Thank you for standing by and welcome to the Stelco Holdings Inc. Third Quarter 2022 Earnings Call. My name is Sam and I'll be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad at any time. I'll now hand the call over to Trevor Harris with Stelco. Trevor. Good morning, everyone, and welcome to Stelco's Quarterly Earnings Conference Call. Speaking on the call today to discuss our results for the third quarter of 2022 will be Alan Kestenbaum, our Executive Chairman and Chief Executive Officer, and Paul Scherzer, our Chief Financial Officer. Yesterday, after the market closed, we issued a press release overviewing Stelco's Financial Results for the Third Quarter of 2022. This press release, along with the company's financial statements and management's discussion and analysis, have been posted on SEDAR and on our investor relations website at investors.stelco.com. We have provided a link to the presentation referenced on today's call on our website as well. I'd like to inform everyone that comments made on today's call may contain forward-looking statements which involve assumptions which have inherent risks and uncertainties. Actual results may differ materially from the statements made today, so do not place undue reliance on them. Stelco management disclaims any obligation to update forward-looking statements except as required by law. With that in mind, I would ask everyone on the call to read the legal disclaimers on page 2 of the accompanying earnings presentation, and also to refer to the risks and assumptions outlined in Stelco's public disclosures. In particular, the third quarter 2022 Management's Discussion and Analysis sections relating to forward-looking information and risks and uncertainties, as well as our filings with securities commissions in Canada. The appendix of our presentation and the non-IFRS performance measures and review of non-IFRS measures of our MD&A provide definitions and reconciliations of the non-IFRS measures that we use today. Please also note that all dollar figures referred to on today's call will be in Canadian dollars unless otherwise noted. Following today's prepared remarks, Alan and Paul will be taking questions. To maximize efficiency, we ask that all participants who would like to ask a question please limit themselves to one question and one follow-up before re-queuing. With that, I would now like to turn the call over to Alan. Thank you, Trevor, and good morning, everyone. Through the third quarter of 2022, Stelco was once again able to demonstrate our resilience and take full advantage of our structural cost advantage, while at the same time delivering positive returns to our valued shareholders. For the seventh consecutive quarter, we emerged as the North American industry leader with a 29% adjusted EBITDA margin. For context, the next closest margin was 25% and the industry average was 17%. This is a significant achievement that was accomplished in the face of significant market headwinds, driven by deteriorating pricing and inflationary pressures on our input costs. Moreover, we were able to increase our volume of shipments over the previous quarter and utilize our low-cost advantage to deliver strong adjusted EBITDA. This success has put Stelco in a position to demonstrate once again the strong alignment between senior management and our co-investors, and return capital to us and them through dividends and share repurchases. In addition to increasing our regular dividend by 40% to CAD 0.42 per share this quarter, we are also pleased to announce a special dividend of CAD 3 per share that will return an additional CAD 165 million of capital to our valued shareholders. This in addition to the repurchase and retirement of approximately 29% of the shares that were outstanding at the start of this year, including 17 million shares or 25% in Q3 and the current quarter alone. We continue to lead the industry in return of capital to shareholders as a percentage of our market capitalization, and with the dividends announced today, we will have returned CAD 1.8 billion since we went public in November 2017. Notwithstanding our success to date, we are focused on the challenges that lie ahead with market conditions that we expect to remain challenging in the near term. While inflation has had an impact on many of our costs, we are starting to see that abate with some input prices, especially for coal, natural gas, and alloys, beginning to turn downwards. Stelco will continue to explore every opportunity to improve our industry-leading cost structure and take advantage of the more than CAD 900 million of capital investments we have made into our facilities since 2017. Most recently, during the third quarter, we began to realize the benefits from both our upgraded coke battery and our new electricity cogeneration facility, which commenced full operations that will provide us with excellent opportunities to improve productivity and reduce both costs and our carbon footprint. During the quarter, we also successfully reached new five-year agreements with our unionized employees that will ensure stability in our workforce as we work together to navigate these challenging times. The inflationary environment that is impacting our business is also impacting our employees personally, and I am pleased that we were able to work with the union leadership and members to reach agreements that protect both our workers and their families as well as the company. I look forward to continuing to work together with our valued union partners to keep Stelco as a leader in the North American steel industry. As we move forward, we will not deviate from the successful strategy that has continuously delivered strong results for our business. Our core principles and values are strong. We maintain a strong balance sheet, which will give us operational, strategic, and capital flexibility. We will utilize our tactical flexibility model to pursue the highest possible margins across all product lines, from pig iron to coated products, and we will deploy our capital in a responsible manner that benefits all of our shareholders. We have worked hard to unlock the potential of our business and establish Stelco as not only a low-cost steelmaker in North America, but also as an attractive investment for our shareholders, and we will continue to work on these principles. With that, I will turn to Paul and ask that he provide some additional comments regarding our financial performance. Thanks, Alan, and good morning, everyone. As expected, the third quarter proved to be quite challenging in the face of inflationary pressures and reduced pricing in the market. As a result, we did experience reduced financial performance compared to the peak we realized in 2021. However, the inherent strength of our business, which is our low-cost operating structure, allowed us to generate CAD 357 of adjusted EBITDA per net ton and maintain our position as the North American industry leader with respect to adjusted EBITDA margin. This was achieved despite a reduction in our average selling price of 20% over the previous quarter and a reduction of 36% over the third quarter of 2021. The slight increase in shipments over the second quarter offset some of those price pressures and led to revenue of CAD 846 million and adjusted EBITDA of CAD 245 million. The relative success we achieved allowed the business to maintain a strong cash position and overall liquidity. At the close of the third quarter, we had CAD 250 million availability on our revolving credit facility and cash in the amount of CAD 1.395 billion. In keeping with our desire to effectively deploy our capital to the benefit of our shareholders, subsequent to the end of the quarter, we completed CAD 288 million worth of share repurchases under our substantial issuer bid that was in addition to the share buybacks that were completed during the third quarter. With the completion of these buybacks, we've repurchased approximately 29% of the shares that were outstanding at the beginning of this year and still have a cash balance today in excess of CAD 1 billion. As Alan noted in his remarks, our management team remains strongly aligned with our shareholders, and we are exceptionally proud of the capital returns we have provided to date. Following the payment of the dividends announced today, the total capital return to shareholders since our 2017 IPO will be in excess of CAD 1.8 billion. By any measure, we view this as a remarkable achievement for our business. Of course, we are aware of the challenges that lie ahead, and while we have made note of the inflationary pressures and deteriorating pricing that impacted our business through the third quarter, we must also make note that these negative pressures, other than the aforementioned reduction in some of our inputs, are likely to abate in the near term. Accordingly, we are again reiterating our guidance for the fourth quarter that assumes that the lower prices and shorter lead times being experienced currently fully impact results to prevail through the remainder of 2022. However, we will continue to focus relentlessly on cost in order to maintain our industry leadership and so that we can capitalize on any opportunities presented by the market. I remain confident that the strength we have built through strategic capital investment and the creation of an industry-leading cost structure will see Stelco persevere and succeed. We'll continue to take the necessary steps to mitigate and overcome the challenges that face our business and stay true to the core principles that have contributed to our success to date. Thank you for taking the time today to join our call. Thank you, Alan and Paul. That concludes our prepared remarks for today. I would now like to turn the call back to the operator for Q&A, reminding callers that they will be limited to one question and one follow-up before requeuing. Operator? Thank you. We will now begin the Q&A session. If you'd like to ask a question, again, it is star one on your telephone keypad. If for any reason you'd like to remove your name from the queue, it is star two. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We'll pause here for just a moment to compile a Q&A roster. Our first question comes from the line of David Gagliano with BMO Capital Markets. David, your line is now open. All right, great. Thanks for taking my questions. I'm gonna try and ask these in two questions. So first of all, you know, current market dynamics question. You know, obviously price is down, demand weak, lead time soft. There's two parts to this one. First, you know, what we see in indices and things like that suggests price is down, you know, quite a bit in the fourth quarter versus the third quarter. I don't want to put a number out there. I just, I'm trying to get a sense as to, you know, given where we are in the quarter and your lead times and your order books, what's a reasonable expectation for, you know, quarter-over-quarter decline in realized prices? Any indications of, you know, life at the end of the tunnel here, given that we're heading into a, you know, typically a seasonally stronger period? That's my first question. Sorry about that. David, I don't think we're gonna provide you, like, actual prices. I don't think we can do that. It is down. You'll see that in our results. As you know, we're active in an industry here. The indices are, I think, you know, finally reflective of what's actually going on. Very often, there's a very significant lag. I think if you refer to the CRU prices, I think you'll get a pretty good sense of how things have moved quarter-over-quarter, keeping in mind that it did take them time to catch up and get into a lag. You know, that's in terms of that. You know, in terms of an outlook, you know, one of the great things about this business is you don't worry about it going out of style, and as long as you're a producer like us that's able to produce constantly with a margin, you keep going. I do see some things shaping up that suggest as we get into Q1, the environment will be better. A lot of that is driven by scrap. You know, we've seen this now over and over again, most recently during the COVID time, during 2021, remarkably, prices of steel went up even at 60% utilization, because scrap became very tight. Scrap is not tight now by any measure. Scrap is continuing to decline. We're starting to see the early seeds of the types of things that generally do create scrap tightening and let me list them. One, you know, lower prices result in lower collection. Two, slowdown in housing starts means less demolition and therefore less steel to come back into the steel scrap supply chain. The other thing that we're starting to see is a depreciation finally of the U.S. dollar and what that does is bring back exports. Really early signs. You know, typically this time of the year, you get into the wintertime and collections themselves get hampered by weather conditions and things like that. I do think that as we move into Q1, we'll start seeing some better conditions. You know, that's kind of our outlook and how we're playing it. You know, for Q4, we're doing really well, you know, from an order book perspective. You know, you talk about weakening demand. I think that the macroeconomic statistics definitely show that there would be weakening demand, you know, particularly in construction and other things. You know, we're not a giant producer. You know, we make almost 3 million tons a year, so we're not as exposed to, you know, we're not as sensitive to these types of drops in demand. We work with our regular customers. Their business is, I'd say, flat, not down, definitely not going up. You know, we're holding our own, filling our order book, and doing what we do. That's how we manage the business. You know, it's a cyclical business. You know, when we get to the lower operating performance periods like now, we hold our own, we continue to make money and look at what we can do, which is reducing our costs. You know, as I said, that's my anticipation, but you know, definitely could be wrong. I can see a scenario where interest rates, you know, go up. Everyone, you know, follows the same statistics. You definitely see a scenario where you know, demand gets weakened as construction goes down further, and maybe it hits the auto market. You know, we're ready for that. We know the upturn will come. My crystal ball is telling me to look towards sometime in Q1, but you know, we're prepared totally prepared to be wrong about that prediction and we'll continue to do what we do, which is to continue to you know, work on our cost structure to stay profitable during the trough of the business. Okay. That's very helpful, Colin. Appreciate it. Just another, you know, 2-part question. Just first on the other part of the business, costs, unit costs actually, you know, up quarter-over-quarter, but better than what we were looking for and better than what we've seen from, you know, a number of the other steel producers at the U.S. I'm just wondering if there are any incremental quarter-over-quarter changes meaningfully one way or the other coming in 4Q. That's my first part. The other part on the capital allocation. You know, now we've shifted to special dividends. Obviously, we had a nice, you know, period of buybacks. Still a lot of cash on the books. You know, what's the updated thinking on priority of uses of cash on a go-forward basis between specials, between buybacks and investment options? Right. Okay. On the question of capital allocation, and well, let me first touch on the first one, that Q4. As I mentioned in my remarks, we definitely are seeing a downturn in input prices in various different places. I'll highlight the ones that we're seeing, we're seeing it more, which is in coal, natural gas, and scrap prices. However, like other producers, we do source our coal in advance. You know, we're not going to be seeing the impact of that during Q4 because we're still working off some old contracts. I think unlike a lot of other competitors out there that haven't pulled back a lot of capacity, there's a lot of contracts out there that are sitting that are gonna have delayed deliveries and therefore less near-term demand because they need to fulfill contracts. From our perspective, as you know, we're up in the lakes, the lakes freeze, we have our inputs. We do get the benefit near term in Q4 from the natural gas, from the scrap. Those things do impact right away and continue to impact us right away. We'll see that as a benefit. We do expect to see some lower costs in Q4 as well. You know, even further as we move into next year as we start rolling in some of the lower priced other inputs like alloys, like coal, like other things. You know, we continue to negotiate with other inputs as well to see how we can cut costs. That's what I think you'll see. I think you'll see some moderation in costs in Q4 based on those inputs, and you will continue to see that as we move into next year when we get into some of the new contracts that we have at lower prices. With regards to capital allocation, you know, I think we've done a really good job in being balanced. When I say balanced, it's about keeping enough cash around to have operational and strategic flexibility. We've achieved that. We've taken off 29% of our shares this year, and I don't know how many companies in the world have done that in any industry, you know, in this year, especially at a time where equities, for the most part were escalated. Notwithstanding some, you know, recent performance, but they were escalated. But we actually waited. If you look at most of our purchases were done through Q2 through Q4 when equity markets were down. We missed, you know, the big boom in the first half of the year. We missed the most recent boom because we got these done when equity markets were weaker and sentiment was weaker. I'm incredibly proud about our discipline of not just throwing money, you know, when we have nothing else to do with our money, instead of buying shares back. When you look at most share buybacks, they're done at the top of the market, and because they don't have better investment ideas, and very often management teams who are not aligned like we are with shareholders, you know, feel that they need to go and prove to the world that they think the stock is undervalued. But here, you know, you got to remember, 20% of the stock is in management's hand. We think exactly like our managers and timed our buys at a price that we consider very good. You know, I think it was CAD 35 on this most recent one, CAD 37 on the one before that. You know, we've been incredibly disciplined. We didn't buy back stock when it was CAD 56 a share. You know, we did when it was much lower. I think patience and waiting and discipline and long-term perspective is what drives this management team. That's in terms of the buybacks. The special dividend, yes, we had some extra cash. You know, we want to keep some extra cash. We certainly could have made the special dividend larger. You know, we can do another special dividend if we feel that either from a strategic perspective there are no great alternatives, or we feel comfortable with the cash accumulation in the business, and so we can do that again, and we retain that flexibility. This is our third special dividend since you know we bought the company, took it public in late 2017. I think we've now established a track record of willingness to do a special dividend. We'll continue to look at that. Finally, you know, we think we're getting into a period where we're going to see some opportunities, let's say would be the nicest way I can say it, in our sector. You know, it's something that I have spent a career doing, looking for really good priced opportunities and, you know, if we find them, and we may not, but if we do, we want to be able to be flexible enough to transact on those opportunities. I think we're in a really good place right now. As Paul said, we've got CAD 1 billion of cash, a little bit more than that. You know, we've got an undrawn revolver. We've got a lot of liquidity here. You know, we're going through some tough times, but tough times are good for us because it gives us the ability to be on offense while we continue to generate cash flow. I'm really happy with where we are right now. I think we've got a great record, track record on our capital returns, and it's not a surprise. We're aligned with you guys. You know, we're as I said, management here owns 20% of this company, and so we think like you. We want to do what's best for the shareholders, and sometimes that means keeping some cash on the books to do strategic things, and sometimes it means paying, you know, phenomenal dividends like we did today, increasing the dividend like we did today, and sometimes it means opportunistically buying back stock. All right. That's helpful. Thanks. Thank you, Mr. Gagliano. Next question is from Michael Doumet with Scotiabank. Michael. Hey, good morning, guys. Obviously nice quarter. First question's on, you know, maybe if you can quantify the impact of the weaker Canadian dollar to your P&L. I'm assuming it helped on the revenue, and I'm not sure if there's a lag on the cost side. Again, any way you can quantify that, maybe the sensitivity to FX, on FX effects? Yeah. Actually, there's not much because a lot of our costs are in U.S. dollars, so we're pretty balanced. We've analyzed this over and over again to see, you know, do we gain when the Canadian dollar is weak? Do we gain when the Canadian dollar is strong? If you look at our cost structure, principally on our inputs, you know, the two biggest ones, iron ore and coal, that's all U.S. dollar priced. On the sales side, no one really speaks in Canadian dollars on price. It's always a U.S. dollar price, and then converted at the exchange rate. I would say very little sensitivity or impact to Canadian dollar strength or weakness. Okay. Thanks for that. My second question, just, I guess thinking about cash here. You know, given the rising cost of debt here, how are you thinking about the inventory monetization agreement into next year? Maybe if I can tack on, any updates you can provide us on the EV recycling JV? Sure. On the inventory monetization, very satisfied with that agreement. Works well and, you know, we'll continue to do that. Keep in mind, you know, we're also earning very large, you know, well, not very large, I mean, but the increased interest earnings on the cash that we have. We're pretty happy with that arrangement. What was the second question? Just an update on the EV recycling JV. Oh, the EV. Right. We continue to work on that. We're at the stage now where we're expecting updated samples from the hub part of this operation, which is in Germany. As you know, they've been providing samples and qualifications for the actual end product, and that's what we're in the process of doing right now to battery makers. We see that as a very important milestone to be reached to make sure that the product that's gonna come out of this at the end is fully accessible to very specific battery makers that are willing to commit to the specs. That process is ongoing, and that's what is occurring right now. Perfect. Thanks, Alan. Appreciate it. You're welcome. Thank you, Michael. The next question is from the line of Alexander Jackson with RBC. Alex? Yeah, thanks for taking my question. I was wondering if you could maybe touch on, you know, potential opportunities that you were talking to earlier, with respect to using that cash. As well, are there any other opportunities maybe internally, other projects, potentially cost-saving project or margin-enhancing projects that you guys are looking at? Thanks. Within our CapEx budget, annual CapEx budget, we have a certain amount of growth projects, and some of it is normative. You know, we're constantly looking at refinements to the operating model, operating footprint rather that we have, to increase and enhance our margins. You know, we've got several of those on tap for this year. You know, in terms of outside investments, constantly on the lookout and always engaged in various conversations. You know, nine out of ten of those don't occur, but you still stay in contact with people, you know, in case they can occur. I think the way the company is very, very well positioned right now financially is to be able to transact at a time where valuations have come down and are more reasonable and transactable. That's kind of our mindset right now. You know, certainly not gonna speak about any specific opportunities, but we're always in the mix looking at various things that would make sense for us. The other thing, I mean, I don't know if you guys have seen the announcement on this, but the Government of Canada announced put us on a list of 10 companies in advanced stages of our request to provide financing for our decarbonization efforts. You know, we've not been very vocal yet about what it is that we're doing, but we've got a number of very exciting initiatives which will involve large amounts of capital and hopefully, you know, from sources that don't depend on our cash flow. Those are super exciting. We've not unveiled them yet because we're, you know, still refining what that will be. But we are, as the Government of Canada announced, in increasingly advanced stages of negotiation with them to access the capital to make those kind of investments. You know, our goal is to be able to get outside funding for everything that we're doing, taking advantage of the public and private partnership initiatives that the Government of Canada has you know shown willingness to do. I really give the Government of Canada tremendous amount of really excited and really proud of being in Canada because it's really one of the only governments I can think of that's actually sitting and taking this decarbonization initiative seriously. They're putting their money into it and saying, "We're not just gonna dump this on industrial players. We're gonna be in partnership with you." It's also very exciting. If we can achieve what it is that we're trying to do here, I think it'll be, you know, incredible, differentiated company when it comes to those efforts. Those are the three buckets. There is the buckets internally, which is part of the CapEx, normal CapEx review, which is, ongoing. There is what I just mentioned on decarbonization, and then, you know, constantly looking for strategic, you know, transactions that could change the size and face of the company. Thanks, Alan. Just maybe one follow-up on that third bucket. Is there any themes that you're thinking about with respect to those opportunities? You know, is it within sort of the bread and butter steel production or raw materials, or maybe something outside of the box? If maybe you can answer that, or maybe it's Yeah All of the above coming across your desk. No, it's not. It's definitely not all of the above. It's all everything's in the box, and not outside the box. The reason for that is our investors, you know, invest in our company because they want exposure to the Steel industry. That's the first decision they make. You know, my experience running public companies is when you dilute that, the purpose of the company and start moving into other things that might be good investments, you know, you end up creating a confused company that people are not interested to invest in. We've stayed true to our core. You know, it's interesting, a lot of people ask us all the time, "Hey, you know, you guys don't have—you only have spot exposure, and the spot market went down, and you don't have this long-term contracts and everything else," which I've always said those contracts, you know, are very one-sided. You have buyers out there that don't take materials when the prices are high or they renegotiate when the prices drop. My long-held belief is those contracts are just, you know, one-sided contracts. The best proof I can give to that, 'cause everyone's always saying to us, "Oh, you're exposed to the spot market, you're exposed to prices down," just look at our margins. You know, in a terrible quarter, right? We're in third quarter, we have by far the highest margins in the industry and no long-term contracts, all spot exposure. I think we have the winning formula here, and we're gonna continue to stay with that formula. You know, it works for us and, you know, I think we just prove it on the battlefield. Despite everyone's, you know, questions, "Oh, you don't have long-term contracts," or, "What about when prices drop?" Our investors want steel exposure, period. They don't care if you hedge. They don't care if you have a long-term contracts. They want dividends. They want share buybacks. They want price and they want exposure to the Steel industry. We have stayed firmly in that camp. One of the things that I love about our third quarter results is the fact that we have shown that even with the declining price the way it is, you're not insulated, because at the end of the day, it's run by operational footprint, and it's run by smart purchasing and smart selling. I think that's the beauty of this company, and one of the things I love about these down environments, it lets you know, reestablish the company and reset your costs, and it also lets you operate, you know, at a margin and demonstrate that you can operate at a margin despite everybody else's popular views about, you know, what you should and shouldn't go into. Tactical flexibility is our theme, both from a corporate perspective, financial perspective, and an operational perspective. That's helpful. Thanks a lot. All for me. Thank you, Mr. Jackson. That concludes our Q&A session, as well as the Stelco Holdings Inc. third quarter 2022 earnings call. Thank you all for your participation. You may now disconnect your lines.