Algoma Steel Group (ASTL) Q1 2025 earnings summary

Executive summary

• Fiscal Q1 2025 results were impacted by challenging steel market conditions, with lower shipment volumes and realized prices, partially due to a planned outage at the plate and strip facility in April.

• Safety performance improved, and the company advanced its ESG commitments, highlighted in its second annual ESG report.

• The transformative Electric Arc Furnace (EAF) project is nearing commissioning, with Unit One expected to begin commissioning in calendar Q4 2024.

• Q1 FY2025 steel revenue was $597M, up 5% sequentially but down 21% year-over-year; net income was $6M, down 78% from Q4 FY2024 and 95% from Q1 FY2024.

• Completed second phase of Plate Mill Modernization; EAF project construction on schedule and budget.

Financial highlights

• Adjusted EBITDA was $37.7M (5.8% margin), down from $191.2M (23.1% margin) year-over-year.

• Steel revenue was $597M, down 20.8% year-over-year; shipments were 503,000 net tons, down 11.6%.

• Net sales realization averaged $1,187 per ton, down 10.4% year-over-year; cost per ton of steel sold averaged $1,069, up 12.5%.

• Cash generated from operations was $12.5M, compared to $163.9M in the prior year.

• Net income margin for Q1 FY2025 was 0.9%, compared to 15.8% in Q1 FY2024.

Outlook and guidance

• Plate production is expected to reach 90,000 tons in Q2, with a steady ramp toward an annual run rate capacity of over 650,000 net tons.

• Near-term pricing weakness is expected to persist, with no immediate catalysts for price or demand increases.

• EAF steel production is expected by the end of calendar Q1 2025, ramping toward 3 million tons per year and anticipated to reduce annual carbon emissions by ~70%.

• Cash taxes are expected to be lower in the next two years due to accelerated depreciation from EAF commissioning.

• Company expects to continue paying a quarterly dividend.