Core Viewpoint - Algoma Steel Group Inc. has successfully completed a $500 million financing transaction with the Governments of Canada and Ontario to strengthen its balance sheet and support its transition to Electric Arc Furnace (EAF) technology [1][2][4]. Financing Details - The financing consists of $400 million from the Canada Enterprise Emergency Funding Corporation (CEEFC) and $100 million from the Province of Ontario, with specific secured tranches included [2]. - Algoma has issued 6.77 million common share purchase warrants to CEEFC and Ontario, each exercisable at an exercise price of $11.08 for a 10-year term [2]. Strategic Importance - The seven-year facilities enhance Algoma's financial flexibility as it advances its EAF transformation and seeks to diversify its business [3]. - The financing is seen as a reinforcement of the partnership between Algoma and the government, enabling the company to navigate current market conditions effectively [4]. Operational Focus - The company plans to draw from the secured tranche first to provide immediate liquidity for operations and near-term transformation milestones [4]. - Algoma aims to maintain operational efficiency and cash generation while focusing on its plate-first commercial strategy [4]. Environmental Commitment - The transition to EAF technology is part of one of North America's largest industrial decarbonization initiatives, expected to reduce carbon emissions by approximately 70% [8]. - Algoma is committed to producing steel sustainably, with its new brand Volta representing steel made through EAF technology with significantly lower emissions [9]. Company Overview - Algoma Steel Group Inc. is a leading Canadian producer of high-quality plate and sheet steel products, supporting critical sectors such as energy, defense, automotive, shipbuilding, and infrastructure [7]. - The company is focused on building a greener future and shaping sustainable steelmaking in Canada [7].

Core Viewpoint - Algoma Steel Group Inc. has successfully completed a $500 million financing transaction with the Governments of Canada and Ontario to support its Electric Arc Furnace (EAF) transformation and enhance financial flexibility [1][4]. Financing Details - The financing consists of $400 million from the Canada Enterprise Emergency Funding Corporation (CEEFC) and $100 million from the Province of Ontario, with specific secured tranches included [2]. - Algoma issued 6.77 million common share purchase warrants to CEEFC and Ontario, each exercisable for one common share at an exercise price of $11.08 for a 10-year term [2]. Strategic Importance - The seven-year facilities are designed to strengthen Algoma's balance sheet and provide financial flexibility as the company advances its EAF transformation and seeks to diversify its business [3]. - The financing is expected to support operational efficiency, cash generation, and the company's plate-first commercial strategy [4]. Environmental Commitment - Algoma's transition to EAF technology is part of one of North America's largest industrial decarbonization initiatives, aiming to reduce carbon emissions by approximately 70% once fully transitioned [8]. - The new brand Volta™ will represent all steel produced through Algoma's EAF technology, emphasizing lower emissions and sustainable production [9]. Industry Position - Algoma is positioned as a leading Canadian producer of high-quality plate and sheet steel products, supporting critical sectors such as energy, defense, automotive, shipbuilding, and infrastructure [6]. - The company is committed to building a greener future and strengthening domestic supply chains through its modernization efforts [7].

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q3 2025 was a loss of CAD 87.1 million, with tariffs expense totaling CAD 90 million, leading to a revenue decline of approximately CAD 32 million due to Canadian sales prices being about 40% lower because of tariffs [14][15] - Net loss for the quarter was CAD 485.1 million, compared to a net loss of CAD 106.6 million in the prior year quarter, primarily driven by a CAD 503 million non-cash impairment loss [17][18] - Cash used in operating activities was CAD 117.3 million, with liquidity at CAD 337 million at the end of the quarter [15][19] Business Line Data and Key Metrics Changes - Plate shipments totaled approximately 97,000 tons, consistent with the previous quarter's 103,000 tons, despite a planned two-week outage [8] - Net sales realization averaged CAD 1,129 per tonne, up from CAD 1,036 per tonne in the prior year, reflecting an improved value-added product mix [16] - Cost per ton of steel products sold averaged CAD 1,282, up 24.2% year-over-year [16] Market Data and Key Metrics Changes - The company shipped 419,000 net tons in the quarter, a decline of 12.7% compared to the prior year, attributed to weakening market conditions and the impact of Section 232 tariffs [15][16] - The Canadian market for plate is currently around 600,000 to 700,000 tons, with the company capturing about 50% of that market [52] Company Strategy and Development Direction - The company is pivoting to focus on domestic markets and high-value steel products, particularly plate and specialty products, to reduce exposure to volatile markets [10][11] - The strategic transition to electric arc furnace (EAF) production is being accelerated, with a goal to complete the ramp-up by early 2027 [27][29] - The company aims to position itself as a premium Canadian supplier of essential steel products, aligning with national industrial priorities [11][21] Management's Comments on Operating Environment and Future Outlook - Management highlighted the significant disruption in the steel industry due to U.S. tariffs, which have closed the U.S. market to Canadian producers [7] - The company expects a significant inventory drawdown beginning in Q4 2025 as it transitions to a more efficient EAF-based supply chain [19] - Management expressed confidence in emerging stronger from current challenges, with a focus on operational stability and investment in high-quality products [22] Other Important Information - The company secured CAD 500 million in government liquidity support and expanded its ABL credit facility to CAD 375 million, enhancing financial flexibility [19][20] - The CEO announced retirement at the end of the year, with Rajat Marwah appointed as the new CEO effective January 1, 2026 [12][13] Q&A Session Summary Question: Production profile and EBITDA break-even in a 50% tariff environment - Management indicated a need to accelerate the transition to full EAF production to adapt to current market conditions, aiming for a break-even point post-transition [27][29] Question: Plate production decline and future expectations - Management noted that the decline was due to maintenance days and expected production to rise in Q4 or Q1 next year [31] Question: Expected capital infusions from insurance and government grants - The company anticipates receiving CAD 30 million to CAD 50 million from insurance claims and a significant working capital release of CAD 100 million to CAD 150 million over the next year [32][34] Question: Updated CapEx and net working capital expectations - Management expects a release in working capital in Q4, with a reduction in CapEx as the blast furnace operations shut down [41] Question: Cost targets for the new furnace and market support - The company expects initial costs to be slightly higher due to lower capacity but anticipates achieving target costs as production ramps up [43][44] Question: Positive implications from Canadian trade barriers - Management noted increased interest in Algoma's capabilities and suggested that more government action could strengthen the Canadian market [50][51]

Financial Performance - Q3 2025 shipping volume was 419K NT, a decrease of 19% compared to 520K NT in Q3 2024 and a decrease of 11% compared to 472K NT in Q2 2025[21] - Steel revenue in Q3 2025 was $473 million, down 12% from $539 million in Q3 2024 and down 11% from $534 million in Q2 2025[21] - Adjusted EBITDA for Q3 2025 was $(87) million, a decrease of $91 million from $4 million in Q3 2024 and a decrease of $55 million from $(32) million in Q2 2025[21] - Net loss in Q3 2025 was $(485) million, a decrease of $378 million from $(107) million in Q3 2024 and a decrease of $374 million from $(111) million in Q2 2025[21] - Adjusted EBITDA margin for Q3 2025 was -166%[21] Strategic Initiatives - The company is accelerating the retirement of blast furnace and coke oven operations as it ramps up EAF production through 2025 and 2026[28] - The company achieved first heat for EAF 1 in July 2025[37] - Construction is progressing on EAF 2, with commissioning activities expected in early 2026[37] Market Factors - Steel tariffs of 50% persist on imported steel into the US[34] - There is a current oversupply in the Canadian coil market due to the US market being cut off from Canadian steel mills[34] Safety - The company is implementing an ISO 45001 Safety Management System to further improve health and safety performance[17]

Group 1: Algoma Steel Group Inc. Earnings Report - Algoma Steel Group Inc. reported quarterly earnings of $0.12 per share, exceeding the Zacks Consensus Estimate of a loss of $0.7 per share, and improved from a loss of $0.72 per share a year ago, representing an earnings surprise of +117.14% [1] - The company has surpassed consensus EPS estimates three times over the last four quarters [2] Group 2: Legato Merger Performance - Legato Merger reported revenues of $380.44 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.67%, but down from year-ago revenues of $440.06 million [2] - Legato Merger shares have declined approximately 56.4% since the beginning of the year, contrasting with the S&P 500's gain of 17.2% [3] Group 3: Future Earnings Outlook - The company's earnings outlook is crucial for investors, including current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is -$0.42 on revenues of $443.88 million, and for the current fiscal year, it is -$1.98 on revenues of $1.61 billion [7] Group 4: Industry Context - The Steel - Producers industry is currently ranked in the bottom 32% of over 250 Zacks industries, indicating potential challenges for stocks within this sector [8] - Salzgitter AG, another company in the same industry, is expected to report a quarterly loss of $0.05 per share, reflecting a year-over-year change of +86.5%, with revenues projected at $2.64 billion, down 3.2% from the previous year [9]

Core Insights - Algoma Steel Group Inc. reported third quarter financial results that were in line with previously announced expectations, facing ongoing trade-related challenges while advancing its electric arc furnace (EAF) transformation [1][4][5] Financial Performance - Third quarter revenue was $523.9 million, down from $600.3 million in the prior-year quarter, primarily due to lower steel shipments [5][6] - Steel revenue decreased to $473.3 million from $539.0 million, with revenue per ton of steel sold increasing to $1,250 from $1,153 [5][6] - The company reported a consolidated loss from operations of $651.5 million, including a non-cash impairment loss of $503.4 million, compared to a loss of $83.6 million in the prior-year quarter [6][7] - Net loss for the quarter was $485.1 million, significantly higher than the net loss of $106.6 million in the prior-year quarter, driven mainly by the impairment loss [8][6] - Adjusted EBITDA loss was $87.1 million, with an adjusted EBITDA margin of (16.6%), compared to an adjusted EBITDA of $3.5 million and a margin of 0.6% in the prior-year quarter [9][6] Operational Developments - The EAF project has progressed as planned, with stable performance metrics achieved since the first steel production in July 2025 [11][12] - EAF operations were maintained on a limited schedule to align with market conditions, with plans to transition to a five-day operating week by mid-November 2025 [12] - Following the EAF transformation, the facility is expected to have an annual raw steel production capacity of approximately 3.7 million tons and reduce carbon emissions by about 70% [13][29] Trade Environment - The company continues to face challenges from U.S. trade actions, including a 50% tariff on steel imports, which has restricted access to the U.S. market and led to oversupply in Canada [14][15] - Canadian transactional pricing was reported to be up to 40% lower than comparable U.S. levels, resulting in a revenue reduction of approximately $32 million for the quarter [15][16] Strategic Initiatives - Algoma's board approved a plan to accelerate the decommissioning of its blast furnace and coke oven operations, focusing on low-carbon steel production from the EAF facility [16] - The company has secured $500 million in government-backed liquidity support to enhance financial flexibility and support its transformation strategy [17][18] Liquidity Position - As of the end of the quarter, Algoma had total liquidity of $337.1 million, including $4.5 million in cash and $332.6 million available under its ABL credit facility [18] - The company amended its ABL credit facility to increase total availability by US$75 million, further strengthening its liquidity [18] Dividend Policy - The board suspended the regular quarterly dividend in July 2025 to preserve liquidity and financial flexibility amid evolving market conditions [19]

Core Viewpoint - Algoma Steel Group Inc. is undergoing a planned leadership transition with Rajat Marwah set to succeed Michael Garcia as CEO on January 1, 2026, while Michael Moraca will be promoted to CFO on the same date [1][2][4] Leadership Transition - Michael Garcia will retire at the end of 2025 after leading the company through significant transformation, initiating a comprehensive succession planning process in late 2024 [2][5] - Rajat Marwah, currently CFO, will take on the role of President and CFO effective November 1, 2025, and will become CEO on January 1, 2026 [3] - Michael Moraca, currently Vice President, will be appointed CFO effective January 1, 2026, bringing extensive experience in corporate finance and strategic planning [4] Company Strategy and Transformation - Rajat Marwah has been with Algoma since 2008 and has played a key role in shaping the company's long-term strategy and business transformation, particularly in advancing the transition to electric arc steelmaking [3][5] - The company is focused on becoming a leading low-carbon steel producer, with a significant transformation initiative aimed at reducing carbon emissions by approximately 70% through the adoption of electric arc furnace technology [9] Product Development - The transition to electric arc furnace steelmaking will introduce Volta™, a brand for all steel produced through this technology, which promises lower emissions while maintaining performance [10] - Algoma Steel is committed to investing in sustainable steelmaking practices, supporting critical sectors such as energy, defense, automotive, and infrastructure [8][10]

Core Thesis - Algoma Steel Group Inc. (ASTL) is positioned as a compelling investment opportunity due to its unique status as the only fully leveraged Canadian steel platform capable of meeting the country's growing infrastructure demands [3][4][6] Financial Metrics - As of October 3rd, ASTL's share price was $3.31, with trailing and forward P/E ratios of 14.30 and 9.12 respectively [2] - The stock is currently trading at $4.73, significantly below its estimated replacement cost of $3.4–5.8 billion, which translates to a potential share value of $22–45 net of liabilities [5] Market Position and Demand Drivers - The company benefits from a predictable, multi-year domestic steel demand driven by government-backed infrastructure programs, including the National Shipbuilding Strategy and various transportation projects [4] - A Memorandum of Understanding (MoU) with Seaspan to source steel domestically for shipbuilding further supports the demand outlook and reduces logistical risks [4] Asset Valuation and Upside Potential - ASTL's balance sheet reveals hidden assets valued between $86 million and $425 million, indicating substantial upside potential [5] - The stock trades at just 0.53× book value and 0.44× base-adjusted book value, providing a significant margin of safety for investors [5] Risks and Mitigation - While there are downside risks related to tariffs and project timing, these are considered temporal rather than terminal, suggesting that the long-term investment case remains strong [6] - The combination of undervalued hard assets and imminent infrastructure catalysts positions Algoma Steel favorably for future growth [6]

Core Viewpoint - Algoma Steel Group Inc. is set to release its third quarter financial results for 2025 on October 29, 2025, followed by a conference call on October 30, 2025, to discuss the results and recent events [1][2] Company Overview - Algoma Steel Group Inc. is a leading Canadian producer of hot and cold rolled steel sheet and plate products, based in Sault Ste. Marie, Ontario [3] - The company is a fully integrated producer and a key supplier of steel products in North America, being the only producer of discrete plate products in Canada [3] - Algoma's Direct Strip Production Complex (DSPC) is recognized as one of the lowest-cost producers of hot rolled sheet steel in North America [3] Transformation and Sustainability - Algoma is undergoing a transformation to modernize its plate mill and adopt electric arc technology, focusing on recycling and environmental stewardship to reduce carbon emissions [4] - The company aims to become one of North America's leading producers of green steel, emphasizing investment in its workforce and processes [4][5] - Algoma's commitment to sustainability is positioned to provide North America with a secure steel supply and a sustainable future [5]

Core Viewpoint - Algoma Steel Group Inc. is facing challenges with expected negative Adjusted EBITDA while achieving significant milestones in its transition to low-carbon steelmaking [2][3]. Financial Guidance - Total steel shipments for the quarter are projected to be approximately 415,000 – 420,000 net tons [2]. - Adjusted EBITDA is anticipated to be negative $80 million – negative $90 million [2]. Strategic Initiatives - The company has successfully completed its first arc and first steel production from its electric arc furnace (EAF) in July, marking a key milestone in its transformation [3]. - Algoma is focusing on Canadian market demand with a tailored product mix of plate and coil, supported by federal and provincial financial assistance [3]. Leadership Changes - David Sgro has resigned from the board of directors for personal reasons, with acknowledgments of his contributions during a transformative period for the company [4][5]. - The Chair of the Board, Andy Harshaw, expressed gratitude for Sgro's leadership and impact on the company's strategic vision [5]. Company Overview - Algoma Steel, based in Sault Ste. Marie, Ontario, is a fully integrated producer of hot and cold rolled steel products, serving various sectors including automotive, construction, and energy [6]. - The company is recognized as a key supplier of steel products in North America and is the only producer of discrete plate products in Canada [6]. Environmental Commitment - Algoma is modernizing its plate mill and adopting electric arc technology to significantly reduce carbon emissions, emphasizing its commitment to environmental stewardship [7]. - The company aims to become one of North America's leading producers of green steel through investments in people and processes [7].