Algoma Steel : Q3 F2024 Earnings Call Presentation

Earnings Call Presentation

For the Quarter ended December 31st, 2023

NASDAQ:ASTL TSX: ASTL

February 7th, 2024

in Canadian dollars unless otherwise noted

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 (collectively, "forward looking statements"). Forward-looking statements and information generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "should", "plans", "budget", "continue" or similar expressions suggesting future outcomes or events. Forward-looking statements and information include, but are not limited to, statements regarding the operations, business, financial condition, expected financial results, performance, opportunities, strategies, outlook and guidance of Algoma Steel Group Inc. (the "Company" or "Algoma"), Algoma's strategic objectives, its implementation of an ISO 45001 Safety Management System, its expectation to continue to pay a quarterly dividend, potential purchases under its normal course issuer bid, and Algoma's transformation to electric arc furnace steelmaking (the "EAF Transformation"), including the expected timing of the EAF Transformation and the resulting effects on the Company, expectations regarding future economic conditions, including the price of steel, potential recession and fluctuations in interest rates, Algoma's capitalization and ability to create value for its shareholders.

Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forward-looking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause the actual results, performance or achievements of the Company to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements and information. The material factors or assumptions that were applied by us in drawing conclusions or making forecasts or projections set out in the forward-looking statements and information, and those risks, uncertainties and other factors that could cause actual results to differ materially from the forward‐looking statements and information, include, but are not limited to: global and North American product demand; production levels and capacity utilization; the risks associated with the steel industry generally, including the price of steel; the ability of the Company to implement and realize its business plans, including the EAF Transformation; the risk of downturns and a changing regulatory landscape in the Company's highly competitive and cyclical industry; future results of operations; future cash flow and liquidity; future capital investment; the impact of the foregoing items on our debt service obligations; our ability to operate our business, remain in compliance with debt covenants; restrictive covenants in debt agreements limiting our discretion to operate our business; plant operating performance; upgrades to our facilities and equipment; our joint venture arrangements; our research and development activities; our ability to source raw materials and other inputs at a competitive cost; debt financing, government or regulatory accommodation for key operational inputs and other current or future compliance requirements; our ability to supply to new customers and markets; our ability to effectively manage costs; our ability to attract and retain key personnel and skilled labour; our ability to obtain and maintain existing financing on acceptable terms, when required; changes in environmental, climate change, tax and other laws, rules and regulations, including international trade regulations and global data privacy laws; growth in steel markets and industry trends; significant domestic and international competition; increased use of competitive products; a protracted fall in steel prices; plant operating performance; product mix; level of contract sales; excess capacity, resulting in part from expanded production in China and other developing economies; low-priced steel imports, import levels and government actions or lack of actions with regard to imports; protracted declines in steel consumption caused by poor economic conditions in North America or by the deterioration of the financial condition of our key customers; increases in annual funding obligations resulting from our under-funded pension plans; supply and cost of raw materials and energy; natural gas prices and usage; the cost and reliability of third party suppliers and service providers; currency fluctuations; environmental compliance and remediation; unexpected equipment failures and other business interruptions; a protracted global recession or depression; North American and global economic performance and political developments; and changes in general economic conditions, including as a result of the COVID-19 pandemic, inflation, rising interest rates and the ongoing impact of the conflict in Ukraine.

The foregoing list of factors is not exhaustive and readers should also consider the other risks and uncertainties set forth in the section entitled "Risk Factors" and "Cautionary Note Regarding Forward-Looking Information" in Algoma's Annual Information Form for the year ended March 31, 2023, filed by Algoma with applicable Canadian securities regulatory authorities (available under the company's SEDAR+ profile at www.sedarplus.ca) and with the U.S. Securities and Exchange Commission (the "SEC"), as part of Algoma's Annual Report on Form 40-F (available at www.sec.gov), as well as in Algoma's current reports with the Canadian securities regulatory authorities and the SEC.

Given these risks, uncertainties and other factors, readers should not place undue reliance on forward‐looking statements or information as a prediction of actual results. The forward‐looking statements and information reflects management's current expectations and beliefs regarding future events and operating performance and is based on information currently available to management. Although we have attempted to identify important factors that could cause actual results to differ materially from the forward‐looking statements and information contained herein, there are other factors that could cause results not to be as anticipated, estimated or intended. The forward‐looking statements and information contained herein is current as of the date hereof and, except as required under applicable law, we do not undertake to update or revise it to reflect new events or circumstances.

Certain information in this presentation may be considered as "financial outlook" within the meaning of applicable securities legislation. The purpose of this financial outlook is to provide readers with disclosure regarding the Company's

reasonable expectations as to the anticipated results of its proposed business activities for the periods indicated. Readers are cautioned that the financial outlook may not be appropriate for other purposes.

PRESENTATION OF FINANCIAL INFORMATION

The Company's fiscal year runs from April 1st to March 31st. The Company and its subsidiaries' functional currency is the United States dollar ("US dollar" or "US$"). The US dollar is the currency of the primary economic environment in which the Company and subsidiaries operate. The items included in the unaudited condensed interim consolidated financial statements are measured using the US dollar.

For reporting purposes, the unaudited condensed interim consolidated financial statements are presented in millions of Canadian dollars ("C$" or "$"). The assets and liabilities are translated into the reporting currency using exchange rates prevailing at the end of each reporting period. Income and expense items are translated at average exchange rates for the reporting period. Exchange differences arising are recognized in other comprehensive income and accumulated in equity under the heading 'Foreign exchange on translation to presentation currency.'

The Company's financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS"). IFRS differs in certain material respects from U.S. generally accepted accounting principles ("U.S. GAAP"). As such, the Company's financial statements are not comparable to the financial statements of U.S. companies prepared in accordance with U.S. GAAP.

This presentation should be read in conjunction with, the Company's December 31, 2023 interim unaudited consolidated financial statements and the accompanying notes.

NON-IFRS MEASURES

To supplement our financial statements, we use certain non-IFRS measures to evaluate the performance of Algoma. These terms do not have any standardized meaning prescribed within IFRS and, therefore, may not be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing a further understanding of our financial performance from management's perspective and providing management and investors with additional information for comparison of our operating results across different time periods and to the operating results of other companies. Accordingly, they should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. Please refer to the Company's most recent MD&A for further discussion of these non-IFRS financial measures, including Adjusted EBITDA, and for a reconciliation to comparable IFRS measures, including net income. See also Annex: Adjusted EBITDA Reconciliation on slide 13.

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Earnings Call Agenda

Today's Presenters:

Michael Garcia

Chief Executive Officer

Rajat Marwah

Chief Financial Officer

Safety Performance

Financial Performance

Market Update

Strategic Update

Questions & Answers

2

Safety Without Compromise

Continued Focus and Improvement in Lost Time Injury Frequency Rate (LTIFR)1

	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 priority and to further the
	Company's efforts to improve, we are implementing an ISO 45001
	Safety Management System
1.00	• Algoma employs a Joint Health and Safety System to provide a

healthy and safe workplace

0.90	• Proud participants in the WSIB Health & Safety Excellence Program,
	joining businesses from across Ontario in the exchange of best
	practices, training and development

			0.30		0.30		0.30
						0.20			0.19	0.23
											0.16
											0.14
				0.10				0.10
										0.08
													0.04
F2010	F2011	F2012	F2013	F2014	F2015	F2016	F2017	F2018	F2019	F2020	F2021	F2022	F2023	F2024
														YTD

Safety is Top Priority for Algoma

Source: Company information.

1) Lost Time Injury Frequency is calculated as ((Number of lost time injuries in the reporting period x 200,000) / Total hours worked in the reporting period).

3

Key Performance Highlights

Q3 FY2024 - Ended December 31st, 2023

• Shipping volume was 516K NT in Q3 FY2024, down 6% from 549K NT in Q2 FY2024 and up 13% from 458K NT in Q3 FY2023.
• Steel Revenue was $557 million in Q3 FY2024, down 16% from $666 million in Q2 FY2024 and up 9% from $512 million in Q3 FY2023.
• Adjusted EBITDA was $-1 million in Q3 FY2024, down $82 million from $81 million in Q2 FY2024 and up $35 million from $-36 million in Q3 FY2023.
• Net Income was $-85 million in Q3 FY2024, down $-116 million from $31 million in Q2 FY2024 and down $15 million from $-70 million in Q3 FY2023.
• Cash position was $95 million at the end of Q3 FY2024 with availability of $332 million under the Revolving Credit Facility

Y Q3 FY2024 YTD	1,634 kNT	$1,977 million	$271 million
Adjusted EBITDA
	Shipments	Steel Revenue

Adjusted EBITDA margin fiscal YTD was 12.5%

Source: Company Q3 FY2024 Management's Discussion and Analysis	4
Adjusted EBITDA and Adjusted EBITDA margin are non-IFRS financial measures. See Annex: Adjusted EBITDA Reconciliation on Slide 13

Third Quarter Financial Highlights

Shipping volume ('000s tons)

Net Sales Realization per ton ($/ton)

Steel Revenue($ million)

Cost of Steel Products Sold ($/NT)

Adjusted EBITDA ($ million)

Net Income ($ million)

Q3 FY2024	Q3 FY2023	Change	Q2 FY2024	Change
516	458	↑	13%	549	↓	-6%
1,079	1,116	↓	-3%	1,213	↓	-11%
557	512	↑	9%	666	↓	-16%
1,027	1,157	↓	-11%	1021	↑	1%
(1)	(36)	↑	N/A	81	↓	N/A
(85)	(70)	↓	N/A	31	↓	N/A

Algoma Q3 FY2024 Quarterly Adjusted EBITDA Margin was -0.2%

Source: Company Q3 FY2024 Management's Discussion and Analysis

Adjusted EBITDA and Adjusted EBITDA margin are non-IFRS financial measures. See Annex: Adjusted EBITDA Reconciliation on Slide 13

5

Overview of Net Working Capital Seasonality

Net Working

Capital $M1

	$1,250
	$1,050
millions)	$850
$650
	$450
($	$250
	$50
	-$150
	-$350

$	573	$	589	$	588	$	568	$	641	$	687	$	762	$	623	$	633	$	825	$	926	$	875	$	815	$	849	$	897

																				$823	$887
										$616					$866		$912
							$486			$480	$638		$723	$759
						$470
	$489	$490	$525	$415
	$259	$313	$409		$435	$389	$311	$237		$221	$277	$272	$292	$268
	$149	$175	$143
($55)	($59)	($61)	($79)	($122)	($166)	($165)	($182)	($156)	($162)	($134)	($110)	($172)	($219)	($256)
	($11)	($17)	($19)	($27)	($14)
	($20)	($42)		($123)	($64)	($159)	($117)	($73)	($45)	($48)
										($1)
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4		Q1	Q2	Q3	Q4	Q1	Q2	Q3
		FY 2021			FY 2022					FY 2023			FY 2024
				Accounts Payable (net of prepaids)			Accounts Recievable			Inventory		Taxes Payable (net)

Source Q3 FY2024 Notes to the Financial Statements:

(1) Please note that the chart shown includes Inventory, Trade Receivables, Payables Net of Prepaids, and Taxes Payable Net of Taxes Receivable

6

Construction Update

Rendering becoming Reality

Project Statistics2:

Concrete				Fume Treatment
22,033 cu/m		Dust Hoods
		Plant Foundations
Structural steel		50% installed
		95% complete
11,000 tons
				No.2 Baghouse
Utility Room#1 floor		Meltshop building		equipment
slab completed		roofing 40%		Installation
				30%
Shell Reline		Both Charging		Water Treatment
	Cranes		Plant Excavation
Foundations
	Major components		complete,
90% complete
	installed		Foundation 8%

By the numbers2:

Cumulative $509M

Spending

Remaining $76M

SIF Loan

Project $753M

Commitments

ProjectBudget $825-875M

1. Photo taken February 2, 2024
2. Project Estimates at December 31, 2023

7

Market Update

North American HRC price rebounding/ Plate pricing remains strong

Historical Hot Rolled Coil (HRC) and As Rolled Plate Prices (ARP) (US$/ton)

Key Market Drivers

$2,200

CRU Index HRC / ARP

$2,000

$1,800

$1,600

$1,400

$/NT

$1,200

$1,000

$800

$600

ARP

HRC

$400

11/4/2020

12/9/2020

1/13/2021

2/17/2021

3/24/2021

4/28/2021

6/2/2021

7/7/2021

8/11/2021

9/15/2021

10/20/2021

11/24/2021

12/29/2021

2/2/2022

3/9/2022

4/13/2022

5/18/2022

6/22/2022

7/27/2022

8/31/2022

10/5/2022

11/9/2022

12/14/2022

1/18/2023

2/22/2023

3/29/2023

5/3/2023

6/7/2023

7/12/2023

8/16/2023

9/20/2023

10/25/2023

11/29/2023

1/3/2024

• Index HRC increased approx. 66% over Q3 after the big 3 automakers all finalized their respective labor contracts with United Steelworkers (USW) with a recent high of $1,099 NT.
• The spread between HRC and ARP has narrowed as HRC prices strengthened

Macro Economic Drivers

• In January, the United States Federal Reserve kept its key interest rate unchanged, indicating that a rate cut would only be considered upon observing concrete evidence of inflation returning to the 2% target.
• The US economy remained resilient with 3% quarter over quarter growth versus expectations of 2%; despite 22 year record high interest rates.

Source: Market data as of January 31, 2024.

8

Committed to our Path Forward, Creating a Track

Record of Success

Strategic Direction

Operational & Capital Improvements Algoma has developed and executed numerous operational and capital projects that add long term value to the business

Financial Discipline Algoma is has focused on streamlining its balance sheet, finding effective sources of capital to fund its strategic initiatives and providing long term value to stakeholders

Strategic Partnerships Algoma continues to develop partnerships focused on de- risking the organization and creating long term value for stakeholders

ESG Focus Algoma is committed to initiatives geared at driving performance, reducing risk and developing a culture of organizational excellence that improve our ESG performance

Ladle Met Furnace	EAF Approval	PMM Phase 1	LSP Power Plant	EAF Project	PMM Phase 2	PMM Phase 2
#2	Received board	Enhancing quality and	Installation of new	Construction	Commissioning Heavy	Final installation of key
debottlenecks	approval to begin	expanding grade	turbines to support	progresses on	Gauge Inline Shear	elements to complete
operations and	construction of	range on Canada's	power generation for	transformative electric		project
increases capacity	Electric Arc Furnace	only discrete plate mill	EAF project	arc furnace
		2022
Feb 2021	Nov 2021		June 2023	2021-2024E	Oct 2023	2024E
Return to Public	Debt pay down	Regular Dividend	Substantial Issuer	Normal Course	ABL Renewal	Low Leverage Profile
Markets	Algoma extinguished	Algoma commenced	Bid	Issuer Bid	Amend and extend	Algoma maintains a
including Equity	all of its $358M USD	quarterly dividend of	Algoma buys back	Algoma renewed its	Algoma's now upsized	robust balance sheet with
injection of $306M	Sr. Secured debt	$.05 / share	approx. 1/3 of	NCIB for share	US$300M asset-	liquidity to support market
USD			outstanding shares	repurchases	based loan	fluctuations and its capital
						initiatives
Oct 2021	Nov 2021	Mar 2022	Aug 2022	2023/24	May 2023	Ongoing
Walters	EllisDon	DSV	United States Steel	IESO	Ontario Government	EAF Contractors
Selected to fabricate	Construction mgmt	Global logistics	2-year extension ore	Provides Conditional	Issued Order in	Remaining contract
and construct EAF	support contract for	support for delivery of	contract de-risking	Approval of Phase 1	Council to expedite	awards partering with
Meltshop Building and	EAF construction	EAF equipment	transformation to EAF	& 2 Systemt Impact	transmission lines	select contractors for
other EAF equipment				Assesment	construction	equipment and
2023-2025E						infrastructure installation
	2023-2025E	2023-2025E	Sep 2023	2023	2029E	2024E
Focus on Safety	Newly Constituted	Performance	Enterprise Risk	ESG Position Paper	ESG Sustainability	Emission Reduction
Including zero lost	Board	Management	Management	Published Algoma's	Report	EAF project expects to
time incidents for the	diversity of	Implemented a robust	Develop a culture of	approach to ESG	Algoma publishes its	reduce emissions 70%
past 2 Fiscal Quarters	experience, thought	performance	risk management		inagural ESG report	and improve GHG
	and perspective	management system				performance
				April 2023	2023
Apr - Sep 2021	Oct 2021	May 2019	Nov 2019

Upcoming

Ongoing / Completed Recently Announced

We are positioning Algoma for a new era in steel, well-capitalized to make critical

investments that enhance long term performance and create value for our shareholders

9