ASTLW — 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 (margin of -20.9%).
• Total Shipments: 378,000 net tons, down 31% year-over-year.
• Net Sales Realizations: CAD $1,077 per ton, up from CAD $976 in the prior year, reflecting a better product mix.
• 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, primarily due to tariff costs and lower production volumes.
• Cash Position: CAD $77 million in cash, with CAD $195 million available under the revolving credit facility and CAD $417 million under the tariff loan facility.
• Full Year 2025 Adjusted EBITDA: Loss of CAD $261.4 million (margin of -12.5%).

2. Strategic Updates and Business Highlights

• Operational Transition: Algoma is transitioning from blast furnace operations to Electric Arc Furnace (EAF) production, with the first EAF running 24/7 and the second on schedule.
• Government Support: Secured CAD $500 million in government-backed liquidity to support transformation and reduce cash burn.
• Partnership with Hanwha Ocean: Announced a binding MOU worth USD $250 million, including potential development of a structural steel beam mill and product purchases for the Canadian Patrol Submarine Program.
• Focus on Plate Products: Positioned as Canada's only producer of discrete plate, with strong demand in infrastructure and defense sectors.

3. Forward Guidance and Outlook

• 2026 Shipment Expectations: Forecasting total shipments between 1,000,000 and 1,200,000 tons, with a ramp-up in production as EAF capacity increases.
• Q1 2026 Outlook: Anticipating lower shipments compared to Q4 2025 but improved pricing and cost performance, leading to better adjusted EBITDA.
• Sustaining CapEx: Expected to be around CAD $80 million per year, significantly lower due to the removal of blast furnace operations.

4. Bad News, Challenges, or Points of Concern

• Impact of US Tariffs: The 50% Section 232 tariffs have severely restricted access to the US market, leading to a significant drop in shipments and increased costs.
• Financial Losses: Continued losses in adjusted EBITDA reflect the challenges faced in the current market environment.
• Layoffs: Approximately 1,000 employees will be laid off due to the accelerated wind-down of blast furnace operations, highlighting the human cost of the transition.
• Litigation Risks: Ongoing litigation with US Steel regarding an iron ore supply agreement may pose additional uncertainties.

5. Notable Q&A Insights

• Shipments and Product Mix: Expected to be approximately 50/50 between plate and sheet products, with a gradual ramp-up in shipments throughout 2026.
• Energy Costs: Algoma has a mix of self-generated and grid power, with some hedging in place for natural gas during volatile months.
• Plate Pricing: Plate pricing remains stronger than hot-rolled coil pricing, with government initiatives helping to stabilize the market.
• Beam Mill Project: Critical milestones for the beam mill project are being assessed, with demand outpacing supply in Canada, positioning Algoma favorably.

Overall, while Algoma Steel Group Inc. is navigating significant challenges due to external market pressures and operational transitions, the company is strategically repositioning itself to focus on domestic markets and high-value products, supported by government initiatives and partnerships.