Algoma Steel (ASTL) 7 Nov 24 2025 Q2 Earnings call transcript

Algoma Steel Group Inc. recently held its second quarter fiscal 2025 earnings call, shedding light on the company's operational performance and the status of its transformative electric arc furnace (EAF) project. Michael Garcia, Chief Executive Officer, and Rajat Marwah, Chief Financial Officer, provided insights into the company's financial health, market conditions, and strategic initiatives, offering a comprehensive overview of Algoma Steel's position in the steel industry.

Operational Performance and Market Challenges

Algoma Steel reported a solid operational performance in the second quarter, despite the challenging market conditions. The company's plate shipments increased to approximately 73,000 tons, up from 61,000 tons in the first fiscal quarter, reflecting its ability to grow market share in a challenging environment. Michael Garcia emphasized the company's commitment to workplace safety, emphasizing the importance of employee well-being in the face of the ongoing EAF project.

EAF Project Progress

The EAF project remains on track for commissioning activities by the end of this calendar year, with critical equipment installation well underway. Rajat Marwah highlighted the team's efforts to derisk the project, contracting substantially all remaining work, and securing funding through Ontario's Ministry of the Environment, Conservation and Parks Emissions Performance program. The project's progress underscores Algoma Steel's strategic vision for a greener and more efficient steel production process.

Financial Health and Liquidity

Algoma Steel's financial health remains strong, with a cash balance of over $450 million and a total liquidity of approximately $800 million. Rajat Marwah detailed the company's adjusted EBITDA of $4 million and a strong balance sheet, positioning Algoma well to navigate the current market challenges.

Future Outlook and Strategic Initiatives

Looking ahead, Algoma Steel is optimistic about the post-election steel market conditions, with a focus on operational efficiency and strategic positioning to capture market opportunities. The company's transition to EAF steelmaking represents a significant step forward, aligning with the global trend towards greener production processes.

Investor Questions and Concerns

During the Q&A session, investors and analysts raised concerns about working capital management and the timing of insurance proceeds. Rajat Marwah provided insight into the company's working capital strategy and the expected release of funds from the Ministry of Environment program. The company's strategic approach to managing working capital and the successful execution of the EAF project demonstrate its ability to navigate complex financial and operational challenges.

Conclusion

Algoma Steel's second quarter fiscal 2025 earnings call highlighted the company's operational resilience, strategic initiatives, and financial health. The progress of the EAF project, coupled with a strong balance sheet and operational efficiency, positions Algoma well for future growth and market leadership in the steel industry. As Algoma continues to transition to a more sustainable and efficient production process, investors and stakeholders will closely watch its progress and strategic initiatives.