Algoma Steel Group Inc. (NASDAQ:ASTL, TSX:ASTL) (“Algoma” or “the Company”), a leading Canadian producer of hot and cold rolled steel sheet and plate products, today provided guidance for its fiscal second quarter 2023.
Fiscal second quarter 2023 Adjusted EBITDA is expected to be in a range of $75 million to $80 million.
Michael Garcia, the Company’s Chief Executive Officer, commented, “Our projected fiscal second-quarter results largely reflect previously disclosed operational challenges, as well as the continued decline in prices for our finished products, both of which had a negative impact on overall profitability.”
Mr. Garcia continued, “In the quarter we experienced a production shortfall due to various operational challenges, resulting in a decline in shipments to an estimated 415,000 to 425,000 tons for the quarter. The most significant of these challenges was the previously disclosed plate mill modernization commissioning delay. Additionally, volume through our direct strip production complex (DSPC) was negatively affected by production shortfalls mainly due to temporary workforce availability events. We are implementing various measures to address these issues. We believe most plate mill issues are behind us and we are now operating above 80% capacity. We continue to work with our vendor on mill automation software to reach our full product lineup and capacity. With respect to the coal conveyor that was damaged by fire in the quarter resulting in higher costs, repair work is expected to be completed in early October, allowing internal coke production to return to 100% capacity.”
“Amid the challenges faced in the quarter, we continue to see steady demand for our products and are advancing the development and construction of our transformative Electric Arc Furnace project, which remains on time and on budget for a mid-year 2024 start-up. Additionally, we are pleased to have reached a labour agreement with our unionized workforce that provides labour security for the next five years. With a robust balance sheet, a continued strong cash generating outlook, and a prudent capital return program, we believe we are well positioned to address these near-term obstacles and deliver long-term value creation for all of our stakeholders,” Mr. Garcia concluded.
