Algoma Steel Group Inc. · NASDAQ:ASTL
Algoma Steel — BMO Metals & Mining Conference 2022
27 slides from Algoma Steel's conference presentation, Mar 1, 2022
Slide 1: Investor Presentation
Investor Presentation BMO Metals & Mining Conference March 1st, 2022 in Canadian dollars unless otherwise noted
Slide 2: Disclaimer
Disclaimer CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This presentation contains “forward-looking information” under applicable Canadian securities legislation and “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectivel
Slide 3: Investment Highlights
Investment Highlights Premier Canadian Steel Producer and one of the 1 Leading Flat Steel Producers in North America Today’s Presenter: 2 Continuing to build on a track record of success 3 Record Earnings Performance Transitioning to Low Carbon Electric Arc Michael McQuade Chief Executive Officer 4
Slide 4: Premier Canadian Steel Producer
Premier Canadian Steel Producer… Leading North American Flat-Rolled Producer Located in the Great Lakes Region in Sault Ste. Marie, Ontario • Raw steel capacity of 2.8mm tons (with incremental 0.9mm tons from idled blast furnace capacity) per year • Broad range of high-quality finished sheet and pla
Slide 5: Proximity to Customers and Suppliers
Strategically Located on the Great Lakes in Close Proximity to Customers and Suppliers Attractive Access to Key Suppliers and Customers Across The Great Lakes Minorca Canada North American EAF’s are Concentrated in Midwest and Southern Cleveland- Minntac US Steel Cliffs Superior Geographic proximity
Slide 6: Continuing to build on a track record of success
Continuing to build on a track record of success Strategic Direction Operational & Capital DSPC Automation Ladle Met Furnace Project Aurora Plate Mill EAF Approval EAF Project Improvements Upgrade #2 $50M annualized Modernization Received board Construction started 1 Improves grade debottlenecks eff
Slide 7: Record Earnings Performance
Record Earnings Performance Q3 FY 2022 - Ended December 31, 2021 • Shipment volume was 553K NT in Q3 FY 2022, down 6% from 587K NT in Q2 FY 2022 and up 1% from 548K NT in Q3 FY 2021 • Steel Revenue: was $1,010 million in Q3 FY 2022, up 8% from $937 million in Q2 FY 2022 and up 163% from $384 million
Slide 8: Algoma's EAF Conversion Project: a generational opportunity
Algoma’s EAF Conversion Project: a generational opportunity Raw Materials Materials Ironmaking Steelmaking Preparation Expected Benefits of EAF ~Adds ~700kt of finished steel Iron Ore capacity aligning steelmaking Blast Furnace Mill (Algoma Today) capacity to rolling capacity Capacity Reduced co
Slide 9: EAF Transition Would Materially Improve Algoma's Environmental Footprint
EAF Transition Would Materially Improve Algoma’s Environmental Footprint… Environmental Strategy • EAF production would unlock significant Improving Algoma’s Environmental Profile Provides environmental benefits – EAF steelmaking Long-Term Advantages generates substantially less CO2 and other air po
Slide 10: Construction update
Construction update Future home of Algoma’s new EAF facility: Construction Milestones: • Long lead time equipment ordered by OEM supplier (Danieli) • EAF Melt Shop Piling installation in progress. • Foundation contractor selected and underway • Rail and service relocations underway • EAF building fa
Slide 11: Supplemental Materials
Supplemental Materials ALGOMA — STEEL INC. ——
Slide 12: Safety Without Compromise
Safety Without Compromise Continued Focus and Improvement in Lost Time Injury Frequency Rate (LTIFR) Health & Safety Performance • Ongoing commitment to superior Health & Safety performance has 1.30 led to sustained improvement of safety metrics over time • Health & safety remains our highest priori
Slide 13: Algoma Remains Committed to Sustainable Corporate Citizenship
Algoma Remains Committed to Sustainable Corporate Citizenship Environment Community Involvement • Algoma has a demonstrated commitment to environmental • As the largest employer in Sault Ste. Marie, Algoma Steel is an stewardship and is ISO 14401 certified active responsible stakeholder and is activ
Slide 14: Canadian Government to Provide Attractive Green Steel Financing
Canadian Government to Provide Attractive “Green Steel Financing” to Support the EAF Investment Algoma Secures C$420M of Federal Government Financing for EAF Investment Canada Infrastructure Bank C$220M SIF1 Financing C$200 • On November 29, 2021 Algoma entered • C$200 million through the Net Zero i
Slide 15: Market Update
Market Update North American HRC and Plate prices peaked but remain above previous all-time highs Historical Hot Rolled Coil (HRC) and As Rolled Plate Prices (ARP) Key Market Drivers (US$/ton) • HRC steel prices have experienced price $2,200 declines and shorter mill lead times, however ARP spread o
Slide 16: High-Quality Products and Diversified Blue Chip Customer Base
High-Quality Products and Diversified Blue Chip Customer Base in Attractive End Markets FY2020 Product Shipment Mix FY2020 End Market Exposure (Sales) Tubular 9% Plate 14% Manufacturing / Cold Rolled Sheet Construction Service Centers 6% 11% 45% Hot Rolled Sheet Automotive (1) 80% 35% Plate expected
Slide 17: Flexible, Low-Cost Operations Facilitates Optimization Across High Value Products
Algoma’s Flexible, Low-Cost Operations Facilitates Optimization Across High Value Products Algoma produces a wide variety of products to serve diverse end-markets Algoma is the only plate producer in Canada with current capacity of 350-400kt and potential capacity of 700kt per year once debottle
Slide 18: High-Quality Products and Diversified Blue Chip Customer Base
High-Quality Products and Diversified Blue Chip Customer Base in Attractive End Markets • Product width and strength flexibility allows Algoma to serve a broad customer base across various end markets • Operational flexibility to adjust product mix to align with market pricing and customer demand, a
Slide 19: DSPC Line Offers Conversion Cost Advantage Over BOF Peers
DSPC Line Offers ~C$30-$40/NT Structural Conversion Cost Advantage Over BOF Peers Key Highlights DSPC Complex Recent Enhancements • Algoma is the only integrated steel • Annualized production capability: 2.4mm • Upgraded automation to incorporate most producer to operate a DSPC line, which tons rece
Slide 20: Canada's Only Plate Mill with Potential to Ship 700,000 NT per year
Canada’s Only Plate Mill with Potential to Ship 700,000 NT per year Algoma’s plate mill modernization project is expected to enhance the capacity and quality of one of Algoma’s key products and sources of competitive advantage Key Highlights Phase I - Quality Focus Phase II - Productivity Focus • Ov
Slide 21: Highly Experienced Management Team with Extensive Industry Experience
Highly Experienced Management Team with Extensive Industry Experience Name Title Joined Algoma Years of Experience Bio • Previously served as VP, Finance and CFO of Stelco from Michael 2007 to 2016, retiring as President in 2017 Chief Executive Officer 2019 37 • Led the restructuring and sale of Ste
Slide 22: Algoma's Manufacturing Capabilities
Algoma’s Manufacturing Capabilities Technical specifications Year of Start-Up Competitive advantage Highlights • Comprises 3 batteries: • #7 battery: 1959 • On-site coke production caters to • Annualized production capability of Coke Making – #7 battery (60 ovens) • #8 battery: 1968 ~90% of total co
Slide 23: Recent Financial Performance: Revenue and Cost of Sales
Recent Financial Performance: Revenue and Cost of Sales October 1 to December 31 April 1 to December 31 change FY 2022 FY 2021 change FY 2022 FY 2021 tons Steel Shipments h 0.9% 552,544 547,733 h 18.2% 1,749,942 1,480,243 millions of dollars Revenue $ 1,064.9 $ 430.0 $ 2,864.2 $ 1,156.4 Less: Freigh
Slide 24: Adjusted EBITDA Reconciliation
Recent Financial Performance: Adjusted EBITDA Reconciliation October 1 to December 31 April 1 to December 31 millions of dollars FY 2022 FY 2021 FY 2022 FY 2021 Net income (loss) $ 123.0 $ (73.5) $ 614.1 $ (176.2) Amortization of property, plant and equipment and amortization of intangible assets 21
Slide 25: Annex: Selected Quarterly Information
Annex: Selected Quarterly Information (millions of dollars, except where otherwise noted) 2022 2021 2020 As at and for the three months ended1 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Financial results Total revenue $ 1,064.9 $ 1,010.2 $ 789.1 $ 638.5 $ 430.0 $ 377.0 $ 349.4 $ 502.2 Steel products 1,009.5 936.5 722.
Slide 26: Glossary
Glossary Term Definition Term Definition Basic Oxygen Furnace Vessel used to convert liquid hot metal from a blast Hot Rolled Sheet Carbon steel product commonly used for applications in (BOF) furnace into steel which dimensional tolerances and surface finish quality is not critical (e.g. automotive
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