Algoma Steel Group Inc. · NASDAQ:ASTL
Algoma Steel — Investor Presentation (2022)
28 slides from Algoma Steel's investor presentation, 2022
Slide 1: Investor Presentation Fall 2022
NASDAQ:ASTL Investor Presentation TSX: ASTL Fall 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 Particpants: 2 Continuing to build on a track record of success Rajat Marwah Chief Financial Officer 3 Record Earnings Performance Transitioning to Low Carbon Electric Arc 4 T
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: Strategically Located on the Great Lakes in Close 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: Committed to our path forward, creating a track record of success
Committed to our path forward, creating 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 $50M annualized Modernization Received board Construction started 1 Improves grade
Slide 7: Algoma's EAF Conversion Project: a generational opportunity
Algoma’s EAF Conversion Project: a generational opportunity Raw Materials Materials Ironmaking Steelmaking Preparation Expected Benefits of EAF ~Adds ~700kt of finished steel Iron Ore capacity aligning steelmaking Blast Furnace Mill (Algoma Today) capacity to rolling capacity Capacity Reduced co
Slide 8: Construction update
Construction update Future home of Algoma’s new EAF facility: Foundation Progress (as at Oct 12, 2022): - New Facilities BOSP: Basic Oxygen Steel Production (existing) DSPC: Direct Strip Production Complex (existing) EAF Meltshop: Electric Arc Furnace (new consisting of 2 independent -250NT Danieli
Slide 9: Proposed Operational Transition to EAF
Proposed Operational Transition to EAF NOV 2021-2024 Mid 2024 2025 2026 LONG-TERM CONSTRUCTION COMMISSION PRODUCT ALTERNATIG INDEPENDENT MODE PERIOD RAMP CERTIFICATION HYBRID MODE (“EAF PHASE II”) (“EAF PHASE I”) Coke Ovens Coke Ovens Coke Ovens Coke Ovens 8,9 EAF 1 | EAF 2 7,8,9 7,8,9 8,9 Productio
Slide 10: Fiscal Year 2022 Financial Highlights
Fiscal Year 2022 Financial Highlights FY 2022 FY 2021 % YoY Shipping volume (‘000s tons) 2,297 2,102 9% Net Sales Realization per ton ($/ton) 1,545 768 101% Steel Revenue($ million) 3,549 1,615 120% Cost of Steel Revenue($/NT) 894 694 29% Adjusted EBITDA ($ million) 1,503 199 654% Net Income ($ mill
Slide 11: Key Performance Highlights
Key Performance Highlights Q2 FY2023 - Ended September 30, 2022 • Shipment volume was 435K NT in Q2 FY2023, down 19% from 538K NT in Q1 FY2023 and down 26% from 587K NT in Q2 FY2022 • Steel Revenue: was $552 million in Q2 FY2023, down 37% from $877 million in Q1 FY2023 and down 41% from $937 million
Slide 12: Market Update
Market Update North American HRC price under pressure / Plate pricing remains strong Historical Hot Rolled Coil (HRC) and As Rolled Plate Prices (ARP) (US$/ton) Key Market Drivers $2,200 • HRC steel prices have experienced price declines and shorter mill lead times, however $2,000 ARP spread over HR
Slide 13: Capital Allocation Update
Capital Allocation Update Value Enhancing Uses of Capital: • Strong Balance Sheet: Low leverage / solid cash position • Electric Arc Furnace (EAF) Project: $700 million, 2 year project to transition Algoma to EAF steelmaking, resulting in 3.7 million tons/year of liquid steel capacity and a roughly
Slide 14: Supplemental Information
Supplemental Information 13
Slide 15: Safety Without Compromise
Safety Without Compromise Continued Focus and Improvement in Lost Time Injury Frequency Rate (LTIFR)1 Health & Safety Performance 1.30 • Ongoing commitment to superior Health & Safety performance has led to sustained improvement of safety metrics over time • Health & safety remains our highest prior
Slide 16: 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 17: 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 18: High-Quality Products and Diversified Blue Chip Customer Base
High-Quality Products and Diversified Blue Chip Customer Base in Attractive End Markets FY2022 Product Shipment Mix FY2022 End Market Exposure (Sales) Tubular 7% Distribution Plate 23% Cold Rolled Sheet 12% 8% Hot Rolled Manufacturing / Sheet (1) Construction 80% 32% Automotive 38% Plate expected to
Slide 19: 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 anticipated capacity of 700kt per year once debott
Slide 20: 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 21: DSPC Line Offers Conversion Cost Advantage Over BOF Peers
DSPC Line Offers ~C$30-$40/NT Structural Conversion Cost Advantage Over BOF Peers Key Highlights DSPC Complex Recent Enhancements • Algoma is the only integrated steel • Annualized production capability: 2.3mm • Upgraded automation to incorporate most producer to operate a DSPC line, which tons rece
Slide 22: Canada's Only Plate Mill with Potential to Ship 700,000 NT per year
Canada’s Only Plate Mill with Potential to Ship 700,000 NT per year Algoma’s plate mill modernization project is expected to enhance the capacity and quality of one of Algoma’s key products and sources of competitive advantage Key Highlights Phase I - Quality Focus Phase II - Productivity Focus • Ov
Slide 23: Algoma's Manufacturing Capabilities
Algoma’s Manufacturing Capabilities Technical specifications Year of Start-Up Competitive advantage Highlights • Comprises 3 batteries: • #7 battery: 1959 • On-site coke production caters to • Annualized production capability of Coke Making – #7 battery (60 ovens) • #8 battery: 1968 ~90% of total co
Slide 24: Annex: Revenue and Cost of Sales
Annex: Revenue and Cost of Sales Change Change (FY2022 to FY2022 (FY2021 to FY2021 FY2020 FY2021) FY2020) tons Steel Shipments h 9.3% 2,297,159 i 8.8% 2,102,086 2,305,039 millions of dollars Revenue C$ 3,806.0 C$ 1,794.9 C$ 1,956.9 Less: Freight included in revenue (172.9) (150.4) (175.1) Non-steel
Slide 25: Annex: Revenue and Cost of Sales
Annex: Revenue and Cost of Sales Source: Company Q2 FY2023 Management's Discussion and Analysis 24
Slide 26: Annex: Adjusted EBITDA Reconciliation
Annex: Adjusted EBITDA Reconciliation (i) See "Non-IFRS Measures" on Slide 2 as well as in the Company's Q2 FY2023 Management's Discussion and Analysis for information regarding the limitations of using Adjusted EBITDA and other Non-IFRS Financial Measures. (ii) Adjusted EBITDA Margin is Adjusted EB
Slide 27: Annex: Selected Quarterly Information
Annex: Selected Quarterly Information (millions of dollars, except where otherwise noted) 2023 2022 2021 As at and for the three months ended1 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Financial results Total revenue C$ 599.2 C$ 934.1 C$ 941.8 C$ 1,064.9 C$ 1,010.2 C$ 789.1 C$ 638.5 C$ 430.0 C$ 377.0 Steel product
Slide 28: NASDAQ:ASTL TSX: ASTL
NASDAQ:ASTL TSX: ASTL 57