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Algoma Steel Group Inc., a leading Canadian producer of hot and cold rolled steel sheet and plate products, today announced results for its first quarter ended March 31, 2025.
Unless otherwise specified, all amounts are in Canadian dollars.
Business Highlights and First Calendar Quarter 2025 to First Calendar Quarter 2024 Comparisons
- First quarter operational results in-line with expectations.
- Consolidated revenue of $517.1 million, compared to $620.6 million in the prior-year quarter.
- Consolidated loss from operations of $139.9 million, compared to income from operations of $3.1 million in the prior-year quarter.
- Net loss of $24.5 million, compared to net income of $28.0 million in the prior-year quarter.
- Adjusted EBITDA loss of $46.7 million and Adjusted EBITDA margin of (9.0%), compared to Adjusted EBITDA of $41.5 million and 6.7% in the prior-year quarter (see “Non-GAAP Measures” below).
- Cash generated by operating activities of $92.1 million, compared to $121.2 million in the prior-year quarter.
- Shipments of 469,731 tons, compared to 450,966 tons in the prior-year quarter.
- Paid quarterly dividend of US$0.05/share.
Michael Garcia, the Company’s Chief Executive Officer, commented, “The first quarter of 2025 was an intense period of activity at our site, set against a backdrop of ongoing market challenges. Our financial and operational results were broadly in line with expectations, despite headwinds from tariff uncertainty and subdued demand and pricing in the steel market. At the same time, we advanced construction on our transformative EAF project. While unusually harsh winter conditions delayed progress, we used the opportunity to advance other EAF project work not on the critical path. In parallel, we commissioned several critical systems, including the fume treatment plant and the water treatment plant, positioned the furnace itself, and energized the substation. We now anticipate first steel production from our initial EAF during Q2, with no material change to our total project cost and our 2025 EAF production expectations.”
“We reach this milestone during a period of significant volatility in the North American steel market, with evolving U.S. tariffs—including those on Canadian steel and aluminum—adding uncertainty and driving increased imports into the Canadian market. Despite these challenges, we remain confident that our shift to EAF steelmaking will fundamentally improve our cost structure and enhance our resilience in turbulent market conditions. We believe that we are positioning Algoma to be a strategic force in the North American steel industry for decades to come, all while reinforcing our steadfast commitment to safety and sustainability and that this is the beginning of our journey to becoming a producer of green steel in North America and to delivering long-term value for all stakeholders.”
First Quarter 2025 Financial Results
First quarter revenue totaled $517.1 million, compared to $620.6 million in the prior-year quarter. As compared with the prior-year quarter, steel revenue was $463.2 million, compared to $568.1 million, and revenue per ton of steel sold was $1,101, compared to $1,376. The decline in both was primarily attributable to lower pricing that resulted from weakening market conditions.
Loss from operations was $139.9 million, compared to income from operations of $3.1 million in the prior-year quarter. The year-over-year decrease was primarily due to tariff costs and higher natural gas and electric power pricing. For the first quarter of 2025, tariff costs were $10.5 million.
Net loss in the first quarter was $24.5 million, compared to net income of $28.0 million in the prior-year quarter. The decrease was driven primarily by lower realized pricing and higher input costs as detailed above, partially offset by a $50.0 million insurance receivable. The insurance receivable, which is expected to be paid in the second quarter of 2025, was recorded as other income during the quarter based on the insurer’s approval of a second advance of insurance proceeds relating to the January 2024 collapse of a utility corridor supporting the steelworks. The Company is working closely with its insurance advisors and carrier to finalize the remaining claims associated with the incident.
Adjusted EBITDA in the first quarter (inclusive of the $50 million insurance proceeds receivable) was a loss of $46.7 million, compared with Adjusted EBITDA of $41.5 million for the prior-year quarter. This resulted in an Adjusted EBITDA margin of (9.0%). The average realized price of steel net of freight and non-steel revenue was $986 per ton, compared to $1,260 per ton in the prior-year quarter. Cost per ton of steel products sold was $1,137 compared to $1,091 in the prior-year quarter. Shipments for the first quarter increased by 4.2% to 469,731 tons, compared to 450,966 tons in the prior-year quarter.
See “Non-GAAP Measures” below for an explanation of Adjusted EBITDA and a reconciliation of net (loss) income to Adjusted EBITDA.
Electric Arc Furnace
In November 2021, the Company’s Board of Directors (the “Board”) authorized the Company to construct two new state of the art EAFs to replace its existing blast furnace and basic oxygen steelmaking operations. Progress in the first quarter of 2025 was impacted by unusually harsh winter conditions, which caused some delays. During this period, the Company advanced additional EAF project work not on the critical path and commissioned several critical systems, including the Fume Treatment Plant and the Water Treatment Plant, positioned the furnace itself, and energized the substation. This progress supports the transition to hot commissioning with first steel production from the initial EAF is expected during Q2 2025, representing a major milestone in the Company’s transformation to EAF-based steelmaking.
The Company has contracted substantially all remaining expected project costs. As of March 31, 2025, the cumulative investment was $823.6 million including $83.4 million during the first quarter of 2025. Contracted commitments now total approximately $880 million and as the project moves closer to completion the Company anticipates completing the remaining contracts, including those structured as time and material agreements, within 5% of the upper end of the previously announced budget range. The Company also continues to expect the completion of the EAF project to be funded with cash-on-hand, cash generated through operations, and available borrowings under the Company’s existing undrawn credit facility.
Following the transformation to EAF steelmaking, Algoma’s facility is anticipated to have an annual raw steel production capacity of approximately 3.7 million tons, matching its downstream finishing capacity, which is expected to reduce the Company’s annual carbon emissions by approximately 70%.
Potential Tariff Impacts
In the first quarter of 2025, the President of the United States has issued various executive orders imposing tariffs on products imported from Canada, including (i) tariffs under the International Emergency Economic Powers Act (“IEEPA Tariffs”), applying a 25% duty on most imports from Canada, with a reduced 10% rate on energy products and (ii) tariffs under Section 232 of the Trade Expansion Act of 1962 (“S232 Tariffs”), imposing a 25% ad valorem tariff on all steel and aluminum articles and their derivatives, without exclusions. On April 2, 2025, the President announced a minimum 10% tariff (“Reciprocal Tariffs”) on all U.S. imports, effective April 5, 2025, and higher tariffs on imports from 57 countries. Canada was excluded from the application of the Reciprocal Tariffs, and the order further clarified that the IEEPA Tariffs and S232 Tariffs would not be aggregated on Canadian goods compliant with the United States-Mexico-Canada Agreement. At present, the Company is only subject to the S232 Tariffs, which impose a 25% tariff on steel imported into the United States.
The currently imposed tariffs and the ongoing threat of sustained and/or additional tariffs has contributed to volatility in steel demand and pricing in both the U.S. and Canadian markets, with concerns over supply chain disruptions leading to fluctuations in purchasing patterns. Additionally, uncertainty surrounding trade policies has impacted the U.S. dollar exchange rate, which in turn affects the Company’s sales and cost structure by influencing raw material costs, pricing competitiveness, and cross-border trade dynamics. In many cases, it is not feasible to pass on the tariff cost to customers. Unlike the U.S. market, which is predominantly contract-based, the Canadian steel market operates largely on spot transactions. Over recent months, an increasing imbalance in demand and pricing has emerged between the U.S. and Canadian markets, with Canadian transactional pricing falling below U.S. pricing. This trend is believed to be driven by oversupply in the Canadian market from domestic producers and an increase in import offers from other countries priced below prevailing domestic levels.
To the extent U.S. tariffs have, and may continue to, impact export sales, contribute to oversupply in the Canadian market, result in reduced transactional pricing, or lead to retaliatory tariffs on U.S. imports into Canada—or otherwise cause increases in input prices or reduced availability of inputs in Canada—the Company’s ability to maintain its current cost structure or level of operations may be materially and adversely affected. This may result in reduced production levels, higher costs, and lower operating margins, any of which could have a material adverse effect on the Company’s financial position, results of operations, and liquidity. During the quarter ended March 31, 2025, the Company incurred tariff-related costs of $10.5 million.
Liquidity
At quarter end, the Company had cash of $226.5 million and unused availability under its Revolving Credit Facility of $360.9 million.
Quarterly Dividend
The Board has declared a regular quarterly dividend in the amount of US$0.05 on each common share outstanding, payable on May 30, 2025 to holders of record of common shares of the Corporation as of the close of business on May 13, 2025. This dividend is designated as an “eligible dividend” for Canadian income tax purposes.
Conference Call and Webcast Details
A webcast and conference call will be held on Wednesday, April 30, 2025 at 11:00 a.m. EDT to review the Company’s results for the quarter ended March 31, 2025, discuss recent events, and conduct a question-and-answer session.
