Algoma Steel (ASTL) Q2 2027 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Thu, Oct 29, 2026

CALL PARTICIPANTS

• Vice President of Human Resources and Corporate Affairs-Laura Devoni
• Chief Executive Officer-Rajat Marwah
• Chief Financial Officer-Michael Moraca

TAKEAWAYS

• Shipments -- 144,527 tons, reflecting the transition to EAF-only steelmaking and the impact of the Lake Superior Power outage.
• Adjusted EBITDA -- A loss of $13.9 million, representing an improvement of $73.2 million compared to the prior-year quarter.
• Plate Shipments -- 105,000 tons, accounting for approximately 73% of total shipments.
• Average Net Sales Realization -- $1,510 per ton, increasing 33.7% versus the prior-year quarter due to higher steel prices and a greater share of plate in the mix.
• Consolidated Revenue -- $249.4 million, compared to $523.9 million in the prior-year quarter.
• Direct Tariff Costs -- $18.1 million, decreasing from $89.7 million a year ago as U.S.-bound shipment volumes declined 83%.
• Net Loss -- $129.6 million, compared to a net loss of $485.1 million in the same period last year.
• Cost per Ton of Steel Sold -- $1,492, reflecting lower fixed cost absorption at reduced production volumes.
• Cash Generated by Operating Activities -- $78.6 million, driven primarily by a $163.9 million income tax refund.
• Total Available Liquidity -- $428 million at quarter end, including $152.4 million in cash and $232.5 million of unused credit facility availability.
• Capital Expenditures -- $67.7 million, including construction spending on EAF Unit 2 and a down payment on a replacement turbine.
• Q4 Shipment Guidance -- 25% to 35% increase compared to the third quarter as production ramps from the second EAF unit.
• Full-Year Production Target -- Approximately 1.2 million tons for the upcoming year, with an expected exit rate of 1.5 million to 1.6 million tons by the end of next year.
• Replacement Turbine All-in Cost -- Approximately $35 million USD, with the balance to be financed over a four-year period.
• Government Loan Advances -- $124.5 million received under the LETL facilities during the quarter.
• U.S. Market Exposure -- 24% of total steel shipments, down from 50% in the prior-year quarter due to Section 232 tariffs.
• Capacity Utilization Adjustment -- $53.1 million, which was excluded from the reported Adjusted EBITDA loss.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Marwah noted that "the 50% US Section 232 tariff on steel imports from Canada remains in place," which continues to restrict access to the U.S. market.
• Moraca indicated that the company is "continuing to respond to other legal proceedings in connection with certain supply agreements" affected by the tariff environment.

SUMMARY

Algoma Steel Group Inc. (NASDAQ:ASTL) reported financial results for the quarter ended Sept. 30, 2026, marking the low point of its operational transition to electric arc furnace steelmaking. Management stated that power generation at the Lake Superior Power facility has been restored and the second electric arc furnace unit successfully produced its first commercial heat in October. The company reported a shift in strategy toward Canadian discrete plate markets to mitigate the impact of 50% tariffs on exports to the United States.

• Management noted that the acquisition of a new turbine provides equipment redundancy and the potential to expand power generating capacity in the future.
• The company reached a confidential settlement resolving historical coke supply disputes, which management expects will close out a legacy transition matter.
• Management reported that the federal and provincial governments have introduced new measures, including a joint steel action fund, to prioritize Canadian steel in public procurement.
• CFO Moraca indicated that the company expects a substantial improvement in underlying EBITDA performance for the fourth quarter, excluding capacity utilization adjustments.

INDUSTRY GLOSSARY

• EAF: Electric Arc Furnace, a steelmaking process that uses electricity to melt scrap steel.
• LSP: Lake Superior Power, the company's power generation facility.
• LETL: Large Enterprise Tariff Loan, a government funding program.
• Section 232 Tariffs: U.S. national security-based tariffs on steel and aluminum imports.
• Discrete Plate: Steel plate produced to specific dimensions rather than cut from a coil.
• IESO: Independent Electricity System Operator, which manages Ontario's power grid.

Full Conference Call Transcript

Operator: Greetings, and welcome to the Algoma Steel Group, Inc. Third Quarter 26 Earnings Call. At this time, all participants are in a listen-only mode. A brief Q&A session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Laura Devoni, VP of Human Resources and Corporate Affairs. You may begin.

Laura Devoni: Good morning, everyone, and welcome to Algoma Steel Group's third quarter 26 Earnings Conference Call. My name is Laura Devoni, vice president of human resources and corporate affairs and I will be moderating today's call. Leading the prepared remarks are Rajat Marwah, our Chief Executive Officer and Michael Moraca, 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 ir.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 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. Reconciliations of these measures to the most direct comparable IFRS measures are included in our press release, MD and A, and earnings presentation. 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 third quarter 26 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. 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 Q&A session. I will now turn the call over to our Chief Executive Officer, Rajat Marwah.

Rajat Marwah: Thank you, Laura and good morning, everyone. Thank you for joining us to discuss our third-quarter 2026 results. As always, I want to begin with safety. This quarter asked a lot of our people. In a matter of weeks, our teams restarted the melt shop after a power disruption, commissioned a replacement turbine at the Lake Superior power plant, and bought EAF unit 2 to First-Arc. Sending every employee home safely every day is just as important to us as any of those milestones. I am proud of the discipline our teams showed. Through a demanding quarter. Our results for the third quarter came in line with the guidance we provided earlier this month.

And our underlying performance improved again. Volumes reached a low point of our transition as we completed the planned tie in work for EAF Unit 2, and worked through the outage at Lake Superior Power. Before I get into the details, I want to highlight 3 key themes. First, our results. We shipped approximately 145 thousand tons and delivered adjusted EBITDA within our guidance range at -$14 million Excluding the capacity utilization adjustment, and last quarter's insurance settlement, adjusted EBITDA improved by approximately $19 million from the second quarter, a second consecutive quarter of underlying improvement, delivered on lower volume which Mike will walk you through shortly. Second, paid performance.

We shipped 105 thousand tons of plate, approximately 73% of total shipments and more than we shipped in the third quarter of last year. Average net sales realization rose to $1.51 thousand per ton 11% from the second quarter on higher steel prices. As Canada's only producer of discrete plate, we continue to see healthy demand for infrastructure, construction, and defense customers. Plate volume moderated from our 125 thousand tons in the second quarter reflecting the outage and planned plate mill maintenance. Third, the transformation. We restored full generating capability at Lake Superior Power on September 30. And prior to quarter end, we completed First-Arc testing at EAF Unit 2.

On October 9, we achieved our first commercial heat from the new EAF. A major milestone for Algoma and the result of years of disciplined execution by our employees and contractors. EAF Unit 2 is now ramping. And part of our regular production schedule. Our focus now turns to ramping the combined EAF platform to higher capacity. Let me expand on the outage. Because it shaped much of what we saw during the quarter. On August 17, 1 of the 2 turbines at Lake Superior Power detected an abnormal condition. And was automatically taken offline. The remaining turbine was not affected. LSP supplies electricity to our melt shop, so we temporarily suspended steel production to address this.

We quickly worked with the independent electricity system operator on an interim operating arrangement and restarted the EAF on August 29. Since the restart, those arrangements supported sustained production. Including during planned work on the provincial electricity system. On September 30, we commissioned a newly acquired replacement turbine restoring full generating capability at LSP. I want to thank the ISO and Hydro 1 for their support through this period. Our actions now leave us in a stronger position. We have exercised our option under our existing service agreement with GE to bring a leased turbine into service. While the affected turbine is repaired.

We expect installation to be completed in the fourth quarter and we do not expect it to interrupt steelmaking operations. Once the lease turbine is in place, the newly acquired turbine will serve as a ready spare. Adding equipment redundancy and strengthening the reliability of our power system. After repairs to the affected turbine are complete, we expect the additional generating equipment to give us further operational flexibility and the potential to expand power generating capacity in the future. We use the downtime to pull forward planned maintenance, and to advance commissioning work of our second EAF. On the broader market environment, steel prices moved in our favor in this quarter for both plate and coil products.

Plate remains the core of our mix, where we hold a unique market position. Canadian coil pricing has also improved, and we expect to increase our coil sales through the fourth quarter and into 2027 as we ramp production as market opportunities allow. Direct tariff costs fell to $18 million in the quarter. Down from $90 million a year ago as U. S. Shipment volumes declined 83% from the prior year quarter. The 50% US Section 32 tariff on steel imports from Canada remains in place. These conditions continue to reinforce our Canada centric plate first strategy and we are running the business for the market as it stands today.

On the policy front, I want to recognize the federal and the Ontario governments for last week's announcement to protect Canada and Ontario's steel industry. The measure creates a new joint steel action fund to help the industry diversify production toward the steel products Canada will need. Prioritize Canadian steel in public procurement through the Buy Canadian and Buy Ontario policies, strengthen enforcement against unfair traded imports, and establish a joint Canada Ontario steel task force. Diversification is central to our own strategy. Our transition to electric arc furnace steelmaking and our Canada centric plate first mix are about supplying more of the steel Canada needs. From Canadian-made.

Together, strengthen the domestic market our plate first strategy depends on particularly in infrastructure and defense. We look forward to continuing work with both levels of government on our diversification initiatives. We are thankful for that continued support as we finish this transition and build a stronger, more sustainable Canadian steel industry. I will now turn the call over to Mike for a closer look at the financials. Mike?

Michael Moraca: Thanks, Rajat. Good morning, everyone. As a reminder, all numbers are expressed in Canadian dollars unless otherwise noted. I will start out with a brief note on currency. The Canadian dollar ended the quarter at approximately $1.42 per U.S. dollar, essentially unchanged from June 30. Our foreign exchange loss in the quarter of $10 million reflects exchange rate movements within the quarter on our Canadian dollar denominated monetary assets and liabilities. Comparisons between the third quarter of 26 and the third quarter of 25 were significantly impacted by our transition to EAF steelmaking. In the prior year quarter, the company was producing steel through its legacy blast furnace operations. Which were permanently halted on January 18, 2026.

In the third quarter of 26, all liquid steel production was sourced from Unit 1 of our EAF, with production paused from August 17 to August 29 during the LSP outage. In addition, the prior year 0.25 included a noncash impairment loss of $503.4 million Now on to the results. We shipped approximately 144 thousand tons compared to 419 thousand tons in the prior year quarter, and 181 thousand tons in the second quarter. Volumes moved lower reflecting the accelerated transition to EAF only steelmaking due to the impact of US Section 32 tariffs on export sales and the LSP outage. Shipments were in line with our October 1 guidance of approximately 145 thousand tons.

Consolidated revenue was $249.4 million compared to $523.9 million in the prior year quarter. With steel revenue of $218.2 million Average net sales realizations were $1.51 thousand per ton, 33.7% from $1.13 thousand per ton in the prior year quarter and up from $1.36 thousand per ton in the second quarter reflecting higher steel prices and a greater share of plate in our mix. Partly offset by lower proportion of our premium plate grades during the outage. Cost per ton of steel products sold was $1.49 thousand per compared to $1.28 thousand per ton in the prior year quarter and $1.41 thousand per ton in the second quarter.

Primarily reflecting lower fixed cost absorption at reduced production volumes and a higher proportion of plate in our shipments, I want to highlight that this metric excludes $53.1 million related to capacity utilization costs. Direct tariff costs for the quarter were $18.1 million down from $89.7 million in the prior year quarter reflecting the substantial decline in U. S.-bound shipments. Adjusted EBITDA for the quarter was a loss of $0.9 million representing an adjusted EBITDA margin of -5.6%. This compares to an adjusted EBITDA loss of $87.1 million in the prior year quarter. Which represented a margin of -16.6%,. An improvement of $73.2 million.

Second quarter adjusted EBITDA of $13.8 million included a $45 million insurance settlement we will come back to. Excluding the capacity utilization adjustments, adjusted EBITDA was a loss of approximately $67 million, an improvement of approximately $20 million versus the prior year quarter, on about 1 third of the volume. When comparing to the prior quarter, when you exclude the capacity utilization adjustment from each quarter, and the $45 million insurance settlement from the second quarter, results improved by approximately $19 million on 20% lower volume. This is the second consecutive quarter of underlying improvement and is consistent with what we communicated in July. Turning to cash flow and liquidity.

Operating activities generated $78.6 million of cash in the quarter, compared to a cash used of $79.4 million in the second quarter. The improvement largely came from a significant release of working capital. That included $163.9 million of income tax refunds and a further reduction in inventories. Subsequent to quarter end, we received an additional $35 million of income tax recovery representing the balance of the refunds from carrying back our 2025 losses. We also received the outstanding $45 million in insurance proceeds that finalized and closed the claim from the 2024 utility corridor collapse. Capital expenditures were $67.7 million which includes construction spending on EAF Unit 2, and the down payment on the replacement turbine.

For which we are pursuing financing over a 4-year term. During the quarter, we received $124.5 million under the LETL facilities, and we used cash proceeds mentioned above to pay down our revolving credit facility. Which was essentially undrawn at quarter end. We ended the quarter with $152.4 million of cash, $232.5 million of unused availability under our revolving credit facility. And $43.5 million available to draw under the LETL facilities. Total available liquidity at quarter end was $428 million Looking ahead at the fourth quarter, from a volume perspective, we expect that the third quarter was the low point of the transition.

With power restored and both EAF units now in our production schedule, we expect fourth quarter shipments to increase by approximately 25% to 35% versus the third quarter. With volumes weighted toward November and December as we ramp our second EAF unit. We expect a substantial improvement in our underlying EBITDA performance excluding any benefit of the capacity utilization adjustment. Finally, on legal matters, subsequent to quarter end, we reached a negotiated settlement with Haverkoke, resolving the dispute related to historical Coke supply arrangements. The terms of the settlement are confidential. Previously disclosed, we are continuing to respond to other legal proceedings in connection with certain supply agreements affected by the extraordinary and unforeseen tariff environment.

We are not in a position to comment further on this at this time. I would now like to turn the call back over to Rajat for closing comments.

Rajat Marwah: Thanks, Mike. The third quarter tested this team. And the team delivered. With power restored and both EAF units now in our production schedule, we believe the toughest part of our transition is behind us. I want to leave you with 3 takeaways. First, our underlying results improved for a second consecutive quarter. And we delivered that improvement on lower volume. Plate remained the core of our mix and pricing moved in our favor. Second, full generating capability at LSP is restored. And EAF unit 2 is now ramping. Part of a regular production schedule. Our focus now is ramping both units and eliminating the remaining transition costs.

We enter the fourth quarter with a strong price environment, and more production capacity coming online. Third, our position remains clear as Canada's only producer of discrete plate. Demand across infrastructure, construction, and defense end markets is healthy. We believe that once fully ramped, our EAF platform will give us a structural cost and carbon advantage across market cycles. I want to thank our employees for their work through a demanding quarter. Our customers for their trust, and the federal and the Ontario government for their continued partnership. We look forward to updating you on the ramp up of the EAFs when we report our fourth quarter and full year results. 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 and A session.

Operator: Thank you. We will now be conducting a Q&A session. The first question is from Katja Jancic from BMO Capital Markets. Please go ahead.

Katja Jancic: Hi. Thank you for taking my questions. Maybe starting on the volume side. So you mentioned 4Q up 25% to 35%. But then when we look into next year, can you talk a bit about how you are thinking about ramping the 2 furnaces? Or how much volume you think you can produce next year?

Rajat Marwah: The ramp has started, the ramp is going well. And when you are running both the furnaces, you have to learn how to run with both of them as we are not talking simultaneously. it is being arced alternatively. So that learning is happening right now. Our expectation is that next year, we will continue the ramp. And our production by end of the year should be at an average of you know, from 1.5 million to 1.6 million tons by end of the year. But for the average for the year, we are expecting as we see it today because we are still ramping seeing how it goes. It could be around 1.2 million.

Katja Jancic: And then with, you know, price in Canada on the sheet side, have improved. But, I guess, in part because there was not a lot of shipment from your side. So are there concerns that with you ramping up that could impact pricing, or is the market strong enough to support the incremental sheet that is coming to the market?

Rajat Marwah: Yeah. The market pricing changes that is been happening have various factors affecting it. Definitely, there is. there is production that is. The capacity utilization at different mills have been different. The trade between US, Canada that is happening, the measures that the government have taken on Buy Canada and the and the restriction on imports coming in. Based on TRQs put in place. So there are various factors that are coming into play, the market pricing really depends on how the demand supply works. We have been quite disciplined as we grow. We have our customers here. Who we have been working with for a long time, and we will be getting those markets.

And the other thing I will point out is that we have been, most of the production that we have most of the shipments that we have had on the sheet side was primarily on in the US, which has substantially, substantially come down. So we expect the market to balance out as it balances out, and we have been we have been quite mindful of it and quite disciplined.

Katja Jancic: Thank you.

Operator: The next question is from Ian Gillies from Stifel. Please go ahead.

Ian Gillies: Good morning, everyone.

Rajat Marwah: Morning, Ian.

Ian Gillies: I wanted to start with Canadian government response from last week. And the dollars being provided I was hoping you could maybe spend a bit of time outlining the projects where you think funds would be a good fit and how you think funds coming into your business would fit well within the capital stack because there is so many different types of debt in there right now.

Rajat Marwah: Hi, Ian. So the government has been announcing lot of support for some time, and the last 1 that they have announced which is pretty positive for the steel industry is focused on diversification, on products that can be produced, which Canada needs And, you know, we have been we have been looking into diversification ourselves. Our BMEL, you know, the economics and the rationale around the beam mill has not changed.

And we are working with them you know, actively to find out the right program under which it makes sense for us, for Algoma, for all its-- so I can share that much as of now. there is a lot of discussions that is happening on that front, and we are working through it.

Ian Gillies: Okay. Maybe switching gears on the demand side. I mean, you have noted nation building infrastructure related projects. Are there have you seen much in the way of tangible contracts? Or are you bidding into much work at this point that would suggest they are following this by Canada procedure? Because it is a bit newer, and we are still just looking for signals on that.

Rajat Marwah: Yep. You are right. it is newer. it is taking its time to get through the organizations, but we have seen movement that is happening. And we have seen orders that are coming in. And when you say substantial, there are. From plate perspective, there are various projects that run from infrastructure and defense perspective, and we see us being participating in a lot of them. And we are also seeing along with the demand that is coming here, the Buy Canadian policies are helping a lot as well. You are seeing customers who have not, you know, usually bought from us are buying and even who have bought from us are buying more.

So we are seeing that activity happening. From that front, and I think it will it will continue. It will grow as more and more of these procurement contracts come to an end. Where they can be awarded. So we are seeing activities, and that is that is increasing. it is encouraging as well.

Ian Gillies: Okay. And following on the last set of questions in and around the ramp, of the EAF, Is it all due to learning and figuring out the facilities? Or is there any issues? Or have you had any issues yet to date in scrap procurement to get the facility up to a higher utilization rate?

Rajat Marwah: No, scrap has been good. Procurement has not been an issue. I think our. it is the learning curve that you have when you are ramping up. And the and the last outage that happened because of the power issue did not help. While we are ramping up because it creates a lot of other issues around it. So it is only it is only learning. The equipment has performed well. The second EAF unit that came online, has been ramping way faster because we learned a lot on the first unit, which took us longer. And the second 1 is, I mean, tremendously better. So it will help.

And then comes the learning curve where you are learning how to how to flip between the 2 when you are arcing, and it is just that learning curve that helps you to grow. We have not seen any significant issues as such from equipment or supply perspective.

Ian Gillies: Okay. And then, like, I suppose the follow on is if there is a demand signal next year that would require you to produce more than the 1.2 million to 1.3 million that you mentioned. Do you think you have enough flexibility embedded in the system that you could meet that I know it is a lot to ask, but just curious on that front.

Rajat Marwah: You are right. it is it is a lot at this time. We are ramping up. I feel that you know, if the ramp up if the ramp up proceeds and the learning curve quickens, there is definitely possibilities of getting higher. You look at the capacity perspective with the power that we have available and alternate arcing, we could be as high as 1.8 million, 1.9 million tons. Run rate, and we are we are working through it. And it is a little too early to whether we will be there next year and how soon we will be there next year.

I know we will be there probably by end of next year, but it is difficult to say right now how soon we will be there and as we are ramping up. And I will provide more color in the next call definitely on how we are doing it.

Ian Gillies: Understood. Very much. I will turn it back over.

Operator: The next question is from James McGarragle RBC Capital Markets. Please go ahead.

James McGarragle: Hey. Thanks for having me on. And just a housekeeping 1. Did you mention that you are expecting production to exit Q4 of 27 at around 1.5 to 1.6? Or was that exit at the 1.2 million tons for the Q4 27?

Rajat Marwah: Yep. The exit was, you know, at 1.5, 1.6. that is the exit for next year.

James McGarragle: End of 2020 Appreciate that. And can you just give us an update on how you are thinking about your cost base in terms of that level of production? I know you initially talked about, you know, cost or scrap plus $225. But within that level of production, how would you be thinking about your cost base? The, you know, 1.5 to 1.6 million tons of production per year.

Michael Moraca: Yeah. Good morning, James. I think when you look at the cost side, the scrap plus number that you were referencing was when we have greater capacity, which we expect to have early 28 with the additional power that will be available to our site. Next year through the ramp up, we expect to have that, you know, directionally higher from $220 or $225 at this point. And then the step down in 2028 when the new power comes on more in line with those original targets.

Rajat Marwah: Yeah. I mean, the volume is really the biggest driver So as we increase volume even from where we are at now, the cost structure is going to improve, and that is what we are really focused here on driving down the cost, improving the productivity at the at the units.

James McGarragle: Okay. And then in terms of the capacity utilization charge, I know at the beginning of the year, we talked about that going down linearly. But obviously, you know, the outage, I am sure, in Q3, impacted that. So can you just talk about the updated cadence and how you expect that utilization charge to evolve over the upcoming couple quarters?

Michael Moraca: Yeah. I think that in Q3, we still had, you know, higher than we would have expected with the outage we had. But our view on this is unchanged. We do not expect to have an add back to EBITDA in Q4. We are driving that down. That said, we are still on the ramp up curve. And the costs that are in the business today support much higher volumes, which is why we are very focused on the improvement on the ramp up curve. So we do not expect to have an add back to EBITDA, albeit we are still on the ramp up curve, and we expect to improve our cost structure as more volume is produced.

James McGarragle: Okay. And then just 1 final 1 for me on the CapEx related to the turbine. Can you just talk to help us quantify that amount? Just when we are thinking about modeling CapEx for Q4 potentially into early 27. And, you know, was there any structural implications here? You know, did this potentially suggest the LFP facility was undercapitalized? You know, any potential you know, further unplanned outages As we look into next year, we just kind of truly like a 1 off situation. Any color you can provide around that.

Michael Moraca: Yeah. Sure. Look. The outage at Lake Superior was unplanned. We had a premature failure of 1 of our turbines You know, we have the ability also to, hopefully get some insurance proceeds because of that failure. So we will be working on those we work through the process. We really think that bringing the third turbine is the right move here from a redundancy perspective. It also mitigated further downtime that we might have had at the LSP outage during the previous quarter.

And, bringing that third turbine into the mix provides us not only additional redundancy, but opportunities in the future if we can generate more power depending on the market condition in the power environment here in Ontario. So, we think it is a prudent move These are not losing value. The turbines are very, very hard to get. We were fortunate to be able to have access to this turbine. And we are, you know, we are excited that we have that redundancy now. From a monetary perspective, in the quarter or Q3, the down payment flowed through to capital, which you would see in the capital line. that is about 25% of the cost of the turbine.

And the all in cost for the turbine is approximately $35 million USD. Which we are expecting the balance to be financed over a 4-year period. Appreciate it.

James McGarragle: Thank you.

Operator: The next question is from Albert Realini from Jefferies. Please go ahead.

Albert Realini: Hey, good morning, guys. Thank you for taking my question.

Rajat Marwah: Hey, Albert.

Albert Realini: So I think in the second quarter, the guide was 10% to 20% lower shipments as a result of some of the planned maintenance. So You know, 3Q shipments came in just around the top end of that 20% lower, but that was before the LSP outage. So I guess I just want to see if you were able to fully bring forward all of that maintenance, during the outage, or has maybe some been deferred into 4Q or maybe into 1Q 2027 during a seasonal or a weak period?

Michael Moraca: Yeah. We were able to do quite a bit of the tie in work, during that outage, over the 17th to the 29th where we were down in August. You know, we were able to get some additional shipments out through the quarter as well, which flexes through our inventory which is supporting the shipment number in the quarter. Versus the full expectation of that outage. So you know, we will we will have slightly higher production as well in Q4. Which will support some of the inventory that we have, but that was how we managed the quarter.

Albert Realini: Okay. Great. And then just on a follow-up, you know, there is just maybe a lot of moving parts. On the balance sheet. Just so you can give us high level expectation in the fourth quarter, maybe how some of the working capital items are looking? Any of the excess income tax refunds, any excess receipt of that insurance payment. And then I understand the SunCoke settlement is confidential, but, you know, I think they maybe had mentioned $70 million of working capital impacts as a result of the dispute.

So anything to call out there, maybe if not the amount, anything in terms of what you are expecting on a timing of a potential outflow in fourth quarter into sometime next year?

Michael Moraca: Yeah. Sure. I think I will not comment specifically on the amount, although their view of working capital, obviously, is different than how the impact of this may flow through. For us, we do have the balance of the income tax receipts, that have come in post quarter. And we will have you know, some impact from the settlement, which will flow in the quarter as well. So those are really the exogenous items that are in flow. From a working capital perspective, we will build a little bit of raw material working capital as we get closer to the end of the calendar year. To support the ramp up at the EAF.

Albert Realini: Great. Thank you, guys.

Michael Moraca: Thanks, Albert.

Operator: There are no further questions at this time. I would like to turn the floor back over to Laura Devoni for closing comments.

Laura Devoni: Thank you again for your participation in our third quarter 26 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 fourth quarter and full year results.

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

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.