ASTL — Algoma Steel Group Inc.

Summary of Algoma Steel Group Inc. Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 2025 Adjusted EBITDA: Loss of CAD $95.2 million, representing an adjusted EBITDA margin of -20.9%.
• Cash Flow: Cash used in operating activities was CAD $3 million, an improvement from CAD $77 million in Q4 2024.
• Shipments: 378,000 net tons, down 31% year-over-year, primarily due to the impact of US tariffs.
• Net Sales Realizations: Averaged CAD $1,077 per ton, up from CAD $976 per ton in the prior year.
• Steel Revenue: CAD $408 million, down 23.9% year-over-year.
• Cost of Steel Products Sold: CAD $1,332 per ton, up from CAD $1,032 per ton in the prior year.
• Full Year 2025 Adjusted EBITDA: Loss of CAD $261.4 million, compared to a gain of CAD $22.4 million in 2024.

2. Strategic Updates and Business Highlights

• Algoma is transitioning from blast furnace operations to Electric Arc Furnace (EAF) production, with the first EAF unit running 24/7 and the second on schedule.
• The company has secured CAD $500 million in government-backed liquidity to support its transformation.
• A binding MOU with Hanwha Ocean Company is expected to generate CAD $250 million in value, enhancing Algoma's role in Canada’s defense supply chain.
• The company is focusing on producing high-value plate products for the Canadian market, which is less affected by oversupply issues compared to coil products.

3. Forward Guidance and Outlook

• Shipments for 2026 are expected to be between 1,000,000 and 1,200,000 tons, with a ramp-up in production as EAF capacity increases.
• Anticipated improved pricing and cost performance in Q1 2026, with adjusted EBITDA expected to be better than Q4 2025.
• Sustaining capital expenditures are projected to decrease significantly due to the removal of blast furnace operations, estimated at around CAD $80 million annually.

4. Bad News, Challenges, or Points of Concern

• The 50% US Section 232 tariff has severely impacted Algoma’s ability to compete in the US market, leading to a significant reduction in shipments and revenue.
• The company absorbed CAD $225 million in direct tariff costs for the year, contributing to financial losses.
• The Canadian market is experiencing oversupply, particularly in coil products, leading to pricing pressures.
• Layoffs of approximately 1,000 employees are anticipated due to the accelerated transition away from blast furnace operations.

5. Notable Q&A Insights

• Shipment Expectations: Q1 shipments are expected to be lower sequentially, but a gradual increase is anticipated throughout the year.
• Plate vs. Sheet Pricing: Plate pricing remains more stable compared to sheet pricing, which is significantly lower due to market conditions.
• Energy Costs: Algoma has a mix of self-generated and grid-sourced power, with some hedging in place for natural gas during volatile months.
• Beam Mill Project: The company is actively progressing on the beam mill project, with ongoing engineering and market assessments, though formal contracts are not expected until 2028.
• Scrap Supply: The joint venture for scrap sourcing is performing well, supporting the EAF operations.

This summary encapsulates the key points from Algoma Steel Group Inc.'s Q4 2025 earnings call, highlighting financial performance, strategic initiatives, future outlook, and challenges faced by the company.