Greetings, and welcome to the Algoma Steel Group, Inc. Third Quarter 2025 Earnings Call. [Operator Instructions] [Technical Difficulty] being recorded. It is now my pleasure to introduce Michael Moraca, Vice President and Corporate Development and Treasurer. Please go ahead, sir.

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 [Technical Difficulty] 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. 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. Mike?

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 3 important themes. First, the U.S. 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. Second, we've secured the capital to strengthen our liquidity through $500 million in government support and an expanded USD 375 million 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. 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…

Thanks, Mike. Good morning, everyone. First, 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. 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, 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. 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. 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 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 continues to enjoy a premium relative to hot-rolled coils during the quarter. This resulted in steel revenue of $473 million in the quarter, down 12.2% versus the prior year period. On the cost side, Algoma's cost per ton of steel products sold averaged $1,282 in the quarter, up 24.2% versus the prior year period. Starting March 12, 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 costs were $90 million or $214 per ton, which was included in cost…

[Operator Instructions] And our first question we will hear from Ian Gillies with Stifel.

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 and whether you think you can be at EBITDA breakeven in that scenario? And I think that would be helpful.

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 EAFs 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. So 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. So 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 Rajat address that.

Thanks, Mike. So as Mike mentioned, now we are looking at accelerating it. Our market in the U.S. is practically close to us closed. 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. So from the way we look at it for next year, we will not be selling our 50% portion into the U.S., and we'll be maintaining our share in Canada for plate and coil. So that from a numbers perspective, could be as close as 1 million to 1.2 million tons 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. So that's where we see it going. And from an EBITDA perspective, once all the -- 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 P&L, we see that we start getting pretty close to EBITDA 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. So that's how we see it, Ian, at a very high level.

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. 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?

I think that's a big part of it, Ian. Another part of it is we did have more maintenance days in the outage I mean, in the quarter. So taking the maintenance -- the difference in the amount of maintenance days in the 2 quarters, they were roughly the same. But 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.

Understood. And -- 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. 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.

Sure. I'll ask Mike Moraca to take that question.

Ian, look, on the insurance side, we do expect to somewhere between $30 million and $50 million more to come as we adjudicate through the claim. And then there is some other related cash flow items that you 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 we'll see something north of $100 million, $150 million, some in that range on the working capital side. And then 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. So those are the big movers on the cash flow front.

Yes. 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. But there will be a big amount of inflow that will happen both on all 3 fronts, but big coming from working capital release as well as taxes coming in. And from a 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 and more than that because we'll be running at lower levels. So we should see, as Mike mentioned, $150-odd million of reduction from the working capital and over $100 million or so coming from taxes.

And our next question we will hear from James McGarragle with RBC Capital Markets.

Wish you all the best going forward. And then Rajat and Mike, congrats on the new roles. I just wanted to follow up on the -- some of the commentary you made on cash flow. So those numbers were into 2026, 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?

Sure. So on the working capital side, we normally build working capital in the last quarter, and it's primarily on the inventory side. 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 there will be other movements happening between receivables and others. But the big part of our change normally quarter-over-quarter in the last quarter, calendar quarter is inventories. So the release that we are saying of $100 million, $150 million will include some release coming in the last quarter. And 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-odd million in those facilities. So that in the maintenance CapEx will come down and will get further optimized during next year and year after.

And then I just wanted to follow up on one of the initial comments and the initial questions that were asked. You've given previously some targets, cost -- scrap plus targets on the cost side with regards to the new furnace that you're bringing on. So 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. So just how we can expect that to evolve into 2026 and then how you're thinking about those targets longer term?

So on the cost side, what we said is that it's scrap plus USD 220 roughly 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 1 EAF at full capacity. 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 ] once we have -- once we are running at least 2 million, 2.5 million tonnes. So that's how we see the change on the cost side. On the plate will be -- 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.

And then I guess, in the current environment, do you think the Canadian market can support that 2.5 million tonnes 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 tonnes?

James, this is Mike. I think critical, part of this, 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. But I would say that, that market has not -- is not yet fully developed as we sit here in November -- almost November of 2025. So 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, and this is all without kind of a return to a somewhat normal trade relationship with the U.S. This is all kind of future development and evolution of the Canadian market. So 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 position to take advantage of it. So I think the market is 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 will open up the ability to get -- to take advantage of U.S. business. It will 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. So I don't think it would immediately mean and certainly not for Algoma Steel, it wouldn't mean a return of 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.

And next, we'll hear from Ian Gillies with Stifel.

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?

Yes. I think we've shared our frank views around -- 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 are there any other consequences to doing something like that, which they may not see as positive. But 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's capabilities, both current and potential future capabilities. 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? And 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. But 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, and we've already seen that for the last several months.

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?

You're right. That's hard to -- it's hard to give you a big number. I know that a lot of these -- for instance, the shipbuilding, we've had visits from major shipbuilders who are looking at the -- just the defense shipbuilding agenda over the next several years. And we can make all the ship needed in 10 -- Canadian war ships we could make the amount of plate needed for those 10 ships in 2 days. So 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 ice breakers and pipelines will get a lot of visibility, but we need multiple projects. The plate market in Canada is roughly 600,000 tonnes to 700,000 tonnes right now. We're easily capturing 50% of that. And so it's a relatively small market, and it doesn't take hundreds of projects to start building that market up north of 1 million tonnes. It takes more than a handful, but it doesn't take hundreds. So we feel pretty bullish about the future prospects in plate, but it's hard to give you a specific number.

And then last one for me, and this is probably for Rajat. 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 could be picked, some of dilution, some carry interest. It's just -- I think that would be useful.

Yes, sure. So the way the facilities have been put together, we have a secured line that doesn't have any warrants attached to it. So the intention will be to draw that line first and then go into the unsecured line, where warrants are there. So that helps us to manage that. Most of it is [ spec ] for 2 years, and we will pick it, which makes sense, and then it goes to cash payments. The -- and from a use perspective, we have the ABL, which we want to keep as much as possible from working capital and other perspective and start using the other line. So 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.

There are no further questions at this time. I would like to turn the floor back to Michael Moraca for closing remarks.

Thank you, again for your participation in our third quarter 2025 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. Thank you.

And that does conclude today's teleconference. We thank you for your participation. You may now disconnect your lines at this time.