Greetings and welcome to the Algoma Steel Group First Quarter 2026 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Laura Devone, Vice President of Human Resources and Corporate Affairs. Please go ahead.

Good morning, everyone, and welcome to Algoma Steel Group Inc.'s first quarter 2026 earnings conference call. My name is Laura Devoney, Vice President of Human Resources and Corporate Affairs, and I will be moderating today's call. Leading the prepared remarks are Rajat Marwa, our Chief Executive Officer, and Michael Marocca, 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 security laws which involve assumptions and inherent risks and uncertainties. Actual results may differ materially from statements made today. In addition, our financial statements are prepared in accordance with IFRS, which differs from U.S. GAAP, and our discussion today includes references to certain non-IFRS financial measures. Last evening, we posted an earnings presentation to accompany today's prepared remarks. The slides for today's call can be found in the Investors section of our corporate website. With that in mind, I would ask everyone on today's call to read the legal disclaimers on slide 2 of the accompanying earnings presentation and to also refer to the risks and assumptions outlined in Algoma Steel's first quarter, 2026, Management's Discussion and Analysis. 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. Please also note that 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, Rajat?

Thank you, Laura, and good morning, everyone. Thank you for joining us to discuss our first quarter 2026 results. Before reviewing the quarter's results, I want to take a moment to recognize what our team achieved in early 2026. On January 18th, we permanently halted blast furnace operations, marking the end of 125 years of coal-based integrated steel making at Algoma. That moment also closed out over 50 years of production at our No. 7 Blast Furnace, which over its lifetime produced more than 100 million tons of liquid iron. This is a defining moment for this company. Not a conclusion, but a transformation. Algoma is now a fully electric arc furnace operation, and everything we are building from here rest on that foundation. Let me frame today's results around three themes. First, our EF ramp-up is progressing as expected, and the operational foundation for Algoma's next chapter is in place. Second, this was a transitional quarter by design. While shipment remained low and transition-related costs were elevated, adjusted EBITDA was broadly consistent with the prior quarter when excluding the impacts of capacity utilization adjustments and insurance proceeds. Performance was supported by a deliberate mixed shift towards higher value plate products and improved net steel revenues. We achieved record plate sales of 116,000 net ton with further upside expected as our plate first strategy scales. Importantly, we view this quarter as the EBITDA trough, with performance expected to improve as we continue ramping the EAF platform, increase operational stability, and eliminate remaining transition-related costs. Third, we have the financial runway to execute. The LUTL facilities continue to provide meaningful liquidity support, and we remain focused on reducing cash burn as EAF production scales. Let me expand on each of these. Starting with our EF, the Unit 1 furnace and associated melt shop are performing as designed, with quality metrics achieved across a range of plate and hot rod coil grades. The Q1 power system and other key process components have demonstrated stable performance, supporting consistent metallurgical quality on a full 24-hour per day schedule. This is not a pilot. This is Algoma's steel-making platform, running around the clock, producing Volta, low-carbon steel at scale. Our average net sales realization improved meaningfully, driven by a deliberate mixed shift towards discrete plate sales, where Algoma holds a unique competitive position as Canada's only producer. Plate demand for infrastructure, construction, and defense end market remain healthy. That pricing resilience combined with an improved cost structure as EF volumes build is the foundation of a path to profitability. On the broader market environment, the 50% U.S. Section 232 tariff on steel imports from Canada continues to define the operating landscape. We incurred Canadian $27.4 million in direct tariff cost in the quarter, down from the prior quarter, as we continue to reduce volumes shipped to the U.S. The Canadian market, meanwhile, remains supply pressured, with coil pricing held down by domestic oversupply, import offers, and the continued presence of U.S. steel in the Canadian market. These are structural conditions, not cyclical ones. A strategic response, focusing on plate, de-emphasizing coil, and advancing diversification initiatives that orient our business towards the Canadian market is the right response. On the strategic front, I want to highlight two developments that reinforce the long-term thesis of this company. First, in April, we announced the foundation of Rochelle Algoma Defense, a joint venture with Rochelle, Inc., a Canadian-owned defense manufacturer to establish a Canadian center of excellence for ballistic steel production. This partnership is purpose-built to deliver sovereign ballistic steel defense solutions, including full-cycle capabilities, metal fabrication, forming, welding, and machining right here in Canada. This is a meaningful step in the diversification of our product portfolio and our growing role in Canada's defense industrial base. Second, our binding MOU with Hanwha Ocean announced in January and valued at up to U.S. $250 million, including a U.S. $200 million contribution towards the potential development of a structural beam mill and up to U.S. $50 million in anticipated product purchases tied to the Canadian Petrol Submarine Program. It remains subject to Hanwha Ocean being awarded the CPSP contract and the execution of definitive agreements. We continue to advance this work and remain encouraged by what it represents for Algoma's long-term role in Canada's defense industrial base. Taken together, these initiatives reflect the deliberate positioning of Algoma as a strategic pillar of Canada's industrial and defense supply chain, not simply a commodity steel producer. I want to be direct about something. Algoma is more exposed to tariff than virtually any steel company in North America. We are Canada's only independent steelmaker, and that reality has made Sousa Marie a focal point of the trade disruption that has reshaped the steel industry over the past year. We are not going to understate that impact, nor are we going to minimize the challenge it has created. But this is what we would ask investors to focus on. The investments Algoma has made in a state-of-the-art electric arc furnace platform, and the modernization of Canada's only discrete plate mill have positioned the company at the center of Canada's emerging industrial and defense strategy. Industrial sovereignty requires domestic steelmaking capability. Armored vehicles require ballistic steel. National infrastructure programs are strengthened by structural steel produced domestically by Canadian workers for Canadian supply chain. Algoma is uniquely positioned to support these priorities alongside our customers, partners, and peers across the broader Canadian industrial base. The Rochelle Algoma Defense JV and the Hanwha Ocean BMOU are not peripheral initiatives or aspirational concepts. They are tangible evidence of where industrial policies and strategic demands are moving. Canada is actively seeking to reduce reliance on foreign supply chain for critical material and defense-grade products, and Algoma is participating directly in that effort. working alongside government, customers, and industrial partners to help build resilient domestic capacity. Importantly, the current tariff environment, while undeniably challenging, has accelerated the urgency around domestic sourcing and industrial self-sufficiency. In many respects, it has reinforced the strategic value of Canadian steelmaking capacity in ways that were far less visible even two years ago. We are managing through the tariff headwinds. At the same time, we are building the company Canada increasingly needs. Those are not competing narratives. They are fundamentally the same story. I'm not on the call over to Mike for a closer look at the financials. Mike?

Thanks, Roger. Good morning, everyone. As a reminder, all numbers are expressed in Canadian dollars unless otherwise noted. I will start off with a brief note on currency. The Canadian dollar weakened modestly over the course of Q1-2026, moving from approximately $1.37 Canadian per U.S. dollar at December 31st, 2025, to $1.39 at March 31st, 2026, an approximate 1% decline. Our foreign exchange gain in the quarter of $14.3 million reflects the favorable impact of a weaker Canadian dollar. Comparisons between the first quarter of 2026 and the first quarter of 2025 were significantly impacted by several important factors. In the prior year period, the company was producing steel exclusively through its legacy blast furnace operations, which were permanently halted on January 18, 2026. In contrast, steel production during the first quarter of 2026 reflected a transitory operating environment, with production coming from both the legacy blast furnace platform and the company's new electric arc furnace platform, which remains in the ramp-up phase. In addition, the tariff environment during the 2026 quarter was materially more adverse than in the comparable prior year period, creating a significantly different operating and commercial backdrop. Now on to the results. We shipped approximately 224,000 net tons in the quarter, down 52.4% versus the prior year period. Importantly, the prior year quarter reflected production from a fully operating blast furnace platform that no longer exists. We are continuing the ramp-up of our new EAF steelmaking platform, with operating performance expected to improve as EAF production stabilizes and transition-related inefficiencies are reduced. Our average net sales realization was $1,193 per tonne, an increase of 21% versus $986 per tonne in the prior year period. This improvement reflects a deliberate shift of our product mix towards discrete plate, where our pricing premium over hot roll coil remained significant, and we achieved record plate sales volumes during the quarter. Steel revenue was $266.9 million for the quarter, down 42.4% from the prior year period, as the significant decline in shipment volumes more than offset the meaningful improvement in realized pricing. Cost per ton of steel products sold was $1,180 in the quarter, compared to $1,137 in the prior year period. The increase reflects tariff costs of $27.4 million and the impact of reduced fixed cost absorption at lower production volumes. I want to highlight that this metric excludes $90 million related to capacity utilization. Adjusted EBITDA for the quarter was a loss of $28.7 million, representing an adjusted EBITDA margin of negative 9.7%. This compares to an adjusted EBITDA loss of $46.7 million in the prior year period, which represented a margin of negative 9%. The variance in absolute terms was driven primarily by improved product mix. A few items I want to call out specifically. First, on capacity utilization. The $90.2 million capacity utilization charge in the quarter reflects excess fixed costs carried by the company beyond what was required to operate the EAF and the downstream operations supplied by the EAF at the production volumes achieved during the quarter. These costs primarily relate to labor, fixed utilities, equipment, and maintenance costs. These costs are expected to decline over the course of the next two quarters as the transition progresses and are anticipated to be fully eliminated by the fourth quarter. This cost is excluded from adjusted EBITDA as it does not reflect the ongoing economics of the business under the company's intended operating configuration. Second, on the prior year comparison, Q1 2025 included $50 million in insurance proceeds related to the structural corridor collapse of January 2024. There are no comparable insurance proceeds in Q1, 2026. On an apples-to-apples basis, the underlying adjusted EBITDA improvement of $18 million is a meaningful step in the right direction as the AAF ramp continues. Third, on working capital. As the company expected, during the quarter, the company released over $100 million of working capital, which was primarily related to the significant release of work-in-process slab inventory as we rolled slabs from inventory at our plate mill. This slab inventory had been built prior to the closure of the blast furnace. Turning to liquidity, we ended the quarter with $65.3 million of cash, $195 million of unused availability on a revolving credit facility, and $292 million of remaining availability under the LETL facilities. Total available liquidity at quarter end was approximately $553 million. During Q1, we drew $126 million under the LETL facility's net of pick interest, which was largely deployed to offset operating cash consumption and support the transition. Capital expenditures in the quarter were $20.4 million, substantially below the $127 million invested in Q1 2025 when EAF construction activity was far greater. We expect our maintenance CAPEX profile to run meaningfully below our historical sustaining capital level of approximately $120 million annually, as we operate a newer, lower-maintenance EAF facility. Perspectively on cash flow, as we have discussed previously, there are a number of positive cash flow items expected to benefit the company over the course of 2026, including the recovery of approximately $200 million related to income tax refunds and the receipt of the remaining insurance proceeds associated with the final closeout of the previously disclosed insurance claim. On legal matters, as previously disclosed, we have initiated and are responding to legal proceedings in connection with certain supply agreements, taking the position that these agreements have been frustrated by the extraordinary and unforeseen tariff environment. We believe we have valid legal remedies and defences and will continue to defend our position. We are not in a position to comment further on this at this time. I'd like to now turn the call back over to Rajat for closing comments.

Thanks, Mike. Q1-2026 was largely the quarter we anticipated. A transitional period with lower volumes, elevated costs, and the logistical complexity of winding down one steelmaking route while ramping another. But the operational progress during the quarter was real, and the strategic trajectory is Our EF is ramping. Our plate mill is positioned competitively. We are Canada's only producer of discrete plate, and demand for infrastructure, construction, and defense and market is healthy and growing. The Shell Algoma Defense JV and the Hanwha Ocean MOU are tangible evidence that this company is building something with long-term industrial relevance to Canada, not just managing through a difficult steel cycle. The path back to profitability runs through scale, more EF production, more plate tons, and a cost structure that improves with every additional heat we cast. We are not there yet, but the trajectory is the right one, and we have the liquidity to execute. I want to close with a word to our employees. The first quarter of 2026 was not easy. The transition required an extraordinary level of execution from each part of this organization, and the workforce reduction taken in late March added a layer of human difficulty that no restructuring plan makes easier. I'm proud of how every member of our team navigated all of it, and I'm committed to building an Algoma worthy of their continued efforts. Thank you for your continued interest in Algoma Steel. At this point, we are happy to take your questions. Operator, please provide the instructions for the Q&A session.

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

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One moment, please, while we poll for questions. Thank you.

Our first question is from James McGarrigle with RBC Capital Markets.

Hey, thanks for having me on, guys. Yeah, I just wanted to ask a question on the capacity utilization adjustment. Can you just give us some cadence on how you expect that to trend down in Q2 and Q3? And then on that, when we think about Q4 EBITDA, you know, obviously a lot can change, you know, in terms of the price of inputs, the price of steel, but all else equal, Should we be thinking about adjusted EBITDA of minus $30 million in Q4, or is there kind of a path to break even EBITDA toward the end of the year?

Yeah, thanks, James. I think that we still are on the pathway to break even EBITDA. That's our expectation by the fourth quarter. And the capacitization adjustment really will trend down linearly from where we're at here at 90 in this quarter to zero in Q4. So I think you can think of it stepping down in a pretty linear fashion over the next two quarters.

I appreciate the call there. And then just as a follow-up to that, obviously, you know, the capacity utilization going away is going to be, you know, predicated on, you know, higher volumes. So can you just give us some cadence on how you expect volumes to trend in Q2? And then can you talk about more broadly, you know, the appetite in the Canadian market to support higher levels of production, you know, specifically, you know, on the plate as that ramps up? And then, you know, on the coil side, is, you know, the increase in production going to be from higher sheet and, you know, what you think profitability might look like on the sheet side if you're ramping up production there as well?

Yeah, I think I'll start and Reza can add some color here. But I think that directionally the shipments, we would expect to be directionally lower in the next quarter. But on the plate side, we're still going to ship as much as we possibly can. So pushing that as quickly as we can up. The sheep side is really where the constraint is on the market with the oversupply situation we have in Canada.

So, James, that's a good question and a lot of questions. So on the capacity utilization, there is some carrying costs that will drop off, which I think will bring us to the capacity of a million-million-two and our costs aligned with that. So that's what we expect to see in the fourth quarter. From the market perspective, the plate market is healthy, as I said in my prepared remarks, and it's doing okay. We are quite disciplined in our approach. We've started gaining market share, and I would thank the Canadian government on the Buy Canada policy and also our customers who are sticking with us. and we are ensuring that we do whatever we can to be with them and not disappoint them. But on the plate side, we are fine and we are increasing our volume. On the coil side, the market is oversupplied, and we are seeing that putting pressure on the pricing. From our side, we have been quite disciplined in our approach on the coil by taking orders that make sense. And as we start ramping up, we will be mindful of that market.

I appreciate the caller, and I'll turn the line over.

Our next question is from Katja Jancic with BMO Capital Markets.

Hi, thank you for taking my questions. Mike, just to confirm, did you say that sheet volumes in 2Q are going to be lower sequentially?

Correct. Yes.

And then will that be fully offset by higher plate, or how should we think about plate volumes relative to first quarter? How much higher can it get in the near term?

Yeah, I think directionally a little bit higher. We're working on trying to maximize the availability of those orders in the Canadian market and capturing more and more market share, but we do expect it to be slightly higher in Q2, and really we're flexing the coil volumes in light of that.

So overall volumes are going to be slightly higher or flattish?

Slightly lower is the expectation. Yeah.

So I'm just thinking from a utilization perspective or utilization adjustment, what will drive, I guess, lower adjustments?

The driver of the lower adjustments is really shedding those costs that are associated with the legacy assets. So if you think we're staffed with some of the headcount still hadn't come out in Q1 as we had layoffs near the end of this quarter, and then we have other fixed costs as well that were associated with those legacy operations, those will start to shed and will be the main driver of the reduction in the capacitalization adjustment.

And then maybe shifting to on the cost side, Can you talk a bit about your sourcing of scrap right now, where you're sourcing it, how the pricing is currently?

Hey, Katya, that's a very good question. The scrap is coming from Canada and some from U.S., but mostly from Canada. There is enough scrap available from sourcing perspective as we are wrapping up. Pricing is a different dynamic right now. Now, price of scrap is still following the North American selling price, and it's not being adjusted by any other dynamics between Canada and the U.S. As we have seen that the pricing of sheet has been affected between Canada and U.S. due to the oversupply of sheet in Canada and the 232 tariffs. So scrap is still moving at the price, which is the index price linked to the North American CRU index.

Okay, and one more, if I may. You talked about the defense JV. Can you talk a bit more about how big the defense market actually is in Canada? Because usually when we look in the U.S. steel market, defense is a percentage of consumption of steel. It's pretty small. So we just want to, maybe if you could talk about the Canadian market.

Yeah, the analysis is very similar in Canada as well, that when you look at the overall market and divide into equipment, construction, manufacturing, and then defense, it's smaller. But there is a lot of spending that is happening and supposed to happen in Canada. and what we don't look at is the whole supply chain and the entire product that finally gets produced and not just the steel. So we look at steel. Steel supply will be limited, but there will be a lot of value add when you start looking at fabrications, assembling, welding, and so on and so forth. So we are looking at the entire supply chain to provide a full solution to Canadian needs as well as offshore, where everything from nuts to bolts, everything is done in Canada with Canadian labor, Canadian IP, Canadian steel. And that's where the value comes from this JV.

Perfect. Thank you.

Our next question is from Ian Gillies with Stiefel.

Morning, everyone.

Morning, Ian.

Has there been much in the way of developments on an overseas sales strategy since the last time you guys provided an update? Just because that seems like a pretty important piece to get to economies of scale and reduce some of these capacity charges as well.

Ian, we are continuously working on that aspect. There are trials being planned on steel that we can supply. There are discussions happening on both sides on how the supply chain will work and how this will be done over a longer period of time. So things are progressing. We do not expect much supply to happen in this quarter or the next, but we expect that all of that will get finalized towards the end of the year and start supplying those products.

On the scrap side, noting that you're talking about price following the North American price, is there any workarounds or potential workarounds in Canada through additional procurements of DRI or PIG that might provide a cost advantage, or is that just completely unlikely?

Till the time the market is open on both sides of the border, I think it will be the way it used to be for selling price. where you have opportunities on the other end to supply that product. Normally, DRI or HBI, they do carry a premium. And depending upon demand supply, the price will be established. But there's no quick solution from that perspective. The solution that we do have, if let's say this becomes a long-term structure in the market, We have number six blast furnace that does produce, can produce, you know, pig, depending upon how the market price fares out. That's a mitigation that we have. But otherwise, from market perspective, we do see the market to be porous between U.S. and Canada, and the pricing will remain the way it is. Understood.

With respect to the energy sector in Canada, it seems to be thawing a little bit here. I'm just curious with what you're seeing. Are you seeing any potential for incremental orders to send out west, especially in the context of what appears to be some amount of relief on rail rates through CN and CP?

So we are selling into the West right now. And as I said, that our sales on the plate side with our existing customers and the new that we are getting is increasing, and we are seeing that support coming. The challenge still remains on the transportation side. The government is working on it. That program should come into being soon, and we are having those discussions. So it's the logistic cause to get the product there. But the actions that are taken up until now on restricting some of the imports coming in and then going into some subsidy on the rates definitely will help. But to say the least, there is supply happening, and we are seeing some amount of volume uptick towards the west.

Thanks very much. I'll turn the call back over.

Our next question is from Albert Riolini with Jeffries.

Hey, morning, guys. Thank you for taking my question.

Morning, Albert.

I'd ask on the structural B-Mill, assuming obviously that's still a strategic interest, but just any update to maybe the thinking there, any conversations with the government on that? And is that something that's kind of dependent on tariffs staying on longer term and I guess being more of a longer term diversification strategy, or is it kind of independent on tariffs and more of when maybe the cash profile is a bit better, we could see some advancements there?

So there is a lot of work happening on the BEAM side from a work perspective, and we are in continuous discussion with the government as well on various aspects. We've looked at the market and we've studied the market. A lot of work has gone into the market analysis as well. And as we've said in the past, the BEAM market is supplied by imports, and that market is there. and with the investments that's going to happen in Canada over the next many years will only increase that demand. So we are looking at the best way to get this project off the ground and done. Tariffs do play a role right now as we do not have enough products in Canada that can meet the demands in Canada. And this product seems to be a strategy that fits really well with our electric arc furnace. Being an electric arc, this is a natural fit for us to be in the beam market. So I would say that. And, you know, we are working pretty hard and diligent on getting things nailed down in this project. Thank you.

Thank you.

There are no further questions at this time. I would like to hand the floor back over to Mike Maraca for any closing remarks.

Thank you again for your participation in our first quarter 2026 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 second quarter results this summer. Have a great day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.