การประชุมแถลงผลประกอบการไตรมาส 3 ปีงบประมาณ 2026 ของ Algoma Steel (ASTL): การเร่งกำลังการผลิต EAF และแนวโน้มปริมาณการขายไตรมาส 4

ประเด็นสำคัญ

• อัลโกมา สตีล กรุ๊ป (Algoma Steel Group Inc.) มียอดจัดส่งเหล็กประมาณ 144,500 ตัน ในไตรมาส 3 ปีงบประมาณ 2026 ลดลงจาก 419,000 ตันในปีก่อนหน้า และ 181,000 ตันในไตรมาส 2 เนื่องจากช่วงการเปลี่ยนผ่านสู่เทคโนโลยีเตาหลอมไฟฟ้า (EAF) และการขัดข้องของกระแสไฟฟ้าที่เลก ซูพีเรียร์ พาวเวอร์ (Lake Superior Power) เป็นอุปสรรคต่อการผลิต
• EBITDA ปรับปรุงติดลบ 13.9 ล้านดอลลาร์แคนาดา เทียบกับติดลบ 87.1 ล้านดอลลาร์แคนาดาในไตรมาส 3 ปี 2025 หากไม่รวมการปรับปรุงอัตราการใช้กำลังการผลิตและเงินชดเชยจากประกันภัยจำนวน 45 ล้านดอลลาร์แคนาดาในไตรมาส 2 ฝ่ายบริหารระบุว่า EBITDA พื้นฐานปรับตัวดีขึ้นประมาณ 19 ล้านดอลลาร์แคนาดาเมื่อเทียบกับไตรมาสก่อนหน้า แม้ว่าปริมาณการจัดส่งจะลดลงราว 20% ก็ตาม
• ปริมาณการจัดส่งเหล็กแผ่นหนาสูงถึง 105,000 ตัน คิดเป็นประมาณ 73% ของปริมาณการจัดส่งทั้งหมด ขณะที่ราคาขายสุทธิเฉลี่ยเพิ่มขึ้นเป็น 1,510 ดอลลาร์แคนาดาต่อตัน เพิ่มขึ้น 33.7% เมื่อเทียบเป็นรายปี และเพิ่มขึ้น 11% จากไตรมาส 2
• เลก ซูพีเรียร์ พาวเวอร์ สามารถฟื้นฟูกำลังการผลิตไฟฟ้าได้เต็มรูปแบบเมื่อวันที่ 30 กันยายน ส่วนเตาหลอม EAF ยูนิต 2 เริ่มการผลิตเชิงพาณิชย์ครั้งแรกเมื่อวันที่ 9 ตุลาคม และขณะนี้ได้เข้าสู่ตารางการผลิตปกติแล้ว
• ฝ่ายบริหารคาดการณ์ว่าปริมาณการจัดส่งในไตรมาส 4 จะเพิ่มขึ้น 25% ถึง 35% จากไตรมาส 3 โดยปริมาณการผลิตส่วนใหญ่จะกระจุกตัวอยู่ในช่วงเดือนพฤศจิกายนและธันวาคม นอกจากนี้ ยังคาดว่า EBITDA พื้นฐานจะปรับตัวดีขึ้นอย่างมีนัยสำคัญ หากไม่รวมการปรับปรุงอัตราการใช้กำลังการผลิต
• สำหรับปี 2027 ฝ่ายบริหารคาดการณ์การผลิตเฉลี่ยในปัจจุบันไว้ที่ประมาณ 1.2 ล้านตัน และมีอัตราการผลิตปลายปี (exit run rate) อยู่ที่ 1.5 ล้านถึง 1.6 ล้านตัน ทั้งนี้ขึ้นอยู่กับความคืบหน้าในการเร่งกำลังการผลิตของเตาหลอม EAF

ข้อมูลทางการเงินที่สำคัญ

ผลการดำเนินงานทางธุรกิจและการปฏิบัติงาน

เหล็กแผ่นหนายังคงเป็นกลุ่มผลิตภัณฑ์ที่ใหญ่ที่สุดของอัลโกมา สตีล โดยมียอดจัดส่งรวม 105,000 ตัน ซึ่งสูงกว่าไตรมาสเดียวกันของปีก่อนหน้า และคิดเป็นประมาณ 73% ของปริมาณทั้งหมด ฝ่ายบริหารอ้างถึงอุปสงค์ที่สดใสจากลูกค้ากลุ่มโครงสร้างพื้นฐาน การก่อสร้าง และความมั่นคง แม้ว่าปริมาณเหล็กแผ่นหนาจะลดลงจากสถิติสูงสุดที่ 125,000 ตันในไตรมาส 2 เนื่องจากเหตุการณ์ไฟฟ้าดับและการซ่อมบำรุงโรงงานตามแผนงาน

เหตุขัดข้องของกังหันตัวหนึ่งของเลก ซูพีเรียร์ พาวเวอร์ เมื่อวันที่ 17 สิงหาคม ส่งผลให้อัลโกมา สตีล ต้องระงับการผลิตของเตาหลอม EAF จนถึงวันที่ 29 สิงหาคม ก่อนที่จะมีการเปิดใช้งานกังหันทดแทนเมื่อวันที่ 30 กันยายน ซึ่งช่วยฟื้นฟูกำลังการผลิตไฟฟ้าได้เต็มรูปแบบ นอกจากนี้ บริษัทมีแผนจะติดตั้งกังหันเช่าในระหว่างไตรมาส 4 โดยไม่ขัดจังหวะการผลิตเหล็ก ซึ่งจะช่วยให้กังหันที่เพิ่งจัดซื้อมาใหม่ทำหน้าที่เป็นกังหันสำรองพร้อมใช้งาน

เตาหลอม EAF ยูนิต 2 เสร็จสิ้นการทดสอบการจุดอาร์กครั้งแรกก่อนสิ้นไตรมาส และสามารถผลิตเหล็กเชิงพาณิชย์ชุดแรกได้เมื่อวันที่ 9 ตุลาคม ฝ่ายบริหารระบุว่าอุปกรณ์และการจัดหาเศษเหล็กไม่ได้ก่อให้เกิดอุปสรรคสำคัญในการเร่งกำลังการผลิต ข้อจำกัดหลักคือช่วงเวลาเรียนรู้การปฏิบัติงาน ซึ่งรวมถึงการสลับการจุดอาร์กระหว่างเตาหลอมทั้งสองเครื่อง

บริษัทยังคงให้ความสำคัญกับยุทธศาสตร์ "Plate-First" ที่เน้นตลาดแคนาดาเป็นหลัก ขณะที่ภาษีศุลกากรตามมาตรา 232 ของสหรัฐฯ ในอัตรา 50% สำหรับเหล็กจากแคนาดายังคงมีผลบังคับใช้ อย่างไรก็ตาม ปริมาณการจัดส่งไปยังสหรัฐฯ ที่ลดลงได้ส่งผลให้ต้นทุนภาษีศุลกากรโดยตรงลดลงเหลือ 18.1 ล้านดอลลาร์แคนาดา ฝ่ายบริหารคาดว่ายอดขายเหล็กแผ่นม้วนจะเพิ่มขึ้นตลอดไตรมาส 4 และต่อเนื่องไปยังปี 2027 ตามการเพิ่มกำลังการผลิตของเตาหลอม EAF และเมื่อสภาวะตลาดเอื้ออำนวย

แนวทางดำเนินงานจากฝ่ายบริหาร

ฝ่ายบริหารคาดการณ์ว่าปริมาณการจัดส่งในไตรมาส 4 ของปีงบประมาณจะเพิ่มขึ้นประมาณ 25% ถึง 35% จากไตรมาส 3 โดยคาดว่าการผลิตและการจัดส่งจะเน้นหนักไปในช่วงเดือนพฤศจิกายนและธันวาคม ขณะที่เตาหลอม EAF ยูนิต 2 เร่งกำลังการผลิต

นอกจากนี้ บริษัทคาดว่าผลประกอบการ EBITDA พื้นฐานจะปรับตัวดีขึ้นอย่างมาก หากไม่รวมประโยชน์จากการปรับปรุงอัตราการใช้กำลังการผลิต ทั้งนี้ ฝ่ายบริหารไม่คาดว่าจะมีการบวกกลับรายการอัตราการใช้กำลังการผลิตใน EBITDA ปรับปรุงในไตรมาส 4 แม้ว่าต้นทุนช่วงเปลี่ยนผ่านและต้นทุนคงที่ที่ยังดูดซับได้ไม่เต็มที่จะยังคงอยู่ระหว่างการขยายกำลังการผลิตก็ตาม

สำหรับปี 2027 ฝ่ายบริหารประเมินการผลิตเฉลี่ยในปัจจุบันไว้ที่ประมาณ 1.2 ล้านตัน และมีอัตราการผลิตปลายปีอยู่ที่ 1.5 ล้านถึง 1.6 ล้านตัน โดยระบุว่าระบบอาจแตะระดับอัตราการผลิตที่ 1.8 ล้านถึง 1.9 ล้านตันได้ในที่สุด หากมีพลังงานไฟฟ้าเพียงพอและการสลับการจุดอาร์กของเตาหลอมดำเนินไปได้ดี แต่เน้นย้ำว่ากรอบเวลายังคงมีความไม่แน่นอน

ความเสี่ยงและประเด็นที่ต้องให้ความสำคัญ

• จังหวะความเร็วในการเร่งกำลังการผลิตของเตาหลอม EAF ทั้งสองเครื่องยังคงขึ้นอยู่กับการเรียนรู้การปฏิบัติงานและการเพิ่มอัตราการใช้กำลังการผลิต
• การผลิตที่ลดลงยังคงสร้างแรงกดดันต่อการดูดซับต้นทุนคงที่ ทั้งนี้ ที่ระดับปริมาณการเร่งกำลังการผลิตในปี 2027 ฝ่ายบริหารคาดว่าตัวชี้วัดต้นทุน "เศษเหล็กบวกส่วนเพิ่ม" (scrap plus) ของบริษัทจะยังคงมีแนวโน้มสูงกว่าระดับ 220 ถึง 225 ดอลลาร์แคนาดาที่เคยอ้างถึงก่อนหน้านี้
• ภาษีศุลกากรตามมาตรา 232 ของสหรัฐฯ ในอัตรา 50% ยังคงเป็นข้อจำกัดต่อการจัดส่งไปยังสหรัฐฯ และช่วยสนับสนุนการปรับเปลี่ยนเป้าหมายของบริษัทไปสู่กลุ่มลูกค้าในแคนาดา
• เหตุการณ์ไฟฟ้าดับของเลก ซูพีเรียร์ พาวเวอร์ เป็นเหตุการณ์ที่ไม่สามารถคาดการณ์ได้ อัลโกมา สตีล กำลังเพิ่มระบบกังหันสำรองและวางแผนที่จะยื่นเรียกร้องค่าสินไหมทดแทนจากประกันภัยที่เกี่ยวข้องกับความเสียหายก่อนเวลาอันควร
• บริษัทคาดว่าจะต้องสำรองเงินทุนหมุนเวียนสำหรับวัตถุดิบเพิ่มขึ้นในช่วงใกล้สิ้นปีปฏิทินเพื่อรองรับการเร่งกำลังการผลิตของเตาหลอม EAF
• อัลโกมา สตีล ยังคงดำเนินการรับมือกับกระบวนการทางกฎหมายที่เกี่ยวข้องกับข้อตกลงการจัดหาวัตถุดิบที่ได้รับผลกระทบจากสภาวะภาษีศุลกากร นอกจากนี้ บริษัทยังได้บรรลุข้อตกลงประนีประนอมยอมความแบบลับกับแฮฟเวอร์ฮิลล์ โค้ก (Haverhill Coke) หลังสิ้นไตรมาส

สาระสำคัญช่วงถาม-ตอบกับนักวิเคราะห์

ฝ่ายบริหารระบุว่าการเร่งกำลังการผลิตของเตาหลอม EAF มีความคืบหน้าโดยไม่มีปัญหาสำคัญด้านอุปกรณ์หรือการจัดหาเศษเหล็ก โดยยูนิต 2 มีการเร่งกำลังการผลิตได้เร็วกว่ายูนิต 1 เนื่องจากบริษัทได้นำบทเรียนจากการติดตั้งเครื่องแรกมาปรับใช้

เกี่ยวกับอุปสงค์ในแคนาดา ฝ่ายบริหารกล่าวว่านโยบายสนับสนุนสินค้าแคนาดา (Buy Canadian) เริ่มส่งผลต่อการตัดสินใจซื้อ โดยลูกค้าเดิมสั่งซื้อเพิ่มขึ้น ขณะที่ลูกค้าบางรายที่ไม่เคยซื้อจากอัลโกมา สตีล ในอดีต ก็เริ่มหันมาสั่งซื้อแล้ว นอกจากนี้ บริษัทยังอยู่ระหว่างการหารือเกี่ยวกับความช่วยเหลือที่เป็นไปได้จากภาครัฐสำหรับโครงการกระจายความเสี่ยง ซึ่งรวมถึงโครงการโรงงานผลิตเหล็กเอชบีม (beam mill) ที่เสนอไว้

ฝ่ายบริหารระบุว่าปริมาณการผลิตเป็นปัจจัยขับเคลื่อนที่ใหญ่ที่สุดในการปรับปรุงต้นทุนในอนาคต โดยต้นทุนควรจะลดลงเมื่ออัตราการใช้กำลังการผลิตเพิ่มขึ้น และคาดว่ากำลังการผลิตไฟฟ้าที่เพิ่มขึ้นจะช่วยสนับสนุนการปรับตัวดีขึ้นเพิ่มเติมในช่วงต้นปี 2028

กังหันทดแทนมีต้นทุนเบ็ดเสร็จโดยประมาณ 35 ล้านดอลลาร์สหรัฐ โดยประมาณ 25% ได้สะท้อนอยู่ในรายจ่ายลงทุนของไตรมาส 3 แล้ว ขณะที่บริษัทคาดว่าจะผ่อนชำระส่วนที่เหลือเป็นระยะเวลาสี่ปี

หลังสิ้นไตรมาส อัลโกมา สตีล ได้รับเงินคืนภาษีเงินได้เพิ่มเติมอีก 35 ล้านดอลลาร์แคนาดา รวมถึงเงินชดเชยประกันภัยที่ค้างชำระอยู่อีก 45 ล้านดอลลาร์แคนาดา ซึ่งเกี่ยวข้องกับเหตุการณ์ท่อส่งสาธารณูปโภคถล่มเมื่อปี 2024 นอกจากนี้ ข้อตกลงประนีประนอมยอมความแบบลับกับแฮฟเวอร์ฮิลล์ โค้ก จะส่งผลต่อกระแสเงินสดในไตรมาส 4 ด้วยเช่นกัน

บันทึกการประชุมผลประกอบการฉบับเต็ม

บทถอดเสียงฉบับเต็มของการประชุมทางโทรศัพท์ผลประกอบการ

คำชี้แจงจากฝ่ายบริหาร

Operator

Greetings, and welcome to the Algoma Steel Group Inc. Third Quarter 2026 Earnings Call. [Operator Instructions] 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 Inc.'s Third Quarter 2026 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 U.S. 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&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 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.

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 brought EAF Unit Two to first arc. Sending every employee home safely every day is just as important to us as any of those milestones. I'm 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 Two 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 145,000 tons and delivered adjusted EBITDA within our guidance range at negative $14 million. Excluding the capacity utilization adjustment and last quarter's insurance settlement, adjusted EBITDA improved by approximately $19 million from the second quarter, our second consecutive quarter of underlying improvement, delivered on lower volume, which Mike will walk you through shortly.

Second, plate performance. We shipped 105,000 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 $1,510 per ton, up 11% from the second quarter on high 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 record 125,000 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 Two. On October 9, we achieved our first commercial production of steel from the new EAF, a major milestone for Algoma and the result of years of disciplined execution by our employees and contractors. EAF Unit Two 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 off. The remaining turbine was not affected. LSP supplies electricity to our melt shop, so we temporarily suspended EAF production to address this.

We quickly worked with the Independent Electricity System Operator on interim operating arrangements 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 IESO and Hydro One 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 leased 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 EAF production and 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 by 83% from the prior year quarter. The 50% U.S. Section 232 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 government for last week's announcement to protect Canada and Ontario steel industry. The measure creates a new joint steel action fund to help the industry diversify production towards 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 mills. Together, they 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 2026 and the third quarter of 2025 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 2026, 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 quarter included a noncash impairment loss of $503.4 million.

Now on to the results. We shipped approximately 144,500 tons compared to 419,000 tons in the prior year quarter and 181,000 tons in the second quarter. Volumes moved lower, reflecting the accelerated transition to EAF-only steelmaking due to the impact of U.S. Section 232 tariffs on export sales and the LSP outage. Shipments were in line with our October 1 guidance of approximately 145,000 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 $1,510 per ton, up 33.7% from $1,129 per ton in the prior year quarter and up from $1,361 per ton in the second quarter, reflecting higher steel prices and a greater share of plate in our mix, partly offset by a lower proportion of our premium plate grades during the outage.

Cost per ton of steel products sold was $1,492 per ton compared to $1,282 per ton in the prior year quarter and $1,411 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 $13.9 million, representing an adjusted EBITDA margin of negative 5.6%. This compares to an adjusted EBITDA loss of $87.1 million in the prior year quarter, which represented a margin of negative 16.6%, an improvement of $73.2 million. Second quarter adjusted EBITDA of $13.8 million included a $45 million insurance settlement, which we'll come back to.

Excluding the capacity utilization adjustment, adjusted EBITDA was a loss of approximately $67 million, an improvement of approximately $20 million versus the prior year quarter on about 1/3 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 approximately 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 Two 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 of advances 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 approximately $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 towards 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 Haverhill Coke resolving the dispute related to historical coke supply arrangements. The terms of the settlement are confidential. As 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're not in a position to comment further on this at this time.

I'd 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 Two is now ramping and part of our regular production schedule. Our focus now is ramping both units and eliminating the remaining transition costs. We entered 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 market 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 EAF 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&A session.

Operator

[Operator Instructions] The first question is from Katja Jancic from BMO Capital Markets.

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Katja Jancic

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're thinking about ramping the 2 furnaces? Or how much volume you think you can produce next year?

Rajat Marwah

The ramp has started and the ramp is going well. And when you're running both the furnaces, you have to learn how to run with both of them as we are not arcing simultaneously. It's being arc alternatively. So that learning is happening right now. Our expectation is that next year, we'll continue to ramp.

And our production by end of the year should be at an average of anywhere 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 and seeing how it goes, it could be around 1.2 million.

Katja Jancic

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

Rajat Marwah

Yes. The market pricing changes that's been happening has various factors affecting it. Definitely, there's production that's -- the capacity utilization at different mills have been different.

The trade between U.S., Canada that's happening, the measures that the government have taken on Buy Canadian and the restriction on imports coming in based on TRQs put in place. So there are various factors that are coming into play and the market pricing really depends on how the demand supply works.

We've been quite disciplined as we grow. We have our customers here who we've been working with for a long time, and we'll be getting into those markets.

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

Operator

The next question is from Ian Gillies from Stifel.

Ian Gillies

I wanted to start with the 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's so many different types of debt in there right now.

Rajat Marwah

So the government have been announcing a lot of support for some time. And the last one that they've announced, which is pretty positive for the steel industry is focused on diversification, on products that can be produced, which Canada needs. And we've been looking into diversification ourselves.

Our beam mill, the economics and the rationale around the beam mill has not changed, and we are working with them actively to find out the right program under which it makes sense for us, for Algoma, for all its stakeholders. So I can share that much as of now. There's a lot of discussions that's happening on that front, and we are working through it.

Ian Gillies

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

Rajat Marwah

Yes, you're right. It's newer. It's taking its time to get through the organizations, but we've seen movement that's happening, and we've 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's coming here, the Buy Canadian policies are helping a lot as well. We're seeing customers who have not usually bought from us are buying and even customers who have bought from us are buying more. So we are seeing that activity happening from that front. And I think 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's increasing, and it's encouraging as well.

Ian Gillies

Okay. And following on the last set of questions 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 issues. I think it's the learning curve that you have when you're ramping up. 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's only learning. The equipment has performed well.

The second EAF unit that came online has been ramping way, way faster because we learned a lot on the first unit, which took us longer. And the second one is, I mean, tremendously better. So it will help. And then comes the learning curve where you are learning how to flip between the 2 when you're near arcing. And it's just that learning curve that helps you to grow. We've not seen any significant issues as such from equipment or supply perspective.

Ian Gillies

Okay. And then I suppose the follow-on is if there's 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's a lot to ask, but just curious on that front.

Rajat Marwah

You're right. It's a lot at this time. We are ramping up. I feel that if the ramp-up proceeds and the learning curve quickens, there is definitely possibilities of getting higher. When 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 working through it.

And it's a little too early to say whether we will be there next year and how soon we'll be there next year. I know we will be there probably by end of next year, but it's -- it's difficult to say right now how soon we'll be there and as we are ramping up. And I'll provide more color in the next call definitely on how we are doing it.

Operator

The next question is from James McGarragle from RBC Capital Markets.

James McGarragle

And just a housekeeping one. Did you mention that you're expecting production to exit Q4 of '27 at around 1.5 million to 1.6 million? Or would that exit at 1.2 million tons for the Q4 '27?

Rajat Marwah

Yes. The exit was at 1.5 million, 1.6 million. That's the exit for next year.

James McGarragle

Appreciate that. And can you just give us an update on how you're thinking about your cost base in terms of that level of production? I know you initially talked about cost per scrap plus 225. But within that level of production, how would you be thinking about your cost base at 1.5 million, 1.6 million tons of production per year?

Michael Moraca

Yes. 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 directionally higher from 220 or 225 at this point.

James McGarragle

And then the step down in '28 when the new power comes on more in line with those original targets?

Michael Moraca

Yes. I mean the volume is really the biggest driver. So as we increase volume even from where we're at now, the cost structure is going to improve, and that's what we're really focused here is driving down the costs, improving the productivity 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 literally. But obviously, the outage, I'm 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 of quarters?

Michael Moraca

Yes. I think that in quarter 3, we still had 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're driving that down. That said, we're still on the ramp-up curve and the costs that are in the business today support much higher volumes, which is why we're very focused on the improvement on the ramp-up curve.

So we don't expect to have an add-back to EBITDA, albeit we're 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 one final one for me on the CapEx related to the turbine. Can you just talk to help us quantify that amount just when we're thinking about modeling CapEx for Q4 potentially into early 2027. And was there any structural implications here? Does this potentially suggest the LSP facility was undercapitalized? Any potential for further unplanned outages as we look into next year? Or this kind of truly like a one-off situation? Any color you can provide around that?

Michael Moraca

Yes, sure. Look, the outage at Lake Superior was unplanned. We had a premature failure of one of our turbines -- we have the ability also to hopefully get some insurance proceeds because of that failure. So we'll be working on those as we adjudicate 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 conditions in the power environment here in Ontario.

So we think it's a prudent move. These are not losing value. The turbines are very, very hard to get. We were fortuitous to be able to have access to this turbine. And we're excited that we have that redundancy now.

From a monetary perspective, in the quarter, Q3, the down payment flowed through to capital, which you would see in the capital line, that's about 25% of the cost of the turbine. And the all-in cost for the turbine is approximately USD 35 million, which we are expecting the balance to be financed over a 4-year period.

Operator

The next question is from Albert Realini from Jefferies.

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 3Q shipments came in just around the top end of that 20% lower, but that was obviously before the LSP outage.

So I guess I just wanted to see if you were able to fully bring forward all of that maintenance during the outage or have maybe some been deferred into Q4 or maybe into 1Q '27 during a seasonally weak period?

Michael Moraca

Yes. We were able to do quite a bit of the tie-in work during that outage over the 17th to 29th, where we're down in August. 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 we'll 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, there's maybe a lot of moving parts on the balance sheet. Just maybe you can give us a 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 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're expecting on a timing of potential outflow in fourth quarter into sometime next year?

Michael Moraca

Yes, sure. I think I won't 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 some impact from the settlement, which will flow in the quarter as well. So those are really the exogenous items that are on cash 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.

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 2026 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.