , you'd given a previously , you know , some targets , you know , cost scrap plus targets on the cost side with regards to the new furnace that you're bringing on .
James McGarragle: Yeah, thanks for the call and then just wanted to follow up on one of the initial comments. The initial questions that were asked, you'd given previously some targets, cost scrap plus targets on the cost side with regards to the new furnace that you're bringing on. Can you kind of give us an updated view on how you're thinking about that scrap plus cost targets given the impact from tariffs and that you might not be running that furnace at full capacity initially? Just how we can expect that to evolve into 2026 and then how you're thinking about those targets longer term.
Speaker #8: So can you kind of give us an updated view on how you're thinking about that scrap ? Plus cost targets given , you know , the impact from tariffs and that you might not be running that furnace , you know , full capacity initially .
Speaker #8: So just how we can expect that to evolve into 2026 . And then how you're thinking about those targets longer term .
Speaker #6: So on the on the cost side , what we said is that it's scrap plus 220 roughly us for for sheet products . And and that will be slightly higher .
Rajat Marwah: So.
Rajat Marwah: On the cost side, what we said is that it's scrap plus $220 roughly U.S. for sheet products, and that will be slightly higher. It will be in the range of $220 to $250 for the initial period as we will be running the EAF at lower capacity than one EAF at full capacity. We'll see that slightly higher, and it won't be double, but it will be slightly higher, and we see that coming down to around $220 once we are running at at least 2 to 2.5 million tons. That's how we see the change on the cost side. Plate from a conversion perspective will be very similar, just that the variable cost will be higher. You have alloys, and there is a little bit more processing that comes through.
Speaker #6: It will be in in the range of 220 to 250 . For the initial period , as we will be running the EAF at lower capacity than than one year , if at full capacity .
Speaker #6: So we'll see that slightly higher . And then it won't be double , but it will be slightly higher . And then we see that coming down to around 220 odd .
Speaker #6: Once we have once we are running at at least two , 2.5 million ton . So that's how we see the change on the cost side on the , you know , plate will be played from from conversion perspective will be very similar .
Speaker #6: Just that the the variable cost will be higher . You have alloys and there is a little bit more processing that comes through .
Speaker #8: And then I guess in the current environment , do you think the Canadian market can support that ? You know , 2.5 million tons that , you know , you think is necessary in order to achieve that cost ?
James McGarragle: In the current environment, do you think the Canadian market can support that 2.5 million tons that you think is necessary in order to achieve that cost plus target, or do you think something would have to change in terms of tariffs for the Canadian market to be able to support that 2.5 million tons?
Speaker #8: Plus target ? Or do you think you know , something would have to change in terms of tariffs for the Canadian market to be able to support that 2.5 million tons .
Speaker #5: James , this is Mike . I think critical . You know , part of this , the future of Algoma Steel is to be the foundation steel company for the future of of the Canadian nation building agenda .
Michael Garcia: James, this is Mike. I think a critical part of the future of Algoma Steel is to be the foundation steel company for the future of the Canadian nation building agenda, if you will. We have the lowest cost, most flexible liquid steel base in the industry in Canada, or we will soon be there once the transition to EAF is complete and we've ramped up in the next year. I would say that market is not yet fully developed as we sit here in November, almost November of 2025. The market continues and will continue to develop. The nation building agenda that the new government has laid out is pretty clear in terms of everything that wants to be pursued around defense projects, infrastructure projects, shipbuilding, energy, manufacturing, reshoring. This is all without a return to a somewhat normal trade relationship with the U.S.
Speaker #5: If you will . We have the lowest cost , most flexible liquid steel base in the industry in Canada , or we will soon be there .
Speaker #5: Once the transition to EAF is complete and and we've ramped up , you know , in the next year . But I would I would say that that market has not is not yet fully developed .
Speaker #5: As we sit here and in November , almost November of 2025 . So the market continues and will continue to develop the nation building agenda , you know that the new government has laid out is pretty clear in terms of everything that wants to be pursued around , around defense projects , infrastructure projects , shipbuilding , energy manufacturing , reshoring .
Speaker #5: And this is all without , you know , a kind of a return to a somewhat normal trade relationship with the US . This is all kind of future development and evolution of the Canadian market .
Michael Garcia: This is all future development and evolution of the Canadian market. My answer is if all that comes to fruition and even just a portion of it comes to fruition, Algoma Steel will be far and away the most advantageous and the best positioned to take advantage of it. I think the market's going to be there for us if in the meantime or as part of that there's a return to an improved trade relationship to the U.S. which gives us more access to the historical U.S. market. That will put wind in the sails of everything that we've talked about. It'll open up the ability to take advantage of U.S. business. It'll lift the margin across all of our business on both sides of the border. We still believe and are committed to being a strategic part of Canada's nation building agenda.
Speaker #5: So , so my answer is , you know , if if all that comes to fruition and even just a portion of it comes to fruition .
Speaker #5: Fruition, Algoma Steel will be far and away the most advantageous and the best position to take advantage of it. So I think the market's going to be there for us.
Speaker #5: If in the meantime , or as part of that , there's a return to a improved trade relationship to the US , which gives us more access to the historical US market , that will , you know , that will put wind in the sails of everything that that we've talked about .
Speaker #5: It'll open up the ability to get to take advantage of , of us business . It will lift the margin across all of our business on both sides of the border .
Speaker #5: We still believe and are committed to being a strategic part of of Canada's nation building agenda . So I don't think it would immediately mean certainly not for Algoma Steel wouldn't mean , you know , a return of business to to business as usual where , you know , we're just a commodity steel supplier looking for , the best business , whether it's in the US or , or Canada .
Michael Garcia: I don't think it would immediately mean, certainly not for Algoma Steel, it wouldn't mean a return of business to business as usual where we're just a commodity steel supplier looking for the best business, whether it's in the U.S. or Canada. We would be mindful of the strategic risk of just going back to the old business model. I know it's a little bit long winded answer to your question, but yes, we believe in the future of the Canadian market built on the nation building agenda that the government of Canada has laid out and our unique position as Algoma Steel to take advantage of that.
Speaker #5: We would be mindful of of the strategic risk of just going back to the old business model . But I know it's a little bit long winded answer to your question , but yes , we believe in the future of the of the Canadian market built on the nation building agenda that the government of Canada has laid out and and our unique position as Algoma Steel to take advantage of that .
Speaker #8: I appreciate the color , and I'll turn the line over . Thank you .
James McGarragle: I appreciate the caller, and I'll turn the line over. Thank you.
Speaker #3: And next we'll hear from Ian Gillies with Steeple .
Operator: Next we'll hear from Ian Gillies with Stifel.
Speaker #7: I'm just in the Canadian market . Are you seeing any positive implications yet from some of the trade barriers that have been instituted by , by the Canadian government or do they need to , I guess , do the walls need to be taken up a bit higher ?
Ian Gillies: I'm just in the Canadian market. Are you seeing any positive implications yet from some of the trade barriers that have been instituted by the Canadian government, or do they need to, I guess, do the walls need to be taken up a bit higher?
Speaker #5: Yeah , I think , you know , we've shared our frank views around with the government around opportunities we see for them to to put those those walls higher and put more teeth into moves that would strengthen the health of the Canadian market .
Michael Garcia: Yeah, I think we've shared our frank views with the government around opportunities we see for them to put those walls higher and put more teeth into moves that would strengthen the health of the Canadian market. Obviously, the government has a lot to think through when they hear feedback from the steel industry in terms of, you know, are there any other consequences to doing something like that which they may not see as positive? Certainly, from a steel perspective, we think that there's more that they could do and we've been very vocal about that with them. I will say what we are seeing is a tremendous amount of interest in understanding Algoma Steel Group Inc.'s capabilities, both current and potential future capabilities.
Speaker #5: Obviously , the government has a lot to think through when when they hear feedback from the from the steel industry in terms of , you know , are there any other .
Speaker #5: Consequences to doing something that like that which , which they may not , you know , see as , as , as positive , but certainly from a steel perspective , we think that there's more that they could do .
Speaker #5: And we've been very vocal about that with them. I will say what we are is a tremendous amount of interest in understanding Algoma Steel's capabilities, both current and potential future capabilities.
Speaker #5: You know , from every sector of the country , every sector of the of the economy . We've gotten phone calls , visits , inquiries in terms of what do you make , how can you make something for for my steel uses .
Michael Garcia: From every sector of the country, every sector of the economy, we've gotten phone calls, visits, inquiries in terms of what do you make, how can you make something for my steel uses, and if you can't make it today, what type of investment or how soon could you make it? That's all very positive. Some of it is for business that's actually being made right now. Some of it is for future business that may be still a few years away. The visibility, the intention, and the interest in Algoma Steel Group Inc. and what role we can and will play in the future of Canada's nation building is definitely there. We've already seen that for the last several months.
Speaker #5: And if seeing you can't make it today , you know , what type of investment or how soon could you make it ? And that's all , you know , very positive .
Speaker #5: Some of it is for for business . That's actually being being made right now . Some of it is for , for future future business that may be still a few years away .
Speaker #5: But the , the , the visibility , the intention and the interest in Algoma Steel and what role we can and will play in the future of Canada's nation building is definitely there .
Speaker #5: And we've already seen that for the last several months.
Speaker #7: I suspect this question's unanswerable , but do you have any sense of what you think the incremental plate demand could be , or broader steel demand could be from these initiatives , maybe even just on projects announced or potential projects .
Ian Gillies: I suspect this question is unanswerable, but do you have any sense of what you think the incremental plate demand could be or broader steel demand could be from these initiatives? Maybe even just on projects announced or potential projects?
Speaker #5: You're you're right . That's hard to it's hard to it's it's hard to to to to give you a , you know , a big number .
Michael Morocco: You're right.
Michael Garcia: It's hard to give you a big number. I know that a lot of these, for instance, the shipbuilding, we had visits from major shipbuilders who are looking at just the defense shipbuilding agenda over the next several years. We can make all the steel needed in 10 Canadian warships. We could make the amount of plate needed for those 10 ships in two days. It's not going to be one major program which moves the needle. It's going to be a lot of demand throughout the entire economy and all types of projects. Certainly, the defense spending and icebreakers and pipelines will get a lot of visibility, but we need multiple projects. The plate market in Canada is roughly 600,000 to 700,000 tons right now.
Speaker #5: I know that you know , a lot of these for instance , the shipbuilding , you know , we had a we've had visits from Major shipbuilders who are looking at the just the , the defense shipbuilding agenda over the next several years .
Speaker #5: And , you know , we can make all the ship needed in ten Canadian warships . We could make the amount of plate needed for those ten ships .
Speaker #5: In , you know , two days . So it's not going to be one major program which which moves the needle . It's going to be a lot of of of demand throughout the entire economy and all types of , of projects .
Speaker #5: Certainly the , you know , defense spending and icebreakers and pipelines will get a lot of visibility . But we need we need multiple projects .
Speaker #5: The , the plate marketing Canada's is roughly 6 to 700,000 tons right now . We're we're easily capturing 50% of that . And so it's a relatively small market .
Michael Garcia: We're easily capturing 50% of that, and it's a relatively small market and it doesn't take hundreds of projects to start building that market up north of a million tons. It takes more than a handful, but it doesn't take hundreds. We feel pretty bullish about the future prospects in plate, but it's hard to give you a specific number.
Speaker #5: And it doesn't take hundreds of of projects to start building that , that market up north of a million tons . It it takes more than a handful , but it doesn't take hundreds .
Speaker #5: So we feel pretty , pretty bullish about the about the future prospects in plate . But it's hard to give you a specific number .
Speaker #7: And then last one for me , and this is probably for Richard . Could you maybe provide a view on how you intend to start using the credit facilities as you start moving into a bit more cash burn , given the implications , some can be picked , some of dilution , some carry interest .
Ian Gillies: Could you maybe provide a view on how you intend to start using the credit facilities as you start moving into a bit more cash burn, given the implications? Some can be picked, some have dilution, some carry interest. I think that would be useful.
Speaker #7: It's just I think that would be useful .
Speaker #6: Yeah , sure . So , you know , the way the way the facilities have been put together . We have a secured line which doesn't have any .
Rajat Marwah: Sure.
Rajat Marwah: The way the facilities have been put together, we have a secured line which doesn't have any warrants attached to it. The intention will be to draw that line first and then go into the unsecured line where warrants are there. That helps us to manage that. Most of it is pick for two years and we will pick it, which makes sense, and then it goes to cash payments. From use perspective, we have the ABL which we want to keep as much as possible from working capital. Another perspective is to start using the other line. We will be looking at it as we draw on what's the most and the best optimum use of cash is and which cash, and based on our plan for next year, and keep drawing, so we'll be quite mindful of how we are drawing it from that perspective.
Speaker #6: Any warrants attached to it . So the intention will be to draw that line first and then go into the , the unsecured line where warrants are there .
Speaker #6: So that helps us to manage manage that . Most of it is pick from for for for two years . And we we will pick it which , which makes sense .
Speaker #6: And then it goes you know , it goes to cash payments . The and from from use perspective we have the ABL which we want to keep as much as possible from working capital and other perspective .
Speaker #6: And start using the other line . So we we will be looking at it as we draw on what's the most and the best optimum use of cash is and which cash and based on based on our plan for next year and keep drawing .
Speaker #6: So we'll be quite mindful of of how we are drawing it from that perspective .
Speaker #7: Understood . Thanks very much . I'll turn it back over .
Ian Gillies: Understood. Thanks very much. I'll turn it back over.
Speaker #3: There are no further questions at this time . I would like to turn the floor back to Michael Moraca for closing remarks .
Operator: There are no further questions at this time. I would like to turn the floor back to Michael Morocco for closing remarks.
Speaker #4: Thank you again for your participation in our third quarter 2020 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 fourth quarter and full year results early next year .
Michael Morocco: Thank you again for your participation in our third quarter 2025 earnings conference call and your continued interest in Algoma Steel Group Inc. We look forward to updating you on our results and progress when we report our fourth quarter and full year results early next year. Thank you.
Speaker #4: Thank you .
Operator: That does conclude today's teleconference. We thank you for your participation. You may now disconnect your lines at this time.
[Operator]: Sa Sam.