Q3 FY2026
Filed Oct 29, 2026Adjusted EBITDA Loss of $13.9 Million, In Line with Previously Announced Expectations; Lake Superior Power Restored to Full Power Following Third Quarter Turbine Outage; EAF Unit Two Produces First Steel; Ramp-Up Underway
Adjusted EBITDA loss narrowed to ($13.9 million) from ($87.1 million) and operating cash flow was positive, but revenue, shipments and net income remained materially below the prior-year quarter amid the EAF transition, U.S. tariffs and the Lake Superior Power outage.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 revenueother | $249.4M | – | – |
| Q3 2026 steel revenue, net of freightother | $218.2M | – | – |
| Q3 2026 cost of salesother | $326.5M | – | – |
| Q3 2026 administrative and selling expensesother | $17.4M | – | $13.8 million decrease |
| Q3 2026 impairment lossother | — | – | – |
| Q3 2026 loss from operationsother | ($94.5 million) | – | – |
| Q3 2026 finance incomeother | ($2.3 million) | – | – |
| Q3 2026 finance costsother | $24.1M | – | – |
| Q3 2026 interest on pension and other post-employment benefit obligationsother | $3.6M | – | – |
| Q3 2026 foreign exchange loss (gain)other | $10M | – | – |
| Q3 2026 loss before income taxesother | ($131.3 million) | – | – |
| Q3 2026 income tax recoveryother | ($1.7 million) | – | $144.0 million decrease in income tax recovery |
| Q3 2026 net lossother | ($129.6 million) | – | – |
| Q3 2026 net loss per common share, basic and dilutedother | ($1.18) | – | – |
| Q3 2026 Adjusted EBITDAnon-GAAP | ($13.9 million) | – | – |
| Q3 2026 Adjusted EBITDA marginnon-GAAP | (5.6%) | – | – |
| Q3 2026 net loss marginother | (52.0%) | – | – |
| Q3 2026 net loss per tonother | ($896.7) | – | – |
| Q3 2026 Adjusted EBITDA per tonnon-GAAP | ($96.2) | – | – |
| Q3 2026 capacity utilization adjustment in Adjusted EBITDAnon-GAAP | $53.1M | – | – |
| Q3 2026 shipmentsother | 144,527 tons | – | decreased by 65.5% |
| Q3 2026 average net sales realization per ton of steel soldnon-GAAP | $1,510 | – | increase of 33.7% |
| Q3 2026 cost per ton of steel products soldnon-GAAP | $1,492 | – | – |
| Q3 2026 direct tariff costsother | $18.1M | – | – |
| Nine months ended September 30, 2026 revenueother | $813.8M | – | – |
| Nine months ended September 30, 2026 loss from operationsother | ($382.2 million) | – | – |
| Nine months ended September 30, 2026 net lossother | ($385.0 million) | – | – |
| Nine months ended September 30, 2026 net loss per common share, basic and dilutedother | ($3.53) | – | – |
| Nine months ended September 30, 2026 Adjusted EBITDAnon-GAAP | ($28.9 million) | – | – |
| Nine months ended September 30, 2026 Adjusted EBITDA marginnon-GAAP | (3.6%) | – | – |
| Nine months ended September 30, 2026 cash generated by (used in) operating activitiesother | ($13.0 million) | – | – |
Capital returns
- No dividends were declared during the quarter.
- Dividends paid for the nine months ended September 30, 2026 were —, compared to ($14.8 million) in the prior-year period.
What drove it
- Higher steel prices and a greater proportion of plate in the sales mix increased average net sales realization per ton of steel sold by 33.7%.
- Increased plate shipment volume, both in aggregate and as a percentage of sales, and lower labour and other fixed costs supported Adjusted EBITDA improvement.
- Unit One operated on a full 24-hour-per-day schedule and achieved quality metrics across a range of plate and hot-rolled coil product grades.
- EAF Unit Two produced its first heat of liquid steel on October 9, 2026, subsequent to quarter end, and ramp-up activities are progressing as expected.
- Lake Superior Power restored full generating capability on September 30, 2026 after the Company commissioned a newly acquired replacement turbine.
Concerns
- The 50% U.S. Section 232 tariff continued to severely restrict traditional access to the U.S. market.
- Shipments to the United States represented 24% of total steel shipments in the quarter, compared to 50% in the prior-year quarter.
- The August 17, 2026 unplanned Lake Superior Power outage required a temporary suspension of EAF production before interim arrangements enabled production to resume on August 29, 2026.
- The Canadian steel market remains supply-pressured from domestic supply, U.S. steel shipments into Canada and offshore import offers that the Company believes are below fair market value.
- Cost per ton of steel products sold increased primarily because of lower fixed-cost absorption at reduced production volumes and a higher proportion of plate in the shipment mix.
What to watch
- The expected contribution of EAF Unit Two to production and shipments in the fourth quarter of 2026.
- Completion during the fourth quarter of 2026 of the leased turbine installation under the GE Contract Service Agreement.
- The Company’s pursuit of four-year term financing for the replacement turbine.
- Production ramp-up toward full capacity across the two-unit EAF platform.
- The effect of the U.S. Section 232 tariff and the Company’s Canada-centric, plate-first strategy on shipment mix and steel pricing.
Balance sheet and cash flow
- Cash at September 30, 2026 was $152.4 million, compared to $77.5 million at December 31, 2025.
- Unused availability under the Revolving Credit Facility was $232.5 million and availability under the LETL Facilities was $43.5 million, for total available liquidity of approximately $428 million.
- Senior secured lien notes were $494.8 million at September 30, 2026, compared to $476.6 million at December 31, 2025.
- Long-term governmental loans were $429.2 million and the current portion of governmental loans was $2.2 million at September 30, 2026.
- Total liabilities were $1,802.2 million at September 30, 2026, compared to $1,624.8 million at December 31, 2025.
- Total shareholders’ equity was $197.9 million at September 30, 2026, compared to $491.1 million at December 31, 2025.
- Q3 2026 cash generated by operating activities was $78.6 million, compared to cash used in operating activities of ($117.3 million) in the prior-year quarter.
- Q3 2026 net change in non-cash operating working capital was $134.0 million, compared to ($58.2 million) in the prior-year quarter.
- Q3 2026 acquisition of property, plant and equipment was ($67.7 million), compared to ($52.4 million) in the prior-year quarter.
- Q3 2026 cash used in investing activities was ($42.1 million), compared to ($52.4 million) in the prior-year quarter.
- Q3 2026 governmental loans received were $129.4 million; the Company stated it received $124.5 million in governmental loan advances under the LETL Facilities during the third quarter.
- Q3 2026 cash generated by financing activities was $51.6 million, compared to $91.2 million in the prior-year quarter.
- Q3 2026 cash increase was $89.8 million, compared to a cash decrease of ($78.0 million) in the prior-year quarter.
Analysis
Algoma reported Q3 2026 revenue of $249.4 million, versus $523.9 million in the prior-year quarter, as shipments declined by 65.5% to 144,527 tons during the transition from legacy blast furnaces to EAF steelmaking. The quarter was also affected by the Lake Superior Power outage and U.S. Section 232 tariffs. Steel revenue, net of freight, was $218.2 million, while direct tariff costs were $18.1 million. U.S.-bound shipments represented 24% of total steel shipments, compared with 50% in the prior-year quarter.
Pricing and mix provided important offsets to lower volume. Average net sales realization per ton was $1,510, an increase of 33.7% from $1,129, reflecting higher steel prices and a greater proportion of plate in sales mix. The Company stated that plate shipment volume increased both in aggregate and as a percentage of sales. Cost per ton of steel products sold was $1,492, compared with $1,282, primarily reflecting lower fixed-cost absorption at reduced production volumes and higher plate mix.
Loss from operations was ($94.5 million), compared with ($651.5 million), with the prior-year result including a $503.4 million non-cash impairment charge. Net loss was ($129.6 million), compared with ($485.1 million). Adjusted EBITDA loss improved to ($13.9 million) from ($87.1 million), and Adjusted EBITDA margin improved to (5.6%) from (16.6%). The Q3 Adjusted EBITDA result included a $53.1 million capacity utilization adjustment. The net loss comparison was partly offset by a $144.0 million decrease in income tax recovery and a $10.0 million foreign exchange loss versus a $14.3 million foreign exchange gain in the prior-year quarter.
Operating cash flow was $78.6 million, including collection of $163.9 million of income taxes receivable, compared with cash used in operating activities of ($117.3 million) a year earlier. Capital expenditures were $67.7 million, reflecting final construction spending on EAF Unit Two. The Company ended the quarter with cash of $152.4 million and approximately $428 million of total available liquidity, including Revolving Credit Facility and LETL Facilities availability. It also received $124.5 million in governmental loan advances under the LETL Facilities during the quarter.
Operationally, full power generation capability at Lake Superior Power was restored on September 30, 2026, and Unit Two produced its first heat of liquid steel on October 9, 2026. Unit Two is expected to contribute to fourth-quarter production and shipments. The release did not provide quantitative financial guidance, but management said the Q3 Adjusted EBITDA loss was in line with previously disclosed guidance and is focused on ramping the two-unit EAF platform toward improved profitability.
Management, verbatim
Earlier this month, we produced first steel at EAF Unit Two, a major milestone for Algoma and the result of years of disciplined execution by our employees and contractors. Our plate-first strategy continued to drive results, with higher steel prices and a greater share of plate driving stronger net sales realization per ton. With both units now in place and power fully restored at Lake Superior Power following a temporary outage in August, we are entering the final phase of the most significant transformation in Algoma’s history.
Rajat Marwah, Chief Executive Officer
While the 50% U.S. Section 232 tariffs continue to severely restrict our traditional access to the U.S. market, our pivot to a Canada-centric, plate-first strategy is helping us navigate these challenges. With both EAF units in place, we are well-positioned to increase production and meet growing infrastructure, construction, and defence demand.
Rajat Marwah, Chief Executive Officer
Adjusted EBITDA loss of $13.9 million came in line with our previously disclosed guidance, as higher steel prices, a greater share of plate, and lower fixed costs helped offset the temporary impact of the LSP outage. Average net sales realization per ton increased 33.7% versus the prior-year quarter, reflecting stronger steel prices and a greater proportion of plate in our sales mix.
Michael Moraca, Chief Financial Officer
Not in the filing
stated, not guessed- Gross margin was not reported.
- Non-GAAP earnings per share was not reported.
- Free cash flow was not reported.
- Share repurchases were not reported.
- No operating segment revenue disclosure was reported.
- No quantitative forward financial guidance for revenue, gross margin, operating expenses or tax rate was provided.
- The previous outlook was not provided, so a metric-by-metric comparison with prior guidance cannot be made.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.