Algoma Steel Group Inc. (NASDAQ: ASTL; TSX: ASTL) reported results for the three months ended June 30, 2026, saying adjusted EBITDA came in at C$13.8 million, in line with previously announced expectations, as the company continued its shift to electric arc furnace (EAF) steelmaking and a Canada-focused, plate-first strategy.

Unless otherwise noted, all amounts are in Canadian dollars.

Algoma said comparisons with the second quarter of 2025 were significantly affected by the transition away from its legacy blast furnace operations and toward its EAF platform. In the prior-year period, the company produced steel exclusively from its blast furnace operations, which were permanently halted on January 18, 2026 after the 50% U.S. Section 232 tariff altered Algoma’s historical cross-border business model and effectively closed off its traditional access to the U.S. market. In the second quarter of 2026, all liquid steel production came from the company’s first EAF unit, which is still ramping up, while the second unit moved through commissioning.

For the quarter, consolidated revenue fell to C$267.5 million from C$589.7 million a year earlier. The company posted a consolidated loss from operations of C$134.2 million, compared with a loss from operations of C$85.1 million in the prior-year quarter. Net loss was C$96.0 million, versus a net loss of C$110.6 million a year earlier.

Adjusted EBITDA was C$13.8 million, with an adjusted EBITDA margin of 5.2%, compared with an adjusted EBITDA loss of C$32.4 million, or a margin of (5.5%), in the second quarter of 2025. The result included a C$45.0 million final insurance settlement and a C$54.7 million capacity utilization adjustment. Direct tariff costs were C$18.7 million, down from C$64.1 million a year earlier. Cash used in operating activities was C$79.4 million, compared with C$37.9 million in the prior-year quarter. Shipments totaled 181,473 tons, down from 472,056 tons a year earlier.

Chief Executive Officer Rajat Marwah said the quarter showed the resilience of Algoma’s transformed business despite a difficult industry backdrop. He said the company delivered a second consecutive quarter of record plate sales, that the first EAF unit continued to ramp up as expected, and that transition costs declined meaningfully from the first quarter. Marwah added that commissioning activities have begun at the second EAF unit, with first steel expected in the third quarter of 2026.

Marwah also said the 50% U.S. Section 232 tariffs continue to effectively foreclose Algoma’s traditional access to the U.S. market. He said the company’s pivot to a Canada-centric, plate-first strategy is working and noted that, as Canada’s only producer of discrete plate, Algoma is positioned to serve demand from infrastructure, construction and defence. He added that the company appreciated continued federal and provincial government support.

Chief Financial Officer Michael Moraca said adjusted EBITDA of C$13.8 million was consistent with previously disclosed guidance and was supported by record plate sales, a 20% increase in average net sales realization per ton versus the prior-year quarter, and the C$45.0 million final insurance settlement. He said the quarter also included the C$54.7 million capacity utilization adjustment, which relates to excess fixed costs from the company’s previous operating configuration and was down from C$90.2 million in the first quarter. Moraca said the adjustment is expected to decline further and be fully eliminated by the fourth quarter of 2026 as the EAF ramp-up continues. He added that Algoma ended the quarter with about C$437 million in total available liquidity.

Revenue and pricing improved on a per-ton basis even as shipments declined. Steel revenue was C$247.0 million, compared with C$534.4 million a year earlier. Average net sales realization per ton of steel sold was C$1,361, up from C$1,132 in the prior-year quarter, an increase of 20.2%, reflecting a better product mix under the plate-first strategy. Average realized price of steel net of freight and non-steel revenue was also C$1,361 per ton, compared with C$1,132 per ton a year earlier.

The company said the higher loss from operations reflected lower steel shipments due to the continued effect of U.S. Section 232 tariffs, which sharply restricted its historical U.S. export business. That pressure was partly offset by higher plate shipment volume, lower labour and other fixed costs, and a C$2.1 million decline in administrative and selling expenses.

The narrower net loss primarily reflected C$45.0 million in insurance proceeds recognized in other income and a foreign exchange gain of C$18.8 million, compared with a foreign exchange loss of C$31.5 million in the same period last year. Those gains were partly offset by the larger operating loss and a C$38.9 million decline in income tax recovery.

Algoma said the second quarter of 2026 was the second full quarter in which all liquid steel production came entirely from its EAF facility. It said ramp-up activities continued in line with expectations. The Unit One EAF furnace and associated melt shop assets are performing as designed, with quality metrics achieved across a range of plate and hot-rolled coil grades, and operations are running on a full 24-hour-per-day schedule. Construction of the second EAF unit is nearing completion, with first steel production expected in the third quarter of 2026.

The company said the C$54.7 million capacity utilization adjustment represented excess fixed costs beyond what was needed to operate the EAF and downstream operations at the volumes produced. Those costs included labour, equipment leases and rentals, fixed utilities and maintenance costs associated with legacy assets. Algoma said the amount declined from C$90.2 million in the first quarter and is expected to fall further over the next three months before being fully eliminated by the fourth quarter of 2026.

As Canada’s only producer of discrete plate, Algoma said it holds a unique position in the market. It said demand from infrastructure, construction and defence remained healthy during the quarter, supporting a second consecutive quarter of record plate sales, and that plate production is expected to continue increasing as the EAF ramp-up progresses through 2026. That mix is central to the company’s current operating reset, as the shift away from U.S.-bound volumes makes domestic and specialized end markets more important to near-term performance.

Once the EAF transformation is completed, Algoma expects its facility to have annual raw steel production capacity of approximately 3.7 million tons and to reduce annual carbon emissions by approximately 70% from pre-EAF levels.

On the trade front, Algoma said the 50% U.S. Section 232 tariff on steel imports from Canada remained in effect throughout the quarter and that product coverage continued to expand across downstream and derivative steel products, further disrupting North American supply chains. The company incurred C$18.7 million in direct tariff costs during the quarter, compared with C$64.1 million in the prior-year quarter, reflecting the intentional reduction in U.S.-bound volumes. Shipments to the United States represented 23% of total steel shipments in the quarter, down from 54% a year earlier and from a historical range of about 45% to 55%.

Algoma said the Canadian steel market remains under supply pressure, with domestic coil pricing held down by oversupply from Canadian producers displaced from the U.S. market, continued U.S. steel presence in Canada and import offers priced at less-than-fair-value. The company said its strategy of concentrating production on discrete plate, where it has a pricing premium and a unique market position, is intended to help offset those conditions.

On April 7, 2026, Algoma announced the formation of Roshel Algoma Defence Solutions, a joint venture with Roshel Inc., a Canadian-owned armoured vehicle manufacturer. The company said the joint venture is expected to support the development of domestic ballistic steel and related manufacturing capabilities in Canada.

Algoma also said its memorandum of understanding with Hanwha Ocean Co. Ltd., announced in January 2026, has been suspended. The MOU was contingent on Hanwha Ocean being awarded and entering into an effective contract under the Canadian Patrol Submarine Project and on the negotiation and execution of definitive agreements with Algoma. On July 6, 2026, the Government of Canada announced that Thyssenkrupp Marine Systems was selected under the CPSP procurement process.

At June 30, 2026, Algoma had C$62.6 million in cash, C$206.7 million of unused availability under its revolving credit facility and C$168.0 million available to draw under the LETL facilities, for total available liquidity of approximately C$437 million. During the quarter, the company received C$124.5 million in governmental loan advances under the LETL facilities to support operations and the completion of the EAF transition. Capital expenditures were C$29.0 million, compared with C$97.4 million in the prior-year quarter, reflecting the substantial completion of EAF construction. No dividends were declared.

Algoma said a webcast and conference call will be held on Thursday, July 30, 2026 at 11:00 a.m. EDT to review the results, discuss recent events and conduct a question-and-answer session. The webcast and replay will be available in the Investors section of the company’s website at ir.algoma.com. Participants may also join by phone by calling 877-425-9470 domestically or 201-389-0878 internationally and requesting the Algoma Steel Second Quarter 2026 Conference Call. To access the replay, dial 844-512-2921 domestically or 412-317-6671 internationally and enter passcode 13761609.

The company said its condensed interim consolidated financial statements for the three and six months ended June 30, 2026, and the related Management’s Discussion & Analysis, are available on the SEC’s EDGAR website at www.sec.gov, on SEDAR+ at www.sedarplus.ca and on Algoma’s website at www.algoma.com. Shareholders may request hard copies free of charge by contacting [email protected].

Algoma also reiterated its cautionary statement on forward-looking information, including statements related to tariffs, steel pricing trends, the EAF transition, the timing of second EAF completion and production, the expected reduction and elimination of capacity utilization adjustments, expected growth in plate production and shipments, annual raw steel capacity, emissions reductions, liquidity, government funding, the Roshel Algoma Defence joint venture and sovereign ballistic steel capabilities, labour availability, supply chain disruptions and future financial or operating performance.