Algoma Steel Group Inc (ASTL) 2025 Q1 法說會逐字稿

Greetings, and welcome to the Algoma Steel Group fiscal first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. (Operator Instructions)

您好，歡迎參加阿爾戈馬鋼鐵集團 2025 年第一季財報電話會議。此時，所有參與者都處於只聽模式。（操作員說明）

I would now like to turn the call over to Michael Moraca, Vice President, Corporate Development and Treasurer. Thank you, Michael. You may begin.

我現在想將電話轉給企業發展副總裁兼財務主管 Michael Moraca。謝謝你，麥可。你可以開始了。

Good morning, everyone, and welcome to Algoma Steel Group Inc.'s first quarter fiscal 2025 earnings conference call. Leading today's call are Michael Garcia, our Chief Executive Officer; and Rajat Marwah, our Chief Financial Officer. As a reminder, this call is being recorded and will be made available for replay later today in the Investors section of Algoma Steel's website.

大家早安，歡迎參加阿爾戈馬鋼鐵集團公司 2025 財年第一季財報電話會議。今天的電話會議由我們的執行長 Michael Garcia 主持；以及我們的財務長 Rajat Marwah。謹此提醒，本次電話會議正在錄音，並將於今天稍晚在阿爾戈馬鋼鐵公司網站的投資者部分重播。

I would like to remind you that comments made on today's call may contain forward-looking statements within the meanings 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 US GAAP, and our discussion today includes references to certain non-IFRS financial measures. Last evening, we posted an earnings presentation to accompany today's prepared remarks. The slides for today's call can be found in the Investors section of our corporate website.

我想提醒您，今天的電話會議發表的評論可能包含適用證券法含義內的前瞻性陳述，其中涉及假設以及固有的風險和不確定性。實際結果可能與今天的聲明有重大差異。此外，我們的財務報表是根據國際財務報告準則（IFRS）編制的，這與美國公認會計原則（US GAAP）不同，我們今天的討論包括引用某些非國際財務報告準則的財務指標。昨晚，我們發布了一份收益報告，以配合今天準備好的演講。今天電話會議的幻燈片可以在我們公司網站的投資者部分找到。

With that in mind, I would ask everyone on today's call to read the legal disclaimers on slide 2 of the accompanying earnings presentation and also to refer to the risks and assumptions outlined in Algoma Steel's first quarter fiscal 2025 management's discussion and analysis. Please note that our financial statements are prepared using the US dollar as our functional currency and the Canadian dollar as our presentation currency.

考慮到這一點，我要求參加今天電話會議的所有人閱讀隨附收益演示文稿第二張幻燈片上的法律免責聲明，並參考阿爾戈馬鋼鐵公司2025 財年第一季管理層的討論和分析中概述的風險和假設。請注意，我們的財務報表是使用美元作為我們的功能貨幣和加幣作為我們的列報貨幣來編制的。

Our fiscal year runs from April 1 to March 31, and our financial statements have been prepared for the quarters ended June 30, 2024 and June 30, 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.

我們的財政年度從4月1日到3月31日，我們的財務報表已編製截至2024年6月30日和2023年6月30日的季度。請注意，除非另有說明，今天電話會議中提到的所有金額均以加幣為單位。在我們準備好的發言之後，我們將進行問答環節。

I will now turn over the call to our Chief Executive Officer, Michael Garcia. Mike?

我現在將把電話轉給我們的執行長邁克爾·加西亞。麥克風？

Thank you, Mike. Good morning and thank you for joining us to discuss our fiscal first quarter 2025 results.

謝謝你，麥克。早安，感謝您與我們一起討論 2025 年第一財季的業績。

Ensuring the safety of our employees remains a core value and top priority for our company. This unwavering commitment led to significant improvements in our lost time injury performance during fiscal 2024, with continued focus into the current fiscal year. Our focus on safety is more crucial than ever, as our site continues to be a hub of activity with the EAF project advancing. This dedication is further emphasized in Algoma's second annual ESG report released this past Monday, which delves into a wide range of topics across the spectrum of environmental, social and governance in greater detail. The report highlights our ongoing efforts not only in maintaining safety standards, but also in advancing our broader ESG commitments, reinforcing our role as a leader in sustainable and responsible business practices.

確保員工的安全仍然是我們公司的核心價值和首要任務。這項堅定不移的承諾使我們在 2024 財年的誤工工傷績效方面取得了顯著改善，並將繼續關注本財年。我們對安全的關注比以往任何時候都更加重要，因為隨著 EAF 專案的推進，我們的工廠仍然是活動中心。Algoma 於上週一發布的第二份年度 ESG 報告進一步強調了這種奉獻精神，該報告更詳細地探討了環境、社會和治理領域的廣泛主題。該報告強調了我們不僅在維護安全標準方面不斷做出的努力，而且還在推動我們更廣泛的 ESG 承諾，加強我們作為可持續和負責任的商業實踐領導者的角色。

Next, I'll cover the key events and milestones during our fiscal first quarter as, well as give an update on the progress at our transformative EAF project. I will then turn the call over to Rajat for a deeper dive into the numbers and a discussion of our strong liquidity and balance sheet, before closing with an update on market conditions.

接下來，我將介紹第一財季的關鍵事件和里程碑，並介紹我們變革性 EAF 專案的最新進展。然後，我會將電話轉給拉賈特，以更深入地了解這些數據，並討論我們強大的流動性和資產負債表，最後介紹市場狀況的最新情況。

There are a few important themes I would like to get across on this call. First, our results for the quarter reflected overall conditions in steel markets, resulting in lower volumes and realized prices. Shipment volumes were also softer, reflecting the planned outage at our plate and strip facility in April. We prioritized plate production coming out of the outage and expect that we will continue to ramp up volumes over the next several quarters.

我想在這次電話會議上傳達一些重要的主題。首先，我們本季的業績反映了鋼鐵市場的整體狀況，導致產量和實際價格下降。出貨量也較疲軟，反映出我們的板材和帶材工廠計劃在 4 月停產。我們優先考慮停電後的板材生產，並預計我們將在未來幾季繼續增加產量。

Second, our balance sheet and liquidity are strong, having been bolstered by our USD350 million notes offering in April, leaving us with cash at quarter end of almost $500 million and total liquidity of over $800 million. We are well funded to complete our EAF project. And finally, the EAF project is approaching a truly exciting milestone, nearing the planned beginning of commissioning of Unit 1 in our calendar fourth quarter. Every day that goes by derisks the project and brings us another step closer to being one of the greenest producers of steel in North America.

其次，我們的資產負債表和流動性強勁，得益於我們 4 月發行的 3.5 億美元票據，季末我們的現金接近 5 億美元，總流動性超過 8 億美元。我們有充足的資金來完成我們的 EAF 專案。最後，EAF 專案正在接近一個真正令人興奮的里程碑，即將按計劃在第四季度開始調試 1 號機組。每一天的過去，該項目的風險都在降低，我們離成為北美最環保的鋼鐵生產商之一又近了一步。

Now let me give you some additional color on those key themes. Our results for fiscal first quarter of 2025 were in line with our previously disclosed guidance for both shipments and adjusted EBITDA. They reflected a continuation of the challenging market conditions we have seen this year in steel pricing. We are laser-focused on ensuring the safe operation of our existing legacy facilities, some of which are over 70 years old, as we make the transition to EAF steelmaking. All told, the combination of lower shipments and softer realized steel prices led to an overall decline in revenues, adjusted EBITDA and cash flow generation versus the prior year period.

現在讓我對這些關鍵主題進行一些補充說明。我們 2025 財年第一季的業績符合我們先前揭露的出貨量和調整後 EBITDA 的指引。它們反映出我們今年在鋼鐵定價方面所看到的充滿挑戰的市場狀況仍在繼續。在向電弧爐煉鋼過渡時，我們高度重視確保現有遺留設施的安全運行，其中一些設施已有 70 多年的歷史。總而言之，出貨量下降和鋼價疲軟共同導致收入、調整後 EBITDA 和現金流量與去年同期相比整體下降。

As discussed on our last call, during the quarter, we successfully completed substantially all of the remaining upgrades related to the modernization of our plate mill. This upgrade involved installing new equipment across the facility that has enhanced product quality and is resulting in a steady ramp to higher plate shipments. Despite the facility being off-line for three weeks, our plate shipments in the first fiscal quarter of 2025 were approximately 61,000 tons. The second phase of our 2-part plate mill modernization project originally called for a final multi-week outage later this year.

正如我們上次電話會議中所討論的，在本季度，我們基本上成功完成了與中厚板廠現代化相關的所有剩餘升級。此次升級涉及在整個工廠安裝新設備，提高了產品質量，並導致板材出貨量穩定上升。儘管該設施已離線三週，但我們 2025 年第一財季的中厚板出貨量約為 61,000 噸。我們的中板軋機現代化計畫的第二階段最初要求在今年稍後進行為期數週的最終停電。

However, our team was able to accelerate additional work during this outage, so that the vast majority of the modernization project at the facility is now substantially complete. We expect any remaining items to be addressed with other planned maintenance activities over the coming year. We expect our fiscal second quarter plate production to be close to 90,000 tons as we execute a steady ramp over the balance of the fiscal year towards our expected annual run rate capacity of over 650,000 net tons.

然而，我們的團隊能夠在這次停電期間加快額外的工作，因此該設施的絕大多數現代化項目現已基本完成。我們預計任何剩餘的問題將在來年透過其他計劃的維護活動得到解決。我們預計第二財季中厚板產量將接近 90,000 噸，因為我們將在本財年剩餘時間內穩步提升，以實現超過 650,000 淨噸的預期年產能。

With our previously announced exit from the wide coil market during our 2025 fiscal year, we will be in position to prioritize plate production and sales, taking advantages of our position as Canada's only discrete producer of plate products. This should result in a more favorable product mix that is expected to drive meaningful margin enhancement.

隨著我們先前宣佈在 2025 財年退出寬幅捲材市場，我們將能夠利用我們作為加拿大唯一的離散板材產品生產商的地位，優先考慮板材的生產和銷售。這應該會帶來更有利的產品組合，預計將推動利潤率大幅提高。

With the maintenance outages on the blast furnace and the plate mill upgrade complete, our operations are running normally, and we continue to expect solid production levels in the second half of calendar 2024. In April, we completed a USD350 million note offering which bolstered our liquidity position substantially as we enter the home stretch of our EAF project construction.

隨著高爐維護停運和中厚板軋機升級完成，我們的運作正常運行，我們繼續預計 2024 年下半年的生產水準將保持穩定。4 月份，我們完成了 3.5 億美元票據發行，在我們進入 EAF 項目建設的衝刺階段時，大大增強了我們的流動性狀況。

Cash on hand at quarter end was almost $0.5 billion. And when combined with our undrawn credit facility, gives us great flexibility and security to execute our strategic growth strategy.

季末手頭現金接近 5 億美元。與我們未提取的信貸額度相結合，為我們執行策略成長策略提供了極大的靈活性和安全性。

Now, let me give you an update on our progress during the quarter on our electric arc furnace project. This is a truly exciting time in Sault Ste. Marie as we continue to see the skyline change at the site of the EAF, with the exterior sheeting closing the building in anticipation of commissioning activities commencing by the end of this year. With EAF steel production expected by the end of the calendar first quarter of next year, we will begin to ramp towards a shipping capacity of approximately 3 million tons per year.

現在，讓我向您介紹本季電弧爐專案的最新進展。這是蘇聖瑪麗真正激動人心的時刻。瑪麗，我們繼續看到 EAF 現場天際線的變化，外部板材封閉了建築物，預計今年年底將開始調試活動。預計明年第一季末電爐鋼產量將達到每年約 300 萬噸的運輸能力。

During the quarter, cumulative investment in the EAF project reached $611 million. To date, we have committed contracts totaling approximately $850 million, with over 90% tied to fixed price contracts. Progress to date on both the construction of the project and the contracted portion of work yet to be completed has significantly derisked the project budget. We expect that all remaining contracted work will be settled during the current quarter. As a reminder, our start-up plan continues to include normal production from our existing steelmaking facility, while ramping up steel production from our EAF in calendar 2025, followed by a complete switch to EAF production.

本季，EAF項目累計投資達6.11億美元。迄今為止，我們已承諾的合約總額約為 8.5 億美元，其中 90% 以上與固定價格合約相關。迄今為止，專案建設和尚未完成的合約部分工作的進展已大大降低了專案預算的風險。我們預計所有剩餘的合約工作將在本季完成。謹此提醒，我們的啟動計畫繼續包括現有煉鋼設施的正常生產，同時在 2025 年提高電弧爐的鋼鐵產量，然後完全轉向電爐生產。

In summary, in very tough market conditions, we focused on what was within our control in the quarter, operating our existing facilities, safely completing the important upgrades at our plate mill and advancing the EAF project on schedule and on budget. Near-term pricing weakness can't dampen our excitement for what's happening at our company and the huge step forward it represents for Algoma Steel and our community. I'd like to once again thank all our employees for their hard work, dedication and professionalism.

總而言之，在非常嚴峻的市場條件下，我們在本季度專注於我們控制範圍內的事情，運營我們的現有設施，安全地完成中厚板廠的重要升級，並按計劃和預算推進 EAF 項目。近期的定價疲軟並不能削弱我們對公司所發生的事情以及它代表阿爾戈馬鋼鐵公司和我們社區向前邁出的巨大一步的興奮。我要再次感謝我們所有員工的辛勤工作、奉獻精神和專業精神。

Now, I will pass the call over to Rajat to go over our financial results for the quarter. Rajat?

現在，我將把電話轉給拉賈特，以審查我們本季的財務表現。拉賈特？

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.

謝謝，麥克。早安，感謝大家加入通話。提醒一下，除非另有說明，所有數字均以加幣表示。

Our first quarter results included adjusted EBITDA of $37.7 million, which reflects an adjusted EBITDA margin of 5.8% and cash generated from operating activities of $12.5 million. We finished the quarter with a strong balance sheet, including $493 million of cash and availability of $351 million under our revolving credit facility.

我們第一季的業績包括調整後 EBITDA 3,770 萬美元，反映出調整後 EBITDA 利潤率為 5.8%，經營活動產生的現金為 1,250 萬美元。本季結束時，我們的資產負債表強勁，其中包括 4.93 億美元的現金以及循環信貸額度下的 3.51 億美元的可用資金。

Now let me dive into the key drivers of our performance. Steel revenue of $597 million in the quarter, down 20.8% versus the prior-year period. We shipped 503,000 net tons in the quarter, down 11.6% versus the prior year quarter. The decrease in shipments was largely attributable to the planned maintenance outage at our plate and strip facility as we work to complete the final stages of our plate mill modernization project.

現在讓我深入探討我們績效的關鍵驅動因素。本季鋼鐵收入為 5.97 億美元，比去年同期下降 20.8%。本季我們淨出貨量為 503,000 噸，比去年同期下降 11.6%。發貨量減少主要是由於我們努力完成中厚板軋機現代化項目的最後階段，因此我們的中厚板和帶鋼工廠計劃進行維護停機。

Net sales realization averaged $11.87 per ton, down 10.4% versus the prior-year period. The decrease versus the prior year level reflects weaker market conditions, partially offset by improvement in our value-added product mix as a proportion of steel sales. On the cost side, Algoma's cost per ton of steel products sold averaged $10.69 in the quarter, up 12.5% versus the prior year period. The main drivers of the increase versus the prior year period include lower volume, the cost of replacing internally produced coke with purchased coke and higher natural gas.

淨銷售額平均實現每噸 11.87 美元，比去年同期下降 10.4%。與去年水準相比的下降反映了市場狀況的疲軟，但我們的增值產品組合佔鋼鐵銷售比例的改善部分抵消了這一影響。成本方面，阿爾戈瑪本季每噸鋼材銷售成本平均為10.69美元，比去年同期成長12.5%。與去年同期相比，成長的主要驅動因素包括產量減少、以外購焦炭取代內部生產焦炭的成本以及天然氣價格上漲。

Cash flow from operations totaled $12.5 million for the quarter, as compared to $163.9 million in the prior-year period. The main drivers of the decrease in cash flow in the quarter was lower operating income. Inventories at the quarter end were $800 million, down modestly from $808 million at the end of the 2024 fiscal year. We remain focused on driving down working capital levels and continue to expect a release of at least $100 million in fiscal 2025.

本季營運現金流總計 1,250 萬美元，而去年同期為 1.639 億美元。本季現金流減少的主要原因是營業收入下降。本季末的庫存為 8 億美元，略低於 2024 財年末的 8.08 億美元。我們仍致力於降低營運資本水平，並繼續預期 2025 財年釋放至少 1 億美元。

Next, I'll remind you of the financing activity we completed in early April. Our wholly owned subsidiary, ASI, issued and aggregated USD350 million of 9.125% senior secured second lien notes due April 2029. This move enhanced the strength and flexibility of our balance sheet and reflects the positive view that credit investors have of our company and their confidence in our strategic direction and financial stability. All told, the company had cash of $493 million and unused availability under the revolving credit facility of $351 million, representing approximately $845 million of liquidity plus approximately $45 million available on our Strategic Innovation Fund loan supporting the EAF project.

接下來我要來跟大家介紹我們四月初完成的融資活動。我們的全資子公司 ASI 發行了總額為 3.5 億美元、利率為 9.125% 的優先有擔保第二留置權票據，將於 2029 年 4 月到期。此舉增強了我們資產負債表的實力和靈活性，反映了信貸投資者對我們公司的正面看法以及他們對我們的策略方向和財務穩定性的信心。總而言之，該公司擁有 4.93 億美元現金和 3.51 億美元循環信貸額度下未使用的可用資金，相當於約 8.45 億美元的流動資金加上我們支持 EAF 項目的戰略創新基金貸款的約 4500 萬美元。

One additional note on the insurance recovery related to the coke-making corridor collapse in January. We continue to work closely with our insurance providers and adjusters as they complete their assessments. While claims of this nature require a detailed adjudication process, we have made progress on the property damage component and expect to receive an advanced payment of $25 million in the current quarter as we work through the balance of both the business interruption and property damage claim.

關於 1 月煉焦走廊崩潰相關的保險賠償的補充說明。當我們的保險提供者和理賠員完成評估時，我們將繼續與他們密切合作。雖然這種性質的索賠需要詳細的裁決程序，但我們在財產損失部分已經取得了進展，並預計在本季度收到2500 萬美元的預付款，因為我們正在處理業務中斷和財產損失索賠的平衡問題。

Now, I'll turn the call back to Mike Garcia, our CEO, for closing remarks.

現在，我將把電話轉回給我們的執行長 Mike Garcia，讓其致閉幕詞。

Thanks, Rajat.

謝謝，拉賈特。

Looking at the state of the North American steel market, prices have generally weakened through the spring and into the summer. While prices have shown signs of stabilizing somewhat since late July, we do expect that these prices will generate headwinds on earnings performance over the near term. Softer market conditions in the last few months reflect ample spot supply, short lead times, economic uncertainty and cautious buying during the typically slower summer buying season. As we wait for these headwinds to abate, we will continue to focus on what we can control: operating our facilities safely and positioning ourselves to best capture market opportunities as they arise.

從北美鋼鐵市場的狀況來看，從春季到夏季，價格普遍走軟。雖然自 7 月底以來價格已顯示出一定程度的穩定跡象，但我們確實預計這些價格將在短期內對獲利表現產生不利影響。過去幾個月市場狀況疲軟，反映出出現貨供應充足、交貨時間短、經濟不確定性以及夏季採購季通常較慢的採購謹慎。在等待這些不利因素消退的過程中，我們將繼續專注於我們可以控制的事情：安全地運作我們的設施，並在市場機會出現時最好地抓住市場機會。

We have been on this journey to bring electric arc furnace steelmaking to Sault Ste. Marie for close to five years. Our entire company is energized as we approach this major milestone. In the months ahead, we will continue to relentlessly focus on the safe operation of our existing facilities while executing the commissioning of our transformative EAF project. Our strategic vision in undertaking this endeavor is expected to unlock significant shareholder value, while delivering some of the greenest steel in North America.

我們一直致力於將電弧爐煉鋼帶到蘇聖瑪麗。瑪麗已經近五年了。當我們接近這一重要里程碑時，我們整個公司都充滿活力。未來幾個月，我們將繼續堅持不懈地關注現有設施的安全運營，同時執行變革性電弧爐專案的調試。我們在進行這項工作時的策略願景預計將釋放巨大的股東價值，同時提供北美一些最環保的鋼鐵。

Thank you very much for your continued interest in Algoma Steel. At this point, we would be happy to take your questions. Operator, please give the instructions for the Q&A session.

非常感謝您對阿爾戈馬鋼鐵公司的持續關注。此時，我們很樂意回答您的問題。接線員，請給予問答環節的說明。

(Operator Instructions) David Ocampo, Cormark Securities.

（操作員指示）David Ocampo，Cormark 證券。

Thanks for taking my questions. Maybe first one here for Rajat. We're getting closer to the EAF coming online. I was wondering if you could help us understand the duplicate costs that you guys will incur during hybrid phase? And then the second part of the question is what do unit economics look like once we're a full EAF operator? Is that scrap plus $200 to $220 of conversion cost? I think that's a number you've alluded to in the past. So, just hoping that you could refresh us on those metrics.

感謝您回答我的問題。也許是拉賈特的第一個。我們離 EAF 上線越來越近了。我想知道您是否可以幫助我們了解您在混合階段將產生的重複成本？問題的第二部分是，一旦我們成為完整的電弧爐營運商，單位經濟效益會是什麼樣子？該廢品是否加上 200 至 220 美元的轉換成本？我認為這是您過去提到過的數字。所以，只是希望您能讓我們了解這些指標。

Sure, David, and thanks for the question. So, as we transition through the EAF, the major cost change that will happen while we are running in the transformative mode is the labor cost from a fixed cost perspective. And then the difference between purchasing scrap or producing (technical difficulty) internally. The way we see it is that next year when we start producing from both the furnaces, which is the blast is running at their current capacity and EAF adding tons as we ramp up, our cost on a per ton basis will come down because there will be more volume.

當然，大衛，謝謝你的提問。因此，當我們透過漁業生態系統轉型時，我們在轉型模式下運作時將發生的主要成本變化是從固定成本角度來看的勞動成本。然後是購買廢品和內部生產（技術難度）之間的區別。我們的看法是，明年當我們開始從兩台熔爐生產時，即高爐以目前的產能運行，電弧爐隨著我們的產能增加而增加噸數，我們的每噸成本將會下降，因為音量更大。

But on absolute terms, the cost will be -- on a fixed basis will be very similar. Variable will vary based on some of the index contracts that we have in scrap purchase. But on a fixed cost basis, it will be very similar to what we have right now because the number of people that we need to run the furnace is already in the current cost that you're seeing there here, they're getting trained, they are writing SOPs and so on and so forth.

但從絕對值來看，在固定基礎上的成本將非常相似。變數將根據我們在廢品採購中擁有的一些指數合約而有所不同。但在固定成本的基礎上，它將與我們現在的情況非常相似，因為我們運行熔爐所需的人員數量已經包含在您在這裡看到的當前成本中，他們正在接受培訓，他們正在編寫標準操作程序（SOP）等等。

So, our cost will -- on a per ton basis, will come down as we start producing more and shipping more during the transformative period. And when we get to the stage where we shut down the blast furnace and get into only electric arc furnace, there will be substantial savings on the fixed cost side as people will go out to match with the operational capabilities. We will look at scrap plus $200 to $220 in the very similar range, as I mentioned earlier, from a full cost perspective.

因此，隨著我們在轉型期間開始生產更多和運輸更多，我們的每噸成本將會下降。當我們進入關閉高爐並只進入電弧爐的階段時，固定成本方面將節省大量資金，因為人們將出去與營運能力相匹配。正如我之前提到的，我們將從完全成本的角度考慮廢鋼加上 200 美元到 220 美元的非常相似的範圍。

Okay. And I think if we're thinking about the reduction in headcount, I think it was close to 1,000 employees, if I'm not mistaken. Can you update us on how that's going to be achieved? Or is there going to be sizable transition costs as it relates to reducing headcount?

好的。我認為，如果我們考慮裁員的話，如果我沒記錯的話，我認為裁員人數接近 1,000 人。您能否向我們介紹如何實現這一目標的最新情況？或者，由於減少員工數量，是否會產生相當大的轉型成本？

David, this is Mike. Yes, I mean, the most impactful savings or changes that will happen from a headcount perspective will be when we no longer are operating our blast furnace and coke ovens. There will be some smaller adjustments on some of the supporting departments such as maintenance and some of the infrastructure support departments. But your headcount number is about right. And from an execution standpoint, it's relatively straightforward when you no longer run an asset or a department that it's well laid out in the CBA what happens to those employees. As they leave the company, they retain some recall rights within the collective bargaining unit for a period of time. And the cost of making that headcount reduction is pretty well laid out in the CBAs, and we have good visibility to it.

大衛，這是麥克。是的，我的意思是，從員工數量的角度來看，最有影響力的節省或變化將是當我們不再運作高爐和焦爐時。一些維護等支援部門和一些基礎設施支援部門會有一些較小的調整。但你的人數大約是正確的。從執行的角度來看，當你不再經營某個資產或某個部門時，CBA 中已經明確規定了這些員工會發生什麼，這相對簡單。當他們離開公司時，他們在一段時間內保留集體談判單位內的一些召回權。削減員工人數的成本在 CBA 中已經明確列出，我們對此有很好的了解。

Okay, that's helpful. Then Michael, while I have you, just on the $25 million that's left to contract, what's the risk that you guys potentially go over budget? Just wanted to know what the worst-case scenario would look like either order of magnitude or even what could go wrong.

好的，這很有幫助。那麼邁克爾，當我有你的時候，就剩下 2500 萬美元的合同，你們可能超出預算的風險是什麼？只是想知道最壞的情況會是什麼樣子，甚至是可能出現什麼問題。

Sure. Yes. So, we've made commitments and put contracts in place, representing CAD850 million. And our goal and expectation is to place the remaining commitments and contracts needed for completion of the project within the remaining range of the budget, which is $25 million. We've got a small number of contracts to place that will complete kind of the installation and construction of the facility. All the equipment is already on site.

當然。是的。因此，我們做出了承諾並簽訂了價值 8.5 億加元的合約。我們的目標和期望是將完成該專案所需的剩餘承諾和合約納入剩餘預算範圍（2500 萬美元）內。我們已經簽訂了少量合同，將完成設施的安裝和施工。所有設備均已就位。

Everything is going into place. We're at a pretty heavy busy time in terms of the project construction and installation. The building is -- the exterior of the building is largely complete, the tie-in to the adjacent operations is largely complete. Transformers in the first EAF furnace are in place. Those are nine transformers because it's a Q1 technology. The cranes are being -- many of the cranes are already being commissioned as we speak.

一切都在順利進行中。就項目建設和安裝而言，我們正處於相當繁忙的時期。建築的外觀已基本完成，與相鄰業務的連接也已基本完成。第一座電弧爐的變壓器已就位。這是九個變壓器，因為它是 Q1 技術。起重機正在投入使用——截至我們發言時，許多起重機已經投入使用。

So, the intention of the team is to get those last installation and construction contracts placed within the budget. We have about less than 10% of the total budget is -- and commitments or contracts are time and material. So, there's always a little bit of risk in execution of time and material contracts that if you consume more time or more materials than you will have the risk of a budget overrun. So, we're managing that very closely. And that's one of the things that the project team is focused on.

因此，團隊的目的是將最後的安裝和施工合約納入預算範圍內。我們的總預算大約不到 10%，承諾或合約是時間和材料。因此，在執行時間和材料合約時總是存在一點風險，如果您消耗的時間或材料多於您將面臨預算超支的風險。因此，我們正在非常密切地管理這一點。這是專案團隊關注的事情之一。

Again, that's probably within the scope of the entire budget. That's 60 to -- maybe $70 million of the total cost. So, the risk is on that number. So, I think at this point, we're -- we're in the home stretch of the project. We're focused on execution. We're focused on placing these last bit of contracts for the installation and construction. And our intention is to finish it within that CAD875 million number. So, it's hard to put a measure on the risk, but we're focused very closely on finishing this project at CAD875 million.

同樣，這可能在整個預算的範圍內。這相當於總成本的 6,000 至 7,000 萬美元。所以，風險就在這個數字上。所以，我認為此時此刻，我們正處於該專案的最後衝刺階段。我們專注於執行。我們專注於簽訂安裝和施工的最後一份合約。我們的目標是在 8.75 億加元的範圍內完成它。因此，很難衡量風險，但我們非常關注以 8.75 億加元完成這個專案。

Okay. It sounds like the time and materials is tracking in line with your expectations so far. Is that correct?

好的。聽起來到目前為止，時間和材料都符合您的預期。這是正確的嗎？

Yes. And we brought in a project coordinator, EllisDon, to help us with the management of that time and material piece as well as the overall scheduling and pacing of all the different construction and installation activities going on throughout the project site. And they've been on board for over a year-and-half. So, they've been a great addition to the team.

是的。我們聘請了專案協調員 EllisDon，協助我們管理時間和材料，以及整個專案現場進行的所有不同施工和安裝活動的整體調度和節奏。他們已經在船上工作了一年半多了。因此，他們對團隊來說是一個很好的補充。

Katja Jancic, BMO Capital Markets.

Katja Jancic，BMO 資本市場。

Hi, thank you for taking my questions. Maybe starting on the plate ramp-up. So second quarter, you expect 90,000 tons. How should we think about the ramp-up in the rest of the year?

你好，謝謝你回答我的問題。也許從板塊加速開始。因此，您預計第二季產量為 9 萬噸。我們該如何看待今年剩餘時間的成長？

Well, I think from a production standpoint and a capability standpoint, we feel really good about where we are. The mill came out of the April outage. I think it's a 22-day outage. The mill came up very smoothly from that outage. We're really delighted with the capabilities and the performance of the mill. We're still working on some of the shear line pacing to make sure that the shear line is performing well, but that's not a limitation to our actual shipments or production because we have not yet shut down the gas cutting line.

嗯，我認為從生產的角度和能力的角度來看，我們對自己的現狀感覺非常好。該工廠已從四月的停電中恢復過來。我認為這是 22 天的停電。工廠從那次停電後恢復得非常順利。我們對工廠的能力和性能非常滿意。我們仍在研究一些剪切線的節奏，以確保剪切線運作良好，但這並不限制我們的實際出貨或生產，因為我們尚未關閉氣割線。

So from a production standpoint, we are real happy about where we're sitting. I think the main challenge right now, frankly, is the market. We're in a soft market and the commercial team, although we're getting great reception on the quality of our plate and the delivery performance of our plate mill, demand is not necessarily robust right now. There's still a $300-plus spread on plate pricing versus coil. So, we feel good about that. But we're facing a little bit of a soft market right now.

因此，從製作的角度來看，我們對目前的情況感到非常滿意。坦白說，我認為目前的主要挑戰是市場。我們處於疲軟的市場和商業團隊中，儘管我們的中厚板品質和中厚板軋機的交貨性能得到了很好的認可，但目前的需求不一定強勁。板材價格與捲材價格仍有 300 多美元的價差。所以，我們對此感覺良好。但我們現在面臨一些疲軟的市場。

So, I think that our current expectation for that 90,000-ton quarter is in place. And ramp up for the end of the year, we'll probably be a little bit lower in the next quarter after this current quarter because of -- we are taking a small maintenance outage in the mill. So that's the way we're seeing our plate business right now.

因此，我認為我們目前對 9 萬噸季度產量的預期已經到位。在今年年底，我們的產量可能會在本季度之後的下一個季度下降，因為我們正在工廠進行小規模維護停機。這就是我們現在看待板材業務的方式。

And can you remind us how much of your plate volume goes into the US market?

您能否提醒我們，您的板材中有多少進入了美國市場？

About 30%. And that's not strictly 30% month after month, but around 30% throughout the whole year.

大約30%。這並不是嚴格意義上的逐月 30%，而是全年 30% 左右。

And then maybe, Mike, you mentioned initially, pricing environment is soft. We're currently in a seasonally slower demand period. How should we think about near-term shipments in total? Last quarter in part, you were impacted by the plate maintenance or upgrade. What about this quarter? How should we think about shipments?

麥克，你最初提到，定價環境可能很軟。我們目前正處於季節性需求放緩時期。我們該如何看待近期的總出貨量？上個季度，您受到了板塊維護或升級的部分影響。這個季度呢？我們應該如何考慮發貨？

Yes, Katja, thank you. I think they'll be directionally higher. The operations are performing well. The commercial team is working hard to keep our customers supplied. I think that we don't see -- we know where pricing is right now. I don't see any near-term catalyst for increased pricing over the balance of the year, and that's probably going to be the same around demand, but it will certainly be directionally higher in the quarter to come. And this is a time during the current market environment where we're focused on completing the EAF project and we have all the liquidity we need even in the current market conditions to complete the project on time and on budget.

是的，卡佳，謝謝你。我認為它們的方向會更高。業務運作良好。商業團隊正在努力確保我們的客戶得到供應。我認為我們沒有看到——我們知道現在的定價在哪裡。我認為今年剩餘時間沒有任何近期價格上漲的催化劑，需求方面可能也是如此，但在未來一個季度肯定會定向走高。在當前的市場環境下，我們專注於完成 EAF 項目，即使在當前的市場條件下，我們也擁有按時、按預算完成項目所需的所有流動性。

And maybe if I just make one last one. You announced that you're relaunching the NCIB. Would you be willing to use some of the available liquidity given that it's pretty large right now? Or is this going to be tied more to free cash flow generation?

也許我只做最後一張。您宣布將重新啟動 NCIB。鑑於目前的流動性相當大，您是否願意使用一些可用的流動性？或者這會更多地與自由現金流的產生聯繫在一起？

Well, I think we need -- we wanted to put the -- reinstate the NCIB to give us the flexibility to do both of those, to buy -- to return capital to shareholders, to buy shares of the company when we think it's a good time to buy. We're mindful of our liquidity position. We need to finish the EAF project and continue to execute on our strategic transformation, but we're always mindful of our capital allocation strategy. So, we think the NCIB being in place gives us the flexibility to pursue that.

嗯，我認為我們需要——我們想要——恢復 NCIB，讓我們能夠靈活地做到這兩點，購買——將資本返還給股東，當我們認為這是一個公司股票時購買公司股票購買的好時機。我們很注意我們的流動性狀況。我們需要完成EAF專案並繼續執行我們的策略轉型，但我們始終專注於我們的資本配置策略。因此，我們認為 NCIB 的到位使我們能夠靈活地實現這一目標。

Ian Gillies, Stifel.

伊恩·吉利斯，斯蒂菲爾。

As you think about using the NCIB and whether the stock is, expensive or inexpensive as a baseline, do you think about your production being 2.2 million tons, 2.7 million tons or something closer to 3 million as a baseline for setting that value of when to figure whether the stock is inexpensive or not to go and use that?

當您考慮使用 NCIB 以及庫存是否昂貴或便宜作為基準時，您是否會考慮您的產量為 220 萬噸、270 萬噸或接近 300 萬噸作為設定何時值的基準計算庫存是否便宜或不去使用它？

Well, I mean -- that's a great question. I think we are building this company to be a 3 million plus -- 3 million finished goods steel company of plate and DSPC. And that's the value we are creating, and that's going to be enabled by completing these EAF furnaces and starting them up successfully in 2025 and then reaching 2.4 million tons of EAF production sometime in 2026. We've got the power secured to do that. So, there's no limitations from the power.

嗯，我的意思是——這是一個很好的問題。我認為我們正在將這家公司打造成一家年產 300 萬以上的板材和 DSPC 成品鋼鐵公司。這就是我們正在創造的價值，這將透過在 2025 年完成這些 EAF 爐並成功啟動它們，然後在 2026 年某個時候達到 240 萬噸 EAF 產量來實現。我們有能力做到這一點。所以，權力沒有限制。

And so, that's how we kind of think of the value we're creating and our view of the value of the company. Now, we aren't there yet. We've got to complete the project and get it started up. But I think where we've gotten to over the last five years that we've been on this journey, we are in a really exciting place right now and we'll be making EAF steel in another -- just over six months.

因此，這就是我們如何看待我們正在創造的價值以及我們對公司價值的看法。現在，我們還沒到那一步。我們必須完成該項目並啟動它。但我認為，在過去的五年裡，我們已經走到了這一步，我們現在正處於一個非常令人興奮的地方，我們將在接下來的六個月內生產電爐鋼。

And Ian, just another comment. I think our valuation is low, and it's not a surprise. And it will go up as we complete our EAF and it's reflective in what others -- what normally the trading levels are. So, I think it's pretty clear, but our focus definitely is always that Mike said, completing this project and making sure we have enough money to complete it.

伊恩，只是另一則評論。我認為我們的估值較低，這並不奇怪。當我們完成 EAF 時，它將會上升，並且它反映了其他情況——通常的交易水平。所以，我認為這很清楚，但我們的重點絕對是麥克所說的，完成這個項目並確保我們有足夠的資金來完成它。

Understood. As we move into calendar '25, Rajat, can you help us think about some of the tax benefits from turning on the EAF? Because I would presume there's a lot of capital cost allowances and the like. So should cash taxes impact be quite low next year or lower?

明白了。當我們進入 25 年日曆時，Rajat，您能幫助我們考慮啟用 EAF 帶來的一些稅收優惠嗎？因為我認為有很多資本成本補貼等。那麼明年現金稅的影響是否應該相當低或更低？

You're absolutely right. As we commission and we capitalize, we have accelerated depreciation in Canada, where we can take most of it in two years. So, our cash taxes definitely will be lower, and we'll get that advantage over two years or three years depending upon how the economy is performing, but our taxes will be lower.

你是絕對正確的。當我們進行委託和資本化時，我們在加拿大加速了折舊，我們可以在兩年內承擔大部分折舊。因此，我們的現金稅肯定會更低，我們將在兩年或三年內獲得這種優勢，具體取決於經濟表現如何，但我們的稅收會更低。

And then last one for me as it pertains to EAF and power. Is there any sort of detailed update you can provide on the status of where you're at with the Public Utility Commission and getting final approval to build that power line? I thought it was something that was supposed to come through this summer into the fall.

最後一個是我的，因為它與電弧爐和電力有關。您是否可以提供任何詳細的更新信息，說明您與公用事業委員會的關係以及獲得建設該電力線的最終批准的情況？我認為這應該是今年夏天到秋天的事情。

Yes. So, we expect the final determination, official approval from the Ontario Energy Board of PUCs [lead] to construct application either at the end of August or early September. We've been in very close contact with PUC as they prepare the application with OEB as they're examining it. We've been tracking -- there haven't been any issue -- there haven't been any extra questions from OEB or interveners that have stepped forward in opposition to the project. But it does take time for the OEB to do a complete examination of the application and issue their positive finding. Once that's in place, that kind of starts the activity going for the actual construction, which we believe will be completed in 2027.

是的。因此，我們預計安大略省 PUC 能源委員會 [領導] 會做出最終決定，正式批准在 8 月底或 9 月初建立應用程式。我們與 PUC 保持著非常密切的聯繫，他們正在與 OEB 一起準備申請並進行審查。我們一直在追蹤——沒有任何問題——OEB 或挺身而出反對該計畫的干預者也沒有提出任何額外的問題。但 OEB 確實需要時間對申請進行全面審查並發布積極的調查結果。一旦到位，實際施工活動就會開始，我們相信施工將於 2027 年完成。

At that time, when you think about what that completion of the power line here in the community of Sault Ste. Marie will do is we have enough power to make 2.4 million tons of EAF steel coal charging, 100% without augmenting any hot iron from our blast furnaces. With the completion of that local line in 2027, that will give us enough power to produce 3 million tons of EAF steel. That would be the combination of the increased grid power available to us and continuing to run our Lake Superior Power plant. And then the final stage would be the completion of the grid, the transmission lines in the Ontario province that would allow us, again, to make 3 million tons, but without running our [captive] power plant, which would significantly lower our cost and our carbon emissions profile.

那時，當你想到蘇聖社區的電力線路竣工意味著什麼。瑪麗要做的是，我們有足夠的電力來生產 240 萬噸電弧爐鋼煤裝料，100% 無需增加高爐中的任何鐵水。隨著該線路於 2027 年竣工，我們將擁有足夠的電力來生產 300 萬噸電爐鋼。這將是我們可用的電網電力增加和繼續運營我們的蘇必利爾湖發電廠的結合。然後最後階段將是完成安大略省的電網和輸電線路，這將使我們能夠再次生產 300 萬噸，但無需運行我們的[自備]發電廠，這將大大降低我們的成本和我們的碳排放概況。

So really, we'll be at full production based on the amount of steel we can make in our EAF and our downstream once that local power line is complete in 2027. And then after that, the only power changes will just serve to lower our cost and our carbon emissions profile.

因此，實際上，一旦當地電力線路於 2027 年竣工，我們將根據 EAF 和下游的鋼鐵產量實現滿載生產。之後，唯一的電力變化將有助於降低我們的成本和碳排放量。

Understood. And maybe just a follow-on, if I may. So does that mean at some point, perhaps it's a longer-dated item that LSP becomes a potential monetization opportunity to service some extra value?

明白了。如果可以的話，也許只是一個後續。那麼，這是否意味著在某個時刻，LSP 可能成為一個提供額外價值的潛在貨幣化機會？

I think so. I think it will depend on the overall state of the Ontario grid and how the system operator and the OEB view that power plant in terms of does it add grid stability? Does it have value from a [peaker] perspective to ensure available power and to the extent that those discussions will be happening at that time. I think there will be value in maintaining that power plant and having it part of the overall generation footprint in the province to run it to generate 110 megawatts of power when it's needed by the system operator.

我想是的。我認為這將取決於安大略省電網的整體狀況以及系統營運商和 OEB 如何看待發電廠是否增加了電網穩定性？從[演講者]的角度來看，確保可用的電力以及當時進行這些討論是否有價值。我認為維護該發電廠並將其納入該省總發電足跡的一部分，以便在系統運營商需要時運行它以產生 110 兆瓦的電力是有價值的。

Thank you. There are no further questions at this time. I would like to hand the call back over to Michael Moraca for any closing comments.

謝謝。目前沒有其他問題。我想將電話轉回邁克爾·莫拉卡（Michael Moraca）以徵求結束意見。

Thank you. Thank you again for your participation in our first quarter fiscal 2025 earnings conference call and for your continued interest in Algoma Steel. We look forward to updating you on our results and progress when we report our fiscal second quarter results scheduled for November. Thank you very much. Have a good day.

謝謝。再次感謝您參加我們的 2025 財年第一季財報電話會議以及您對 Algoma Steel 的持續關注。我們期待在 11 月報告第二財季業績時向您通報我們的業績和進展。非常感謝。祝你有美好的一天。

This concludes today's conference call. You may now disconnect your lines. Thank you for your participation.

今天的電話會議到此結束。現在您可以斷開線路。感謝您的參與。