Algoma Steel Group Inc. Reports Financial Results for the Second Quarter 2025

Executive Summary

• Algoma Steel Group reported a second quarter 2025 net loss of $110.6 million (compared to net income of $6.1 million in the prior-year quarter), driven by lower steel prices, reduced shipment volumes, and significant tariff-related costs.
• The company achieved a major operational milestone by completing preparations for and initiating first arc and first steel production from its new Electric Arc Furnace (EAF) project in early July 2025, marking the start of its transition to green steel production.
• The Board of Directors suspended the regular quarterly dividend (approx. US$5.2 million) to preserve liquidity amid macroeconomic uncertainty, trade policy volatility, and weak steel market demand.

Key Details

• Financial Performance (Q2 2025 vs Q2 2024):
  • Consolidated Revenue: $589.7 million (down from $650.5 million).
  • Net Loss: $110.6 million (vs. Net Income of $6.1 million).
  • Loss from Operations: $85.1 million (vs. Loss of $12.5 million).
  • Adjusted EBITDA: Loss of $32.4 million (vs. Profit of $37.7 million); Margin of (5.5%).
  • Cash Used in Operating Activities: $37.9 million (vs. Generated $12.5 million).
• Operational Metrics:
  • Shipments: 472,056 tons (down from 503,152 tons).
  • Steel Revenue: $534.4 million; Revenue per ton: $1,249 (down from $1,293).
  • Average Realized Price (net of freight/non-steel): $1,132/ton (down from $1,187/ton).
  • Cost per ton of steel products sold: $1,144 (up from $1,069/ton).
• Tariff Impact:
  • Tariffs paid in Q2 totaled $64.1 million (vs. nil in prior year).
  • Cumulative tariff costs for H1 2025 were $74.6 million.
  • U.S. shipments represented 54% of total volumes in Q2.
  • Canadian net sales realizations were up to 40% lower than U.S. levels due to market disruption from Section 232 tariffs (increased to 50% as of June 4, 2025).
  • Estimated revenue impact from tariff-related pricing disparities was $30 million.
• EAF Project Update:
  • First arc and first steel production achieved in early July 2025.
  • Cumulative investment as of June 30, 2025: $881 million.
  • Project expected to be funded by cash-on-hand, operating cash flow, and existing credit facilities.
  • Post-transformation capacity: ~3.7 million tons annually; expected to reduce carbon emissions by ~70%.
• Liquidity and Capital Structure:
  • Cash at quarter-end: $82.5 million.
  • Unused Revolving Credit Facility: $329.1 million.
  • Bank indebtedness: $16.4 million.
  • Senior secured lien notes: $473.5 million.
• Dividend Suspension:
  • Regular quarterly dividend suspended (approx. US$5.2 million) to maintain financial flexibility.
• Strategic Initiatives:
  • Company applied for the federal Large Enterprise Tariff Loan (LETL) program for $500 million to support operations and strategic diversification.

Notable Quotes

• Michael Garcia, CEO: “The second quarter of 2025 was a pivotal period for Algoma, during which we completed the preparations for our first production of Volta™... This milestone was realized in early July with the successful production of our inaugural steel in the first of our two state-of-the-art EAFs.”
• Michael Garcia, CEO: “Achieving first arc and producing our first steel from the EAF in early July represents a historic accomplishment that marks the true beginning of our transition from a legacy higher-cost traditional steelmaker to one of the lowest-cost green steel producers in North America.”