Algoma Steel Group (ASTL) Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Shipments: Approximately 224,000 net tonnes, down 52.4% year-over-year.

Steel Revenue: CAD 266.9 million, a decrease of 42.4% from the prior year.

Average Net Sales Realization: CAD 1,193 per tonne, up 21% from CAD 986 per tonne in the prior year.

Cost per Tonne: CAD 1,180, slightly higher than CAD 1,137 in the prior year, impacted by CAD 27.4 million in tariffs.

Adjusted EBITDA: Loss of CAD 28.7 million, with a margin of negative 9.7%, an improvement from a loss of CAD 46.7 million in Q1 2025.

Liquidity: Ended the quarter with CAD 65.3 million in cash and approximately CAD 553 million in total available liquidity.

2Strategic Updates and Business Highlights

Transition to Electric Arc Furnace (EAF): The company has fully transitioned to EAF operations, marking a significant shift from coal-based steelmaking.

Record Plate Sales: Achieved record plate sales of 116,000 net tonnes, driven by a strategic focus on higher-value plate products.

Joint Ventures: Announced the formation of Roshel Algoma Defence, a joint venture aimed at producing ballistic steel, and a binding MOU with Hanwha Ocean for a structural beam mill, valued at up to USD 250 million.

Market Positioning: Algoma is positioning itself as a key player in Canada’s defense industrial base, emphasizing the importance of domestic steelmaking capabilities.

3Forward Guidance and Outlook

Operational Improvement: The company expects performance to improve as EAF production stabilizes and transition-related costs decline, projecting a path towards breakeven EBITDA by Q4 2026.

Capacity Utilization: Anticipates a linear reduction in capacity utilization adjustments from CAD 90 million in Q1 to zero by Q4 as production ramps up.

Market Conditions: The plate market remains healthy, while the coil market is oversupplied, impacting pricing.

4Bad News, Challenges, or Points of Concern

Tariff Impact: Algoma is significantly affected by the 50% U.S. Section 232 tariff on steel imports, incurring CAD 27.4 million in direct tariff costs during the quarter.

Production Transition: The transition to EAF has resulted in lower production volumes and elevated costs, with Q1 being characterized as a transitional quarter.

Market Pressures: The Canadian market is experiencing oversupply in coil products, which is likely to continue affecting pricing and profitability.

5Notable Q&A Insights

Capacity Utilization: Management expects capacity utilization adjustments to decrease linearly over the next two quarters, with a goal of reaching breakeven EBITDA by Q4.

Volume Expectations: Shipments are expected to be slightly lower in Q2, with plate volumes anticipated to increase, while sheet volumes may decline due to market conditions.

Scrap Sourcing: Scrap is primarily sourced from Canada, with prices following North American indices; there are no immediate plans for alternative sourcing strategies such as DRI or pig iron.

Defense Market Potential: While defense steel consumption is a smaller segment of the overall market, there is significant growth potential due to increased government spending and a focus on domestic supply chains. This summary encapsulates the key financial metrics, strategic initiatives, future outlook, challenges, and insights from the Q&A session, providing a comprehensive overview of Algoma Steel's performance and direction for Q1 2026.