Earnings call transcript: Algoma Steel Q4 2024 reports loss amid market challenges

Algoma Steel Group Inc. (NASDAQ: ASTL) reported a challenging fourth quarter of 2024, with earnings per share (EPS) missing analyst forecasts. The company posted an EPS of -$0.61, below the expected -$0.4531. Revenue also fell short of expectations at $590.3 million, compared to the forecasted $598.49 million. According to InvestingPro data, the stock appears slightly undervalued at current levels, with a market capitalization of $607.74 million and a price-to-book ratio of 0.63. Despite these results, Algoma Steel’s stock showed resilience, rising by 1.72% to $5.92, reflecting investor optimism about future prospects, particularly the upcoming Electric Arc Furnace (EAF) project.

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Key Takeaways

• Algoma Steel’s Q4 2024 EPS was -$0.61, missing forecasts.
• Revenue for the quarter was $590.3 million, below expectations.
• Stock price increased by 1.72% post-earnings announcement.
• Upcoming EAF project expected to enhance production efficiency.
• Full-year 2024 steel revenue decreased to $2.2 billion from $2.6 billion in 2023.

Company Performance

Algoma Steel faced a tough year, with full-year 2024 steel revenue declining to $2.2 billion from $2.6 billion in 2023. The company’s adjusted EBITDA for the year was $22.3 million, a significant drop from $319 million in the previous year. InvestingPro analysis shows the company maintains strong liquidity with a current ratio of 3.31, though it’s currently burning through cash with negative free cash flow. The company’s Financial Health Score stands at "FAIR," suggesting moderate stability despite current challenges. Despite these setbacks, the company remains optimistic about its strategic initiatives, particularly the transition to EAF production, which is expected to improve efficiency and reduce costs.

Financial Highlights

• Revenue: $590.3 million in Q4 2024, below the $598.49 million forecast.
• EPS: -$0.61, missing the forecast of -$0.4531.
• Full-year 2024 steel revenue: $2.2 billion, down from $2.6 billion in 2023.
• Adjusted EBITDA: $22.3 million, compared to $319 million in 2023.

Earnings vs. Forecast

Algoma Steel’s Q4 2024 earnings results fell short of analyst expectations, with an EPS of -$0.61 versus the forecasted -$0.4531. This represents a negative surprise of approximately 34.7%. Revenue also missed expectations, coming in at $590.3 million compared to the forecast of $598.49 million.

Market Reaction

Despite the earnings miss, Algoma Steel’s stock price rose by 1.72% to $5.92 in after-hours trading. InvestingPro data reveals the stock has experienced significant pressure, down 43.17% over the past six months, with RSI indicators suggesting oversold conditions. This recent increase suggests that investors are focusing on the company’s future potential, particularly the EAF project, which is expected to begin production in April 2025.

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Outlook & Guidance

Looking ahead, Algoma Steel projects total shipments in 2025 to be between 2.1 and 2.2 million tons. The EAF project is anticipated to significantly contribute to production, with an expected run rate capacity of over 650,000 net tons annually. The company also plans to benefit from new tariffs on U.S. steel imports and potential Canadian government support.

Executive Commentary

CEO Michael Garcia expressed optimism about the future, stating, "2025 represents an exciting time in the story of Algoma." He emphasized the company’s strong funding position to complete the EAF project on budget and on schedule, highlighting its potential to transform production capabilities.

Risks and Challenges

• Global steel market challenges, including soft demand and trade tensions.
• Oversupply in the Canadian steel market, particularly in coil products.
• Potential impacts from U.S. election uncertainty and interest rate fluctuations.
• Dependence on successful EAF project implementation to improve financial performance.

Q&A

During the earnings call, analysts inquired about the company’s breakeven steel production price, which was noted to be $9.50 CRU. Questions also focused on the expected $100 million insurance payout, with $20-25 million anticipated in the near term, and potential carbon tax rebates of $7-7.5 million.

Full transcript - Algoma Steel Group Inc (ASTL) Q3 2025:

Conference Operator: Greetings, and welcome to Algoma Steel Group’s Third Quarter twenty twenty five Earnings Call. At this time, all participants are in listen only mode. A brief question and answer session will follow-up today’s formal presentation. As a reminder, this conference is being recorded. It’s now my pleasure to introduce Michael Maraca, Vice President, Corporate Development and Treasurer.

Sir, you may now begin.

Michael Maraca, Vice President, Corporate Development and Treasurer, Algoma Steel Group: Good morning, everyone, and welcome to Algoma Steel Group, Inc. Earnings conference call for the three and nine month periods ended 12/31/2024. Leading today’s call are Michael Garcia, our Chief Executive Officer and Rajat Marwa, our Chief Financial Officer. As a reminder, this call is being recorded and will be made available for replay later today in the Investors section of Algoma 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 law, which involve assumptions and inherit risks and uncertainties.

Actual results may differ materially from statements made today. In addition, our financial statements are prepared in accordance with IFRS accounting standards, which differs from U. S. GAAP, and our discussion today includes references to certain non GAAP financial measures. Last evening, we posted an earnings presentation to accompany today’s prepared remarks.

The slides for today’s call can be found in the Investors section of our corporate website. With that in mind, I would ask everyone on today’s call to read the legal disclaimers on Slide two of the accompanying earnings presentation and to also refer to the risks and assumptions outlined in the management discussion analysis for the three and nine month periods ended December 31. 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.

As previously reported, the company has changed its fiscal year end from March 31 to December 31, resulting in a nine month fiscal reporting period ended 12/31/2024. For ease of comparison, we will focus our comments today on the three and twelve month periods ended 12/31/2024 and 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 will now turn the call over to our Chief Executive Officer, Michael Garcia.

Mike?

Michael Garcia, Chief Executive Officer, Algoma Steel Group: Thank you, Mike, and good morning, everyone. Thank you for joining us to discuss our fourth quarter and full year calendar 2024 results. Employee safety remains our foremost priority at Algoma Steel. I’m pleased to report significant improvements in our lost time injury performance throughout 2024. With our electric arc furnace project approaching first arc and first steel expected in April, our site continues to be a hub of activity, making our safety focus more critical than ever.

Before diving into the details, I want to highlight three important themes. Our quarterly results reflect the continued challenging conditions across global steel markets, particularly due to tariff uncertainty, which led to lower realized prices during the quarter. Our balance sheet and liquidity position remains strong with over $267,000,000 in cash at quarter end and total liquidity of $630,000,000 We are well funded to complete our transformative EAF project on budget and on schedule. We are in the final stages of EAF commissioning and expect first steel production in April. Our fourth quarter results aligned with our previously disclosed guidance for both shipments and adjusted EBITDA.

These results reflect the challenging market conditions we’ve experienced, particularly in the second half of twenty twenty four. Steel pricing was affected by U. S. Election uncertainty, interest rate concerns, soft demand and tariff and trade war tensions, all of which have influenced our customers’ buying behavior. In summary, softer realized steel prices and higher cost more than offset higher shipments, leading to an overall decline in revenues as well as adjusted EBITDA and cash flow generation compared to the prior year.

Our plate shipments for calendar Q4 twenty twenty four reached approximately 82,000 tons, up from 73,000 tons in calendar Q3 twenty twenty four. Looking ahead, we expect our Q1 twenty twenty five plate production to be directionally higher as we look to capitalize on our position as Canada’s only discrete plate producer and execute a steady ramp up towards our expected annual run rate capacity of over 650,000 net tons. We are evaluating market conditions as they are changing rapidly and we are dynamically adjusting our product mix between plate and coil products where possible based on capacity and contractual obligations. This approach continues to provide mix benefits as we focus on higher margin products. Now for an update on our transformational electric arc furnace project.

Despite the harsh winter, including particularly heavy snowfall in November and December, cold commissioning activities began in the fourth calendar quarter of twenty twenty four and are progressing in the first quarter of twenty twenty five. These activities include the installation, testing and validation of critical equipment and systems to ensure operational readiness, including EAF charging cranes as well as the fume treatment plant and water treatment plant. This phased approach allows for thorough assessment and adjustments before transitioning to hot commissioning. With work advancing as planned, first steel production is expected in April 2025, marking a significant milestone in the project’s execution. We have no changes to our expected final budget and are excited to begin EAF operations in 2025.

And despite navigating challenging market conditions, we remain well positioned with our balance sheet and liquidity profile. When both furnaces are up and running, we expect to see improved operational efficiency and overall cost structure as we steadily ramp our shipping capacity to approximately 3,000,000 tons per year, matching steel production to our downstream finishing capacity. As of 12/31/2024, cumulative investment for our EAF project was at $740,000,000 including $68,000,000 during the calendar fourth quarter of twenty twenty four. All material aspects of the project have been contracted and we anticipate completing the remainder of the project including those structured as time and material agreements within 5% of the upper end of the previously announced budget range. Regarding the evolving tariff situation between The U.

S. And Canada and its potential impact on our business, the implementation of tariffs on Canadian steel and aluminum imports has introduced even more uncertainty into the North American steel market. We expect the Canadian government’s swift and appropriate response will support the industry as we weather the impact of tariffs. Given the deeply integrated North American supply chain, we believe rational dialogue will prevail between these two close allies, restoring normal steel trade between Canada and The U. S.

While we expect these tariffs to pose a significant challenge, we expect that our transition to EAF steelmaking will strengthen our cost structure and enhance our ability to navigate market uncertainties over the long term. In summary, despite very challenging market and weather conditions, we’ve maintained our focus on the safe operation of existing facilities, continued our ramp in plate production and achieved the final steps toward the first steel production at the EAS. As I’ve said before, the near term uncertainty in steel markets and uncertainty around tariffs cannot diminish our excitement for what’s happening at our site and the tremendous step forward it represents at our company and community. I’d like to once again thank all of our employees for their hard work, dedication and professionalism. Thank you.

And I will now turn the call over to Rajit for a deeper dive into our financials. Rajit?

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: Thanks, Mike. Good morning and thank you all for joining the call. As a reminder, all numbers are expressed in Canadian dollars unless otherwise noted. Our calendar fourth quarter results included adjusted EBITDA that was a loss of $60,300,000 and cash used in operating activities of $76,900,000 We finished the quarter with a strong balance sheet including $267,000,000 of cash and $362,000,000 under our revolving credit facility. Now let me dive into the key drivers of our results.

We shipped 549,000 tons in the quarter, up 6.3% versus the prior year quarter. Net sales realization averaged $9.76 per ton compared to $10.79 per ton in the prior year period. The decrease versus the prior year level reflects weakening market conditions, partially offset by improvement in value added mix as a proportion of sales. Plate pricing continued to enjoy premium relative to hot rolled coil during the quarter. This resulted in steel revenue of $536,000,000 in the quarter, down 3.8% versus the prior year period as the lower realized prices more than offset higher shipments.

On the cost side, Algoma’s cost per ton of steel products sold averaged tenthirty 2 in the quarter, very similar to the prior year period. Cash used in operations totaled $77,000,000 for the quarter compared to a use of $47,000,000 in the prior year period. Inventories at the December 2024 were $879,000,000 compared to $887,000,000 at the December 2023. Looking forward, we remain on track to release approximately $100,000,000 of working capital from March 24 to March 25. Now let me run through the full calendar year comparisons.

We shipped 2,000,000 net tons for the full year 2024 compared to 2,200,000 net tons in the prior year. Net sales realizations averaged $11.07 per tonne, down 5.6% versus the prior year, reflective of softer market conditions on average across the calendar year, partially offset by improvements in value added product mix as a proportion of steel sales. This resulted in steel revenue of $2,200,000,000 compared to $2,600,000,000 in the prior year. On the cost side, Algoma’s cost of steel products sold averaged 10.54 per ton for the year, an increase of 7.4% over the prior year. The main drivers of this increase were higher variable cost on account of greater consumption of purchased coke and lower shipment volume.

Adjusted EBITDA for the full year was 22,300,000 representing an adjusted EBITDA margin of 0.9% compared to adjusted EBITDA of $319,000,000 and an adjusted EBITDA margin of 11.2% in calendar twenty twenty three. The decrease was mainly attributable to lower shipments, lower price realization and higher cost. Cash flow from operating activities for calendar twenty twenty four was $82,000,000 compared to $269,000,000 in calendar twenty twenty three. The decrease year over year was primarily due to factors previously discussed. We remain focused on driving down working capital levels and continue to expect a release of working capital as we transition to EAF.

Also on the cash flow front, we expect to receive an advance on insurance payout related to the futility corridor and blast furnace outage a year ago with the balance of payout expected by year end. Before I turn it back to Mike, let me make a few comments on our calendar first quarter twenty twenty five results to date. Due to persistently weak market demand on account of trade uncertainty, we reduced our order book during the current quarter. Coupled with a brief unplanned outage at a blast furnace in February, we expect shipment this quarter to be sequentially lower than the fourth quarter, likely in the mid 400,000 ton range. Along with lower pricing, this is expected to result in adjusted EBITDA that is sequentially lower as compared to calendar fourth quarter twenty twenty four.

Despite the near term weakness and trade uncertainty, steel pricing has jumped the last several weeks and we expect those price improvements will start to be reflected in our results next quarter.

Michael Garcia, Chief Executive Officer, Algoma Steel Group: I’d now like to turn the call back to Michael Garcia for closing comments. Mike? Thanks, Rajit. In summary, despite very challenging market and weather conditions, we’ve maintained our focus on the safe operation of existing facilities, continued our ramp in plate production and achieved the final steps toward the on time first arc of the EAF project. 2025 represents an exciting time in the story of Algoma as we expect to commence first steel in April with a ramp in production and first arc at the second furnace coming at the end of the year.

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 green steel production in North America. As I’ve said before, the near term uncertainty in steel markets and concerns around tariffs cannot diminish our excitement for what’s happening at our site and the tremendous step forward it represents for our company and community. 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 and A session.

Conference Operator: Thank Our first question is from the line of David Ocampo with Cormark Securities. Please proceed with your questions.

David Ocampo, Analyst, Cormark Securities: Hi, thanks for taking my questions. So first one here, Rajat. Maybe you can clarify a little bit, I think quite catches on the blast furnace outage that happened in the quarter. How many weeks was it out for and what’s the expected cost of bringing that back online?

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: Yes, it was not out for a long time. It was a couple of days to a week and it was regular. It was not a significant issue that led to it. So not significant cost involved with it. It was more to do with the heavy snow, the extreme weather condition that we faced during this period, which was not expected leading to more ice and the water going into the furnace, which creates some issues.

So it was for a couple of days to a week, but no additional cost.

David Ocampo, Analyst, Cormark Securities: Okay. And then maybe just turning the page to tariffs, which I imagine will be front and center for you guys. But when we look at crude prices and think about your cost profile as a blast furnace operator, are you guys still able to generate positive EBITDA or at least breakeven EBITDA with a 25 tariff on your shipments to The U. S?

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: Yes. When you start looking at where the pricing is right now, actually it’s going to $9.50 as you see the print on CRU. It starts breaking even to a little bit money on the current cost side on the coils that go into The U. S. So your assumption is right that it’s gone higher than what we were saying.

Michael Garcia, Chief Executive Officer, Algoma Steel Group: David, this is Mike. The plate’s also gone up even more than coil. I think since inauguration date, both products are up 30% to 35%.

David Ocampo, Analyst, Cormark Securities: Got you. And then that’s for at least for the index that we’re seeing for crude prices and maybe that pertains more to The U. S. But I’m curious what you guys are seeing for Canadian sheet prices, especially given that there could be a potential oversupply with Klipsch moving some of the Stelkos shipments down to The U. S.

To avoid those tariffs?

Michael Garcia, Chief Executive Officer, Algoma Steel Group: Yes. So David, you’re right. The Canadian market has shown different dynamics than The U. S. Market in the last couple of months.

It’s, I would say, oversupplied with coil right now and undersupplied with plate. So the announcements by Canada yesterday putting a tariff on U. S. Steel will help. There’s about 3,500,000 tons of U.

S. Steel in the Canadian market over the last twelve months. So that’s an opportunity for both coil, but more so even plate to start moving up in price in the Canadian market.

David Ocampo, Analyst, Cormark Securities: I guess if you had a crystal ball, like how much of a discount do you think Canadian sheet prices will be versus the crude index once those tariffs do come into place? I know it’s a bit of a tougher question to answer, but perhaps you can provide some color there.

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: When you leaving the dynamics on products and customers and preferences, if you simply look at the math, if Canada is oversupplied and there is 25% tariff, so you will at least see closer to the 25% variation in the price in U. S. Versus Canada because there’s more sheet available in Canada versus the demand. So that’s a simple math when you look at it and that does not include dynamics around specific type of hot rolled or little value add preference customer wise and other things. So it will range from, let’s say, 20% to 25%, maybe 28%.

But again, just a guess, nobody knows how the market will settle. But logically, that’s where the math that’s how the math works.

David Ocampo, Analyst, Cormark Securities: Okay. I’ll hop back in the queue. I’ll let people ask some questions first.

Michael Garcia, Chief Executive Officer, Algoma Steel Group: Thanks David. Thanks.

Conference Operator: Our next question is from the line of Katya Jancyk with BMO Capital Markets. Please proceed with your question.

Katya Jancyk, Analyst, BMO Capital Markets: Hi. Thank you for taking my questions. Maybe staying on the tariffs. If these tariffs stick and you just mentioned at $9.50 crew price, you’re essentially breaking even. Are you thinking of taking any mitigating effects like for example, are you looking at potentially lowering costs?

Is there anything you can actually do at this point to mitigate what’s going on?

Michael Garcia, Chief Executive Officer, Algoma Steel Group: Hi, Katya. This is Mike. Obviously, lowering cost is always our focus and with the being a couple of weeks away from EAF production, That is the biggest lever that we have to lower cost as a company and as we ramp up that EAF production and eventually decommission our blast furnace and coke ovens that will reset our cost basis significantly. With that being said, we’ve been pursuing an aggressive cost reduction plan for really several months now even before tariffs were the threat that they are now. And we’ve realized gains, there’s more cost savings initiatives to that we’re pursuing.

So that’s kind of an ongoing thing at all costs or at all times, I would say.

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: And just on the numbers, the numbers keep changing so quickly from the market perspective and how they will stick in the market is yet to be seen. But when you start doing the math, our cost is, as I’ve said, is around $6.50 for a hot rolled coil full in and U. S. And we’ve been working on lot of cost reduction, but assuming that where it is, I mean the math is easy to do on what it will cost us or how much money we’ll make on what pricing. And that’s only for the sheet side without value add and without plate.

Katya Jancyk, Analyst, BMO Capital Markets: Just to clarify, you said $6.50 is the all in cost for HRC right now for HE? Correct. Yes, HRC. And then maybe just on the insurance comment, can you remind us how much you’re expecting to get in and maybe more specifically what the timing of that is?

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: Sure. So we do expect around $100,000,000 to come in. We are working on some advance over the next month or so. And thereafter, we expect everything to get settled during this calendar year.

Katya Jancyk, Analyst, BMO Capital Markets: And how much of the $100,000,000 is in the next month or near term?

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: Anywhere from $20,000,000 to $25,000,000.

Katya Jancyk, Analyst, BMO Capital Markets: And then I think Rajat, you mentioned before on the working capital release. Can you just remind us how much and the timing?

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: Sure. So we will see $100,000,000 working capital release in this quarter, which is what I’ve mentioned in the past when we were fiscal year expecting $100,000,000 to come by March 2025 and we’ll see that reduction. And continuing on that path, we’ll see more reduction coming as we transition to EAF as the stock of iron ore and coal and coke comes down and we put scrap in. But that probably will come over this year and next, most of it coming in the next year.

Katya Jancyk, Analyst, BMO Capital Markets: And the tariffs do not change the $100,000,000 that you’re expecting to release in this quarter? No. Okay. I’ll hop back into the queue. Thank you.

Thanks.

Michael Garcia, Chief Executive Officer, Algoma Steel Group: Thank you. Got you.

Conference Operator: Our next question is from the line of Ian Gillies with Stifel. Please proceed with your questions.

Ian Gillies, Analyst, Stifel: Good morning, everyone.

Michael Garcia, Chief Executive Officer, Algoma Steel Group: Good morning.

Ian Gillies, Analyst, Stifel: Just a clarifying comment, you mentioned breakeven at 09:50 CRU. Is that on a consolidated sales basis or is that only on The U. S. Related sales?

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: So I did say and I just want to clarify that, that at 09:50, you do the math, our cost is $6.50, so we’ll make some money. It’s not just breakeven. And the breakeven probably is lower than that when you look at 25% tariff. So that’s just to clarify and the cost will be $6.50 for us for hot rolled coil U. S.

And plate definitely the cost will be higher, but the pricing is substantially higher.

Ian Gillies, Analyst, Stifel: Understood.

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: Does that clarify?

Ian Gillies, Analyst, Stifel: Yes, that’s helpful. Thank you. As it pertains to toggling between HRC and plate, can you maybe talk a

David Ocampo, Analyst, Cormark Securities: little bit about where you

Ian Gillies, Analyst, Stifel: think you could get plate production to this year in the event that tariffs happen for the entirety of the year? And how you can go about toggling like really toggling that piece just because there’s been a bit of push and pull the last year on what you thought you might actually produce in calendar year 2025?

Michael Garcia, Chief Executive Officer, Algoma Steel Group: Sure, Ian. So we shipped 82,000 tons of plate last quarter. I think you’ll see a directionally higher ramp up in plate in the quarters to come. Our next kind of intermediate goal for plate is reaching the 40,000 ton per month level. I think that we’re very confident of that.

It takes a combination of and you get this typical debate in a steel company is, do we have to have the operations and demonstrate a capability first or do we have to have the sales first? And the ops guy will say, well, we had the sales, I’d be there. And the sales guy would be, well, if we had what the customer wants, we would be there. So I think you actually need both almost simultaneously. You have to demonstrate the delivery performance, the quality and the reliability as a supplier to the customer at the same time that you kind of need sales to put in front of your mill to ramp up.

We feel very confident about getting to this next intermediate step of 40,000 tons and then going beyond that as the year progresses. The plate market in Canada is rapidly changing. We’re the only discrete plate producer in Canada. But even with that being said, it’s and it’s not a humongously large market, but in the last twelve months, there was more U. S.

Sold plate in the Canadian market than Algoma sold plate. So that gives us a great opportunity with the tariffs that the announced that the Canadian government announced yesterday to go out and capture more market share and more plate sales in Canada. We’ve already in the last twenty four hours had discussions with plate buyers in Edmonton and with the folks in the supply chain for the two Canadian icebreaker ships that were announced. We’ve made lots of marine plate in Algoma’s history. We’ve made armor plate.

So to the extent that the defense spending and shipbuilding starts to ramp up in the Canadian market, we see that as a great opportunity, especially if the government implements by Canadian requirements for that build. So I think that’s how we see the plate ramp up here at the company. Again, it’s a really important opportunity for us and we’re focused on it, especially during this uncertain time of tariffs.

Ian Gillies, Analyst, Stifel: Understood. That’s helpful. There’s been a lot of commentary in and around the Canadian government supporting the steel industry. I’m just curious as to whether it becomes something more than just retaliatory tariffs, and whether you think something more along the lines of government loans or government grants may become available, not just to Algoma, to the broader steel industry, and whether that would be something you’re amenable to?

Michael Garcia, Chief Executive Officer, Algoma Steel Group: Yes. I mean, I’ve seen the same public company public comments that you’ve seen about support for the industries affected, vocal support that we’re going to protect Canadian workers, we’ll have their I’m trying to channel my inner Doug Ford here. But we’ve seen the same comments and I can tell you that we have already engaged in one on one discussions with government officials at both the provincial and the federal level on exactly what that means and what mechanism or what form that pledge of support might take. So there’s nothing I can disclose now, but those discussions are ongoing.

Ian Gillies, Analyst, Stifel: Understood. Last one for me. In the event tariffs get worse from here and they move higher and you think about the operating platform for the business or the operating parameters, do you continually continue running the furnace at close to or near to 100% utilization just to keep it full and so on and so forth and stockpile inventory? Or do you try and reduce throughput and manage your sales volumes that way?

Michael Garcia, Chief Executive Officer, Algoma Steel Group: Well, I mean, as you know, Ian, when you’re running a blast, it’s very difficult to model a better financial result with a blast furnace that you aren’t running at full capacity utilization. So that’s what we’re dealing with at least for the next twelve to eighteen months while we ramp up the EAF. So then your question was about inventory. It’s difficult to just build a stock of coil inventory without a customer because there isn’t great amounts of standard spec hot rolled coil that you can just put on the ground and have a high degree of comfort that you’re going to sell that coil easily in the spot market or with customers. With plate, we’re certainly going to take the opportunity because plate is so important to us this year.

We need to rebuild our plate slab stock a little bit. We do have a plate stocking program that where we put plate in stock, finished plate without customers assigned yet and we sell out of that. So we’ll make sure that both the inventory levels in those two items are where they need to be to support the opportunities on the plate side of our business. But in general, we’re not going to put thousands of tons of coil on the ground in the hope that the tariffs go down and we can then start shipping coils into The U. S.

To customers that we have or would go acquire. Does that help? Understood.

Ian Gillies, Analyst, Stifel: Yes, I know that helps. And last one for me and likely at the margin, but just curious whether you anticipate receiving any carbon tax rebates in 2025?

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: Ian, we are expecting the first payment, which was probably around $7,000,000 7 point 5 million dollars for surely to come. And the second one is in is under discussion. So we’ll see how it goes through, but we are expecting $7,000,000 to $7,500,000 to come this year.

Ian Gillies, Analyst, Stifel: Understood. Thank you very much. I’ll turn the call back over.

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: Thanks, Ian.

Conference Operator: Our next questions are from a follow-up from the line of David Ocampo with Cormark Securities. Please proceed with your questions.

David Ocampo, Analyst, Cormark Securities: Thanks. I just wanted to circle back on my previous question about Canadian discount prices that’s happening in the market. But more specifically that you guys have a pretty large contracted order book and I think that’s all based on crew prices. So are your customers or Canadian customers giving any pushback if spot prices in Canada are at at a 20% to 25% discount roll to the crew?

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: So David, most of the contracts that we have are in U. S, very little in Canada. Canadian market mostly works on spot and that’s why you’re seeing this kind of anomaly also happening in Canada. So Canadian pricing are lower and most of it is spot. The U.

S. Guys are in contract and it goes through CRU.

David Ocampo, Analyst, Cormark Securities: Okay. And then just last one, just on the EAF ramp, first production expected in April, but I was hoping you guys could provide a little bit more color on how much production you guys can expect on a quarter by quarter basis until you’re fully ramped in twelve months?

Michael Garcia, Chief Executive Officer, Algoma Steel Group: Sure. So our plan for the full year, the remaining,

David Ocampo, Analyst, Cormark Securities: I guess,

Michael Garcia, Chief Executive Officer, Algoma Steel Group: nine months is around just over 200,000 tons of EAF production. The majority of that will be on EAF, the first EAF that we’re starting up in a couple of weeks. And it will be a pretty relatively steep ramp on the towards the back half of the year. We want to be making our first EAF steel. The plan is in April as we shared, there won’t be significant amounts of steel produced in the second calendar quarter, but then there’ll be more in the third and I would say much more in the fourth, if that helps.

David Ocampo, Analyst, Cormark Securities: Okay. And then Rajat, you think the $650,000,000 breakeven that’s on a combined basis between the EAF and blast furnace or is that one or the other?

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: No, that’s this year on the blast furnace. EF will be as I mentioned, we have most of the fixed costs on the EF barring some. So the additional tonnage that’s coming from the EF will give contribution because most of the fixed costs is there. So that will be scrap and other variable cost electrodes and others and less the selling price. So it will be on contribution.

Once it’s done, as we said, EF will be scrap plus $2.20 for us, 200 to 2 20 US for us for full conversion and that’s how it will play out.

David Ocampo, Analyst, Cormark Securities: Okay. That’s perfect. That’s all for me. Thank you.

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: Thanks, David.

Conference Operator: Our next questions are a follow-up from the line of Katya Janesik with BMO Capital Markets. Please proceed with your questions.

Katya Jancyk, Analyst, BMO Capital Markets: Hi. Thank you for taking my question again. On the volume for this year, so if we have 200,000 tons from the EIF, how to think about in the first Q, you already said mid 400,000. How to think about the volume in the rest of the year from the blast furnace overall? And then also how to think about the split between plate and HRC given that maybe there’s a little more opportunity on the plate side?

Rajat Marwa, Chief Financial Officer, Algoma Steel Group: Correct. So it will be anywhere from 2,000,000 to 2,200,000 tons in the total. I mean, you can take 2.1 to 2.2 just to narrow the range from overall shipment for the calendar year. And on the plate side, we will see higher shipment for sure that it will probably average around 35 or for the balance of the year 35,000 or 1,000 tons a month to 40,000 tons a month. So that will be our shipment on the plate side and overall two point one to two point two.

Katya Jancyk, Analyst, BMO Capital Markets: Okay. Thank you.

Conference Operator: Thank you. At this time, I’d like to turn the floor back to Michael Maraca for closing remarks.

Michael Maraca, Vice President, Corporate Development and Treasurer, Algoma Steel Group: Thank you again for your participation in our calendar fourth quarter twenty twenty four 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 calendar first quarter results later this spring. Thank you.

Conference Operator: This does conclude today’s conference. You may disconnect your lines at this time. We thank you for your participation and have a wonderful day.

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