Algoma Steel Group Inc.

Revenue was $267.5 million, down from $589.7 million in the prior-year quarter. Shipments were 181,000 tons versus 472,000 tons a year ago, and average net sales realization rose 20.2% to $1,361 per ton from $1,132 per ton. Adjusted EBITDA was $13.8 million, or a 5.2% margin, versus an adjusted EBITDA loss of $32.4 million and a negative 5.5% margin in the prior-year quarter. Cost per ton of steel products sold was $1,411 per ton versus $1,144 per ton a year ago, and direct tariff costs were $18.7 million versus $64.1 million. Net loss was $96 million versus $110.6 million, and loss from operations was $134.2 million versus $85.1 million. For Q3, management said shipments should be directionally lower by 10% to 20% versus Q2 because of planned downtime for Unit 2 tie-in and maintenance, and they expect underlying EBITDA excluding capacity utilization to continue improving sequentially. They also said Unit 2 first steel is expected later this quarter, capacity utilization costs should be fully eliminated by Q4, and the exit run rate in 2027 should be 1.5 million to 2 million tons.

Rajat Marwah said the quarter showed the transformed business can perform despite a difficult steel market, pointing to positive adjusted EBITDA, record plate sales, and the first full quarter with all liquid steel from the EAF platform. He emphasized that Unit 1 is running 24/7, Unit 2 commissioning is underway, and the company is entering the final stage of its biggest transformation, with a structural cost and carbon advantage once the transition is complete. His tone was confident and constructive, while acknowledging tariff pressure, operational complexity, and planned downtime in Q3.

Michael Moraca focused on the bridge from legacy operations to EAF, noting the Canadian dollar weakened about 2% and contributed an $18.8 million foreign exchange gain. He cited the $54.7 million capacity utilization adjustment, down from $90.2 million in Q1 and expected to be fully eliminated by Q4, plus the $45 million insurance proceeds that closed out the utility corridor claim in full, bringing total recovery to $145 million net of deductibles. Liquidity was about $437 million at quarter end, including $62.6 million of cash, $206.7 million of revolver availability, and $168 million available under LETL facilities; he also pointed to an expected $200 million of income tax refunds and said the goal is to reach cash flow breakeven.

Analysts pressed on why Q3 shipments will be lower, and management said it is mainly due to planned maintenance, Unit 2 tie-in work, and a scheduled operational downtime window designed to get both units online for Q4. Questions also focused on the mix between plate and sheet, with management saying plate may be slightly lower in Q3 because of maintenance, but plate remains the priority and should grow further into 2027, with potential volumes around 600,000 tons. On defense and Hanwha, management said the submarine MOU was suspended after the government chose another bidder, but Algoma still plans to participate where possible and is advancing its own defense and beam strategy. On financing, management said upcoming cash items and margin improvement are intended to reduce reliance on additional financing, though other balance-sheet options remain possible if needed.