Algoma Steel (ASTL) 7 Nov 242025 Q2 Earnings call transcript

Greetings, and welcome to the Algoma Steel Group Inc.

Second Quarter 2025 Earnings Call.[Operator Instruction] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mike Moraca, Vice President, Corporate Development and Treasurer. Thank you, sir.

You may begin.

welcome Earnings Steel Conference and Quarter Inc.'s everyone, XXXX Fiscal Call. morning, to Group, Algoma Second Good Leading today's call Officer; and are Michael Garcia, Marwah, Chief our our Financial Officer. Rajat Chief Executive

Actual and this comments is replay reminder, today Investors I Steel's the of in made remind would a As like later being securities inherent contain recorded today's statements to within uncertainties. applicable available will call risks of and assumptions call for may forward-looking may Algoma website. section be from laws, on materially involve made meaning which today. you differ statements that results and the made

everyone our refer Discussion Last financial our presentation we presentation call as accompanying that earnings accompany our to addition, fiscal Investors which today Steel's be posted Management differs today's in U.S. to X The quarter our and slides Slide Please currency. the earnings the in Analysis. in prepared statements are can and In ask section measures. presentation legal dollar of dollar mind, also accordance the on Canadian second website. call disclaimers our our U.S. discussion to with functional the outlined in of certain IFRS, for corporate financial evening, are I prepared as the that would found to today's includes an risks and GAAP, XXXX assumptions references Algoma remarks. using today's note statements from financial prepared With and to on read the currency non-IFRS and

March the year X Furthermore, prepared December September XXXX. our and for April today, XX, information financial XXXX, XXXX. been have plan evaluating and year have runs today's we note, months from financial September period. XX, reported fiscal March Our otherwise ended to to the investors operating X reported in historical for and provide of December XX, statements X XXXX fiscal Board of XXXX, of to and starting referred change change all has in XX, to quarter years March are this to a assist XX to in Algoma's announcing X-month a reclassified a This period year. on fiscal XX result amounts year-end from will that approved noted. in our being as results impact unless dollars the reporting ended in Canadian on XX in in We first Please annual December call will the are XX, Directors the

Michael the will we I over remarks, question-and-answer conduct Garcia. Mike? turn now to will prepared our Executive Chief Following call session. Officer, a our

and fiscal Thank thank you, XXXX you Good discuss us morning, joining for our results. to Mike. second quarter

workplace demonstrated been relentless to time the of the has Over commitment employee our levels yielded injury last of EAF quarters, peak more lost activity, several measurable safety our performance. results, vital. With by on reaching our construction focus project never improved safety

We continue aspect a the just of corporate team value, prioritize operate. fundamental safety every not a how to we well-being as of member, but reinforcing

would then and numbers few strong sheet our well call. update on a conditions. turn update over There key market an events Rajat give at our will EAF this a the into dive themes closing are before discussion liquidity with and important balance on I across to of a get like project. on during and fiscal transformative progress I'll the as as for cover quarter second Next, an deeper I our milestones call to

blunting the impact across the First, conditions continued delivered solid soft steel markets. operational quarter, performance partly of we in global

million liquidity end balance sheet with and Second, over at cash million. $XXX $XXX strong of our of are total liquidity and quarter

items derisked the now substantially commissioning start EAF to enter And of activities well-funded all are we have complete our EAF as months. quarter. with this project remaining transformative we contracted finally, the in We the coming project further

on color me let you some additional Now give key those themes.

of our were rate XXXX the versus prior and challenging election, prices line revenues, seen of economic for led Our flow in conditions overall year a and market pace results of uncertainty shipments demand, reflect this period. cuts, EBITDA, decline behavior. our overall soft we adjusted second previously quarter steel the as steel the buying the told, lows weighed with factors continuation customers' They lower realized an both around year in and to interest U.S. the adjusted EBITDA. guidance softer disclosed cash which year-to-date fiscal touched shipments during All have on and quarter generation for pricing, in

shipments our quarter. quarter second first tons XXXX fiscal plate plate in conditions up tons, the XX,XXX the in shipments. Our impacted expected Market XX,XXX fiscal from of were approximately

our our position However, conditions, help market We're with to market able product able share and us categories delivery inventories were will despite we XX,XXX tons. to Algoma approximately of grow strategic poor customer production expectations performance continue in that service. was in rebuild American the for as leader line North we to improve as

continue market to of plan up production improving towards near the the year the annual capacity expected of of fiscal signals rate term, clear run XXX,XXX net no tons. over are in there ramping the balance our over plate While we

plate expected We the favorable margin Canada's enhancement. volume mix that forward a associated products challenging. drive and in are going conditions should improvements only modernization to product and quality more Market is remain discrete and completed result producer of meaningful

our of on our consistent operation what focus and can we However, we on including unwavering focused the customers. remain facility control,

are and we the quarter. We seasonal higher our entering in fiscal unusual directionally don't maintenance shipments expect should impacts see third production normal to but any period,

on give me during electric exciting quarter transformational an let project. Now you our furnace our on progress update the arc

underway, fume site. we site, installation now yard nearly QX busiest with over well energized. is XXX-ton our the specialized substation, been been our our cranes, our Critical system systems and with treatment and piping, diameter feet of EAF which installed, on X,XXX has towering infrastructure electrical including facility has phase including Critical Danielle large power With the automated the our cranes. now trades XXX scrap our equipment of project contractors are in over

by calendar year, this milestone. of the commissioning proud that and you told to have important to I'm for track on we We remain we end expect say commence activities that

beginning and milestone running, the per regard being as we is be with expect to project When and the levels. executing by year. production operating to first tasked reach million to XX% commissioning We are of on of important current than tons have shipping year, contracting reached production as in deliver steel a steady-state track who remain activity staffed team the of time selected the remaining activities up as with we end furnaces both X and on quarter the we calendar next the expected will approximately December, construction. higher first for EAF Every bit capacity

been has what period particularly large for a we sustained all have advancing materials construction the projects. you labor and of As during industrial with project know, associated been inflation, high

with worked all share EAF today that we equipment has contracted including the stakeholders, team and turn. to project. work the project suppliers all on derisk substantially major subcontractors project the at have Our proud to closely remaining I'm every

of we the As within to to work construction the project X% we recent finish continue most budget of towards both of commissioning EAFs, the expect completion and guidance.

project receive balance cash to further has XXXX, Conservation the of sheet since We paid excited Environment, are of applied of enhancing the Under Emissions our net EAF reimbursement and program, also program. down Parks liquidity. driving that project expects for Ministry Algoma and eligible under Ontario's to and and the strength is carbon cost this Performance for the announce taxes Algoma's EAF

investment each these agencies as transformation companies. related Ste. previously Sault regional to Ontario. Phase in many Lake the grid One's to project EAF transition be of is new Algoma XXX-kilovolt of by required Hydro totaling steelmaking committed of the of One for X were city's and Plant. with transition province partnership PUC Superior reached Ontario enhancement the and steelmaking, quarter, support infrastructure see August, to power of date, In will Marie. The No pleased where combined tied transmission the and Act will EAF to Energy construct own involves XX% authorization the come Board prioritized obtaining have pursuant capital EAF Specifically improves to our the during from from by approximately The to the Hydro Transmission line million the supported to Power for EAFs and we we a planned $XXX fixed-price upgrades. components cumulative to contracts project contribution grid, million. This $XXX And over the X required part access upgrade contracts.

normal switch of components as toward of our us for full with In a of plan plate in start include continues EAF safe facility As existing up tough our steel production on-time focused to EAF the up our contracting the This we of first by production. in conditions, from we to summary, ramping an production. market our our our steps from planned calendar project. taking XXXX, flexibility and EAFs reminder, provides existing EAF the to the full operational on finalizing while production, ramp-up activities furnaces steelmaking the start-up production operation ramp followed for project commissioning and facilities, remaining our customers, EAF the the very eventual

our employees and I step again our community. the professionalism. all happening our at for huge can't our for to forward for dedication, like As hard weakness I'd dampen and steel represents work, excitement quarter, in site markets said once the thank what's their last company our near-term it and

to will over quarter. I the go for Rajat? Rajat over Now results pass financial call to our the

joining you the Good Thanks, for Mike. morning, all and thank call.

dollars, noted. are As unless a expressed reminder, Canadian numbers in all otherwise

strong for $X million, including million This $XXX revolving an totaled Cash which $XX.X more credit quarter million. a proceeds which cash approximately second X.X%. our include operating of liquidity million, the approximately detail $XX from of total Our of activities We generated will of adjusted sheet, availability totaling reflects finished quarter facility million balance $XXX under of includes adjusted EBITDA margin benefit explain the with of net in million. $XXX insurance and results after. EBITDA I

and $XXX the the shipments mix pricing. XX.X% our versus was me versus prior shipments in of revenue decrease the averaged drivers partially walk year value-added market The the ton, Steel revenue prior-year a through to in The conditions, period. the as decrease by market period. let product XXX,XXX improvements prior soft was steel proportion attributable conditions per reflects largely prior sales net weaker down quarter, realization depressed year performance. the the in versus down Net sales. and down tons quarter. year in Now level $X,XXX our offset million XX% you were key Steel versus of X.X% quarter,

quarter, On the main at end modestly increase prior previously December capital of million, year. will the sold at last year fiscal purchase $XXX use we seen Algoma's March were The at corridor X.X% on the We in than quarter driving a years, of total of of at from capital working prior drivers the expect million levels. perspective, down down increased volumes timing from cost remain previous the million discussed. Inventories coke. the by steel level of XXXX, on end least year cost release lower as the in note include the averaged the and focused utility grow per additional lower quarter, $X,XXX From versus versus the up working and the XXXX incident period. side, One we products inventories a during of January. ton $XXX period a $XXX

to the related damage. quarter, insurers During we from received advance an property

$XX You offset approximately with will by income associated financial other through approximately costs million insurance our million during $X proceeds the quarter, statement outage. flowing see of the as

call on work the and back interruption business Garcia of property for our claims. to adjusters comments. recovering I'd Michael continue damage the to Mike? the with funds over now to like for balance turn closing We

you, Thank Rajat.

demand depressed economic Looking U.S. prior pricing election, the at uncertainty. to contributing of market, American and state the overall steel North to the remained

touched mid-XXXs. in quarter, During lows the the year-to-date past pricing index

moved on reflection and While we the U.S. some improvement, over it participants potentially weeks, a the the sidelines a traded sideways market result past again election. saw sitting lower awaiting has few modest price from of

prices a prices are that applaud more approach on We we do will of contract strengthens and unified by mitigating the imports. aluminum tariffs closely earnings the account recent that steel overseas Canada's current American near with order In that aligns our trade United will on ground. imposition performance unfairly headwinds expect We Canadian States, North steel postelection, optimistic Chinese our as fostering market policy it book. continue term, from to generate regional the of competition traded gain on steel lagging

as further transitioning from including the focus abate, investments we plate modernization capture facilities of is continue across in steel. servicing on safely, As we all will to producers XXX-plus of phase of our by while opportunities ourselves of that to discrete EAF. to are and they headwinds blast what recent completion the furnace the we year and these positioning one America's of to production traditional customers, exaggeration production operating construction our control, for This Algoma, in no being wait most to our the history arise, existence, can market commissioning Canada's say the of best It's we only supported exciting greenest facility. North steel executing Steelworks,

the dramatically be truly Steel. Sault instructions this been will continued our I'm in take team interest very holds. our economy, local have and value excited enhancing of to in Ste. capacity, safety, Operator, are years would for production our for The what future to busy operations. your Thank our improve happy and accomplished, expand the what We we give session. of and for dedication their Q&A questions. ones environmental several you the Algoma your much significantly energize Marie, the aspect we point, please of for At proud every unlock on footprint, stakeholders. all their tremendous the focus last has

[Operator Instructions] line first with BMO comes from Markets. the question Jancic Katja of Our Capital

Maybe the working starting on capital.

Rajat, about that? clarify, what's current this driving it to talk recent be Can would higher not given I the said in to be Because as more you you EAF past. that would the think Just that build assume the going much quarter, start. I in as is

in start-up EAF beginning will start-up will March, happen and of first  So of the the EF start sometime heat the end quarter. next the the

furnace for coal, manage and building So not we carry are we material we for are the much already EAF. specifically And trying that. inventory, to blast and

to we December, we then by from normally, it -- bring down. and million buildup December up the March $XXX around So build

are think around see happening will that. we'll be quarters, When But is will on point that 'XX I the probably lower think you extra right, at the we X year, it a REF, if I but be than look March. the see million it will ramping XXXX. will side in come be as scrap up release buildup we'll and next some you happening $XXX be your smoother. see then buildup,

talk you buildup how maybe can And about that think EAF the side? to about for

the need month, we'll -- and of So X some material for we be to up of transitioning X.X extent it inventory will of but slowly, slowly scrap, that of for building furnace we months coke the then the max will be it. we the will be months reducing batteries or as roughly out blast

we batteries eventually, million of release we million anywhere may to from period, EAF. about it and during eventually, $XXX way million further think shut capital transition will is the and down, blast least on the the So that $XX have we see $XX to are build. coke when of are at But but in working furnace only

working at transition releasing we happened next at -- least see -- March. year, may that then will build out the we XXX should when blast which the see we furnace coming see least for In million December. capital-wise, will $XXX And overall, So when be is between, slight a by complete. a another $XXX million,

correct? million to is build site the $XX $XX million. said you And Was that

Yes. Yes.

that to drive one the you -- typically, Because December in Mike, sequentially. expect I bit increase the a that quarter, may, quarter, on little mentioned current I you initially softer. What think, volumes increase? for environment the will more a If is right,

we of your are So about most see talking lower -- peers volumes.

Yes.

think operating I schedule. our primarily, it's

So have scheduled in the any outages we quarter. don't

that you'll increase So from our see I think perspective. volume

You're right.

on sentiment don't over economic although weeks increase X we'll As X a a I next quarter. think significant see demand probably in activity, period, there's we positive the holiday enter or think the I the

question Securities. the David line with next Our of Ocampo from comes Cormark

But production to to And of that both maybe and you delivered be also on as could Environment in of come the lost timing was you remains then comment well could guys, I proceeds Mike, that terms you and quarter. from insurance in total this. or hoping occurred Rajat as the proceeds program. the the property the timing that to could total damages from take Ministry

Sure.

on That's the on the insurance property million we've we see as damage. million there front, mentioned, to So $XX higher. that is slightly $XX-odd

the it between next, some we've receive which will and quarter, is and And the next quarter. And be see received and this property -- $XXX we between million. loss to range probably over million, as right now, we'll in the I yes, little quarter most $XX our think balance March on in $XXX XX% should more that of more XX% than than roughly the has indicated, been recovered. that of million that damage, a we

are we Now going through the process.

what flow I before that's As is. it's our process. hope into quarter, expect but it lengthy We said, get March or June to could do -- of end by the

So most should it quarter be property I interruption. we or a get for see the if will in of business by come March, and it following trying should mean, perspective, it can are at -- we to from that least

how it's think on applied for So it that way XXXX, years. side. insurance will second part the third the out, the program. it X gets flow the roughly year. or that and -- and the year. that's way the the is applied carbon, we laid through process on It on year every it's of -- We've And based in are recovery But about it it's is happens takes to

So should flow. be how year X let's say, by works. years will this XXXX, this next, we is early delay, will either and probably it it way the or It it get

they the it the ends, after file, they gets year audit the then work, they So year. the we following do you calculate do in and

the So we it's a way get the X-year money. lag,

numbers so with million since up I guys just 'XX. you numbers? Okay. have $XX line have that paid And I calendar right, your my Does having

but calendar start it's counting think a I No, it. much for number you lower 'XX,

was 'XX that cumulative, Rajat, to... Sorry, so

But becomes with align and our for guys, we The and year you're easier about it's fiscal which on it. and And year done done those is which right, this year happy pretty No, everybody, And quarter Yes. that. it's excited you you us cumulative basis. numbers It are now. the will for will is basis, done that much more it right. for calendar we -- a have and actually XXXX, -- are an The annual on year-by-year. finalized. is it then one basis, gets calendar and see, you're

has And or declare running the program each decide to year. province year, whether the another is for

we guarded But XXXX a emissions while province undertaking at for we the all future So project as carbon on the XXXX. of committing paid paid qualify are this of the has the made applies this. little decision to life the the project, that taxes in for definitely, end taxes that were will it we're

from that's it a but helps That for does at count Okay. it definitely all then the they're one on in That's to callable know in a But did quarters, past, this look the can warrants modeling is helpful. cashless And look us equal negative I It like standpoint. really share count Rajat. XX. the and just probably the maybe to income. the and quarter, the the share just share last goes you. basic But at you diluted be the if count, settled warrants basis, a include diluted

to what's to about model for dilution that's out? the one everyone this the right way maximum think So trying

way The let's the right dilution and is perspective. it's -- XX.X the is, good it's $X-odd David. XX, callable dilution the say, look because -- and difference at that there between dollars strike at from and that's That's $XX.X very thing -- to if XX question, that's price X/X a the you're it's is it --

shares, issue you dilution. if it's X/X So then

have that leads those And to only It's accounting, rules. and whole X/X. to the XX is dilution. not we follow it's the So accounting

XX%, And those a how perspective, is, settlement, the which where we the So brings look that's from XX, goes higher it to option price at cashless do And dilution show share depending the it. it. we upon lower, at we but goes to rules at changes, real while But X/X. to only follow X/X. it's have modeling

the Our comes Ian line of next Gillies from with question Stifel.

et you plate the to near this just or that isn't The asked be the slowing mix going oversaturated last about a quarter. the to are I all you down term, ramp, any at changing I'm seems in that are great, putting ask moment, cetera? at pricing thought about little again. or market given that, additional thinking

like Well, out we're and not I market chasing plate business. a going of destabilizing mean, lot the

rebuilding inventories. are strategic We

So we if previous rebuilding sure certainly slow we which things. some that during stock. quarter, for plate, have a this few We're are demand making strategic we've we're a of our had doing

customers, which to So and that's that those we know some the of but both our that sell. inventory to regular plate building because products that stocked also customers demand programs, of. expectation going consumers our -- be it's is on-the-floor includes grades automotive existing need just-in-time high fully are It's of sizes not or automotive

are and of grade to proving of to be We needs of that modernization the inch the material, improving advantage finish time some done profile of and X.X any taking the our thinner the in rolling work of terms below.

are to we advantage time be So taking plate in of we're returns, plate mindful when of really promised up building we slow demand, of take And being demand well performance. our and think that, advantage positioned we'll the that.

updated Understood. put That's helpful. you're much out, to feel cost and the the change left and Or final confirm, there is pretty a kind budget? With number? to this just there you in final, of the like that EAF new do down tied budget but respect could much is

Yes. We is good going change. to feel much not that really

budget. think and as more what to commissioning. we communicating we as we're fact, mean and refer And I is it and visibility we're confident have better now to having disclosed. the up, I we where In may now budget didn't previously better noticed end focused a on approach you to that different going we're

that work all level, under tracking. the be where and should it XX% a high contracted budgeted spending of XX% material. time less is in is all actual work. substantially on the tracking and through got of probably time about We've of We're place work contracted. And and operating the that material So than work at

work. hasn't that material there cost been overrun on a So and time

that of the poor life cost budget cost this that by from the legitimate are us original the contractor the overruns of been because overruns. project, has project look increased a If you execution gets from of cost when to number, not it back has

a the and to hasn't driven what's So cost, and the hasn't finishing inflationary cost of the in the that's the all not time the has that detailed a execution. caused pretty again, -- contracts been placing design not up been it up, it's contract then It's increased environment. What's and poor go overspent. any material that of project

So original contemplated. -- being cost the But are budget said, once higher than a as we just that the is placed at the contracts got being work place. executed the in contracts contemplated

So end you we feel of I be And can't an about it it's to confident number going where we're up. number, but -- exact give south referenced. that will X% going we to be

Understood. next That's rather one start able I probably third over helpful. own the as context guess some of last more your than provide couple ton of And you inventory? think into for cost of purchased coal me, and in any you have use coking to quarters are may to you trend you very the Rajat, party how per

 Sure.

So it slightly overall, the when you year, for will look trending lower. be at cost next the

up need have tied we year, most on fixed all we the based the costs mentioned, have we people all of for I As there. the that sitting

some the for the where On I of coming. side think year, see we some commodity is down, coming variable coke next coal, pricing -- reduction should

and slightly those gas the primarily up goes Our calendar cost commodities quarter all just and higher at is -- you first cost, and up. winter consumption of also when because that goes our look generally, getting always here, power

further down work that that. that that start as stabilize the the on and EAF the But slightly. then you'd first will overall, coming with see production So increase and the you we second down cost happen get and -- see coming

So we that's it, see how Ian.

now. probably producing substantial make a you couple cost our will does But of a I start You points probably overall, it on not drop, when we percentage higher we increase. change a be substantial frankly, right don't will it's I've and side of couple see percentage down happening, and points. go plate, not the It within ton cost change see up. a Does even number, but will see mix proportionately more. a see as coming you do a mean it The help? we hovering per as given a significant from not that basis, within a we cost

It's plate of No, where be door. the you're much going us helpful. that's out no, figuring to -- a matter how just putting plates out

reached of session. Mr. have over to to call question-and-answer I'd the end remarks. We the for like turn back Garcia any our closing

for We and updating you, quarter our participation results and Steel. conference report your on scheduled quarter when continued look second third operator. Thank results interest progress for is thank you in our again Thank and February. forward Algoma to XXXX you your you. fiscal our That all, fiscal earnings call in we for

you. concludes teleconference. This Thank today's

disconnect your for a day. may Thank you participation, at have time. lines your wonderful this You and