Steel Dynamics Stock

Good day and welcome to the Steel Dynamics Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that this call is being recorded today, October 20, 2026, and your participation implies consent to our recording this call. If you do not agree today's terms, please disconnect.

At this time, I would like to turn the conference over to David Lipschitz, Director, Investor Relations. Please go ahead, sir.

Thank you, Sylvie. Good morning, and welcome to Steel Dynamics' Third Quarter 2026 Earnings Conference Call. As a reminder, today's call is being recorded and will be available on our website for replay later today. Leading today's call are Mark Millett, Chairman and Chief Executive Officer of Steel Dynamics; and Theresa Wagler, Executive Vice President and Chief Financial Officer. The other members of our senior leadership team are joining us on the call individually.

Some of today's statements, which speak only as of this date, may be forward-looking and predictive, typically preceded by believe, expect, anticipate or words of similar meaning. They are intended to be protected by the Private Securities Litigation Reform Act of 1995 should actual results turn out differently. Such statements involve risks and uncertainties related to integrating or starting up new assets, the aluminum industry, the use of estimates and assumptions in connection with anticipated project returns and our steel metals recycling fabrication and aluminum businesses as well as to general business and economic conditions. Examples of these are described in the related press release as well as in our annually filed SEC Form 10-K under the headings Forward-Looking Statements and Risk Factors found on the Internet at www.sec.gov and if affable in any later SEC Form 10-Q. You will also find any referenced non-GAAP financial measures reconciled to the most directly comparable GAAP measures in the press release issued yesterday entitled Steel Dynamics Reports Third Quarter 2026 results.

And now I'm pleased to turn the call over to Mark.

Well, good morning, everyone. Thank you for joining us this morning for the third quarter 2026 Earnings Call. Before I begin our report, I would like to take a moment to congratulate Theresa on her appointment as CEO at the end of this year. As most of you know, she's been with the company for 28-plus years, starting when we had just our first mill in Butler, Indiana. And back then, here's just a handful of people, and now we've got 14,000 strong in our team. In that time, she has built an incredible understanding of our markets, our customers and our company. Most importantly, she understands our culture and is passionate about our people. She has been acutely involved with the strategic decisions and direction we have taken these past 15 years, decisions that have driven tremendous growth and about 3,000% shareholder value appreciation, a value with very few -- very few can claim. That success has also been supported by an incredible team of 14,000 people as I said, and the best senior leadership on the planet, all of whom have been very keen, very key contributors of our growth.

I just want to -- very unusually maybe, but I'd just like this to signal them out. Miguel Alvarez, Jim Anderson, Matt Bell, Chad Bickford, Chris Graham, Barry Schneider, Tommy Scruggs, Rick Poinsatte. These folks have been incredible. And with this team and with Theresa at the helm, we will undoubtedly drive SDI to even greater heights.

So that said, and congratulations, Theresa?

Thank you very much, Mr. Mark.

Our teams, I think in the third quarter achieved a very strong quarter-over-quarter financial and operational performance. That said, we did come interest shy of our earlier guidance range due to late September anticipated moves in foreign currency and aluminum hedging unrealized market-to-market adjustments of just under $30 million.

Some quarter highlights included record quarterly steel shipments of 3.8 million tons, adjusted EBITDA of $1.2 billion, an extremely strong cash flow from operations of $846 million. Both the milestones relating to the aluminum mill commissioning and ramp were also achieved. Seriously, my sincere thanks to an amazing team that consistently brings our vision and strategies to life. As I said always, safety will be our most important cultural pillar and value with great dedication to each other. Our team continues to focus on our take controller safety philosophy. We have hundreds of volunteers that travel across our company, not simply auditing our safety practices at our facilities, but cultivating our culture to ensure each facility has the right attitude and mindset to drive our performance ever upwards. It is an incredible time commitment and so inspiring as they operate as a family, supporting each other while challenging the status quo and striving for continuous improvement every day.

So before I continue, though, Theresa, will you update us on some specifics relative to Q3?

Absolutely. Thank you, Mark, and thank you for your kind words. Good morning, everyone. I appreciate you being with us this morning. For the third quarter of 2026, our net income was $756 million or $5.26 per diluted share with adjusted EBITDA of $1.2 billion. Third quarter 2026 revenues were $6.5 billion, and operating income was just under $1 billion -- was just over $1 billion, higher than sequential second quarter results driven by higher realized steel pricing and record steel shipments.

As Mark mentioned, the steel team delivered an outstanding quarter with record shipments of 3.8 million tons. Our steel operations generated operating income of $1 billion in the third quarter, a 43% sequential increase as average selling prices per ton increased $102. During the third quarter of 2026, the domestic steel industry operated at an estimated utilization rate of 80%, while our steel mills operated at 92%. We consistently achieve higher utilization due to our value-added product diversification, differentiated customer supply chain solutions and the support of our internal manufacturing businesses, and this is consistent throughout all market cycles.

Regarding flat-rolled steel, market conditions remain favorable. Customer demand is strong inventory levels throughout the supply chain remain very lean, and order lead times are elevated. Value-add spreads to coil prices have recovered, increasing to over $230 per ton as the largest flat-rolled steel coder in North America, we are well positioned to capitalize on these margin opportunities. As a reminder, approximately 80% of our flat-rolled steel portfolio, sometimes more is linked to contractual pricing that generally lags market changes by 2 months. Given this significant improvement in flat-rolled steel pricing and the continued expansion of value-added spreads, we expect these favorable market dynamics to positively impact our fourth quarter results and into 2027.

Long product steel markets also remain incredibly strong, supported by healthy activity in nonresidential construction. Customer demand continues to be exceptionally robust with order backlog extending well into 2027. We remain optimistic about demand for our diversified product portfolio of steel products and believe our end market exposure positions us incredibly well. For modeling purposes for those on the call, our hot-rolled coil shipments in the third quarter were 992,000 tons, our cold-rolled shipments were 146,000 tons and finally, our coated flat-rolled shipments were 1 million -- excuse me, were 1,630,000 tons.

Third quarter 2026 operating income for metals recycling was $33 million lower than sequential -- sorry, it was $33 million lower than second quarter earnings due to lower realized pricing. Our metals recycling team is partnering even more closely with our steel and aluminum teams to expand scrap separation capabilities. This will provide a meaningful advantage in increasing recycled content in our aluminum flat-rolled products while expanding our earnings opportunity. Our steel fabrication team achieved third quarter operating income of $91 million, an increase from second quarter results of $85 million as increased volume and higher average pricing offset significantly higher steel raw material input costs. I want to give a shout out to the team. They did an incredible job.

Our steel joists and deck business is experiencing strong demand with our order backlog 50% higher today than a year ago. The Dodge Momentum Index, which generally leads Construction spending by 12 to 18 months remains elevated and is improving. We are also seeing improved pricing within our steel joists and deck business with strong expectations for 2027, supported by positive customer sentiment and quoting activity, continued manufacturing onshoring and public funding for infrastructure and other fixed asset investment programs. We're starting to see the uplift from this macro environment and we believe it could be considerable.

Third quarter 2026 operating losses from our aluminum operations were $26 million, a 21% improvement over sequential results. Shipments and financial performance were below our original expectations due to a matter within the hot strip mill, which Mark will describe in a moment. The issue has been resolved, and we expect improved performance going forward. We expect volume, cost structure and profitability from the aluminum rolling mill to improve in the fourth quarter and throughout 2027. In the third quarter, we generated strong cash flow from operations of $846 million. Our cash generation is supported by our differentiated server business model and highly variable low-cost structure. At the end of the quarter, we had liquidity of $2.4 billion.

During the third quarter of 2026, we invested $150 million in capital investments with fourth quarter estimates also in that same range. During 2026, we have repurchased $591 million of our common stock and continued a positive dividend profile. At September 30, $260 million remained available under our current repurchase program. These actions reflect the strength of our capital foundation and cash flow generation capability and the continued confidence in our future. Our capital allocation strategy prioritizes high-return growth opportunities while maintaining a disciplined and balanced approach to shareholder value creation.

Shareholder returns are anchored by a sustainable and growing base dividend, complemented by a flexible share repurchase program that allows us to return additional capital to shareholders when appropriate. At the same time, we remain committed to preserving our investment-grade credit profile ensuring the financial strength and flexibility needed to support strategic growth initiatives, navigate market cycles and create long-term value for our shareholders. Our free cash flow profile has fundamentally changed, increasing to an average annual $2.4 billion during the most recent 5 years. And if you exclude our recent transformational growth, it averages $3.2 million per year, an incredible achievement. And there's more to come.

Over the past number of years, we've invested more than $5 billion, arguably $6 billion in 3 primary transformative organic growth initiatives. These investments reflect our disciplined approach to capital allocation and our commitment to growing in markets where we believe we can create sustainable competitive advantages. As these assets continue to mature, we expect them to generate meaningful earnings and related free cash flow. We've established a strong and sustainable capital foundation that enables us to invest in meaningful strategic growth opportunities, consistently return capital to shareholders and maintain the investment-grade financial metrics that underpin our long-term success.

And I would be remiss if I also didn't congratulate Mark on his upcoming retirement, although my belief is will be busier then than he is now. And just to point out, under Mark's leadership, we went from a market cap of $3 billion to today, $35 billion and continuing to move forward. We had around 3,000 people. And when he originally started, we had 3 to now almost 15,000, and that was all under Mark's leadership. So thank you, Mark, for that.

Well, thank you, Theresa, but it takes the team, takes a village. So thank you, though. Consistently achieving those incredible results year-over-year. It just doesn't happen. It is the product of an effective business model that mitigates volatility, a commitment to state-of-the-art technology, both leveraged by unique and passionate culture driven to excel. The resulting performance reflects the dedication of our teams and the effective strategies we have developed and executed over time. We have invested strategically to gain significant scale, high-margin product and market diversification, efficient and unique customer supply chains and synergistic operating platforms to optimize market opportunities throughout economic cycles. These strategies enable us to consistently achieve at the highest levels, allow us to control our own destiny and outperformed competitors across all market goals.

Our foundational focus on market and product diversification, particularly in higher-margin value-added products, support stronger through-cycle facility utilization and drive superior financial performance. We optimize cash generation, which enables a balanced and consistent capital allocation strategy that supports growth, maintains financial strength and delivers compelling long-term returns to our shareholders. Our disciplined approach to capital investment continues to generate strong through-cycle cash flow and supports one of the highest return on invested capital profiles not only of steel companies but in the industrial sector. Our most recent and most significant current investment is in aluminum flat-rolled products. The mill is transitioning from commissioning to full production ramp and the excitement continues to be palpable as you tour the facility.

The team has outperformed all industry expectations, constructing and commissioning an incredible facility in industry-leading time. Competitors and customers alike that have toured the mill are amazed at the quality and the capability of the plant and the speed of product qualification. But even more important to me, they are broadly complementary of the quality and the speed decor of the team. Again, they and our culture will differentiate us from the rest of the industry. The team is navigating a volatile aluminum market, driven by the impacts of geopolitical conflict and domestic supply chain challenges. But despite these near-term challenges, they've remained focused on execution custom service and operational excellence. Beyond these temporary constraints, we are operating in a unique and highly favorable long-term market environment. The United States faces a significant structural supply deficit of more than 1.4 million tons of aluminum sheet. And that shortfall is a forecast to widen as demand continues to grow across key end markets.

We believe our aluminum platform is exceptionally well positioned to capitalize on that growing domestic demand, creating substantial long-term value for our shareholders. The investment is in clear alignment with our core competencies. Our construction capabilities have once again been proven with Columbus and the Mexican slab cast mill, a state-of-the-art facilities built cost effectively and in record time. We expect the same result for our second recycled slab center currently being built in Mississippi. We are using our deep operational know-how in combination with technical expertise of aluminum industry experts. Our proven incentive-driven performance culture will drive higher efficiency and lower cost operations compared to our competitors.

Our metals recycling platform will facilitate higher recycled content. We're the largest North American metals recycler, including aluminum. Supply chains are in place in both Columbus and Mexico to achieve the highest recycled content in the industry. New separation technologies are now successful in amplifying supply chain value while providing broader access to usable aluminum scrap. Production to date is confirming our expected cost differentiation. When operating at our nameplate capacity and expected product mix, through-cycle EBITDA expectation for a normalized market conditions remains at $650 million to $700 million plus a further $40 million to $50 million for our metals recycling platform.

Operating experience to date, albeit still in ramp-up still supports our 5 key competitive cost advantages, labor efficiency, higher recycled content, which we achieved in the first half of '27, high yields and optimized logistics, all driven by our performance-based operating culture, utilizing state-of-the-art equipment. The strategic investment is a cost-effective and high return growth opportunity, providing steel dynamics with additional countercyclical diversification while further stabilizing and growing our cash generation capabilities. The customer base remains eager for a new market entrant, one that is known to be innovative, customer-focused and responsive. But that said, every startup and ramp-up brings its share of challenges. I'd like to sincerely thank our customers for their patience and partnership as we continue to fine-tune our operations and optimize performance. Their trust and support have been invaluable, and we remain focused on delivering the highest quality products reliability and service they deserve.

The hot side is fully operational with the ability to run at rated capacity and superior yields. All 3 coal mills are now operational and running well, which will allow us to access the 650,000 metric ton annual capability. We're in the process of improving yields and anticipate achieving our efficiency goals over the coming months. The first of 2 automotive continuous anneal and solution heat treat lines is fully operational. We achieved finished product qualification status and multiple automotive manufacturers for 5182 and 5754 products, and we are currently in trials for 6,000 series material. We have plans to ship finished automotive products before the end of this year, and I think it all would agree that is a phenomenal achievement. The second cash line is currently in commissioning and will be operational in the first quarter of '27.

We have experienced earlier-than-anticipated product certifications, and it is a testament to the incredible talent we have been able to embed in the team and the technical capabilities of mill -- of the mill. There's great energy, great momentum. As we move through construction, commissioning and ramping of the various production lines, we continue to be excited by our progress, with expectations for significant cost optimization benefits to occur in the near term and product mix benefits throughout '27. We did expect to have higher shipments and profitability in the third quarter. But as we ramped up to the higher rolling speeds for light gauge product, we developed a surface quality issue that resulted in significant yield losses. After a period of troubleshooting, we identified the need to change the coolant in the hot strip mill. The troubleshooting, cooling change and subsequent reestablishment of rolling conditions led to several weeks of lower production and lower yield, impacting volume and increasing costs in the quarter.

As Theresa suggested, the matter has been fully resolved and operations have been excellent so far in October. Quality and yields throughout the facility have improved dramatically. The hot strip mill has been operating at 75% thus far in October. Those put us a month behind, we still believe we can achieve 90% by the end of the year. We believe volume and profitability from our aluminum operations will increase sharply in the fourth quarter and continue improving through 2027 as stand-up costs subside, utilization yields improve and scrap content increases. We remain highly enthusiastic about our current and future growth initiatives, which we believe will continue to drive the high return growth momentum we have consistently demonstrated. The through-cycle earnings potential of over $1.4 billion from our recent key growth projects is becoming a reality. Capital funding is substantially complete and operational optimization is our focus for both our recent flat-rolled steel and aluminum investments.

I'm encouraged by the growing recognition among our teams, customers and investors on the strength and consistency of our cash generation, coupled with our disciplined high-return approach to capital allocation. We believe that steel industry has undergone a fundamental paradigm shift in recent years, supported by an increasingly mercantile is the global trade environment that should help maintain a more level playing field through continued and appropriate trade enforcement mechanisms. We expect continued growth in fixed asset investment, which remains a key driver of demand for metal products. Manufacturing reshoring continues to gain momentum and together with growing investments in industrial infrastructure and computing is expected to continue to support nonresidential construction activity. As decarbonization initiatives continue, the resulting increase in global cost structures will materially steepen the cost curve, enhancing Steel Dynamics' competitive position in driving opportunities for market share gains and expanded metal spreads.

Our highly diversified value-added product capabilities provide a distinct competitive advantage, allowing us to leverage the evolving metals market environment and amplify our relative earnings par. In closing, as I have often said, our people are our foundation, and I thank each of them for their passion, dedication and commitment to our success. -- and we are committed to them. I remind each team made listening today, nothing is more important than safety for you, your families and for one another. I also thank our loyal customers. Our partnerships are built on trust delivering on our commitments and collaborating to create innovative solutions and value.

Finally, I thank our suppliers and our service providers, your partnership, trust and support for essential to our continued success. I would suggest SDI has never been in a better position. Current business is in phenomenal shape, and we are on the cusp of yet another step function increase in through-cycle cash generation. We have a phenomenal team in place to continue our leading growth trajectory, and I look forward to looking from the far of their success.

So with that, we will take questions, please.

[Operator Instructions] And your first question will be from Nick Cash at Goldman Sachs.

And congrats again, Theresa and Mark. So you just mentioned, Mark, and I still expect to hit about 90% utilization in terms of hot band production exiting the year. But I just wanted to know if you -- how should investors think about that 90% utilization? Is that hot band production gold mill or finished sheet shipments if it is hot band production? Should investors think about how that translates to shipments?

Well, I think obviously, you've got to start at the beginning and the hot mill feeds all material downstream. So capability and suggesting it is the hot strip mill. Shipments will not be at 90%, albeit we have the 3 coal mills fully operational today. It's going to take a little while for a month or 2 to get the entry through the supply chain.

No, that's helpful. And just one more to follow up on the margin side. Give you a pretty extensive list of margin tailwinds on the aluminum side. But is it possible to provide any color or break down the margin opportunity that comes from the higher scrap utilization versus better yields, fixed cost absorption and richer product mix? And also, what is the demand for the cadence to getting to your optimal scrap utilization?

Yes. Nick, so the magnitude, we haven't -- it's really hard to give a range of what that might look like. The magnitude of impact really is that the yields will have the most impact. And as Mark mentioned, we're actually -- we saw a significant improvement in yields across the facility, including the cold mills in October so far. I know we're just 3 weeks in. But since we made the coolant can change, we've really been able to dial into those preferred yields in what we think is a long-term goal for us and where we want to be. So we see getting to those yields before the end of this year and then refining them and having them be consistent throughout 2027. So that's the biggest impact.

The second then would be the scrap content. And so we have been using more primary aluminum or P1020 as we've gone through the certification or qualification processes with the different product types. We will in the first half of 2027, the increasing amount of scrap content. So hopefully, by midyear next year, we're in more of an optimized product mix on the raw material side. And then finally, the component of labor, we really are already there, right? So the third impact would be having a lower labor cost. And we're operating with, what, 750 people today, around 700 people compared to what the competitors would be with well over 1,000 people. So we've got that already dialed into the things that you should focus on would be on our yields. And the scrap content, which we think will have definitely in line by mid next year, if not before.

Next question comes from Alex Hacking at Citi.

Yes. Mark, let me add my congratulations I know you're still going to be around at the company, but I guess this might be our last earnings call, taking a company from 3 people to 14,000 people, it's quite some achievement. I guess just following up on the aluminum side, Theresa, you gave some color there on the raw materials mix and the yields. When do you think you get to an optimal kind of end product mix? Is that would that be achievable by the end of next year? Or that's something that we should be looking for more in 2028?

Yes. No, thanks, Alex. And thanks to your comments about Mark, on your first report, too. We choose him about it being the titan of the industry. That said, as it relates to the product mix, the fact that the team has achieved the ability to ship finished automotive product here in the next coming months, that's extraordinary. We've only been operating for just less than a year. We do expect to be increasing the amount of automotive as a part of the mix throughout 2027, and whether we're completely dialed it at 30% by the end of the next year, probably won't be only because we need to be able to get on to the automotive platforms. So can sheet industrial definitely are already there on the can sheet side. Automotive will have a significant more amount in 2027, but I'd say you probably get to optimize sometime in that 2028 period just because we need to have the ability to get on the new platforms from an automotive producer perspective.

Next question will be from Katja Jancic at BMO Capital Markets.

Congrats to both the Theresa and Mark. Maybe on the fabrication side, prices seem to be inflecting. How should we think about pricing in that business from here?

So Katja, you're right. And that was a super extraordinary is that the fabrication team. Obviously, the volume is all important. And as a reminder, we had really the industry didn't have great volume. It was lower than pre-COVID for 2025 -- or 2024 and 2025. We started to see demand really pick up at the end of 2025 into '26. We've seen that momentum continue as projects that were put on delay in '24 and '25 are now coming to fruition, and that's also impacting the long product steel side of our business in a very positive way. So the pricing that's going into the backlog today, so those projects that are being priced and really looking for delivery in early 2027, do have higher pricing associated with them. So you should see that be very positive for the fabrication segment.

That said, fourth quarter seasonality, you still might see some of that. So I wouldn't expect to see something other than the team I'm keeping really strong with volumes and with consistent pricing in the fourth quarter, but 2027 seems to be a really strong opportunity for an uplift on margins, volumes and pricing.

Maybe just quickly, would it be possible to quantify how much higher prices are in the backlog?

It would be possible, Katja, but then the commercial team would fire me. So I can't. Thanks for asking. Sorry about that.

Next question will be from Carlos De Alba at Morgan Stanley.

And let me join the congratulatory comments for both Mark and Theresa. And my question is on the steel mills. Any color or maybe Mark or Theresa on how you see the margins in that business trending in the fourth quarter, maybe early 2027, scrap prices that have been lagging steel prices are now catching up. So wondering if you see potential for margin expansion in the fourth quarter and early next year?

Carlos, I think the marketplace as you likely know, it's very, very tight right this second. You've got the confluence of mill lead times have extended well into 2027 right now. Inventories remain at sort of the low end of historical ranges. You've got Q4 outages probably is going to take 1 million, 1.2 million tons out of the marketplace. And you've had up to this point, restrained imports. And so you've got this tightness for sure. And I do believe that we'll see some continued, again, intentional and not rapid pricing increases or momentum. That momentum, I think, is going to continue.

And then on the scrap side, you're right. It's been relatively stable. We saw a bump in October. But if you look at the dynamics of the marketplace at this -- even at this price, is incredibly attractive to the folks bring a scrap to our yards. So the obsolete flow right now is very, very, very strong. The export market is -- still remains relatively soft. The scrap segregation technologies that we've talked about in the past truly sort of effectively expanding the scrap reservoir and reducing the prime scrap needs. You've got strong manufacturing. So prompt scrap flows are also strong. So I don't see any major upward pressure in raw material costs. So it would be our view that the margins or spreads will remain very, very strong to slightly upward in the coming months.

Question comes from Lawson Winder at Bank of America .

I appreciate today's update. And then I would just say it's really reassuring to say a very well-planned, well-thought-out and very sensible leadership transition well done. I'd like to follow up on the comments on the steel fab business. So message heard loud and clear. There's going to be an uplift on pricing, volume and margin in 2027. Nevertheless, I mean, it is notable that just if you look at Q3 TTM versus Q2 TTM metrics, volumes are up substantially, but the operating incomes were down. And I just wanted to ask if there's some partly offsetting cost headwinds that we should be thinking about heading into 2027 on the fab business as well as those positives that you noted in the prior comments.

Yes. Lawson, I thank you for your kind comments earlier. As it relates to the TTM, the difference is the fact that steel prices just strengthened very, very quickly, and our steel joists and deck uses a lot of flat-rolled steel. And so that pricing parental has impacted the margins because the teams needed a minute to be able to increase the pricing associated with that raw material uplift and that's being placed into the backlog into the future. So it's not real time, although they're experiencing the higher steel costs. So that's really why you're seeing the difference in the TTM amounts that you're looking at.

Going forward, as they've had the momentum now of having much higher demand dynamics, they're able to have pricing power, if you will, or pricing support is a better word, I guess. We don't see that as affecting nearly as much the 2027 even in light of what we believe will be an elevated steel price environment.

Okay. That's very helpful. And then, there is -- or planned maintenance outages at all 3 of the flat-rolled mills this quarter. Any factors that you would potentially call out that might cause these outages to be shorter or longer than any of those of the past? And then, when specifically do you expect each of them to happen?

All the outages are somewhat normal, like 3, 3.5 day outages with the exception of Butler. Butler may be -- I don't know, a little longer, we're changing out one of the large overhead cranes, but nothing overly substantial as we see it right now.

And those outages are October, November, Lawson.

Next question will be from Albert Realini at Jefferies.

Also congratulations both Mark and Theresa. So just a higher level here, across the major steel players, we've kind of seen are to diversify earnings, whether it's consumer offerings specialty steel products or maybe even in some -- you guys, you've positioned the company increasingly kind of become a value-added metals producer rather than solely steel recently. The earning mix has shifted pretty meaningfully back towards steel. The mills have accounted for better than 90% of earnings, I believe, this quarter, which I think is probably the highest level since pre-COVID a bit higher than maybe some of your peers. So just should we think of that as something because maybe like a high watermark for steel share of earnings? And based on how you anticipate aluminum eventually rebounding, kind of how do you expect that shift to evolve over the next year?

Yes. I mean it's -- Albert, that's a great observation, actually. Yes, it probably is, I would say, a user vernacular, a high watermark simply because fabrication is rebounding from a volume perspective pricing perspective. And we do think it was muted in '24 and '25. We don't think that's even through cycle for them or representative of through cycle. And aluminum is just getting started. And so -- and aluminum will be consistent. So it will be somewhat of the stabilization in both the earnings and the cash flow as there's less volatility generally in that industry as it relates to the earnings profile. And certainly, we've built diversification within our rolling mill to have even further, I think, stability as it relates to cash flow and earnings. So as we progress through you'll see a shift in the fourth quarter and then certainly throughout all of 2027 as aluminum ramps, both from a volume perspective but also from an earnings capability perspective. Steel is still very important, but you'll see aluminum and fabrication become increasingly more of a contribution to the total mix. Mark, do you agree with that?

Yes.

Questions will be from Tristan Gresser at BNP Paribas.

Congratulations, Mark and Theresa. If I may push you a little bit on aluminum division, I think previously, you had this target to be EBIT positive in H2. Would that still be possible now -- and maybe for next year, I mean, when we look at consensus, is already above your normalized kind of EBITDA targets, so how do you feel about that? And do you think there are the conditions to get there given the visibility you have on your ramp?

Well, we were EBITDA positive actually in Q3. And...

EBIT, sorry.

I'm sorry. EBIT.

Yes. I'm sorry, I thought you said EBITDA too and -- it was my fault.

Sorry.

No, no, that's okay. For the second half of the year, in totality, given the experience that we had in the third quarter, I don't think it's likely. Definitely, they are in the first quarter and onward for 2027. And regarding the second part of your question, we won't comment on where analyst estimates are for any segment or for the company as a whole. So as far as commenting on whether we're comfortable with where estimates are for aluminum next year. We won't comment on that. What we will say is that we have complete confidence in the team commercially it's there, the orders are there, the opportunity is there.

From a raw material perspective, we have full confidence in the recycling team to help us supply and increase the amount of recycled content. So on operationally, given the changes that just took place in the August, September, September time frame, we feel confident in the ramp as well. So we feel very constructive, very optimistic about next year for aluminum.

The question -- I would just add I think sometimes one has to reflect and calibrate a little. And the -- obviously, some of the headlines this morning on the reports suggesting a challenge and maybe a stumble. All I can say is that I want us to recognize this has been a phenomenal achievement by the team. Those that are toward the facility, it is absolutely spectacular, and we'll likely hold or Theresa will likely hold a visit early, at some point next year, and you'll see it. But it's absolutely first-class facility. We've got a first-class team. And in combination, it's led to these accelerated qualifications in both automotive and cans. Again, that one needs, I think, to reflect and focus on that. when you climb a peak or Everest, you're going to stumble a little bit along the way. But when you have a champion team like we have, there's absolutely no doubt in my mind that you will be started in the future as to what that facility is going to be able to achieve.

All right. That's good to hear. And the second question is, well, given you have a very strong free cash flow outlook for next year, can you give us some update on capital allocation for 2027. I mean what will be the focus? It looks like building another steel mill in the U.S. may not be a great ID M&A is not worth so do you need to see the aluminum plant to be well ramped up in a good track before you announce anything and we just need to expect higher buybacks until then? Or how should I think about it?

Sure, Tristan. So we're in the middle of going through our kind of formal process around capital allocation as it relates to CapEx and other items. We have a clear pipeline of organic growth opportunities of differing sizes and the team right now is in the process of prioritizing those over the next kind of 1- to 3-year time frame. We're going to be talking about those early next year in 2027. Right now for CapEx next year, it might be in the range of $600-plus million, but that needs to be refined. And we'll be talking about that during a Capital Markets Day sometime in the first half of next year as it relates to more specificity about what those projects look like. Mark, do you have anything to add?

Well, I assume that the new steel mill is the [indiscernible] project that announced or suggested, let me put it that way, a week or 2 ago. And I think it's an incredulous on its fantasy. I would say, we do not feel that the chances of that coming to fruition in all honesty, this is going to occur.

Next question comes from Tim Tanners at Wells Fargo.

And it's been great working with you, Mark, over all these years. So best of wishes in the next chapter. Look forward to continuing to work with Theresa on to this Capital Markets Day. I wanted to talk about your supply flat-rolled volumes surprised us down year-over-year on the carbon side. And as you mentioned, markets are super tight for that and for merchants and spectral there anything in your system that you can flex a bit and produce more into next year? How do we think about your volumes and opportunities to reach this growing demand and opportunity?

Well, I think obviously, Sinton room to expand materially in ones, it's doing incredibly well. it's running at, let's just say, 210,000 to 220,000 -- 210,000, 220,000 tons a month, right, the second. And the expectation is for that to continue to grow to 250,000 tons a month or perhaps more. But there's certainly room to improve there. And as that facility ramps up, they're also ramping up the products that they make. So they're X65 right now well on their way to X70 product. And as a reminder, it's about the only mill -- or it is the only mill, I believe, that can produce 84 wide, 1-inch coil plate at a sort of a X70 grade material. So certainly room to expand there. Our structure mill has a few little tricks up their sleeve, and that's going to add -- I don't know whether we've been saying how much. Theresa, have you been advertising that?

80,000 to 100,000.

Yes, about 80,000 to 100,000 tons of extra stuff out of that facility structures, out of that facility. And as we always have been able to do, we tweak here and tweak there and the guys and the goals just do better year-over-year. So yes, there's room to grow our capability for sure.

Okay. That's a lot of structural. That's great update. On Sinton, follow-up and ask why it hasn't been running full out? Is it a mix issue? Or is there anything else to explain?

Well, we obviously, I think -- and hopefully, everyone considers our challenges there to be history. But we've got to that good solid state of 80%, 85%, and it just takes -- it takes a little bit of time to tweak and get the little bugs out of it. So there's no killings here whatsoever. The team has got a great attitude. They've got a plan to get there. It's just a matter of a little bit of time.

Next question comes from Samuel McKinney at KeyBanc.

Coated product mix as a percentage of the flat-rolled volumes has increased every quarter for a year now, with galv spreads relative to hot rolled, nicely improved and looking poised to remain above their long-term average for a while. Just talk about the internal strategy and the demand drivers to keep increasing that mix, if you can.

Yes. Samuel, it's a great observation. So that was done intentionally. If you'll remember, about a year, 1.5 years ago, we added for value-added flat roll coating lines, 2 at Sinton and 2 at one of our Indiana processing facilities. And so those have been ramping up during this period of time. very much supporting the increase of value-added product mix within the portfolio. And you should expect to continue to see that improve over the next probably 6 months as well because there's still room for higher utilization from those lines. So you should continue to see that increasing as we continue our strategy as much value added as we can to create a supply chain that's a little harder to change.

And just to add to that, it's been our MO for years, and it's something one has to do in the steel industry because essentially no secrets, but the team is -- continues to have a pipeline of new coated type products. We've got digital print, which is an absolutely phenomenal technology, and we also have some pre-paint improvements that we're going to be bringing to market. So it's not just a volume thing. We will continue to expand our products on those lines.

Next question comes from Bill Peterson at JPMorgan.

Also echoing the congratulations for the entire team there. First question is on long products. I think you answered partially in relation to Tim's question, but the shipments continue to outperform year-to-date relative to flat rolled. Can you describe some of the key drivers in the market and I guess you have the ability to expand capacity? How should we think about this outperformance continuing? And what would be driving that?

I'll start and then Mark can put the icing on the top. There was a change built at the very beginning of the year that Jim Anderson and the team executed incredibly well aware. We actually at our Steel West Virginia facility. We shuttered an agent, if you will, melt shop. And so internally, that's allowed us to send bill it throughout the system from our other facilities. So that's helped create a much more efficient supply chain internally and help improve margins and utilization across the other 3 mills, if you will. So that's one part of it.

The second part of it is just that the markets are so incredibly strong, and it really dovetails from what we mentioned around the demand for steel joists and deck on industrial and nonresidential construction it's really driving specifically within structural beams and increased demand environment that we see, and it is actually dovetailing into 2027 as well. Mark, do you want to add something?

Yes. I wouldn't -- the -- to show long products, structural markets are incredibly, incredibly strong. Spreads are at very, very good levels. I wouldn't get too overexcited thinking that we're too focused in like data centers or whatever. It is pretty broad-based across a lot of sectors, to be honest. I think the -- our exposure to the data center pushes only about 15% in the structural world.

That was actually lead to my -- that was going to lead to my second question. And obviously, there's some concerns in the market around data center, 15%. That's a great data point. But can you give us a sense of how that compares to the last year in terms of the backlogs or just other sort of reference point? Has it grown as a portion of the backlog? Or has it been steady? And recognizing that you've called out manufacturing industrial strength more broadly?

From the -- Mark mentioned structurals, steel joists and deck in our fabrication business. It represents less than 10%, generally around 8%. That's been pretty steady. As it relates to the structural world, it's probably increased in 2026, but it's leveled off. It's not something that's driving a frenzy or driving the demand dynamic itself. It's much more broadly based than that.

Next question comes from John Tumazos, Very Independent Research.

Congratulations, and thank everyone for their service to the company. In terms of the aluminum business, is there room in the scrap market to supply in the finished product market for a second, say, northerly Columbus Complex? Is that something that could be a potential use of funds or compete for capital allocation?

So I'm just going to tip in for a second, John, that those were kind of 2 questions. So the scrap environment and the demand environment can support another rolling mill in the U.S. or in North America for sure, whether that's at Columbus or not is a different question. Mark, I don't -- you can go ahead.

Yes. No, no. The market is definitely there. Even when Novelis' [indiscernible] facility finally comes online, there's still at least -- in today's market, that's only going to grow in the future. There's still a space for [indiscernible] -- certainly one form Columbus based mill for sure. And there is definitely the scraps to pay out there, John, to support it.

Your highest cost debt is [ 5.375 ]. So today, do your cash balances yield more than your debt costs?

Come on. Don't you want to go out [indiscernible] bank. No. From a capital foundation perspective, we do have some notes next year that will be coming due, I think, in December of next year. And we're constantly looking at the balance between the capital stack, John, and what our opportunities are. We're pretty opportunistic on the financing side. So well pointed out point.

I model debt repayments because I don't know where the money is going to go, but it seems like your yields might be more in congratulations. .

That concludes our question-and-answer session. I'd like to turn the call back over to Mr. Millett for any closing remarks.

Well, super. Well, for those remaining on the line, thank you for your support and our employees really, really -- you've done a phenomenal job. And I think as was noted, it's likely my last conference earnings call anyway, still going to be associated at a distance to help out wherever I'm asked to help out in the future. But again, thank you for your patience and support over the years. It's been an absolutely incredible journey, and it's only going to be continued by why I consider a phenomenal team and the best leadership team in the world. So thank you, everyone. Have a great day. Be safe.

Once again, ladies and gentlemen, that concludes today's call. Thank you for your participation, and have a great and safe day.

Good day, and welcome to the Steel Dynamics Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised this call is being recorded today, July 21, 2026, and your participation implies consent to a recording of this call. If you do not agree to these terms, please disconnect.

At this time, I'd like to turn the conference over to David Lipschitz, Director, Investor Relations. Please go ahead.

Thank you, Matthew. Good morning, and welcome to Steel Dynamics' second quarter 2026 earnings conference call. As a reminder, today's call is being recorded and will be available on our website for replay later today. Leading today's call are Mark Millett, Chairman and Chief Executive Officer of Steel Dynamics, Theresa Wagler, Executive Vice President and Chief Financial Officer, and Barry Schneider, President and Chief Operating Officer. The other members of our senior leadership team are joining us on the call individually.

Some of today's statements, which speak only as of this date, may be forward-looking and predictive, typically preceded by believe, expect, anticipate or words of similar meaning. They are intended to be protected by the Private Securities Litigation Reform Act of 1995 should actual results turn out differently. Such statements involve risks and uncertainties related to integrating or starting up new assets, the aluminum industry, the use of estimates and assumptions in connection with anticipated project returns and our steel, metals recycling, fabrication and aluminum businesses, as well as to general business and economic conditions. Examples of these are described in the related press release as well as in our annually filed SEC Form 10-K under the headings, Forward-looking Statements and Risk Factors, found on the Internet at www.sec.gov and if applicable, in any later SEC Form 10-Q. You will also find any referenced non-GAAP financial measures reconciled to the most directly comparable GAAP measures in the press release issued yesterday entitled Steel Dynamics Reports Second Quarter 2026 results.

And now I'm pleased to turn the call over to Mark.

Super. Thank you, David, and good morning, everyone. Thanks for joining us this morning for our second quarter 2026 earnings call. As reported, our teams achieved a strong second quarter financial and operational performance. The quarter highlights included record quarterly steel shipments of 3.7 million tons, adjusted EBITDA of $921 million, and we achieved meaningful milestones across our Aluminum and Sinton platforms. It's exciting to watch our long-term vision, translate into operational success, customer partnerships and growing value creation.

We have an amazing team, of people that achieve best-in-class performances each and every day. I'm just simply honored to be one of them. But sadly, one of our new team members, Elijah Jones from New Process Steel was fatally injured in an accident that occurred while work was being performed on equipment this past [ April ]. It is gut wrenching for everyone to experience such an event, and our prayers and thoughts continue to be with Elijah's family family, friends and teammates. We often say safety is always important cultural pillar and value. Our world-class safety culture continues to evolve and our team's unwavering dedication to our Take Control safety philosophy has continued to strengthen even further.

I'm continually inspired by the commitment of our team members, demonstrating towards one another. They operate as a family, supporting each other while challenging the status quo and striving for continuous improvement every day. We are resolute and committed to achieving a 0 incident environment and will not be satisfied until that becomes a reality. Before I continue, I'd like Theresa and Barry to both add color to the quarter's results. So Theresa?

Thank you, Mark. Good morning, everyone. Thank you for joining us this morning. For the second quarter of 2026, our net income was $534 million or $3.69 per diluted share with adjusted EBITDA of $921 million. Second quarter 2026 revenues were $6.1 billion and operating income was $700 million, higher than sequential first quarter results driven by higher realized steel pricing and record steel shipments.

Our Steel Operations generated operating income of $721 million in the second quarter, a 30% sequential increase as average selling prices per ton increased $105. Value-added spreads to hot band have also improved $70 per ton from the lows experienced in the fourth quarter of 2025. As the largest flat-rolled steel coater in North America, this will be especially beneficial moving forward. As a reminder, approximately 80% or more of our flat-rolled steel business is linked to lagging price contracts in aggregate generally lagging 2 months. So the more recent flat-rolled steel price increases and further improved value-added product spreads will positively impact our third quarter results.

Additionally, demand and related pricing for our long product steel group is especially strong, with demand and pricing continuing an upward trend. Second quarter 2026 operating income from our Metals Recycling platform was $48 million, in line with sequential earnings as increased shipments offset lower steel metal spread. Scrap flows also remained seasonally strong with ample supply. Our Steel Fabrication team achieved second quarter operating income of $85 million, aligned with first quarter results of $90 million as increased volume and steady pricing were offset by higher steel raw material input costs. Our Fabrication business generally maintains between 10 to 12 weeks of steel inventory, which can tighten margins in a rising steel price environment. Our steel joist and deck business is experiencing strong demand and order activity. As a result, our order backlog is 45% higher now compared to this time last year. We are also seeing increasingly constructive price discussions. This trend reflects improving market fundamentals and healthy demand conditions.

The aluminum team's execution is amazing, Mark will provide the details later on the call. As for the financial impact, second quarter 2026 operating losses associated with the continued start-up and commissioning of our Aluminum Operations were $33 million, 48% improvement over sequential results. There was also an additional noncash impairment charge of $16 million related to the relocation of our second planned recycled class center. Aluminum flat-rolled sheet shipments increased to 53,000 metric tons in the quarter from 22,500 metric tons achieved in the first quarter of this year. We expect volumes and profitability from Aluminum rolling mill to increase sharply in the second half of 2026 and into 2027 and as the third cold mill is brought online in the third quarter as start-up cost subside, utilization and yields improve and scrap content increases.

In the second quarter, we generated cash flow from operations of $428 million. Cash was reduced by $225 million due to working capital growth that was primarily associated with increased customer account values as product pricing improved throughout our businesses and aluminum flat-rolled sheet sales continue to climb. Our cash generation is supported by our differentiated circular business model and highly variable low-cost structure. At the end of the quarter, we had liquidity of $2 billion comprised of cash and investments of $800 million and are fully available unsecured revolver of $1.2 billion. During the second quarter, we invested $124 million in capital investments and invested $262 million year-to-date. We believe the second half of 2026 capital investments will be in the range of between $300 million and $350 million.

In the first half of 2026, we increased our cash dividend and we repurchased $350 million of our common stock, with $489 million remaining authorized for share repurchases at the end of June. These actions reflect the strength of our capital foundation and cash flow generation capability and the continued confidence we have in our future. Our capital allocation strategy prioritizes high-return growth opportunities while maintaining a disciplined and balanced approach to shareholder value creation. Shareholder returns are anchored by a sustainable and growing base dividend, complemented by a flexible share repurchase program that allows us to return additional capital to shareholders when appropriate.

At the same time, we remain committed to preserving our investment-grade credit profile, ensuring the financial strength and flexibility needed to support strategic growth initiatives navigate market cycles and create long-term value for our shareholders. Our free cash flow profile has fundamentally changed over the last 5 years from an annual average of $540 million between 2011 and 2015 to $2.4 billion for the most recent 5-year period, and there's more to come. Over the past several years, we have invested more than $5 billion in 3 transformative organic growth initiatives, our Sinton steel mill, value-added coated lines and aluminum flat rolled products platform. These investments reflect our disciplined approach to capital allocation and our commitment to growing in markets where we believe we can create sustainable competitive advantages. As these assets continue to ramp and mature, we expect to generate meaningful earnings and related cash flow.

Collectively, these projects are estimated to provide over $1.4 billion of through-cycle annual EBITDA capability representing a significant opportunity to enhance our future growth, profitability and shareholder returns. We've established a strong and sustainable capital foundation that enables us to invest in meaningful strategic growth opportunities consistently return capital to shareholders and maintain the investment-grade financial metrics that underpin our long-term success. Barry?

Thank you, Theresa. Our Steel Fabrication operations performed well, delivering solid earnings as increased demand and steady realized pricing helped offset higher steel input costs. Order activity has been stronger than we have seen in a number of years. The increased demand has been led by several large markets, reducing the risk that any single sector derails the overall positive trajectory. The Dodge Momentum Index, which generally leads construction spending by a 12- to 18-month window increased to its highest recent level, up more than 30% year-over-year. The increase was driven by commercial planning, accelerating institutional activity, led by health care, the long-range project pipeline appears robust, supporting that idea, contract project backlogs also stood at over 9 months of May, which is [indiscernible] highest level in several years.

Our Steel Fabrication order backlog was up over 45% compared to this time last year. We are also beginning to see improved pricing. We continue to have high expectations for the business this year due to positive customer sentiment, quoting activity continued manufacturing onshoring and public funding for infrastructure and other fixed asset investment programs. The uplift from this macro environment could be considerable. Our Steel Fabrication platform provides meaningful support for our steel mills, particularly critical in softer demand environments, allowing us to operate at higher through side utilization rates than our peers. This also helps mitigate the financial risks associated with lower steel prices.

Our Metals Recycling operations performed well during the quarter, benefiting from increased scrap availability and higher shipment as improved weather conditions supported stronger seasonal collection activity. We currently expect scrap pricing to stay relatively steep in the coming months. The North American geographic footprint of our Metals Recycling platform provides a strategic competitive advantage for both our steel mills and our scrap generating customers. And particularly, our Mexican operations strengthened the raw material positions of our Columbus and Sinton facilities. They also provide strategic support for aluminum scrap procurement for our flat-rolled aluminum investments.

Our Metals Recycling team is partnering even more closely with our Steel and Aluminum teams to expand strap separation capabilities through enhanced processes and technology. This will help mitigate potential prime ferrous scrap supply challenges over time and provide a meaningful advantage and increased recycled content in our aluminum flat rolled products while also expanding our earnings opportunities. The steel team delivered a solid quarter with record shipments of 3.7 million tons. During the second quarter of 2026, the domestic steel industry operated at an estimated production utilization rate of 81%, while our steel mills operated at 90%. We consistently achieve higher utilization due to our value-added product diversification, differentiated customer supply chain solutions and the support of our internal manufacturing businesses. This higher through-cycle utilization is a key competitive advantage, supporting our strong and growing cash generation and best-in-class financial metrics.

Regarding flat-rolled steel markets, conditions are strong as solid demand and lean inventory levels support a tight market environment. Lead times are elevated and customers continue to express optimism. Within flat roll steel, we're also seeing continued improvement in value-added pricing spreads, which have returned to more normalized levels, benefiting from the impact of the core trade cases successfully resolved last year. Long product steel markets are also strong, driven by strength in nonresidential construction. We believe this strength will continue, especially with the structural steel and railroad products. Special bar quality markets are also improving across multiple sectors, including industrial, manufacturing and energy-related markets.

Regarding the steel market environment, North American automotive production forecast for 2026 are to remain in line with prior year, despite a generally stable production environment, our specific automotive customer base continues to present us opportunities. We have strengthened our position as a supplier of choice for many U.S.-based European and Asian automotive producers, driven in part by our lower carbon content steel offerings and differentiated value-add product capabilities. I already mentioned the strength of the nonresidential construction market related to Steel Fabrication. This holds true for long products steel as well. Our platforms continue to benefit from ongoing re-shoring trends and domestic manufacturing investments which are supporting sustained demand across our end markets.

In the energy sector, oil and gas activity remains strong with pipe manufacturers already looking into 2027 projects. Demand for the solar market also continues to be very robust. Additionally, we are seeing improved demand from the agricultural sector, although residential construction activity remains relatively subdued. We remain optimistic about demand for our diversified portfolio of value-add steel products and believe our end market exposure positions us well.

Regarding trade policy, we will be preserving a strong durable trade framework that provides operational viability for U.S. steel producers by disallowing unfairly traded foreign products. The current administration has based a 50% Section 232 tariff for important steel on national security matters, fully supporting the industry long term. We are also actively engaged with the USTR regarding the USMCA review, to ensure there are no weakening regarding our protections, including melted and poured provisions. The administration has launched new Section 301 investigations, targeting countries of both [indiscernible] to market with excess steel and rely on forced labor in its production, we are specifically advocating for these remedies to be additive to the existing 232 steel tariffs. We are advancing legislative and regulatory priorities to create meaningful demand for our steel, particularly through investments in infrastructure, shipbuilding and the power sector. On the demand side, we are working closely with Congress to strengthen Buy American Steel Requirements in the ships for American Act and the Federal Highway Bill, turning large public spending vehicles into volume opportunities for our steel businesses. Now back to you, Mark.

Thank you, Barry. Thank you, Theresa. All well said. Consistently achieving such positive results year-on-year, it doesn't just happen. It reflects the dedication of our teams and the effective strategies we have developed and executed over time. We have invested strategically to successfully achieve significant scale, high-margin product to market diversification, efficient and unique customer supply chains and synergistic operating platforms to optimize market opportunities throughout economic cycles. When combined with our performance-driven compensation culture, these strategies enable us to consistently achieve at the highest levels and outperform competitors across all market cycles.

Our foundational focus on market and product diversification, particularly in higher-margin value-added products, support stronger through-cycle facility utilization and drive superior financial performance. We optimize cash generation, which enables a balanced and consistent capital allocation strategy that supports growth, maintains financial strength and delivers compelling long-term returns to our shareholders. Our disciplined approach to the capital investment continues to generate strong through-cycle cash flow and supports one of the highest return on invested capital profiles in the industrial sector. The most recent and most significant current investment is in Aluminum flat-rolled products. And as I mentioned in the last call, the excitement and the pride of the aluminum team is absolutely incredible. It is inspiring to watch them transition from construction and commissioning into full-scale production, serving customers with the high-quality products they expect from Steel Dynamics.

The team has outperformed all expectations, constructing and commissioning an incredible facility in industry-leading time. Competitors and customers alike that have toured the mill are amazed at the quality and the capability of the plant and the speed of product qualification. The team is navigating a volatile aluminum market, driven by the impacts of geopolitical conflict and domestic supply chain challenges. But despite these near-term challenges, they remain focused on execution, customer service and operational excellence.

Beyond these temporary constraints though, we are operating in a unique and highly favorable long-term market environment. The United States faces a significant structural supply deficit and more than 1.4 million metric tons of aluminum sheet and that shortfall is forecast to widen as demand continues to grow across key end markets. Combined with appropriate tariffs on imported aluminum products, the supply imbalance is further strengthening the value proposition for domestic producers. And we believe our Aluminum platform is exceptionally well positioned to capitalize on the growing domestic demand, creating substantial long-term value for our shareholders. This investment is in clear alignment with our core competencies. Our construction capabilities have once again been proven. Both Columbus and the [indiscernible] at San Luis Potosi, are state-of-the-art facilities built cost effectively and in record time. We're using our deep operational know-how in combination with the technical expertise of aluminum industry experts and our proven incentive-driven performance culture will drive higher efficiency and lower cost operations compared to the competitors.

We also believe we have an advantaged commercial position. 2/3 of our existing carbon flat-rolled steel customers also consume and process aluminum flat-rolled sheet. Our growth in the automotive sector will complement our existing steel position and provide customer material optionality. The beverage can market will provide countercyclical market diversification and a more stable earnings profile within the aluminum space will further enhance the consistency of our through-cycle cash generation.

Our Metals Recycling platform will facilitate higher recycled content. We're the largest North American metals recycler, which includes aluminum. Our knowledgeable teams have developed new separation technologies, amplifying the supply chain value while providing greater access to usable aluminum scrap. So production to date is confirming our expected cost differentiation. When operating at our nameplate capacity and expected product mix, through-cycle EBITDA expectations for normalized market conditions, remains at $650 million to $700 million, plus another $40 million to $50 million for our Metals Recycling platform.

Operating experience today, albeit in ramp-up is verifying the 5 key competitive cost advantages. Labor efficiency, higher recycle content, higher yields, optimize logistics, all driven by performance-based operating culture, utilizing state-of-the-art equipment. This strategic investment is cost-effective and a high-return growth opportunity, providing Steel Dynamics with additional countercyclical diversification while further stabilizing and growing our cash generation capabilities. The customer base is proving to be eager for a new market entrant, one that is known to be innovative, customer-focused and responsive. We have reviewed business relationships as long term, founded on trust with a continuous goal of creating mutual value, not just simply financial value, but we will provide new supply chain solutions, new products with preferred quality and service, that said, every startup and ramp-up brings its share of challenges.

And I'd like to sincerely thank our customers for [indiscernible] and partnership as we continue to fine-tune our operations and optimize performance. Their trust and their support have been invaluable, and we remain focused on delivering the highest quality products, reliability and the service they deserve. The hot side is fully operational with the ability to run at rated capacity. 2 of the 3 cold mills continue to increase production, while the third and funnel cold mill started this month. That will allow us to have the full 650,000 metric ton annual capability. The first of 2 automotive continuous annealing solution heat treat lines is fully operational. We achieved finished product qualification status at multiple automotive manufacturers for 5182 and 5754 products, and we are currently in trials for 6,000 series alloys. I think you would agree, it's an absolutely phenomenal achievement when you consider the mill has only been running for a little around 12-months.

The second CASH line is expected to be start commissioning in the fourth quarter of this year. The team is incredibly excited with the earlier-than-anticipated product certifications, is a testament to the incredible talent we have enabled to embed in the team the technical capabilities of the mill. There's great energy and great momentum. The new [indiscernible] production and commissioning and ramping of the various production units, we are encouraged by our progress, with expectations for significant cost and product mix optimization benefits to occur in the near term.

With [indiscernible] volume operations will increase sharply in the second half of '26 and continue improving through 2027 as start-up costs subside, utilization and yields improve and scrap content increases. The aluminum flat roll mill itself produced 84,000 metric tons in the second quarter, which is approximately 50% of capability, with expectations to exit 2026 at a monthly production rate of at least 90% capacity, allowing for full volume capability in '27.

So we remain highly enthusiastic about our current and future growth initiatives, which we believe will continue to drive the high return growth momentum we have consistently demonstrated. The through-cycle earnings potential of over $1.4 billion from our recent growth projects is becoming a reality. Capital funding is substantially complete, and operational optimization is our focus for both our recent flat rolled steel and aluminum investments. I'm encouraged by the growing recognition among our teams, our customers and investors to have the strength, consistency of our cash generation coupled with our disciplined high-return approach to capital allocation. We believe the steel industry has undergone a fundamental paradigm shift in recent years, supported by an increasingly mercantilist global trade environment. This will help maintain a more level playing field through continued and appropriate trade enforcement mechanisms as Barry described already.

We expect continued growth in fixed asset investment, which remains a key driver of demand for metal products. New and reshoring of manufacturing continue to gain momentum and together with growing fixed asset investment will continue to support nonresidential construction activity. The decarbonization initiatives accelerate, the resulting increase in cost structures across the world will materially steepen the global cost curve, enhancing Steel Dynamics' competitive position and driving opportunities for market share gains and expanded metal spreads. Our highly diversified value added product capabilities, provide a distinct competitive advantage, allowing us to leverage the evolving metals market environment and amplify our relative earnings part.

In closing, as I've said many times before, our people are our foundation. I thank each of them for their passion, their dedication and commitment to our success. As they are committed to us, we are also committed to them. I remind each teammate listening today. Nothing is more important than safety for you, your families and one another. Please keep Elijah's family, friends and teammates in your prayers, and resolve to work even smarter and harder to achieve an incident-free workplace.

I also thank our loyal of customers, as I said previously, our partnerships are built on trust delivering on our commitments and collaborating to create innovative solutions and value. And finally, I thank our suppliers and service providers, your partnership, trust and support were essential to what we do each and every day and to our continued success. Put together, as a team, we look forward to creating new opportunities, to share success today in the years ahead.

With that said, Matthew, I would love to answer questions.

[Operator Instructions] Your first question is coming from Lawson Winder from Bank of America.

This is Satish on for Lawson. My first question is on the Steel Fabrication operations. You mentioned that the ordering activity is strong and then the backlogs are 45% higher year-on-year and the pricing is going to improve yet, the pricing or pricing realized for Q2 was a bit lower than Q1. So how should we think about the pricing or the margin outlook for the second half of 2026?

Satish, thanks for the question. As it relates to the pricing, the pricing that's going into the backlog right now is at improved levels. But that doesn't necessarily mean that, that's realized in the second half of this year. Some of those projects are in the fourth quarter and actually being placed into 2027. So you'll continue to see pricing, I think, remain pretty stable as far as from a realized pricing perspective. But the increases, you should expect to see probably in the next 6 to 9 months from a pricing perspective.

Barry is not a -- that means I got it right. But yes. And then you also just take into consideration what we're seeing in -- on the steel side of the equation for steel input costs. But that said, volume is expected to be really strong for the second half of this year and into next year for fabrication and volume helps to offset some of that.

Of the 45% higher backlog, is there any way you can share how much of it is volume versus price gain?

Satish, you cut out a little bit. You said for the 45% increase in order activity, what was the question? I'm sorry, you broke up.

How much is related to pricing versus volumes?

The 45% increase is volume specific. It's not pricing-specific.

Your next question is coming from Nick Cash from Goldman Sachs.

Just a question on aluminum on the shipments of 53,000 tons this quarter. I guess my first question is, what was the mix on that? I think what you mentioned it could potentially shifting to a little higher on the bev can side?

Yes, it shifted -- the preeminent increase was can sheet. We're also finishing up automotive hot fan shipments and some industrial.

Okay. That's helpful. And just a follow-up on that. You mentioned on the call today in 2H '26 for the remainder of this year. As scrap content increases is going to help drive profitability. Are you guys currently not operating in, I guess, your most optimal scrap mix with what you're producing? And then on the back of that, I guess, what's the interplay with the scrap mix as you move into some automotive shipments in the end of the year, which I believe, and correct me if I'm wrong, it requires a little bit more prime metals?

Yes. The -- you got to remember we're commissioning and ramping up and starting up. So there's no way even though we wish it would be this way that we'd be optimal in anything we do. Although the team is doing a phenomenal job where they are at this moment in time. We are using probably in the order of about 80% scrap for a can sheet give or take a little bit. That will continue to grow. Automotive, I believe, we'll probably sort of 40-60 and 10-20 in scrap at this moment.

Your next question is coming from Carlos De Alba from Morgan Stanley.

On the aluminum -- remaining on the aluminum business, beyond the impairment, the $16 million impairment, is there any impact on CapEx, operating cost and ramp up schedule or maybe the ramp-up schedule is going to be delayed. But of moving the location of your [indiscernible] in the U.S?

I would say operationally, only incremental. The logistics of bringing -- we will still be sourcing UBCs from the West Coast, although it will only be about 60% to 70% as opposed to the 100% that would have gone in the mill. But that's just incremental cost. OpEx would be the same. Again, we took the $16 million write-down for the [ investing ] cost and the CapEx at Columbus is going to rise, I think, in the order of $10 million to $20 million. And that's -- in all honestly, more more to do with just inflation of construction contract more than anything else. The move is not significant. But as you point out, obviously, the ramp is delayed for internal supply.

Mark, when do you expect to maybe the second gas house to be at 100% utilization or the ramp-up schedule?

We -- certainly first half of next year.

All right. Great. And if I may, very quickly, Theresa, any comments on working capital. EBITDA came in ahead of expectations, but obviously, working capital was higher because of pricing primarily. How do you see working capital in the third and second half of the year, third quarter and second half of the year?

Yes. No, it's a fair question. So working capital really did increase in the second quarter more than we anticipated, but that was based on company-wide increases in pricing across all the operations, which is good because the customer accounts remain very strong. So that's eventual cash flow. But we see that working capital should be a funding to certainly neutral, but I would suggest a funding source in the second half of the year.

Your next question is coming from Martin Englert from Seaport Research Partners.

Kind of a follow-up question on moving this slab facility but related to the rolling mill in Columns. If there was some greater upstream slab capability at the Columbus location or elsewhere, what's the maximum capacity of the rolling assets, if there were no slab constraints upstream?

It's 650,000 metric tons. The rolling mill is at -- it has a maximum capacity of 650,000 metric tons per year.

Okay. So there's no constraints upstream if you add additional slab casters or something you won't get more capacity out of it, correct?

Yes. But I would stress the 650,000 million ton is nameplate. And our teams always seem to be able to squeeze a little bit more out of it, but that's not going to be seen for 2 or 3 or 4 years. So...

Okay. Understood. If I could, 1 follow-up, if you could just explain the difference for aluminum products between the CASH line products that you're working on for automotive applications and a CALP line product. And if there's any asset crossover there does adding something like a service treatment line allow you to produce CALP in the future? Or is it more nuanced than that?

I can't give you the nuances of the differences in technology in all honesty, between the -- you said CASH line and...

And CALP line, Continuous Annealing Line with Pretreatment, it tends to lean, I think, towards more exposed automotive.

We -- the CASH line that we have, the pretreatment and everything is fully capable of exposed automotive, I do believe. In fact, I'm two times sure because it's already been shipped and qualified by a couple of automotive guys over in the states.

Your next question is coming from Timna Tanners from Wells Fargo.

I wanted to ask about the broader aluminum guidance still at $650 million to $700 million through cycle profitability. Just wondering, of course, in light of the higher aluminum futures market from when you first announced the project in light of the pretty sticky lower cost for scrap. What does it take to start thinking about a different forecast there?

Timna, it's a great question. But we are fully focused on the job at hand, and that's just executing, again, things up and running. I would say there's absolutely no doubt even though we're in ramp-up, we can see that plan clearly demonstrate the $650 million to $700 million in a normalized environment. So if today's environment remains, then obviously, there will be some upside. But we're not contemplated in that or not calculated that.

Well, actually, Timna, you and I have spoken about it, and we spoke about it at the conferences, the full intent is to allow the teams to get the cost structures aligned, get to using more scrap content, et cetera, all things that Mark mentioned, which we think will take through the third quarter because remember, we're just getting the third cold mill up and running in July, August time frame. The last CASH line will be fourth quarter. So we want to ensure that we actually have everything dialed in before we start to talk about numbers that are higher than what we've suggested in the past. But you're not wrong in the fact that the spread is available today are considerably higher than what we would have included in our $650 million to $700 million. And in time, you're in a shorter term rather than longer term, we will address it.

Okay. That's helpful. One follow-up, if I could, on aluminum. So of course, there's been a lot of attention recently on some incentives to focus on primary aluminum capacity built in the U.S. But in a way, you're also adding aluminum capacity through producing slabs from scrap, right? So is there not any discussion with the administration of also incentivizing or supporting this alternative source of aluminum that is also adding to our national security of aluminum in this country?

I would say, yes, there are discussions. But going back to your point, Timna, the smelting, the primary aluminum that they're producing is just that it's primary aluminum, I don't believe they intend to put in any ingot casting initially. So it's not actually affecting the ingot market.

Your next question is coming from Katja Jancic from BMO Capital Markets.

Mark, earlier you mentioned that the aluminum mill was operating at about 50% utilization rate during 2Q. Can you talk a bit about how the utilization rate progressed throughout the quarter?

It was kind of sequential. It should ramped up month-over-month.

So -- and what was the exit rate utilization? Could you provide that?

It was significantly higher in the June time frame. So averaged 50% for the quarter. So it was probably closer to maybe that 60%. And again, the team feels super good about that, given the fact that we've started up about 9 months ago, and the fact that we're actually now producing automotive quality, can sheet quality, and we're ramping up pretty quickly. But I think what you should expect to see is in the second half of the year, that ramp is forecast to accelerate pretty dramatically as we get the third cold mill because we need that formula to reach the optimal capability of the rolling mill itself. So more to come, but we think it should be a much steep ramp in the second of the year.

Maybe -- and I fully recognize that this is still early, but can you remind us how we should think about CapEx next year or what a reasonable range could be?

Absent -- so we're doing our longer-term capital planning kind of in the next month or so. But absent any significant additional items, I would think that we'd probably be in the range of that $500 million to $600 million at maximum. Our sustaining capital really is only around $250 million to $300 million. So if it was that amount, we would have some growth capital embedded in that as well. But we're really not talking about 2027 yet in much granularity.

Your next question is coming from Tristan Gresser from BNP Paribas.

It's on the steel division. USP went up quite quite a lot in Q2. Scrap prices were relatively steady, but your EBITDA per ton, I think it's only up $60 per ton, which is already pretty great. But what sort of other cost increase have you seen in the quarter? And how should we think about Q3 from a cost perspective?

Tristan, I would say, as Theresa mentioned, our contracts have a lagging nature to them. So most of those are turning over into the higher pricing that we've seen through Q2. So we look forward to pricing increasing. We do believe scrap will go sideways. As far as other cost structures, we haven't seen significant impacts on any of our cost streams. So we manage all those for the long haul. And right now, we're really concentrating on making sure we're on time for our customers and running at high utilization rates.

We did have the teams had some maintenance outages at our 3 flat rolled mills, but those are normal course, but would have increased costs a little bit. Barry said that.

Yes. In Q2, we led with all the mills having an outage, which is somewhat unusual, but it was the right time to take care of the stuff. So some of the costs were embedded in it -- what you saw as the COGS in Q2.

Okay. That's clear. And on the steel division, I think for fabrication, you talked about a pretty strong H2 outlook from a volume perspective. How should we think about your H2 outlook for the Steel division?

The steel plants are all running with excellent backlogs right now. We are enjoying strength in all of the markets we participate in. Now that the spreads between the galvanized and paint have resumed is somewhat normal. We're very bullish on what our coating facilities can do for us. And our customers are all anxious to keep good business going. So we remain really optimistic of where the steel plants are and that's across the divisions. Long products, flat all of our market segments.

Just to -- correct me if I'm wrong, Barry. But just to calibrate that spread, I think we began the year it was like $100.

A little less than $100 has been galvanized and hot-rolled [indiscernible].

And now that's $200?

A little over $220 or so. Yes.

All right. No, that's clear. And maybe one quick follow-up on the cost structure for the Steel division. I mean we're starting to see some noise around electricity costs rising for U.S. steelmakers. If you can share maybe your latest dollar per ton energy costs? And how do you expect that to evolve moving forward? And remind us maybe of your new contract structure for steel and aluminum as well, that could be interesting.

Electricity, certainly, there's a lot of discussion nationwide about electricity and the demand levels. We've seen the relative demand stay steady over the last couple of years. There is certainly a concern about large users like data centers coming in, and that is a regional thing. We have completely different contracts at each of our [indiscernible] facilities. That's just the nature of large loads. But we are seeing ample support from all of our utility providers. We do benefit from running every hour of every week. So there's times at night when it's low demand that pricing reflects that. Our teams are very responsive. They see the real-time pricing in their [indiscernible]. They make good business decisions based on that information. So we see markets around us move, but we're able to continuously run hard and optimize how we use that electricity, which is just as important.

So we don't see any aberration short-term, but we are concerned about the build-out and generation being added to the grid. We also want to see a more reliable grid. The grid itself. There's areas in the country where reliability is a concern. So we continue to work with our utilities and make sure they know what we do to consume power, and we support them. And as far as aluminum, that's more of a natural gas play. And I think where the storage is, we're comfortable. And again, we buy our energy wisely. We look at our needs, and we work with our providers regularly to make sure we're -- we're doing what they did need us to do to be good customers, and we help them be better suppliers for us.

Your next question is coming from Samuel McKinney from KeyBanc Capital Markets.

Granted, we're coming off a low base, but steel imports have increased month-over-month over the last couple of months and July is up noticeably versus June. Any concern on your end that steel pricing levels that finally caused customers to start seeking foreign sources in a more aggressive way?

Sam, I would add to that -- this is very -- we are seeing certain countries shipping through the 232. The offset pricing in the Asian markets has a lot to do with that. So the administration is looking closely at what these rates are, but we've been seeing very high accelerated rates of all steel exports from primarily 3 countries in Asia. These are disruptive. It is a response to their economies needing to export. The [indiscernible] mercantile economies have to find somewhere in the world to put their goods. We are hoping the administration looks at what quotas were in place in some of these countries prior, and they look at what exactly the 232 has to do and try to rein it back in.

We believe the short-term disruption of these imports will hopefully be abated here in Q3, Q4. But we remain competitive with all our customers and the dialogue of getting steel when they need it and being on time is usually the big factor for what our customers are looking for.

Okay. And then I appreciate there are a lot of moving parts, as you start up ADI, but second quarter shipments of 53,000 tons came in a little light of the guidepost you laid out on the last call. Any more detail you can provide on what got in the way of hitting that 60,000 to 70,000 ton mark you previously outlined and what you're expecting into the third quarter?

Yes, it's all part of the learning curve, I would say, as you perfect the different units through the mill, you find challenges or obstructions as you go. We actually left material on the floor that we couldn't ship for a variety of different reasons. No Achilles' heel or whatever, but just a couple of little packaging issues, just miscellaneous stuff. So the 53,000 metric tons could have quite easily have been 60,000 metric ton and it would have been at the bottom of that range. But no major issues. It's just a matter of the team just working out all the bugs.

Okay. And then kind of guide post your outlook for the third quarter?

Significantly improved.

Your next question is coming from Richard Garchitorena from Barclays.

Great. Just first off, just wondering, you mentioned that you had constructive discussions on pricing with your customers on contracts. I wonder if you can give us any color on that. And how should we think about that cadence of when you'll realize those given the lags and contracts? Is that going to be more of a 2027-type thing that we should see?

So that was specific, just so is clarity. It wasn't really contracts per se. It was specific to steel fabrication business and they're quoting and what's going into the backlog. And so I think that -- and Barry, you can correct me, that I would expect to start to see some improvement in the fourth quarter and certainly into 2027, but those projects further out the near term. Is that fair, Barry?

Yes. That's for the fabrication side.

Okay. And then just on a bigger picture, you mentioned that scrap prices have been relatively stable, and you expect them to remain that way for the rest of the year. Despite what we're seeing in terms of the move in HRC prices. So just wondering what's driving that in terms of -- historically, we've seen a much more correlation in terms of scrap prices with the move in steel sheet prices. So is there anything in the industry that sort of keeping those scrap prices flattish?

Well, I think one of the things that was a good victory for the mini-mill industry was Section 301 against Brazil for pig iron imports. The 301 recommendations now exclude pig iron shipments from Brazil into the United States. The pig iron market in the United States is not a merchant market. The only producers of pig iron have very limited ability to sell pig iron directly to the rest of the trade in America. So excluding Brazil, allows that material to flow in here. And although pig iron is a different resource for us, it's cleanliness, it's also introducing energy into our mixes. It does help in relation to the pricing of scrap, particularly the prime quality scraps. So the pig iron trade has been very much disrupted internationally since the Russian invasion of the Ukraine, which continues to put pressure on pig iron supply chains around the world.

So this is a good victory for the mini mill part of our industry, flat rolled that uses pig iron. And I think that will have some impact on spreads of hot-rolled scrap.

And perhaps just to add to that, you've got an environment today where there's pretty -- there's ample supply of scrap in the country. Even with the additional [indiscernible] that's come online over the last few years. You got low import -- low imports, low exports today relatively strong. So that's holding scrap in country. And perhaps not having a massive impact now, but longer term, the good news with the new capacity come online, Nippon, the Hyundai Pasco plant, they're all adding DRI capacity, which helps the the iron unit sort of balance in the country. So we don't see any major change in scrap, to be honest.

Your next question is coming from Bill Peterson from JPMorgan.

Nice job in a quarterly execution. On the -- first turning of the steel. So I guess across the product portfolio, have you seen lead times come in at all or start to decline? Or if not, which products amongst flat-rolled or long products are most extended relative to normalized levels? And I guess second part or two that is with the extended lead times and record pricing in structural, what opportunities do you have there to drive increased output, whether it's higher utilization, increased investments or something else?

With the long products -- our Structural Rail division is really doing incredible job of getting more and more productivity across the board. They are very good at optimizing their mixes so that when an opportunity like this where the order book is really generous, they run more efficiently. So they're really good at scheduling how they put together runs both in the mill shop casting as well as the rolling. We've seen casting records, melting records out of Columbia City, 3 of the last 4 quarters, which good decision-making, tough times allows them to really run hard right now. That energy also translates into the merchants where we're able to really put together effective campaigns rolling schedules. I'm flat product side, again, I think the utilization that we operate at is usually at this very high level. So it does allow us a little bit of enhanced efficiencies when we know what the orders are, so we could be a little bit more effective in the month instead of looking week-to-week.

But we continue to see our lead times right where we want them. We don't want to make -- we don't want to be late. We want to make sure customers get what they want when they need it. And I really have to reach out to Pittsboro [indiscernible] has been a tough market for the last few years and with the onshoring and reshoring efforts that team continues to get more and more productive, all the while maintaining a 95% or better on-time delivery. And that's going to customers who need that steel to make products for OEMs and manufacturers. So across the board, our steel units are able to operate very efficiently when we see orders like this. But it doesn't change our strategy for booking, our strategy for relationships. It's all just really a good time to optimize those [indiscernible] deal side.

And then I guess pivoting to ADI, a lot of questions on utilization and a lot of other things. But just want to make sure, I think you've talked about reaching 90% utilization by end of '26. I want to see if that's still the case or if that's an exit rate? And based on your commentary on mix, scrap content, as well as the steep ramp in the second half. How should we think about the cadence of the earnings through the balance of the year? Should we expect third quarter to pivot to profitability?

So from the perspective of exiting the year at least 90% utilization rate, absolutely. We feel even more confident about that given the performance of the team in the second quarter and more recently. So -- and especially with the onset of bringing a third cold online here in August. So that will be a key to that. As you think about profitability in the second half of the year, yes, we've been kind of approaching EBITDA positive to EBITDA positive, but we would expect to be earnings positive in the second half of the year as well.

Your next question is coming from John Tumazos from John Tumazos Very Independent Research.

Looking forward, a number of years. Where do you think we go next with steel processing buying 2.5 million, 3 million tons more steel than you make, it could be possible to build a sheet mill, another one to make that steel yourselves? Or is there enough scrap aluminum to build a second 650,000 ton Columbus rolling complex? Or is there something else on the horizon?

Well, as always, John, phenomenal questions or thoughts. The hot band substrate requirement that has grown over the years and likely will grow a little more, obviously, is a potential growth avenue. But I would suggest, given the dynamics within the supply-demand balance the -- it wouldn't be a typical mill if we were to do it, but it wouldn't be a mill that we're going to build anytime soon.

The -- on the steel side, I think Barry and the team have got a pipeline of some pretty-damn neat value-add niche opportunities. And as you've always known, we tend -- we don't strive to build and grow, just to be big. We want to maintain the high-margin niche product supply chain type strategy. So we do have steel projects along those lines. And aluminum obviously has is also a great potential for growth. It doesn't necessarily -- our past past history isn't to go and build a big mill and then just copy that same thing. We've only been in the industry, obviously, for whatever it is now 2 years. But we again see smaller value-add niche opportunities that would have great return on invested capital type profiles.

So a big steel mill anytime soon, no. Massive 650,000 tons aluminum mill, probably not here in the very, very near future. But there's plenty of opportunities for us to grow.

[Operator Instructions] Your next question is coming from Albert Realini from Jefferies.

Just on capital allocation, given the earning trajectory, the continued focus on the execution of the ramp of ADI and some of the working capital and '27 CapEx commentary. I mean, how should we be thinking about the trajectory of repurchases in the coming quarters? Is it reasonable to assume what we saw during the '23 quarters? Or is maybe a similar kind of increase from the first to the second quarter more, I guess, reasonable if pricing holds up in the second half?

The expectation would be, as we've mentioned, we want to take the opportunity as we have excess cash flow to lean in on the share repurchases. We think that the current pricing is still incredibly attractive to do that. So in the second quarter, we were at $200 million. We paused in the first quarter, as we mentioned, to allow for the ramp of working capital as aluminum ramps up. I don't know that we have specific plans for what the second half of the year looks like. I would say it's going to trend more towards like what you saw in the second quarter and perhaps last year, but that will depend on the cash flow as we progress through second half.

That concludes our question-and-answer session. I'd like to turn the call back to Mr. Millet for any closing remarks.

Super. Thank you, Matthew. I appreciate everyone's interest and support today. And I just would like to, as always, thank our customer base, we can't do what we do without you. And particularly on the aluminum side, your patience with us and your support has been extraordinary. Service providers phenomenal, we can't do without you guys either guys and girls. Employees I just, my hat off to you, I said it at the very beginning, I'm honored to be part of the team. You do a phenomenal job. I just want to really, really, really stress that we need to continue to work smarter, harder and be committed to getting to that zero-incident safety environment. And to shareholders and investors we treat your money as it's our own, and we hopefully have demonstrated a good responsibility there, and we're going to continue to do that in the future. I don't think there's ever been a time where I am more excited for the team. Given the the step function increase in cash generation that we're going to see from these new assets with the growth opportunities that the team has identified going forward. It's nothing but phenomenal what they're going to achieve. So thank you. Thank you. Thank you, everyone.

Thank you. And once again, ladies and gentlemen, that concludes today's call. Thank you for your participation.

Good day, and welcome to the Steel Dynamics First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised this call is being recorded today, April 21, 2026, and your participation implies consent to our recording this call. If you do not agree to these terms, please disconnect.

At this time, I would like to turn the conference over to David Lipschitz, Director, Investor Relations. Please go ahead.

Thank you, Tom. Good morning, and welcome to Steel Dynamics First Quarter 2026 Earnings Conference Call. As a reminder, today's call is being recorded and will be available on our website for replay later today.

Leading today's call are Mark Millett, Chairman and Chief Executive Officer of Steel Dynamics; Theresa Wagler, Executive Vice President and Chief Financial Officer; and Barry Schneider, President and Chief Operating Officer. The other members of our senior leadership team are joining us on the call individually.

Some of today's statements, which speak only as of this date, may be forward-looking and predictive, typically preceded by believe, expect, anticipate or words of similar meaning. They are intended to be protected by the Private Securities Litigation Reform Act of 1995 should actual results turn out differently. Such statements involve risks and uncertainties related to integrating or starting up new assets, the aluminum industry, the use of estimates and assumptions in connection with anticipated project returns and our steel, metals recycling, fabrication and aluminum businesses as well as to general business and economic conditions.

Examples of these are described in the related press release as well as in our annually filed SEC Form 10-K under the headings Forward-looking Statements and Risk Factors found on the Internet at www.sec.gov, and applicable in any later SEC Form 10-Q. You also find any referenced non-GAAP financial measures reconciled to the most directly comparable GAAP measures in the press release issued yesterday entitled Steel Dynamics Reports First Quarter 2026 results.

Now, I'm pleased to turn the call over to Mark.

Super. Thank you, David. Good morning, everyone. Thanks for sharing your time this morning for our first quarter '26 earnings call. As reported, our teams achieved a very strong first quarter financial and operational performance. Several highlights for the quarter included record quarterly steel shipments of 3.6 million tons. We saw significant progress within our aluminum operations. It really is exciting to see our vision coming to life there. We had adjusted EBITDA of $700 million. And again, most importantly, our teams continue to emphasize and keep safety top of mind.

We have an amazing group of people that achieved best-in-class performance each and every day, incredibly proud of the whole team. Our world-class safety culture continues to evolve and our team's dedication to our Take Control safety philosophy is extraordinary. Out of some 135 SDI locations, 94% operated in the first quarter without one lost time injury. I'm continually inspired by the commitment they have for one another. They consider themselves family and challenge the status quo each day. But as always, we will never be satisfied until we achieve a 0 incident environment.

But before I continue, I'd like to shift to Theresa and Barry for the commentary. Theresa?

Thanks, Mark. Good morning, everyone. Thank you for joining us this morning. As for the first quarter 2026, our net income was $403 million or $2.78 per diluted share with adjusted EBITDA of $700 million. First quarter 2026 revenues were $5.2 billion, and operating income was $538 million, higher than sequential fourth quarter results driven by higher realized steel pricing and record steel volumes.

Our steel operations generated operating income of $557 million in the first quarter, a 73% sequential increase as average selling prices per ton increased $86. From an index perspective, average HRC pricing increased from an average of $850 per ton in the fourth quarter to $975 per ton in the first quarter today -- excuse me, in the first quarter, today is over $1,000. Barry will talk more about the markets in a moment.

Value-added spreads to HRC have also improved. As the largest coater in North America, this will especially be helpful to our forward performance.

As a quick reminder, approximately 75% to 80% of our flat-rolled steel business is linked to lagging price contracts, in aggregate, generally lagging 2 months. So the most recent flat-rolled steel price increases will positively impact our second quarter results. Additionally, demand and related pricing for our long product steel is strong with pricing also continuing to improve.

From metals recycling perspective, first quarter 2026 operating income was $47 million or 155% higher than sequential earnings based on higher pricing for both ferrous and nonferrous scrap. Shipments were modestly lower in the first quarter due to inclement weather for several weeks in January and February. Scrap flows are strong again with expectations for seasonally increased shipments in the second and third quarters in addition to increases related to further support of our aluminum operations.

Our steel fabrication team achieved first quarter operating income of $90 million, aligned with fourth quarter results as a benefit from higher shipments was offset by the increase in steel input prices. Our fabrication business generally maintains between 10 to 12 weeks of steel inventory, which can tighten margins in a rising steel price environment.

Our steel joist and deck demand remains solid, evidenced by very strong order activity with March representing the current high point. We were with the aluminum management team last week, and things are going incredibly well. That said, a quick reminder that we are still constructing and commissioning while we are an operational start-up. Mark will provide specifics in a moment.

As for the related first quarter financial impact, earnings for aluminum were lower than we originally expected with an operating loss of 80 -- or sorry, an operating loss of $65 million. Operating costs were significantly higher in January as the team experienced normal start-up issues, necessitating a temporary pause in operations and a write-down of some inventory. Things were resolved quickly and are operating smoothly now with increasing volumes already being realized.

We generated cash flow from operations of $148 million in the first quarter. Cash was reduced by $120 million related to our annual company-wide retirement profit sharing funding and an additional $150 million related to working capital growth, specifically associated with our new aluminum investment. We also experienced significant working capital growth related to increased pricing across our businesses, increasing both customer accounts and inventory values.

Our cash generation is consistently strong based on differentiated circular business model and highly variable low-cost structure. At the end of the quarter, we had liquidity of $2 billion comprised of cash and investments of $800 million, and our fully available unsecured revolver of $1.2 billion. During the first quarter, we invested $138 million in capital investments. We believe total investments for the entirety of 2026 will be in the range of $600 million.

In the first quarter, we increased our cash dividend by 6% and repurchased $115 million of our common stock with $687 million remaining authorized at the end of March. These actions reflect the strength of our capital foundation and consistently strong cash flow generation and our continued confidence in our future.

Our capital allocation strategy prioritizes high-return growth with shareholder distributions comprised of a base positive dividend profile that is complemented with a variable share repurchase program, while we remain dedicated to maintaining our investment-grade credit designation. Our free cash flow profile was fundamentally changed over the last number of years from an annual average of $540 million from 2011 to 2015 to $2.4 billion for the most recent 5-year period. And if you exclude our growth investments related to our Texas steel mill and our new aluminum investment, they averaged $3.2 billion per year. And there's more coming.

We've invested over $5 billion in 3 primary organic growth investments, including our Texas mill, our value-added flat-rolled coating lines and our aluminum investment. These projects have an estimated through-cycle annual EBITDA of approximately $1.4 billion. We placed ourselves in a position of strength to have a sustainable capital foundation that provides the opportunity for meaningful strategic growth and strong shareholder returns while maintaining our investment-grade metrics.

And I really want to give a shout also to our biocarbon team. Last week, we did something that I think probably hasn't been done anywhere else in the world. We had instead of a ribbon cutting ceremony, we had a log cutting ceremony. So kudos to that team that's doing very well as well.

So Barry?

Thank you, Theresa. Our steel fabrication operations performed well in the first quarter of 2026, delivering strong earnings. Steel joist and deck order backlog was solid at quarter end with December through March, representing some of the strongest order entry we have seen in the past 18 months. This backlog extends into the fourth quarter of 2026. We continue to have high expectations for the business this year due to positive customer sentiment and quoting activity, continued manufacturing onshoring and public funding for infrastructure and other fixed asset investment programs. The uplift from this macro environment could be considerable. Our steel fabrication platform provides meaningful volume support for our steel mills, particularly critical in softer demand environments, allowing us to operate at higher through-cycle utilization rates than our peers. This also helps mitigate the financial risks associated with lower steel prices.

Our metals recycling operations also performed well in the quarter as scrap prices increased during the quarter, more than doubling operating income. Congratulations to the team. They had some tough weather earlier in the year. The North American geographic footprint [ of our metals ] recycling platform provides a strategic competitive advantage for both our steel mills and our scrap generating customers. In particular, our Mexican operations strengthened the raw material positions of our Columbus and Sinton facilities. They also provide strategic support for aluminum scrap procurement for our flat-rolled aluminum investments.

Our metals recycling team is partnering even more closely with our steel and aluminum teams to expand scrap separation capabilities through enhanced processes and technology. This will help mitigate potential prime ferrous scrap challenges over time and provide a meaningful advantage in increasing recycled content in our aluminum flat rolled products while expanding our earnings capabilities.

The steel team delivered a solid quarter with record shipments of 3.6 million tons. During the first quarter of 2026, domestic steel industry operated at an estimated production utilization rate of 77%, while our steel mills operated at 89%. We consistently achieve higher utilization due to our value-added product diversification, differentiated customer supply chain solutions and the support of our internal manufacturing businesses. This higher through-cycle utilization is a key competitive advantage, supporting our strong and growing cash generation and best-in-class financial metrics.

Regarding the flat-rolled steel markets, conditions continue to improve, supported by strong demand and lower imports. Lead times remain elevated, and customers remain optimistic about the outlook. Specifically in flat rolled steel, we see improving value-added spreads returning with the impact of the core trade cases that we won in 2025. Long product steel markets continue to be strong in 2026. And we expect another solid year as demand and pricing remain favorable, particularly in structural steel and railroad rail with our Columbia City and Roanoke both achieving record months in production. SBQ markets are also improving across the various sectors with increasing manufacturing and energy product support.

Regarding the steel market environment, North American automotive production estimates for 2026 are expected to be similar to 2025. Our specific automotive customer base has not only remained stable, but has provided opportunities for growth. We have become a supplier of choice for many U.S.-based European and Asian automotive producers due in part to our lower carbon content capabilities. Nonresidential construction remains strong, led by data centers and an increase in multifamily homebuilding. Our platforms continue to benefit from ongoing onshoring activity and domestic manufacturing projects.

In the energy sector, oil and gas activity has been strong, with the pipe mills already booked well into the summer, with solar continuing to remain strong in our order books. Overall, we remain optimistic considering demand for our diversified value-added steel products in the coming year.

And with that, I'll return it to Mark.

Barry and Theresa, thank you. As you can see, everyone has been an incredibly good quarter, great performance by everyone, something to celebrate for sure, but we're also celebrating Barry's birthday today. So I just want to interject and it's really do we get donuts anymore in the office? And today was a special day. So we bring that too.

But again, the consistently sort of sustain the positive results just doesn't happen because I think you all realize it's the result or the strategies implemented and executed by the teams over time. We've continually invested strategically to provide scale of business, product market diversification, unique customer supply chains, and we've been linking operating platforms to optimize market opportunities throughout economic cycles.

When combined with our performance-driven incentive culture, we consistently achieved at the highest levels compared to our peers. Our foundational focus on market and product diversification into high-margin value-added products drive higher through-cycle utilization and superior financial metrics. We optimize cash generation, allowing for a consistent and balanced cash allocation strategy that has consistently delivered strong shareholder returns.

Our disciplined investment approach continues to support a strong and growing through-cycle cash generation profile while maintaining one of the highest ROIC metrics among our industrial peers. At the moment, our largest such investment is in the aluminum flat rolled products arena.

And when touring the facility is there, the excitement of the aluminum team is palpable. As you watch them perform, now transitioning from construction and commissioning to production and serving the customers with high-quality products. They're also constructively navigating a rolling aluminum market manifested by the traffic impacts of the Iranian war and the domestic supply chain challenges. But beyond these, hopefully, near-term constraints, we're also experiencing a unique and very favorable long-term market environment. There's a significant and fundamental domestic supply deficit of over 1.4 million tons of aluminum sheet. And this deficit is forecasted to grow with additional demand in the coming years.

In '24 and 2025, that deficit was supplied through high-cost imports, which are now even higher as tariffs increased 10% in '24 to the current 50% level. And this investment is a clear alignment with SDI's core competencies. Our construction capabilities have once again been proven, both Columbus and our house in San Luis Potosi, a state-of-the-art facilities. And they were brought on in record time compared to other facilities and at a very, very reasonable cost on budget or near to budget.

We're using SDI's deep operational know-how in combination with the technical expertise of aluminum industry experts and our proven incentive-driven performance culture will drive higher efficiency and lower cost operations compared to our competitors.

We also believe we have an advantaged commercial position. 2/3 of our existing carbon flat-rolled steel customers also consume and process aluminum flat rolled sheet. Our growth in the automotive sector will complement our existing steel position and provide customer material optionality. The beverage can market provides countercyclical market diversification, and a more stable earnings profile within the aluminum space will further enhance the consistency of our through-cycle cash generation.

Our raw material platform will also facilitate high recycled content. We're the largest North American metals recycler, which includes aluminum. And we've successfully developed new separation technologies, allowing us to have more access to usable aluminum scrap at a lower cost.

Production to date, even at its early stages, is already confirming our expected earnings differentiation. When the markets normalize, we're confident in the through-cycle EBITDA expectation for normalized markets, again, remains at $650 million to $700 million plus a further $40 million to $50 million for our recycling platform. As we've spoken in the past, the 4 key areas of Vantage from a labor efficiency standpoint, higher recycled content, high yield and optimize logistics. And it's all driven by our performance-based operating culture, utilizing state-of-the-art equipment.

This strategic investment is a cost-effective and high return growth opportunity, providing Steel Dynamics with additional diversification while further stabilizing and growing our cash generation capabilities.

We've seen that the customer base is Hungary for a new market entrant, one that is known to be innovative, customer-focused and responsive. We view business relationships as long term, founded on trust with a continuous goal of creating mutual value. Not simply just financial value, but we will provide new supply chain solutions, new products with preferred quality and service. Many customers have already experienced this through the actions we have taken to help solve some of the recent supply chain challenges. It's been fortuitous for us, allowing us to help the market while accelerating material qualification.

For all that said, all startups of the challenges, I would like to thank our customers for their patience as we fine-tune our operations and continue our ramp-up.

To date, we have received certifications from multiple customers for industrial and can sheet finished products as well as certification for automotive aluminum hot band. What is incredible to me is that even finished automotive products are currently in the qualification process with several automotive customers. We believe we could receive acceptance in the coming weeks. This accelerated certification should allow us to shift our product mix to a higher margin mix this year. reaching the planned optimized mix of 45% can sheet, 35% automotive and 20% industrial sometime in '27.

The hot side is fully operational now and has demonstrated the ability to run at full rated capacity. The last of 4 preheat furnaces will be in service at the end of the second quarter, and we have successfully rolled 3,000, 5,000 and 6,000 alloys.

Two of our three cold mills are now ramping operations and producing prime product. The third cold mill is expected to begin producing in the third quarter.

The cold reversing mill, in particular, is successfully producing shippable 303 or 3003, 5052 and 3104 products. The first of two automotive continuous [ annealing ] solution heat treat lines or cash line is now operational and producing material for qualification for automotive customers. The team has brought that particular line on an absolute record speed. And it truly is testimony to the team we have there. And we believe we should receive qualification from several customers in the coming weeks. The second cash line is expected to begin commissioning in the third quarter.

The team is incredibly excited with the earlier-than-anticipated product certifications. And again, it is a testament to the incredible talent we have been able to embed throughout the facility. There's great energy and great momentum. We're extremely excited by the physical production and quality capability of the mill today, especially this earlier in the start-up, and we're focused on achieving operational and quality consistency. We continue to believe we'll be exiting 2026 at a monthly rate of 90% capacity.

So as we continue to be impassioned by our current and future growth plans, as they will continue to drive the high return growth momentum we have consistently demonstrated over the years. The earnings growth of our most recent projects is compelling. The capital funding for Sinton, the 4 value-add lines and aluminum dynamics is basically complete, but the projected future through-cycle EBITDA contribution of $1.4 billion a year.

I'm excited as our teams, customers, investors recognize the power and consistency of our strong cash generation, combined with our disciplined high-return capital allocation strategy. It is our belief that the steel industry has undergone a paradigm shift in recent years, supported by the pervasive sensing that will provide a level playing field through continued and appropriate trade mechanisms.

Fixed asset investment will continue to grow, which directly correlates with increased metal products demand. And reshoring and manufacturing continues to increase. And along with AI and cloud computing, will support nonresidential construction, further strengthening what is an already robust long products market.

In decarbonization, itself will materially steepen the global cost curve, providing steel dynamics with a huge competitive advantage to gain market share and increase metal spreads. Our highly value-added product capabilities provide us with a very unique advantage to leverage this evolving business environment and amplify our relative earnings capability.

So in closing, I've said it a million times, I think they never tire of saying it that our people and our foundation -- or foundation. I think -- thank you to them for their passion and dedication. We're committed to them. And I remind those listening today that safety for yourselves, your families and each other is the highest priority. And we're remiss not to thank our loyal customers, many of whom have supported us since our inception. These partnerships are based on trust on doing what we say we will do in creating new solutions to enhance the value proposition.

Our new aluminum partners are experiencing the same. And also to our suppliers and service providers who we value and trust and work with each and every day. Thank you. So we look forward to creating new opportunities for all of us today and in the years ahead. So thank you, and we'll take questions now.

[Operator Instructions] And the first question this morning is coming from Albert Reline from Jefferies.

So on aluminum, obviously, a lot of external moving parts impacting fundamentals here. So one, maybe if you could just talk through some of the impacts you expect to see on the business going forward from the recent change in tariff policy? And then I believe last quarter, you kind of briefly touched on mark-to-market margins being higher than what was used in calculating the guided through-cycle EBITDA number for the business. So obviously, since that point, we've had some significant global supply impact. So just wondering if you could provide any further color in terms of how much potential upside to those numbers you see at spot prices or margins.

Well, at -- I'm not so sure our crystal ball is any clearer than yours for into the future. Obviously, the market today is absolutely phenomenal from a standpoint of entering a new facility. So qualifying our products quicker has been a very fortuitous thing. Margins today are obviously very, very strong, which is helping a start-up ramp. I guess, from the performance to date, looking at the yields, the efficiencies, et cetera, et cetera. Again, we're just we would say we're confident -- more than confident that with the $650 million, $700 million of EBITDA per year. And we can't see any downside in the future.

Yes. You're spot on. The spreads that we use from a profitability standpoint, just market related for each of the product sets are significantly lower than the spreads that are available today. And right now, I think what we'd like to do is get continue to have the teams perform incredibly well, but there's a significant difference and a significant benefit that would inure to us in today's spread environment that we think does have more of a structural shift. So in the coming months, what we'd like to do is actually probably discuss what through cycle is. We think just like the steel industry went through a structural change in what that might look like the aluminum industry as well. So I would just say more to come on that.

Your next question is coming from Carlos De Alba from Morgan Stanley.

Just staying on with the aluminum business, congrats on the ramp-up. I just wanted to maybe get a little bit more color on the issues that you faced in the past quarter and related also to the inventory write-off that you had. Was that due to quality issues or maybe just more color in general on what happened in the business? And what makes you feel comfortable that you have basically put those behind and we continue to ramp up the volumes?

Thank you, Carlos. Essentially, it was principally limited to the January, leaked a little bit into February. It was -- you're right, it was a quality issue. It was a stain on the product issue. Should have caught it, should have seen it, but it's been resolved.

It wasn't an equipment issue, Carlos. It was a practice issue.

Got it. Okay. And maybe if I may add, any views on how you might ramp up the volumes? Clearly, as you just mentioned, current prices are significantly above what everyone expected. So the more you can produce and sell out the better. So any color on that that would be great.

Well, just as a ramp in Q4, we were around 14,000 tons. I think, of shipments, give or take a little bit. Q1, you saw it's around 22,000. We're expecting the exception of any unexpected just to qualify, unexpected disruptions, we should be around, we think, 60,000 tons to 70,000 tons in the second quarter. We have -- obviously, the cold reversal mill was running pretty well in the first quarter, but we have the full addition of the first tandem mill and that should change things dramatically down there.

And I think to speak to the quality, just to reemphasize that a majority of what we actually produced or shipped, I should say, more accurately in the first quarter and will be in the second quarter as well as can sheet. So it's high-quality material.

Your next question is coming from Timna Tanners from Wells Fargo.

I wanted to see if you could provide a little more color about your mix. I know with the coated lines ramping up? How is that progressing? I don't -- I didn't hear the breakout. I don't know if you still provide that. If so, that would be helpful. And if I could, a second question, just I know a lot of interest in what you're thinking about in terms of uses of cash with the strong free cash flow outlook, the fall in CapEx. So if you could provide some more color on that would be great.

Excellent. I'm sorry, I was -- So I think you're specifically looking for the flat-rolled shipments and the first quarter flat-rolled shipments for hot band was 1,017,000 tons. Hot rolls was 151,000 tons, and coated was 1,530,000 tons. And the 4 new value-added lines are actually operating incredibly well, Barry, percentage basis, do you have it?

They're operating at full capacity right now and the markets that they service are the markets that were the most impacted by the core cases. So we are enjoying high-quality production and making our customers happier and making sure that we have the right stuff in all of our mixes like we normally do.

And from a capital allocation perspective, we are focused on consistently doing what we've been doing, which we think has been really successful. So it's growing the business as our priority and then complementing that with a progressively positive dividend profile, which is complemented by the share repurchase program, which we're still engaging in. And I know we did take a bit of a pause in the first quarter related to the working capital growth that we saw coming both for the new operations that we have, but also just because we've had increased pricing across the business. But -- so you should continue to expect to see the same.

Your next question is coming from Martin Englert from Seaport Research Partners.

I had a question on unit conversion costs. If you could just qualitatively touch on some of the positive negative factors quarter-on-quarter, what moved higher, what moved lower? And curious if energy was any meaningful influence on the quarter.

Martin, this is Barry. We didn't see any huge increases. We have seen some structural increases in things like paint. But as far as energy goes, there was a small boost here and there, but not to a level that we're concerned about. Despite what's happening around the world, we have very good relationships, and we're very efficient with our energy. So our teams respond when there are immediate upsets in energy, but we're able to continue running at very high rates of production. And otherwise, it's not a major concern for what we've seen so far.

To Barry's point, Martin, there's nothing to point out, except remember that product mix really does have a pretty significant impact when you're viewing it from the outside in. And structural -- or long steel products just generally have higher conversion costs. So as they continue to have really robust shipments and volumes because of demand that does look from the outside in, like our conversion costs are a bit higher.

Your next question is coming from Tristan Gresser from BNP Paribas.

The question I have is on pricing. I just wanted to have your view on the market at the moment. I mean, if we look at a chart with historical steel prices in the U.S., I mean, up cycles have always been very brutal, big swings in prices. And this time, it's been very different, very gradual price increases almost on a weekly basis. So like to view how do you explain that? And most importantly, is that improving? You think the sustainability of the current rally -- how do you view the supply and demand at the moment for flat rolled? And any risk of imports picking up in the coming months and disrupt a bit the balance?

Tristan, when we look at the flat roll markets, we're seeing our customers have more confidence. And certainly, the tariff world we've delivered in the last 2 years is that impacts. But I think more importantly, a lot of our customers have seen the supply chains are very important. So when we have discussions with our customers, our supply chain position being so local to many of the businesses and having diverse products. It allows us to engage with them on a longer-term frame than just what we see in a quarter or perhaps half a year. So we do have confidence that this market is strong. It's demand driven. We do feel like the pricing has been responsive as capacity has gotten closer, ramped up across the industry.

Getting imports that are unfairly dumped in this contract -- into this country were very significant. Those are so disruptive and there are subsequent cases that have been filed regarding circumvention. All the steel tons that are at sea have to find a home. And when you have a global interruption like we have right now, I'm very happy that we have 232 protections. The executive orders early in April that helped to further define both steel products, aluminum products as well as derivative products is very helpful. because that encompasses the entire supply chain. So I think we are feeling the results right now of our businesses in America picking up and the supply chain excellence that we have is really taking hold. So I feel like we have a good position and we're strong, and we're super excited about long products. There's so many big projects out there that engineering and ownership of those projects is getting involved early with our long products team. We continue to market our long products and our fabrication teams together. That allows us to establish physicians with these projects, whether it's pharmaceuticals or electric vehicle production or energy we have solutions that help them. So it's a robust market we're in. And we hope globally, things calm down a little bit. Other than that, we're doing our best to make our customers happy.

Your next question is coming from Katja Jancic.

Maybe on the pig iron side, the prices are moving higher. Can you remind us how much of pig iron do you currently import? And are there any potential mitigating factors you're looking at taking?

Katja, I'll give you a brief overview. We only use pig iron at our flat rolled mills. Our Butler mill has its own technology for making liquid iron that takes care of about 90% of Butler's needs. Those -- that liquid iron is actually produced from recycled iron oxide products. So it's also a very sustainable product. So when we look at the Columbus mill and Sinton mill, that's our primary users of pig iron. And we will use anywhere between 12% and 22%, and we do that based on what the qualities required and the productivities required for those products. So what we do to mitigate that is really found through our relationships with -- our scrap provider. We have incredible connection between the scrap and the steel side. So the scrap is continually cleaning the Shred 1 product, we call it, so that we know exactly what we're going to get in the melting furnace when we want it. That's a big part of being able to capture value in that supply chain. So what we do to mitigate it is we put very clean shredded product, very clean busheling intentional when we need it. We use pig or to supplement that. So we look at the cost every day and the availability. So we've been very good at buying. I think we keep good position to pig iron. We're aware of the working capital. So we also don't just binge on it for sure. But I'm really proud of what the teams do between Omni on the scrap side and what our melt shops do. We've got a great iron team in the middle that helps coordinate that. So it's really a benefit of having our team so closely connected and free to make those decisions quickly. So it's real. Prices go up, but we continue to find better ways to minimize it and better ways to let our team do what they do best.

Your next question is coming from Samuel McKinney from KeyBanc.

I think I'll ask a birthday question for Barry after he called out the solid results in structural and rail, put up the best quarterly shipment number in a couple of years. And you guys noted demand there remains very strong. Maybe dig a little deeper into what's driving the uptick in activity there and how the '26 contracts shook out versus last year?

Well, on the long product side, I think the team, even after all the years, our incentive-based system drives our people to make better things and more of them. And that team has just been very efficient in putting together sequencing last month. The melt shop -- cash was 200,000 tons, which is a difficult achievement and a long product's bill because of the different sections they cast. So the efficiency of operations helps them put the right backlog on the ground, put the right inventory in place. But I can't say enough about how the sales team through the Long Products group is working together to make sure that Roanoke, Steel of West Virginia and Columbia City are all equally represented to customers so that we can get the best positions to make what they need.

So I think the optimization is really a part of just the ongoing challenge our mills operate with, with incentive. And there's been a shock to the railroad rail system over the last year. We were able to also increase some of those products with our customer base to help alleviate some other supply side problems that existed in rail, continues to be a good part of our product offering. And we also -- our SBQ mill with increased sales and relationships through the automotive, energy and other forging customers has also been purchasing from Columbia City. So we were able to work all the long products very efficiently together that allows. And I tell the guys good decisions you made 2, 3 years ago, you get to enjoy today. So they continue to make tough decisions to have to so that we can run better when we have a market in front of us. So we're excited about what we see. We don't see it slowing down. And we're happy to be engaging the projects early in the process. That helps with spec-ing and laying out the best solution through the fabricating networks.

Your next question is coming from Lawson Winder from Bank of America.

Steel Dynamics, look, like you guys have never been one to pass up on an opportunity for growth or expansion. And I was just thinking, your prior discussion there of long products and all the opportunity there. I mean can you make a compelling case today for a material expansion in that long products market? And I'm going to try and tap on a second sort of related question, which is -- and I brought it up on these calls before, but it's just like the aluminum market rolling market in the U.S. is like, I think, a great opportunity. But today, with the benefit of now being really active in the market, same question. I mean do you see a case for investment by Steel Dynamics into that market as well for new capacity?

But, I think we -- Well, you, I think, know our team perhaps. But it's incredibly inspiring as to the opportunities and the ideas that they bring forth. We've got a pipeline -- a broad pipeline of strategic opportunities, greenfield growth for sure across all the spaces. It's aluminum dynamics for sure has opportunity. We see an industry that was a little bit like the steel industry 30-plus years ago that they haven't been able to earn the cost of capital consistently and reinvest in their facilities and grow. We would like to take advantage of that. And so there are products, for sure, certain product lines that we feel we could invest in long term. And obviously, there's a massive deficit -- supply deficit there, which will continue to grow. So we do see tremendous opportunity in aluminum. But at the same time, we're a steel company, and the steel guys have got their own innovative projects. So we're assessing them. And as we see fit, we will invest accordingly.

Your next question is coming from Bill Peterson from JPMorgan.

This is Bennett on for Bill. I wanted to ask about steel substitution, mid-to-updated aluminum price environment. I mean over the past few weeks, you've heard from companies both sectors actually that this may be starting to unfold. And given that Steel Dynamics not uniquely sits on both sides of the fence, are you hearing about this from your customers? Are you seeing any evidence of it to date?

Well, the good thing there is we do have that optionality and can take advantage of whatever direction the market may go. We have not seen or heard of any substantial substitution, to be honest, Ben. And I don't believe you're going to see it. The investments that the automotive companies have made in their production facilities is massive. And you don't change that overnight. The pricing environment that we see today will change for sure and will revert to a more normalized level at some point, albeit at a high level and a very good opportunity for us for Steel Dynamics.

I think even counter to the idea of substitution, there's just been recent announcements from a major automotive producer where they're adding additional aluminum in the auto bodies in the Midwest. And so there will be increasing demand from that perspective. So I think that further supports the idea of lack of substitution.

Your next question is coming from Tristan Gresser from BNP Paribas.

Just two quick ones. Was the I know you mentioned in December that the plant was -- the aluminum plant was EBITDA positive. I was wondering if you could share some information about March, if the plant was EBITDA positive in March already? And just regarding BlueScope, what is the situation at the moment? Or still discussion ongoing? What can you tell us? Yes, that would be it.

Thanks, Tristan. From an aluminum perspective, the plant was not on a full quarter basis, EBITDA positive, but it was basically breakeven combined February and March because we had that pause in January that made it difficult, as they're doing an incredible job now with full expectations for the remainder of the year to be very positive from an EBITDA perspective.

Mark, do you want to handle the BlueScope question?

Yes. I think obviously, we never talk with any great specificity as to what we're doing from a strategic standpoint. But suffice it to say, we have a -- an incredibly strong partnership with Ryan Stokes and the SGH organization. And as you know, we presented what we consider a best and final sort of joint offer. And it's our belief it was absolutely full and fair, and that was back in February. As you have seen, that best and final offer was summarily rejected and there has been no constructive engagement by the company...

Your next question is coming from Timna Tanners from Wells Fargo.

I was going to also ask about BlueScope and since you just addressed it, I guess I'll try another angle. But I think it'd be interesting to hear how you think about downstream versus steel growth versus maybe organic projects? And in the way past a long time ago, there was talk of a new plate mill plate is really strong. Teams, I here, are sold out. I think maybe are there other expansion opportunities there? Or are you thinking about kind of more of a downstream approach? So just any color on how you're thinking about your growth options generally would be great.

Thank you, Timna. I think, again, our strategic philosophy hasn't changed at all. We pursue and explore all opportunities. I can't remember ever saying there might be interest in plate. Barry, do you an interesting play...

Well, the Sinton does address some plate needs. It's part of the reason the technology was chosen, but, yes.

Again, with Nucor's entry there, I think that the plate market is well served. I believe our focus will be -- has been and will be sort of downstream, innovative ways to improve and bring value to the supply chain in different products that we're not in today. Again, as you know, we're not in business just to grow to get bigger. We like to continue a focus on sort of value-add differentiating products and supply chains. And the team has a myriad of opportunities that continue to get explored, took a little bit of a hiatus given our CapEx for Sinton and aluminum dynamics. Now that's behind us. We will continue to explore those opportunities. In aluminum, there is -- it's phenomenal where we could go.

That concludes our question-and-answer session. I'd like to turn the call back over to Mr. Millett for any closing remarks.

Well, thank you very much. Thank you for those still on the call. Again, those that have supported us in the past and do so today, we will endeavor to do our best to spend your money wisely and continue to have the best shareholder return in the steel business. Our team, again, phenomenal job. It's incredible what you do. You inspire me personally, and just make sure you're safe, look after each other out there. And for those that help us each and every day, both customers and service providers, we can't do it without you either. Thanks for your patience with us. I know we can be tough at times. But we're doing tough challenging things. And together, we will succeed. So thank you, everybody. Appreciate your support. See you next quarter.

Once again, ladies and gentlemen, that concludes today's call. Thank you for your participation, and have a great and safe day.

Good day, and welcome to the Steel Dynamics Fourth Quarter and Full Year 2025 Earnings Conference Call.

[Operator Instructions] Please be advised this call is being recorded today, January 26, 2026, and your participation implies consent to our recording this call. If you do not agree to these terms, please disconnect.

At this time, I would like to turn the conference over to Mr. David Lipschitz, Director, Investor Relations. Please go ahead.

Thank you, Ali. Good morning, and welcome to Steel Dynamics Fourth Quarter and Full Year 2025 Earnings Conference Call. As a reminder, today's call is being recorded and will be available on our website for replay later today.

Leading today's call are Mark Millett, Chairman and Chief Executive Officer of Steel Dynamics; Theresa Wagler, Executive Vice President and Chief Financial Officer; and Barry Schneider, President and Chief Operating Officer. The other members of our senior leadership team are joining us on the call individually.

Some of today's statements, which speak only as of this date, may be forward-looking and predictive, typically preceded by believe, expect, anticipate or words of similar meaning. They are intended to be protected by the Private Securities Litigation Reform Act of 1995 should actual results turn out differently. Such statements involve risks and uncertainties related to integrating or starting up new assets, the aluminum industry, the use of estimates and assumptions in connection with anticipated project returns and our steel, metal recycling and fabrication businesses as well as to general business and economic conditions.

Examples of these are described in the related press release as well as in our annually filed SEC Form 10-K under the headings Forward-Looking Statements and Risk Factors, found on the Internet at www.sec.gov and if applicable, in any later SEC Form 10-Q. You will also find any referenced non-GAAP financial measures reconciled to the most directly comparable GAAP measures in the press release issued this morning entitled Steel Dynamics Reports Fourth Quarter and Full Year 2025 Results.

And now I'm pleased to turn the call over to Mark.

Super. Thank you, David, and good morning, everyone. I hope you're all a little warmer than we are in the Midwest and Indiana here in Fort Wayne. But nonetheless, we appreciate you taking the time to join us for our fourth quarter and full year 2025 earnings call. As you have seen, our teams achieved a solid 2025 financial and operational performance in what was a challenging market environment through the year. This is a testament to our diversification, the scale and circular manufacturing business model that we have.

The highlights were record annual steel shipments of 13.7 million tons, cash from operations of $1.4 billion and adjusted EBITDA of $2.2 billion. And most importantly, we had another strong year in terms of safety. At Sinton, consistent operational execution has been achieved. The downstream value-add coating and prepaint product quality has matured.

At Aluminum Dynamics, we have produced and shipped finished aluminum flat-rolled products for the industrial and beverage can markets as well as hot band for the automotive sector. Although there's still work ahead, the team has strong momentum, positioning us well as commissioning continues and operations ramp.

As always, I'm extremely proud of the entire Steel Dynamics team. They are the foundation of our company, and there's no doubt their passion, innovative spirit and commitment drive our success, and they inspire me each and every day. I am very -- also very excited actually to welcome our new team members joining us through the final acquisition of New Process Steel, which occurred this past December. We are certainly excited to grow with you.

As I mentioned, the most gratifying achievement was having a strong safety performance. Our world-class safety culture continues to evolve and our team's dedication to take control of safety philosophy is extraordinary. I'm continually inspired by the commitment they have for one another. They consider themselves family and challenge the status quo each and every day. That said, we will never be satisfied, though, until we achieve a 0 incident environment.

Before I transition the call to Theresa and Barry, I'd like to provide some perspectives arising from the press release and investor presentation we posted on Monday, January 5, related to the proposed BlueScope transaction. During the past 5 years, we have focused on strategic organic investments in steel and aluminum products. The associated additional free cash flow generation is meaningful and as you know, very close at hand. We are well positioned with substantial liquidity, low leverage and significant expected free cash flow generation to support the continuation of our consistent, disciplined and balanced capital allocation strategy.

Our criteria for growth has not changed. We grow to differentiate our product offerings, supply chains and to create value for all our stakeholders. Our long-standing track record of best-in-class return on invested capital and other return metrics is testament to our disciplined approach to both greenfield and acquisitional growth. We have a well-deserved reputation for excellent execution, clear long-term strategy, a business model that enables strong cash flow generation through market cycles and a culture second to none.

Our actions are intentional and strategic, not opportunistic. We pay fair value for good businesses that enhance value for all constituents. In December 2025, we submitted an offer to purchase BlueScope together with our Australian partner, SGH. The offer proposed SGH acquire 100% of BlueScope on an all-cash basis with a subsequent on sale of the U.S. assets to Steel Dynamics, providing all BlueScope shareholders with a tax-effective cash realization opportunity. The proposal was the most recent in a series of constructive approaches to provide BlueScope shareholders the opportunity to unlock the trapped value of the North American businesses and to find the right home for their businesses in Australia, New Zealand and Asia. That home is clearly with SGH, given their track record of value creation across the industrial space, which closely mirrors the focus on delivery, capital allocation and free cash flow generation of SDI.

The offer is compelling, reflecting the value of BlueScope's business appropriately and is significantly higher than the value its shares have ever realized in over 15 years. The deal construct is simple and straightforward. We requested a customary but short 30-day due diligence period, which provides the opportunity for an effective and speedy process. However, our offer was rejected by the BlueScope Board without any engagement. And the commentary within BlueScope's subsequent public releases regarding the proposal has to be seen as very disappointing. The premise for the Board's rejection was principally based on insufficient value that they provided shareholders with no reasonable executable alternative strategy that would provide the same certainty of similar shareholder return.

Our cash offer is certain, immediate and tax effective with no financing contingency. It eliminates the significant execution risk and hopes that financial improvement might come from improved market spreads and currency exchange rates that are far from predictable. We agree that the North American assets and their operating teams are of quality as we know them well. In fact, for many years, our steel operators have frequently worked closely with the BlueScope teams, exchanging best operating practices and safety initiatives. The BlueScope North American assets, teams and senior leadership are not the problem. Rather, BlueScope's long-term financial and share price underperformance are the result of conservative incomplete growth strategies.

As a case in point, North Star BlueScope and the recently acquired coating businesses are a severe structural disadvantages. The steel mill is essentially a stranded asset and does not have the physical structural capability to provide the necessary value-add products required to supply the geographically disparate coil coating operations. They are missing essential equipment at a minimum, cold rolling and galvanizing. The required investment today could be as much as AUD 1.5 billion to AUD 2 billion, not to mention the years of waiting on equipment and the construction risks.

In February 2024, BlueScope publicly discussed an associated plan to invest at that time, USD 1.2 billion, about AUD 1.8 billion today for a greenfield project to achieve a similar outcome. Yet they officially deferred the project a year later in February 2025 due to market uncertainty and the pivot to acquisitions. Recently, BlueScope wrote down the asset value of nearly AUD 0.5 billion associated with its recent 2022 acquisition of the North American Coatings business, noting that the business was not achieving expectations. More recently, rather than investing for long-term growth, the Board announced a onetime tax ineffective nonrecurring unfranked special dividend of AUD 453 million, providing no recurring long-term benefit to shareholders. We would suggest the North American BlueScope strategy isn't working.

Steel Dynamics operational interactions with the BlueScope organization has spanned over 20 years. Discussions with senior leadership have explored various value-creating concepts along the way. We have both enjoyed considerable business interaction through the sale of scrap, coated coil, joist and construction products to the BlueScope business, and we purchased substantial steel from North Star BlueScope. Suffice it to say, we have a unique and clearly qualified perspective on BlueScope's North American strategy and business model, along with the associated earnings capability of their assets. And our respective leadership teams have long understood that industrial logic of combining our businesses.

Our proposal to purchase BlueScope along with SGH is not an opportunistic foray to acquire assets on the cheap. It represents a long-standing desire to maximize shareholder value for all stakeholders. Our investment premise is straightforward. SDI is the logical owner of the North American assets as we can unlock the latent value. Currently, North Star BlueScope is a stranded commodity-centric single-site steel mill. It will be pressured by additional hot-rolled coil production capacity coming online in the U.S. within the next 24 months. Product diversification is critical for it to sustain earnings power and an imperative for the desired value creation within their acquired coating business. These challenges are self-evident from the recent massive asset write-down that I mentioned earlier. The scale, supply chains and business model of SDI would provide immediate resolution.

Additionally, BlueScope has publicly emphasized the monetization of industrial and rural land located in remote regions of Australia and New Zealand. We believe there are likely significant zoning and environmental challenges, not to mention development timelines spanning what could be decades. BlueScope's plan for earnings uplift will take considerable time to realize with substantial execution and market risk.

So for us, Steel Dynamics, our pipeline for growth investments is robust. Our track record of delivering profitable growth is without comparison. The acquisition of BlueScope North America makes sense for Steel Dynamics strategically but we will be led by our focus on value creation and will be guided by rationale and not hope, and we will remain disciplined as always.

So with all that said, and given the public nature of how this has evolved, we won't be making any further comments or taking questions related to the BlueScope transaction after our commentary. And we thank you for appreciating and respecting that request.

So with all that said, I love to talk about the exciting things going on within Steel Dynamics. So Theresa?

Thank you, Mark. Happy New Year, everyone. Thanks for being on the call. I am going to be brief with my comments today. In 2025, we achieved operating income of $1.5 billion and net income of $1.2 billion or $7.99 per diluted share. Cash flow from operations was $1.4 billion and liquidity remained strong at over $2.2 billion as we continued strong shareholder returns and near the completion of a significant organic growth phase with the associated cash flow close at hand.

For the fourth quarter specifically, our net income was $266 million or $1.82 per diluted share. As some of you noted, our effective tax rate benefited the quarter by approximately $15 million due to state adjustments and other benefits related to certain reserve items. Fourth quarter 2025 revenue were $4.4 billion and operating income was $310 million, lower than sequential third quarter results driven by lower realized steel pricing and lower volume.

For the full year 2025, operating income from our steel operations was $1.4 billion versus prior year income of $1.6 billion. Record steel shipments, as Mark mentioned, of 13.7 million tons were more than offset by compressed flat-rolled steel metal margins. In the fourth quarter, our steel operations generated operating income of $322 million, sequentially lower driven by seasonally lower shipments combined with planned maintenance outages at our 3 flat-rolled steel mills. Barry will provide more context regarding the outages in a moment.

For those of you tracking the flat-rolled shipments for your models, fourth quarter hot-rolled shipments were 942,000 tons, cold-rolled 122,000 tons and coated products were 1,395,000 tons. For the full year 2025 operating income from our metals recycling operations, it was $97 million, almost 30% higher than 2024 results based on improved pricing and volume and gains the team continues to achieve in operating efficiencies. For the fourth quarter, operating income actually declined about $13 million from a sequential basis based on lower pricing and seasonally lower shipments.

Our metals recycling platform provides a significant competitive advantage for our steel, aluminum and copper operations using innovative new separation technologies and growing supplier relationships to support their customers and our growing internal needs.

For the full year 2025 earnings from our steel fabrication platform, they were $407 million, representing a solid year, yet lower than the prior year earnings as average realized pricing and volume declined. However, pricing and metal margins actually moderately expanded in the fourth quarter as our steel fabrication team achieved operating income of $91 million.

Our steel joist and deck demand remains solid with good order activity. December was one of the strongest activity months in 2025, setting up 2026 very well.

We're incredibly excited for our Aluminum team's operational and commercial progress. Mark will provide specifics later on, on this call. But as planned, the team was EBITDA positive in December based on 10,000 metric tons of shipments and improving cost structures, a true achievement as there is still ongoing construction and equipment commissioning in various parts of the operations.

For the full year and fourth quarter 2025, we generated cash flow from operations of $1.4 billion and $273 million, respectively. Of note, there was a structural increase in working capital related to our new aluminum investments, which reduced full year cash flow by approximately $450 million and fourth quarter cash flow by approximately $155 million. Our cash generation is consistently strong based on our differentiated circular business model and highly variable low-cost structure. At the end of the year, we had liquidity of over $2.2 billion.

On November 21, 2025, we did issue $800 million in investment-grade unsecured notes comprised of $650 million of 4% notes due 2028 and $150 million of 5.25% notes due in 2035. The net proceeds from the notes were used to redeem our $400 million notes due 2026 and for other general corporate purposes.

During 2025, we invested $948 million in capital investments. We currently believe capital investments for 2026 will be in the range of $600 million. Some of the aluminum CapEx did shift from the fourth quarter into the first quarter just from a timing perspective.

We also completed the purchase of the remaining 55% equity interest in New Process Steel effective December 1, as Mark mentioned, and I also want to welcome the teams. In 2025, we purchased $900 million of our common stock or over 4% of our outstanding shares and $240 million during the fourth quarter. At December 31, we still had $801 million remaining authorized for share repurchases. These actions reflect the strength of our capital foundation and consistently strong cash flow generation capability and the continued optimism and confidence in our future.

Our capital allocation strategy prioritizes high-return growth with shareholder distributions comprised of a base positive dividend profile that's complemented with a variable share repurchase program, while we remain dedicated to maintaining our investment-grade credit designation.

Our free cash flow profile has fundamentally changed over the last 5 years from an annual average of $540 million per year for the 5-year period 2011 to 2015 to $2.2 billion for the most recent 5-year period. And if you exclude the recent investments in Sinton and Aluminum, it actually would be $3.2 billion per year. And there's still more coming. We've invested over $5 billion in 3 primary organic growth investments. These projects have estimated through-cycle annual EBITDA capability of approximately $1.4 billion.

We have placed ourselves in a position of strength to have a sustainable capital foundation that provides the opportunity for meaningful strategic growth and strong shareholder returns while maintaining investment-grade metrics. We are squarely positioned for the continuation of sustainable optimized long-term value creation.

Thank you. Barry?

Thank you, Theresa. Our steel fabrication operations performed well throughout 2025, achieving strong earnings. At the end of the year, our steel joist and deck order backlog was solid with December being the third strongest bookings month of the year. The backlog extends through the first half of 2026. We continue to have high expectations for this business this year due to the positive customer sentiment and quoting activity, moderating interest rates, continued manufacturing onshoring and public funding for infrastructure and other fixed asset investment programs. The uplift from this macro environment could be considerable.

Our steel fabrication platform provides meaningful volume support for our steel mills, critical in softer demand environments, allowing for higher through-cycle steel mill utilization compared to our peers. It also helps mitigate the financial risk of lower steel prices. Our metals recycling operations also performed well this year, increasing operating income by almost 30%. Congratulations to the team.

The North American geographic footprint of our metals recycling platform provides a strategic competitive advantage for our steel mills and for our scrap generating customers. In particular, our Mexican locations competitively advantage our Columbus and Sinton raw material positions. They also strategically support aluminum scrap procurement for our flat-rolled aluminum investments. Our metals recycling team is also partnering even more closely with both our steel and aluminum teams to expand scrap separation capabilities through process and technology solutions. This will help mitigate potential prime ferrous scrap supply issues in the future. It will also provide us with a significant advantage to materially increase the recycled content for our aluminum flat rolled products and increase our earnings opportunities.

Steel team had another solid year with record shipments of 13.7 million tons. During 2025, the domestic steel industry operated at an estimated production utilization rate of 77%, while our steel mills operated at 86%. We consistently operate at higher utilization due to our value-added steel product diversification, our comprehensive differentiated customer supply chain solutions and the support of our internal manufacturing businesses. This higher through-cycle utilization of our steel mills is a key competitive advantage, supporting our strong and growing cash generation capability and best-in-class financial metrics.

Operationally, we did have some downtime in the fourth quarter related to planned outages at our 3 flat-rolled steel mills. There were some additional delays, which inhibited production by 140,000 to 150,000 tons. Regarding the flat-rolled steel markets, prices have recently improved, supported by stable demand and lower imports. Lead times have extended and customers remain optimistic about the outlook. Long product steel markets were a highlight throughout 2025, and we expect another solid year as demand and pricing remains strong, particularly in structural steel and railroad rail.

Regarding the steel market environment, North American automotive production estimates for 2026 are expected to be similar to 2025. Automotive dealer inventories continue to remain below historical norms and actually declined further in December. Our specific automotive customer base has not only remained stable but have provided opportunities for growth. We have become a supplier of choice for many U.S.-based European and Asian automotive producers due in part to our lower carbon content capabilities.

Nonresidential construction should benefit from ongoing onshoring activity, recently announced domestic manufacturing projects and continued infrastructure spending. In the energy sector, oil and gas remained steady with solar continuing to be very strong. Overall, we remain optimistic concerning demand for our diversified value-added steel products in the coming year.

With that, back to you, Mark.

Super. Well, thank you, Theresa. Thank you, Barry. I think everyone can appreciate sustaining such positive results don't just happen. They result from the strategies implemented and executed by the teams over time. We have invested strategically to provide scale, product and market diversification, unique customer supply chains and linked operating platforms to optimize market opportunities throughout market cycles. When combined with our performance-driven culture, we consistently achieve at the highest levels. We optimize cash generation, allowing for a consistent and balanced cash allocation strategy that has delivered strong shareholder returns. And our disciplined investment approach continues to support a strong and growing through-cycle cash generation profile while maintaining the highest return on invested capital among our industrial peers.

In aluminum, we just grew more and more excited each and every day as we watch the aluminum teams execute, moving from construction through commissioning to serving the customers with high-quality products. I believe we enjoy a unique market environment. There is a significant domestic supply deficit of over 1.4 million tons for aluminum sheet, and this deficit is forecasted to grow along with demand. In 2024, that deficit was supplied through high-cost imports, which are now even higher cost as the tariffs increased from 10% in '24 to the current 50% level.

We've seen that there's clear alignment with many of our SDI's core competencies. Our construction capabilities have once again been proven both Columbus and San Luis Potosi are state-of-the-art facilities. We are using our deep operational know-how in combination with the technical expertise of aluminum industry experts that have joined us. And our proven performance-driven culture will drive higher efficiency and low-cost operations as compared to our peers.

We believe we have an advantaged commercial position. 2/3 of our existing carbon flat-rolled steel customers also consume and process aluminum flat rolled sheet. Our growth in the automotive sector will complement our existing steel position and provide customer material optionality. The beverage can market provides countercyclical market diversification and a more stable earnings profile within the aluminum space will further enhance the consistency of our through-cycle cash generation.

Our raw material platform will facilitate higher recycled content. We're the largest North American metals recycler, which includes aluminum. And that team has done an incredible job successfully developing new separation technologies, allowing us to have both more access to usable aluminum scrap and at a lower cost. Production to date, even in its early stages, is already confirming our expected earnings differentiation. Through cycle EBITDA expectation remains clearly at $650 million to $700 million for the mill itself, plus another $40 million to $50 million for the Omni platform. As we spoke in the past, the 4 key areas of advantage being labor efficiency, the higher recycled content, the higher yield through the process and optimized logistics, all of which are driven by our low-cost culture. This strategic investment is a cost-effective and high-return growth opportunity, providing SDI with additional countercyclical diversification, further stabilizing and growing our cash generation capabilities.

As the industry already knows, the 650,000 metric ton project is no longer a vision. It's clearly here and clearly having a positive impact in the industry. The customer base is excited to have a new market entrant that is known to be innovative, customer-focused and responsive to their needs. For us, business relationships are long term, founded on trust with a continuous goal of creating mutual value. And that's not just simply financial value but new supply chain solutions, new products, better quality and better service, and we are seeing to react surprising speed.

Many customers have seen that with recent supply side challenges in the aluminum flat-rolled products market, the timing of our ramp-up has been fortuitous, allowing us to help the market while accelerating our material qualifications. Start-ups have the challenges, and I would like to thank our customers for their patience as we fine-tune our operations. To date, those customers have been very responsive, and thank you for that. We have received certification from many customers for industrial and can sheet finished products and for automotive aluminum hot band. This accelerated certification should allow us to shift our product mix to a higher-margin mix in 2026, reaching optimization sometime in 2027 as compared to our earlier expectation of 2028.

Three of the 4 melt cast houses are fully commissioned and have produced all 3,000, 5,000 and 6,000 series ingots for industrial, can sheet and automotive sectors for rolling mill commissioning, product development and commercial shipments. And the team there is doing an absolutely phenomenal job actually as they are through the whole mill, I guess. The hot mill is completely commissioning, having ran 303, 5052 industrial, 3104 can sheet, 5754 and 5182 automotive-grade material. The cold reversing mill is successfully producing 3003, 5052 and 3104. The first tandem mill is in commissioning and starting to produce. The second tandem cold mill and the first of 2 CASH lines are on schedule to be operating before the end of the first quarter '26.

The team is incredibly excited with the earlier-than-anticipated product certifications for sure. It's a testament to the phenomenal talent we have embedded in the team, and there's so much great energy and momentum throughout the mill. We're extremely excited by the physical production and quality capability of the mill this early in the start-up and are focused on achieving optimal consistency. We ended the year shipping 10,000 tons in December, which is about 20% of our capability -- eventual capability and are confident we will be exiting 2026 at a rate approaching 90% capacity.

We're impassioned by our current and future growth plans as they will continue to drive the high-return growth momentum we have consistently demonstrated over the years. The earnings growth of these new projects is compelling. The capital spending for Sinton, the 4 value-add lines and aluminum dynamics is largely spent with a projected future through-cycle EBITDA contribution of over $1.4 billion. I'm excited as investors to recognize the power and the consistency of our strong cash generation, combined with our disciplined high-return capital allocation strategy.

It is our belief that the steel industry has undergone a paradigm shift in recent years, supported by a pervasive sense of mercantilism that will provide a level playing field through continued and appropriate trade mechanism. Fixed asset investment will continue to grow, which directly correlates with increased metal products demand. Continued reshoring, AI and cloud computing will support nonresidential construction. And decarbonization will materially steepen the global cost curve, providing Steel Dynamics with a huge competitive advantage to gain market share and increase metal spreads. Our highly diversified value product capabilities provide us with a very unique advantage to leverage this evolving metals business environment and will amplify our relative earnings capability.

In closing, as I always say and always believe our people are our foundation. I thank them, some 14,000 of our teammates. And when you include the partners in life, their spouses and their children, there are 63,000 people in the SDI family. And I thank each and every one of them for their passion and their dedication. And we're committed to them. And I remind those listening today that safety for yourselves and your families and each other is the highest priority.

I'd be remiss not to thank our loyal customers, many of whom have supported us since our inception. These partnerships are based on trust on doing what we say we will do and creating new solutions to enhance the value proposition. And our new aluminum partners will experience the same. And as I said earlier, I appreciate their patience as we work together to get Columbus up and running.

And finally, to our suppliers and service providers who we value and trust, and thank you. We can't do what we do without you. We look forward to creating new opportunities for all of us today and the years ahead.

And with that, Ali, we would love to take questions.

[Operator Instructions] Our first question today is coming from Katja Jancic with BMO Capital Markets.

Maybe starting on the aluminum rolling mill. Mark, I think you said that the mill is expected to reach 90% utilization by the end of '26. Is that correct?

That's correct. And I think -- that's a little sooner than we've, I think, talked in the past. But what we're seeing from the team and from the equipment, it's given us a strong confidence that, that can be achieved.

And then given that the mill reached or was EBITDA positive in December, and when looking at the current aluminum and the Midwest premium environment, how should we think about the profitability over the next few quarters?

Well, I would -- we anticipated that, that positive EBITDA profile will continue through the year.

So Katja, we're going to be ramping up. So there's still -- as Mark mentioned on his opening remarks, we're still commissioning and constructing some of the downstream facilities, if you will. And so that will have an impact to the first half of the year. But we do expect to remain and be improving EBITDA throughout the first half of the year. And then the second half of the year really is about product mix optimization.

Our next question is coming from Lawson Winder with Bank of America Securities.

What I'd like to do is just kind of ask a question along the lines of investment and not necessarily M&A, but into growth, too. When you think about your balance sheet and the amount of debt that you could potentially take on, whether for some sort of acquisition or for a major investment into new capacity, where do you kind of see the upper limits of your comfort level?

Thanks for the question, Lawson. So we do have a balance sheet that actually has a considerable amount of capacity. When we look at where we'd like to be on a through-cycle basis, we're very direct about being less than 2x on a net realized basis, and we're well under 2x today as we said from a liquidity and debt perspective. So there is room to move. And that is also in light of the fact that our structural EBITDA is actually improving. So that $1.4 billion that we talk about associated with aluminum and sitting in the 4 value-added lines hasn't really begun to be realized in any meaningful way yet. So all of that is adding extra capacity to the balance sheet as well.

We are incredibly committed to the investment-grade markets but there's a lot of room in our ratings to be able to add that capacity. So I won't talk about necessarily a top range. I'll just say on a through-cycle basis, we definitely will remain under a 2x net levered basis.

Our next question is coming from Tristan Gresser with BNP Paribas.

Just a quick follow-up on the aluminum. If you expect to reach kind of targeted utilization rate by year-end, and I understand your product mix might not be fully optimal by then. But given the current pricing environment, is it fair that by year-end this year, you should get to your -- at least to your targeted margin profile into Q4, at least those months in Q4?

If you're referring to the through-cycle $650 million to $700 million EBITDA estimate, is that what you're trying to...

Yes.

So what we've said in the past is that actually the margins that we are achieving -- not achieving today. The margins on a market basis that are available today are actually higher than what we projected on a through-cycle basis for the investment itself, just given where the Midwest transaction price, et cetera. So there is that opportunity, I think, more quickly. Yet, we're still working through start-up. We're still working through all of those items. So we're not prepared today to talk about what profitability might look like in the fourth quarter of this coming year but all the market factors are positioned to actually give us a significant advantage over what we had modeled on a through-cycle basis.

All right. That's clear. And if you allow me a quick follow-up. Just on Sinton, if you can give us an update. I think there were a press report of some incident in January. And if you could talk a little bit about the volume outlook into Q1 for the steel business, that would be also appreciated.

Lawson, this is Barry. With regards to the incident here at the beginning of the year, we did have a transformer failure at the Sinton facility. It was one of the high-voltage transformers in the yard. This was an original transformer. And I think as we talked about publicly, we had some transformer issues at that facility we were starting up. We believe this transformer was subjected to some of that stress on the system early. So we have been monitoring it.

We took the opportunity a couple of years ago to actually go out and buy significant amounts of other transformers that we have engineered into the system. So we don't have any concerns of ongoing problems. We believe we've rectified the original engineering and locational challenges we had down there. So all in all, it was a great job by the Sinton Fire Department. It was rather demonstrative, the failure, but nobody was injured. The damage was limited to the transformer itself and operations resumed shortly after the plant was safe, which was within the 12 hours or so of the incident.

So we don't expect any ongoing concerns. And the team has done a good job of getting the backup resources. It's very difficult to get transformers in this world. So they acted quickly a couple of years ago to make sure we had the right stuff spared and installed. So we feel good about where we're going. And it was unfortunate but onward, upward with Sinton.

Our next question is coming from Tim Tanners with Wells Fargo.

Regarding the $1.4 billion structural contribution, I feel like we talked about aluminum. But just can you give us any updated thoughts on the status of the 4 value-added lines that have been ramping up? And just remind us where Sinton is. I know it's still -- the Slide 9 shows us that it's still running a little lighter than the rest of your operations. When can we expect that to maybe converge?

Yes. Thank you. It's good to talk to you again, Timna. So from the perspective of the $1.4 billion, just to outline where that is on a through-cycle basis, Sinton represents $475 million to $525 million of that. As we mentioned, aluminum is $650 million to $700 million. And then generally on the value-added lines, we think about it more like maybe $50 million per line. So that would be like around $200 million. So the value-added lines last year for the whole year, we were operating each one differently, but around 60% of their capability, the 4 lines.

And then as far as Sinton, Sinton still had a lot of the additional costs to product quality embedded in 2025 that have since been resolved kind of in that fourth quarter, first part of this year time frame. So Sinton really has the capability now like all of our other facilities to operate wherever the market will drive it.

Theresa, if I could add a little color to that. The 4 value-added lines, 2 galvanizing lines and 2 paint lines are actually operating very well. As you are aware, we had the core cases that we had filed a couple of years ago. Those core cases were against corrosion-resistant steels that were being dumped into this country, 10 different countries were at play. We won a substantial awards against those countries that will continue to limit the ability for those countries to just dump material into the United States.

And the new process lines really were pressured because of that dumped material. We had excess of 1 million tons that have already been removed from the market that have been coming from these 10 countries around the world. So as we've ramped through that, we've fine-tuned our quality, and we've made sure that the customer base is excited about the product they're receiving from those lines. They are operating full at this point in time. And because of our supply chain, being able to take bans, hot-rolled coil and convert them into galvanized and painted coils, it's really structurally helped respond quickly as markets change. Our supply chain was the innovation with painting, and it remains our strength and the quality and innovation of the product. So we're really excited about what those lines will do now for us that we aren't competing with the dumped tons from all across the world.

Our next question is coming from Bill Peterson with JPMorgan.

I guess I'd like to follow up on an earlier question on Sinton but broadened out a little bit. It sounds like the Sinton impact in the current quarter was fairly modest in terms of impact but I understand there may have been some other outages in your network in the late fourth quarter. Just trying to get a sense, is there -- can you help us quantify the impact on outages? And maybe more broadly, is there any planned maintenance in the first quarter that may impact your shipment profile?

Bill, this is Barry. Our outages, we're really good in making a priority to take care of our equipment. And as you can imagine, our major flat-rolled mills are of different ages with Butler at 30 and Columbus around 20 and Sinton brand new. There's different things we do at all these plants. It's part of our long-term strategic plans to take care of our assets. Some cases, we add capabilities. Other cases, it's just good old-fashioned maintenance. It just coincided that all 3 of these -- the 3 big flat-rolled mills had outages in the fourth quarter. We don't -- we typically do 1 or 2 outages a year depending on what our projects have.

So quarter 1, we don't have anything on the table for us. We're looking more towards the second quarter right now for our planning. So we got a lot of good work done. A lot of that is, as I said, it's making sure that we continue to make state-of-the-art products for our customers and that the machines are running as well as possible. So outside of that, nothing structurally different from what we do.

Our next question is coming from Phil Gibbs with KeyBanc Capital Markets.

Mark, I understand you don't want to talk further about the BlueScope deal. It obviously appears very compelling. But curious if you're prohibited from buying back stock for any reason given there's now a potential deal that's been publicly disclosed.

There's nothing that is regulatory or structural in place, Phil. No.

Okay. And then just a follow-up just on kind of the energy cost wildness we've seen. I know you don't use a lot of natural gas relative to electricity but perhaps there is a little bit of a knock-on effect on electricity as well. I know it's been ramping in some parts of the country, at least for consumers. So just curious in terms of how you're thinking about your energy cost basket heading into the early stages of the year here.

Phil, this is Barry. I think with energy, we have very unique contracts everywhere. Even here in Indiana, we have 3 different electrical contracts. We try to be a good response in the market. So we buy smart. We take market signals for when we buy and sometimes we do take small downtime to help the system grids. With regard to electricity, we really haven't seen anything meaningful. There are times of the day. There are times of a week that it might get expensive. Many of our operations don't see that short term. Some do, and they plan for that.

With regard to natural gas, we typically don't -- we take positions future buys, and we make sure that what we're doing is responsible. When we see cold weather coming, we make sure we buy our transportation so that we can't be interrupted. And typically, as we get into the winter, where it's prudent, we'll make sure more of that product is prepaid or prebought. So we don't see huge swings with energy. We do see local impacts. But in general, we have good relationships with our providers.

And as you -- I'm sure you know, the mini mill process, we use considerably less natural gas per ton because in the flat rolled mills when we cast, it goes directly into a rolling mill shortly after it's cast. So that's the efficiency we get, which helps us with energy quite a bit.

And Phil, just to add on there, just to sort of calibrate where our energy cost or percentage of energy cost is, it's running around about 10% of our production cost, both that's gas and electricity. So even some fluctuation isn't a material impact to us.

Our next question is coming from John Tumazos with John Tumazos Very Independent Research.

I'm unfamiliar with what are hot-rolled aluminum automotive products. I'm sort of asking an innocent question. I don't want to make it sound like I'm skeptical. I'm just unaware. What are finished applications on a car for hot-rolled aluminum? And is it possible that you're also selling hot-rolled aluminum to another aluminum roller whose cold rolling capacity is bigger than their hot-rolled capacity or for whom you have quality specs they can't make?

The -- your question, as always, is on point, John, and I wouldn't say it's naive in any way, shape or form. There's not a real market for direct hot band aluminum going into an automobile. It does get converted. That conversion is being done by others today because we don't have the full downstream capability, and we don't have the CASH line. So others in the industry are converting that. And I think it's been part of the -- just a great sort of entrance into the whole aluminum market itself. Obviously, that market has been challenged on the supply side. And we have gone out and wherever we can, we're helping the industry generally, and part of that is supplying hot band to folks.

When will you -- excuse me, Mark, when will you have all the capabilities to coat and cold rolled the automotive aluminum to sell the final product 100% on your own?

The restriction is essentially the CASH line and the first CASH line is due to be operational at the end of the first quarter.

And CASH stands for what? What is the acronym mean, excuse me?

Continuous...

Continuous anneal surface hardening. It's a final heat treatment so that it can be at the right strength when it goes to the mill.

I thought we took cash to the bank that you will.

John, in my naivety, I thought it was C-A-C-H-E for the longest time.

Congratulations.

[Operator Instructions] Our next question is coming from Lawson Winder with Bank of America Securities.

When you look at the aluminum market today and the success you've had so far with the start-up, and you look out maybe a couple of years, do you see the potential for Steel Dynamics to add additional aluminum rolling capacity?

There's absolutely no doubt that aluminum will be a growth platform for us going forward. And that's not to substitute or replace growth opportunities in steel or any of our other businesses. And just in general, we -- you got to compliment or I compliment our team. They do a phenomenal job ensuring that we've got a pipeline of really effective value-add opportunities. And so yes, we will continue to expand in steel. And obviously, aluminum is a new platform for us. And given the kind of the profile of that industry, there's a lot of -- and the supply-demand dislocation, there's certainly phenomenal opportunities there for us.

Okay. Fantastic. And if I could also just ask on your thoughts or prescriptions for the dividend this year, you would normally look to update your thinking on the dividend in March. At this point, do you see any other investment considerations that might constrain the extent to which the dividend could be increased this year, particularly when thinking about this very significant positive free cash flow inflection that's anticipated at Steel Dynamics in 2026?

So Lawson, the capital allocation strategy that we use for shareholder distributions are to keep the dividend growing as we have structural growth in cash flow. We have increased the dividend very significantly already for the advent of Sinton starting up, et cetera. So as we have further structural changes, we will increase the dividend appropriately. So aluminum could be part of that this year or maybe it's next year but we'll let you know. In the absence of that, we definitely lean in with the variable share repurchase program.

Our next question is coming from Phil Gibbs with KeyBanc Capital Markets.

You mentioned aluminum expected to be running at 90% by year-end '26. I think your previous view was 75%. What's given you the added confidence to, I guess, say that this morning and also meaning kind of what's changed?

Well, I think given our experience in Sinton, we've been sort of retaining more of a conservative position, I would say. So that on top of what I see as a phenomenal team down in Columbus doing phenomenal things with an absolutely amazing piece of kit. The -- Barry, I think, has said it in past calls but just the nature of the aluminum process and production sort of steps or units, it's a lot more forgiving from a start-up standpoint. We've explained it in the past, a thin slab or steel mill such as a Sinton or a Butler or whatever, because the whole mill, melt through refining, through casting, through rolling is just one continuous thing, one hiccup in one spot can take you down. And it sort of compounds itself through the system. Whereas in aluminum, we have -- just at Columbus, we have the 4 melt cast units, got the hot mill, you've got -- we will have 3 cold-rolling units. It's just a lot more forgiving. So given all that, we just see.

It's the redundancy in it, in the system.

Yes. That's right. And so we just have a high confidence level.

Just a follow-up to that. Can you give us an idea of where you're running at right now? I know there's a lot of trials and things going on, and you may not want to double count stuff that's not purely commercial but trying to just understand where you are from a capacity utilization standpoint.

I would prefer not to be that specific. I would say that the -- our shipping rates are not necessarily a reflection of the production rates. because of the quality, it just evolves. We're ramping up. That needs to be refined and optimized, and it's getting optimized almost on a weekly basis. But the actual physical capability of the equipment is very sound.

Our next question is coming from Carlos De Alba with Morgan Stanley.

Hopefully, you can hear me. But just maybe, Theresa, can you comment a little bit on working capital? How do you expect that to move throughout the year given that you will continue to ramp up the [ alu ] business? And then CapEx beyond 2026, any comments there?

Yes. Thanks, Carlos. I think I got both questions. From a working capital perspective, a majority of the build that was required for aluminum, given the current pricing dynamics of aluminum, just the pure metal itself. Most of that has been captured already in 2025. There'll be some slight fluctuations between now and the end of the year. Nothing that I think would be material enough to be noted. First quarter, however, just remember that we actually pay our profit sharing to all of our employees in that first quarter time frame. So generally, that has some pressure on the working capital and the cash flow. Otherwise, everything looks like it's pretty steady for the year.

As it relates to capital expenditures beyond 2026, as a reminder, our maintenance or what we refer to as our sustaining capital really is fairly low. It's generally around $250 million, maybe upwards of $300 million now. And beyond that, we haven't really named any specific material projects at this point in time.

Thank you. This concludes our question-and-answer session. I'd like to turn the call back over to Mr. Millett for any closing remarks.

Super, Ali. I appreciate that. And for those remaining on the call, again, thank you for your support and for your time today for sure. Our teams aspire to create that shareholder value creation that we seem to be able to do year in, year out and 2025 was a reflection of that. Most importantly, to our employees that might be on the line, you've all done an absolutely phenomenal job. You continue to do an absolutely phenomenal job. And what you do each and every day, that execution drives our success, and it drives that in the marketplace as well.

So thank you. And each and every one of you, be safe for yourselves, for each other and for your family. So thank you very much. Have a great day, everyone. Bye-bye.

Once again, ladies and gentlemen, that concludes today's call. We thank you for your participation, and have a great and safe day.

Good day, and welcome to the Steel Dynamics Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised this call is being recorded today, October 21, 2025, and your participants implies consent to our recording this call. If you do not agree to these terms, please disconnect.

At this time, I would like to turn the conference over to David Lipschitz, Director, Investor Relations. Sir, please go ahead.

Thank you, Elie. Good morning, and welcome to Steel Dynamics' Third Quarter 2025 Earnings Conference Call. As a reminder, today's call is being recorded and will be available on our website for replay later today. Leading today's call are Mark Millett, Chairman and Chief Executive Officer of Steel Dynamics; Theresa Wagler, Executive Vice President and Chief Financial Officer; and Barry Schneider, President and Chief Operating Officer. The other members of our senior leadership team are joining us on the call individually.

Some of today's statements, which speak only as of this date, may be forward-looking and predictive, typically preceded by believe, expect, anticipate or words of similar meaning. They are intended to be protected by the Private Securities Litigation Reform Act of 1995 should actual results turn out differently.

Such statements involve risks and uncertainties related to integrating or starting up new assets, the aluminum industry, the use of estimates and assumptions in connection with anticipated project returns and our steel, metals recycling and fabrication businesses as well as to general business and economic conditions.

Examples of these are described in the related press release as well as in our annually filed SEC Form 10-K under the headings forward-looking Statements and Risk Factors found on the Internet, at www.sec.gov and, if applicable, in any later SEC Form 10-Q. You will also find any referenced non-GAAP financial measures reconciled to the most directly compared GAAP measures in the press release issued yesterday entitled Steel Dynamics Reports Third Quarter 2025 Results.

And now I'm pleased to turn the call over to Mark.

Super. Thank you, David. Well, good morning, everybody. Thank you for being with us on our third quarter 2025 earnings call. Some may suggest hyperbole, but I often said that we have the best teams on the planet and they proved it once again in the third quarter.

Operationally, they executed incredibly well while keeping each other safe, and achieve pivotal successes in furthering our significant growth projects. Financially, even with some interim market headwinds in flat roll, we achieve a number of key operational milestones. We had a record steel shipments of 3.6 million tons. Revenues were $4.8 billion, adjusted EBITDA was $664 million, and we had a healthy cash flow from operations of $723 million. At Sinton, we believe consistent operational execution has been achieved.

It was a record quarter for shipments, downstream coating and prepaint product quality has matured, and the value-add product portfolio is expanding nicely. Industry participants are recognizing that this is the middle of the future. Our Linen team continues to make strong progress in commissioning and ramping operations, receiving a number of quality certifications in September and October.

In particular, our can sheet has been performing extremely well with equivalent results to competitive material. Much more to do, but incredibly exciting performance today. In our biocarbon team shipped their first product in September. We're extremely excited to have this new tool in our decarbonization journey that will further reduce our carbon footprint from an already industry-leading low level.

I continue to be proud of the entire Steel Dynamics team because they are just the foundation of our company, and they continue to amaze me. And so we're laser-focused on providing the very best for their health and safety. It is an everyday conversation at every level. Our world-class safety culture continues to mature and our team's dedication to our tape controller safety program is extraordinary and continues to produce strong results.

Their commitment is inspiring. They consider themselves family and challenge the status quo each day to keep you other safe. But that said, there will always be more to do as we drive toward a 0 incident environment as there is nothing more important for us.

So with that, I'll hand it to Theresa and to Barry to give some color to the quarter.

Excellent. Thank you, Mark. Good morning, everyone. Thank you for joining us, and thanks to the team for an exceptional performance. Our third quarter 2025 earnings per diluted share were $2.74 with adjusted EBITDA of $664 million. Both third quarter 2025 revenue of $4.8 billion and operating income of $508 million were higher than the second quarter results driven by record steel shipments and metal spread expansion as scrap raw material costs declined more than steel prices.

As we discuss our business this morning, we continue to focus and execute on our transformational growth initiatives. Our steel operations generated operating income of $498 million in the third quarter, 30% higher sequentially based on record shipments, supported by an almost 20% improvement in shipments from Sinton and metal spread expansion.

Average scrap costs declined $27 per ton, while average realized pricing only declined $15 per ton. For modeling purposes, this quarter's hot band shipments were 1,097 000 tons. Cold-rolled shipments were 120,000 tons; and finally, coated shipments were 1,486,000 tons. Additionally, we also highlight that our 3 flat-rolled steel production divisions have planned maintenance outages in the fourth quarter, which could reduce volume by as much as 85,000 tons.

For the third quarter, operating income from our mills recycling operations was $32 million, significantly above our sequential second quarter results driven by near-record shipments supported by domestic steel demand and study nonferrous volume coupled with metal spread expansion. We're the largest North American metals recycling processing ferrous scrap and non-ferrous aluminum, copper and other metals, and we're growing to support our increased steel capacity and aluminum flat-rolled operations through new and expanded supplier relationships and through the use of innovative separation technologies.

Our metals recycling platform is a significant competitive advantage for all of our platforms. Our steel fabrication team achieved operating income of $107 million in the third quarter, 15% higher than second quarter sequential results due to increased volume, coupled with relatively flat metal spread. Our [ joists ] and deck backlog extends through the first quarter of 2026 with solid pricing. And federal programs, manufacturing growth and onshoring are expected to support domestic fixed asset investment and therefore, related steel joist index consumption in the coming years.

Congratulations to the aluminum teams in Columbus and San Luis Potosi, hitting so many early quality milestones, the energy and momentum are contagious. Related startup operating losses of $57 million were somewhat higher in the third quarter than previously expected as the team's continued construction and commissioning of various areas while also accelerating testing for beverage can and automotive products.

We currently estimate comparative losses to be in the range of $40 million for the fourth quarter of 2025. Based on current expectations, we continue to believe our aluminum operations will achieve monthly EBITDA breakeven or better in the fourth quarter of this year. During the third quarter of 2025, as Mark mentioned, we generated strong cash flow from operations of $723 million, of that, operational working capital was a funding source of $126 million.

We ended September with liquidity of over $2.2 billion. For the fourth quarter of 2025, we believe capital investments will be in the range of $200 million and early estimates for capital expenditures for the full year 2026 are in the range of $500 million to $600 million.

During 2025, we've repurchased $661 million of our common stock or 3.4% of our outstanding shares. At September 30, $1 billion remained available for share repurchases. Since 2017, we've increased our cash dividend per share by 223% and we've repurchased $7.4 billion of our common stock. That's over 40% of our outstanding shares, all while maintaining investment-grade ratings and growing.

These actions reflect the strength of our capital foundation and consistently strong cash flow generation capability. Our capital allocation strategy prioritizes high-return strategic growth with shareholder distributions comprised of a base positive dividend profile that's complemented with a variable share repurchase program while we remain dedicated to preserving our investment-grade credit designation.

Our free cash flow profile has fundamentally increased over the last 5 years to $3 billion, excluding our large strategic Sinton and aluminum investments. We've truly placed ourselves in a position of strength. To have a sustainable capital foundation that provides the opportunity for meaningful strategic growth and strong shareholder returns.

We recently announced that each of our company's steel mills achieved global steel Climate Council product certifications. For our customers, this means greater transparency and confidence when sourcing lower and body carbon steel products from us.

And I'm incredibly proud and excited to announce that our biocarbon solution team safely produced and shipped their first biocarbon material in September and it was successfully used as a carbon replacement at our Columbus Flat Rolled Steel division, providing an even lower carbon supply chain for our steel customers in the future.

The team plans to continue to refine operations and increase production into the first quarter of next year. This achievement marks a pivotal SEP in our decarbonization journey and verse demonstrates our ability to translate innovative concepts into tangible results, a personal thank you to all 73 biocarbon team members. Decarbonization is a meaningful part of our long-term value creation strategy, and we're dedicated to our people, our communities and our environment.

We are committed to operating our business with the highest integrity. We uniquely have an actual path forward that's intentional and manageable, and we believe considerably less expensive than may lay ahead for many of our peers. We're squarely positioned for the continuation of sustainable, optimized long-term value creation. Thank you. Barry?

Thank you, Theresa. Our steel fabrication operations improved their sequential results as volumes increased 12% sequentially, more than offsetting slight metal spread compression. Order activity remained steady in the quarter, and our backlog now extends through the first quarter of 2026.

Pricing for steel joist and deck bookings remained relatively stable throughout the quarter. We continue to be optimistic for our Steel [indiscernible] platform based on the continued onshoring of manufacturing, continued announcements of significant privately funded manufacturing projects and public funding for infrastructure and other fixed asset investment programs.

The long-term uplift of this backdrop could be considerable for all of our platforms. Our steel fabrication platform provides meaningful volume support for our steel operations, critical and softer demand environments allowing for higher through-cycle steel utilization compared to our peers. It also helps mitigate the impact of lower steel prices.

Earnings for our metals recycling operations were much higher in the third quarter as metal spreads improved and shipments were at near record levels. We believe [ fares ] scrap prices have stabilized and are likely to remain relatively steady throughout the rest of the year, aside from typical seasonal fluctuations. Additionally, the team continues to expand its access to recycled aluminum for our aluminum flat-rolled operations.

North American geographic footprint of our metals recycling platform provides a strategic competitive advantage for our steel, aluminum and copper operations and for our scrap generating customers. Our metals recycling team partners closely with our metals production and manufacturing teams to expand scrap separation capabilities through advanced process and technology solutions.

This collaboration helps mitigate supply risk by making more grades of ferrous and nonferrous scrap usable for operating platforms and generally at a lower cost. Additionally, it positions us to significantly increase the recycled content in our products, unlocking enhanced earnings capabilities.

The steel team delivered a solid quarter with record shipments of 3.6 million tons. In the third quarter of 2025, the domestic steel industry operated at an estimated production utilization rate of 78%, while our steel mills operated at a notably higher rate of 88%. This consistently higher utilization reflects our value-added steel product diversification, differentiated customer supply chain solutions and strong support from our internal manufacturing businesses.

Our elevated through-cycle utilization rate is a key competitive advantage, underpinning our growing cash generation capability. Overall realized steel pricing slightly declined in the quarter due to lower flat-rolled steel pricing tied to lagging contracts, which more than offset increasing structural and railroad rail pricing.

Overall, domestic steel inventories remain lean from a historical basis. However, coated flat-rolled steel volume and pricing compressed during the quarter due to an inventory overhang related to imports received earlier in the year prior to the positive related trade rolling. We do believe that prices have bottomed out and will improve as we head into 2026.

Last month, the ITC unanimously voted affirmatively on the final determination that imports of corrosion-resistant steel from 10 countries injured the U.S. steel industry. This uniquely positions us as we are the largest producer of nonautomotive coated flat-rolled steel products in North America.

Together with the announced Section 232 steel tariffs, these developments are expected to positively impact demand for lower carbon emission U.S.-produced steel products. The underlying steel demand remains steady, However, customers continue to exercise caution in placing orders to ongoing changes in trade policies.

That said, we believe steel prices have stabilized in the near term with potential for upward movement in 2026. Our Sinton, Texas flat-rolled steel mill achieved higher earnings in the third quarter, driven by record shipments and the continued efficiency and quality gains. Congratulations to the team.

The team continues to make improvements in yield cost reduction and quality. They are also continuing towards additional product development to expand our current flat-rolled steel capabilities. Meaningful progress has been made on unique high-quality API pipe grades, high-strength grade 10 110, pressure vessel quality and OEM qualification packages for our automotive customers.

We are seeing increased shipments from SIM's value-added coating lines which are strengthening the facilities product mix and boosting its through-cycle earnings capabilities. Regarding the steel market environment, North American automotive production estimates for 2026 were recently revised modestly upward yet currently remain modestly below 2025 forecast.

Fortunately, our specific automotive customer base has not only remained stable but have provided opportunities for growth. We have become a supplier of choice for many U.S.-based European and Asian automotive producers due to our superior carbon content capabilities. Additionally, numerous announcements have been made concerning a considerable volume of automotive production moving to the U.S. from foreign locations in the coming years.

We continue to grow market share in both flat-rolled and SBQ steels within the automotive sector. Nonresidential construction should benefit from ongoing onshoring activity, recently announced domestic manufacturing projects and continued infrastructure spending that are expected to further support fixed asset investment construction-related demand.

In the energy sector, oil and gas activity remains steady, with solar continuing to be very strong as producers adapt to benefit from expiring incentives. Overall, we remain extremely optimistic concerning steel demand and pricing dynamics for the domestic producers in the coming years based on the expected demand from new manufacturing and U.S.-produced steel content requirements.

With that, I'll return it to Mark Millet.

Super. [indiscernible] I appreciate that. Thank you, Theresa. So after many years, I think it's clearly evident that our performance-driven team-based culture in combination with a proven, diversified and value-added business model drive superior financial metrics.

This consistently strong operating and financial performance continues to support our cash generation and growth investment strategies, allowing a very balanced cash allocation strategy that has delivered the highest shareholder returns, not only among our metals peers for the best of domestic manufacturers.

Our disciplined investment approach continues to support a strong and growing cash generation profile while maintaining a best-in-class return on invested capital. Our aluminum investments are now a reality and are extremely compelling. Initial operations and commercial activity are confirming our initial investment premise.

We believe we will enjoy a unique commercial position. Unlike our entry into the oversupplied steel market some years ago, there's a significant domestic supply deficit of over 1.4 million tons for aluminum sheet. And this deficit is forecasted to grow even before tariffs. In 2024, that deficit was supplied through high-cost imports, which are now at an even higher cost as the tariffs increased from 10% from 24% to the current 50% level.

There's a clear alignment with many of SDI's core competencies. Our construction capabilities have been once again proven. Both Columbus and SLP are state-of-the-art assets. And if you just think about it for a second, we shipped our first coil within 24 months of groundbreaking.

And here we stand today, 27 months from groundbreaking and we're shipping a prime product to the can sheet in automotive markets. That's an absolutely incredible, incredible performance. My hats off to the team down there to Glen pushes into Greg Wigan everyone for making that happen. It's an absolutely beautiful, beautiful facility, work of art.

We also lever our deep operational know-how, have an extensive and successful experience operating melting, casting rolling type assets. And our performance-driven culture will drive higher efficiency and lower cost operations, just as we did when we entered the steel industry some 30-plus years ago. It's demonstrated and the teams will achieve.

We have an advantaged commercial position. 2/3 of our carbon flat rolled steel customers also consume and process aluminum flat rolled sheet. Our growth and penetration into the automotive sector will complement our existing steel position and give customers product optionality. The countercyclical beverage can market which, in conjunction with the more stable earnings profile experienced through the use within the aluminum space will further enhance the consistency of our through-cycle cash generation.

Our own material platform will facilitate higher recycled content. We are the largest North American metal recycle, including aluminum, we recycle already around about GBP 0.5 billion of [ linen ] per year. And we've successfully developed new separation technologies, allowing us to have both more access to usable aluminum scrap at a lower cost.

Operational experience thus far is confirming our earnings differentiation. We've advertised and do believe that through-cycle EBITDA of $650 million to $700 million is absolutely achievable, plus an additional $40 million to $50 million for our omni operations.

The key areas of advantage remain labor efficiency, higher recycled content, higher yield and optimize logistics along with our low-cost culture. There is no doubt the strategic investment is a cost-effective and high return growth opportunity, providing SDI with additional [indiscernible] diversification further stabilizing and growing our cash generation capabilities.

And for those that have been there, you understand it. The 650,000 metric ton [indiscernible] is no longer a vision. It's clearly here. As our aluminum growth has become a reality and our reputation permeates the industry, aluminum professionals with vast experience have joined us in this excelling project. They see the vision and are energized by our culture where they realize that they will be heard and can have a real impact.

They have helped us build a phenomenal team that combines in-depth knowledge of aluminum flat-roll operations, commercial markets, process technology and custom service complementing our SDI professionals that bring our performance-driven entrepreneurial culture. We're finding the customer base is excited to have a new market entrant that is known to be innovative, customer-focused and responsive to their needs.

For us, as in with steel, business relationships are long term founded on trust and the continuous goal of creating mutual value, not simply financial value, for new supply chain solutions, new products, better quality and better service. We are seen to react with surprising speed. Many customers have just seen that with the recent supply side challenges in the market.

The timing of our ramp-up has been fortuitous, allowing us to help the market while accelerating our material qualification. We received approvals for industrial and can sheet finished products and for automotive aluminum hot band earlier this month. This accelerated certification should allow us to shift our product mix to a higher-margin mix in 2026, reaching optimization sometime in 2017.

Three of the 4 melt [ casthouses ] are fully commissioned at Columbus and have produced 3,000 5,000 6,000 series ingots for the industrial, can sheet and automotive sectors for rolling mill commissioning product development and commercial shipment. The hot mill is completing its commissioning, having run 3003 and 5052 industrial, 3104 can [indiscernible] and 754 auto grade material.

The code reversing mill is in startup and is successfully producing 3003, 5052 and 3104 alloys. Tandem mill #1 will be starting up in November and then Tandem mill #2 and the cash line are on schedule to be available in the first quarter of 2026 and it's absolutely incredible if you walk through the plan because the team is incredibly excited with the earlier-than-anticipated product certification.

It is a testament to the phenomenal talent that we have on the team and is great energy, great momentum. We anticipate exiting 2026 at a rate of 75% capability, and we expect to achieve monthly EBITDA breakeven sometime in the fourth quarter and increasing thereafter as we continue to ramp and optimize our product mix.

Across our business, evolving market dynamics provide an opportunity for us to further enhance our earnings potential. The renewed focus on strategic mercantilist policies to ensure fair and sustainable competition will further improve market strength. The recent coated flat-rolled steel positive trade determination will further curb core and prepaying imports. We're seeing that already. The administration will continue to hold a firm position on tariffs on steel and aluminum imports.

And the inclusion of tariffs on steel content or derivative products, including fabricated structural steel, which has played the domestic industry for years will be substantial benefit. One has to consider that in '24 some 30 million to 35 million ton of steel came in through actual products. And then last year, obviously, the successful sunset reviews of Section 201 and 301 trade cases will remain in place for some years, stopping dumped Chinese steel for accessing our markets.

We will benefit from growing fixed asset investment, which correlates directly with increased steel demand. Risk mitigation to address numerous supply chain dislocations as accelerated reshoring of manufacturing by many OEMs. I AI and cloud computing will support the need for more nonresidential construction, along with data centers, chip factories and battery plants.

We believe that obviously will be associated positive stimulus through the inevitable interest rate reductions that should happen this year and the next. And finally, decarbonization. We're materially steepen the global cost curve providing steel dynamics with a meaningful competitive advantage to gain market share and increase margins. More importantly, we continue to be in passion by our current and future growth plans.

As they will continue to drive the high return growth momentum we have consistently demonstrated over the years. The earnings growth of these new projects is compelling. Capital spending for symptom, the 4 value add lines and alum Dynamics is largely spent for the projected future through-cycle EBITDA contribution of over $1.4 billion.

Steel Dynamics has grown to an incredibly resilient cash-generating business of scale and diversification, driven by the best teams, as I already said, in the world. The model has now demonstrated itself year after year. delivering financial metrics equivalent to best-in-class manufacturing companies. We are fortunate and at the heart of that good fortune are our people.

They are the foundation of everything we do, and I want to personally thank each of them for their passion, their commitment and unwavering dedication. And we are committed to them. And I remind those listening today that safety for yourselves, your families and each other is our highest priority, always. And I would also be remiss not to express my gratitude to our loyal customers, many of whom have been with us since the beginning.

These partnerships are built on mutual trust keeping our word and delivering innovative solutions that enhance your value. Our new aluminum partners can expect the same level of commitment and collaboration and to our suppliers and service providers thank you. We value your continued support and the strong relationships we've built together.

Our culture and business model continue to differentiate our performance, leading best-in-class financial performance. and as a circular metals business, we are uniquely positioned to offer lower carbon supply chain solutions, enhancing sustainability while helping to mitigate cash flow volatility through all market cycles.

This positions us to deliver superior shareholder returns and create lasting value for all stakeholders. So we look forward to creating new opportunities for all of us and today and in the years ahead. And with that said, Elie, we would love to open the line for questions.

[Operator Instructions] Our first question is coming from Katja Jancic with BMO.

Maybe starting on the aluminum rolling mill and the quality qualifications for the products you received so far. Can you talk a bit more what that means for your commercial activity, specifically does that open the door for you to start negotiating more longer-term contracts?

Well, I guess, firstly, the accelerated qualifications that we've been receiving is absolutely incredible, given where we are on our learning curve as you might recognize. Can sheet has been supplied to most of the principal carmakers today for qualification.

Early performance is, again, it's just incredible. And when the team sent me a video of the very first coil going through a can line flawlessly, it was a some to be home. And obviously, we are also having some good progress within automotive. I think what it does it accelerates the value or the product portfolio mix into next year.

And we've always said that we hit our target mix in 2027. I think we'll see that earlier in 2017 than we were expecting.

But to answer your other question, Katja, we are negotiating longer-term contracts, both in the sheet, the can sheet as well as the automotive -- so yes, that has helped, but we had considerable traction, I think, throughout the third quarter as we were starting up. So more to follow on that.

Maybe if I just can quickly squeeze one more. On the 26, how should we think about the mix between industrial, can and auto.

The most significant difference, Katja, is that earlier on, we wouldn't have expected to have very much volume in automotive specifically. And we have full confidence and we were getting to, I think, appropriate amount of mix as it relates to can sheet in 2026.

As you'll remember, the optimized mix for us is it's automotive, I think, is it 40% [indiscernible] sorry. 45% in sheet in the remainder industrial. So we feel pretty confident in that can sheet mix for 2026. But what's changed is we would expect to not reach full optimization in automotive in 2026, but we'll provide more feedback as we get further certified.

Because as Mark pointed out, for automotive right now, we're just certified on the hot band side.

Our next question is coming from Tristan Gresser with BNP Paribas.

Just following up on aluminum, if you could provide maybe an update on the target exit run rate for this year or maybe what you expect in Q1 so we can get a better sense on what to expect in terms of volumes. And I think you were initially expecting positive EBITDA in Q4. So what drove the lower number? Any sort of delay or anything you can share there, that would be great.

So Tristan, I just want to clarify. So we are still expecting to be a positive breakeven to -- sorry, EBITDA breakeven to positive in the fourth quarter. So that hasn't changed. What has changed is this the certification of the more complicated products is taking place more quickly than we expected.

So there are some higher costs associated with that. So that was 1 of the things that I talked about in my opening comments as it relates to the third quarter impact. That said, we haven't been specific about how we're going to ramp in 2026. But what we have done is provided substantiation that we still are very confident in exiting the year at least at a 75% utilization rate.

And as it relates to 2025, there's just a lot of moving pieces right now. So we don't want to get into utilization because it depends on the product mix to a large extent.

Okay. All right. That's fair. And maybe just a quick one on the free cash flow. I mean, you have a very strong free cash flow look -- if you can talk a little bit about your priority in terms of capital allocation into next year, you mentioned CapEx will be between $500 million, $600 million. is growth on the agenda for next year?

And if so, what are the options you may consider upstream steel, aluminum, are you considering maybe different types of metallics asset that could be on play in the region? So any color there would be great.

Mark can speak to what things might look like, but just to give you some specificity around the $500 million to $600 million, Justin. As a reminder, our sustaining capital is generally around $200 million to $250 million. And then we still will have a tail associated with the aluminum project and a little bit on the biocarbon project as well.

It just depends on the timing as we proceed through the end of this year. So that is a preliminary number. But Mark, I don't know if you want to give any context to what other growth opportunities we might be looking towards.

Well, just generally, on the cash allocation broadly. I think with our strong liquidity position and the through-cycle cash generation that will come through next year and the years after. We can retain our balanced cash allocation profile. So one can expect an increase in the dividend, I would think our positive profile will continue into next year.

We feel that the company is selling at an accruable discount today relative to other potential investments one might make -- so we'll continue to buy our shares back. And again, we're doing that not because necessary, our shareholders just want us to or we think it's a flavor of the month. It really is buying a company that is discounted, a quality company that we know with a phenomenal team, phenomenal assets.

Extending from that -- we still have a team that is innovative and creative. They've got a pipeline of organic possibilities, both in steel and aluminum and that will access new products, new product lines for us. Now those aren't massive $3 billion greenfield steel mills, but smaller projects but very, very high return, high reward.

And then obviously, there's the possibility of M&A activity out there. you, but just one highlight, I guess. But you will continue to see us adhere to our disciplined investment approach. I think we have the highest return on invested capital in our space for a reason.

We're disciplined, and we bought good assets with real return, real future return. And you'll see that going forward.

Our next question is coming from Timna Tanners with Wells Fargo.

I wanted to follow up, if I could, on the aluminum questions. So you're starting up and getting qualified on hot band just when there's a player in the market that needs hot band. So could you address that ability to supply Novelis, if possible. And then if you could just comment on the additional CapEx, I believe comparing the presentation that there's another $200 million that was attributed to the aluminum start-up, if you could elaborate on that?

Well, Timna, again, thanks for your questions. We will not comment on where our material is going. I think the aluminum space is a lot more shielded from a confidentiality standpoint relative to steel. And so most of our relationships are under CA or NDAs.

So I can't really speak to that other than it's absolutely phenomenal that the team in such a short period of time is accessing those sorts of markets. Relative to the CapEx, yes, it did expand. Again, in all honestly, it's kind of the wind down of the project and just clearing up all the construction contracts.

But I think more importantly, the last 3 months -- it has been -- in particular, it's been incredibly difficult to get electrical talent with all the data centers, et cetera, being built. We found our contractors sort of drifting away from us and there was a substantial increase in the cost to cover that and maintain our schedule.

Got it. If I could squeeze one more in. There was a comment yesterday that there is a view that customers would be switching away from aluminum back to steel because of the availability, not something we'd heard before? And just would be interested to get your thoughts on that as you're now in both markets.

Well, I think, obviously, if you're a lion consumer and you've seen the sort of supply chain risk that they've just gone through, you've got to ask that question. I think and you've heard us say this before, as we got into the aluminum space and looking for -- just looking -- doing our due diligence for the ADI project.

Automotive makers would have actually consumed more aluminum over recent years if there was more supply. So it's -- are they questioning Alum? I don't think so. Aluminum is an incredibly important material for the future plans. We coming on to -- coming into the marketplace will allow them optionality and create redundancies through the supply chain.

So I think that issue or that question will sort of be mitigated going forward.

Our next question is coming from Lawson Winder with Bank of America.

Great. And good morning, Mark, Theresa and Barry. It's nice to hear from you. And a sincere congratulations on the success of aluminum dynamics. What I wanted to do is just a follow-up, Mark, on your comments on capital allocation and that you noted that M&A might be a possibility. Can you give us a flavor of where there might be opportunities to improve the business through M&A, whether that be in downstream or upstream or raw materials or otherwise?

It -- we would steer away from raw materials I do believe. I think it's it would be aligned or parallel our previous commentary in downstream strategic sort of pull-through volume type opportunities where we can either lever or exploit our core strengths. So downstream in coating, the painting, those value-add opportunities, for sure in value-add sort of manufacturing to some degree, as long as the volumes are there, and it makes sense.

But no, not upstream. Our raw materials space with OmniSource, we're the largest North American recycler of Ferris [indiscernible] today. that's in great shape. You might see a little -- from a regional standpoint, a yard here or there, but no major thing.

Yes, downstream value-add as we've pursued in the past.

Thank you. Our next question is coming from Phil Gibbs with KeyBanc Capital Markets.

It sounds like based on your comments that rail is pretty strong. any context just broadly you can give on that market? And then maybe give us a feel for how much of the rail mix is a part of your structural shipments right now?.

Phil, this is Barry. We committed many years ago to be in the rail market because it's essential that they have a reliable. So when wide plant is strong, you might see a smaller ratio. But in general, we try to say exactly where the customers need us to be. It remains within percentage points of where it always is coming out of Columbia City. And we're resolving our contract relationships for next year right now, but we anticipate growth in that segment, and the team is doing an excellent job with availability of trains to get the product distributed easier, quicker.

And quality-wise, we're working on even better products coming in the next year or so based on some trials they've been doing. So it remains a good part of our business. But in the window that we always keep it. So we try to not to surge it too much 1 way or the other.

And I just have a follow-up on the flat rolled side of the business. And specifically at Sinton and just an update maybe on how the downstream lines are running and how much yield improvement you have left there?

And then Theresa, I also missed the comments you made on the flat rolled mix.

Sure. No problem. I'll grab that, and then Barry can comment.

I'll comment on the downstream units. We're very excited about the quality that the team is getting out of the new lines are added as well as the existing paint and galvanizing line. [ Galbaloom ] is a very difficult product to make. The team has really risen to the occasion. There is a learning curve. And we went through that earlier this year to the point where we are seeing excellent yields, excellent produced prime products.

And our distribution system and our customer base is going through approvals. A lot of the product there goes into contract-type business with OEMs. And those trials are ongoing and very good. So we believe Synta will have the full breadth of product mix to offer as the markets return. As I mentioned, there's a little overhang in the Galvanize still out there.

We think that's diminished. We think it's going to be behind us here in months. The imports coming in the country have substantially tapered off. So we believe the playing field is going to be level. And based on good feelings. We think next year is going to be outstanding for sending to really realize all the hard work they've been putting in.

So Phil, for the shipment, the hot band was 1,097,000 cold-rolled 120,000 and coated 1,486,000.

Phil, if I could just add because the question rent structural tended to be rail-centric. Just looking at the long products market in general, we're finding that to be incredibly strong and robust and believe that we'll certainly continue nonresidential is in good great shape.

And we see on the fabrication side, there's a lot of engineering sort of permitting detailing work going on -- and it would be our view that come the first quarter in 2016, we're going to see a nice return of that volume as well.

Our next question is coming from Carlos De Alba with Morgan Stanley.

So I wanted to check, Mark, you mentioned that you saw some headwinds in the flow roll business. Has the situation improved as we get into the fourth quarter, if you can give us a little bit more color as to how that part of your steel business is shaping out.

Yes. I think the headwind obviously was principally the inventory overhang, which, as Barry just suggested is it's eroding and should be depleted by the end of this fourth quarter. And with the almost nonexistent import profile, first quarter should be in good shape.

I think you started to see that hot band pricing softened through the quarter yet in mid-September, it kind of turned up. And I think we will see sort of slow but positive move through the end of this year. And as Barry said, we are quite, quite optimistic or robust for Q1 and Q2 through the rest of.

Fair enough. And then just maybe complementing on the growth ahead. Given the early success that you have had on the aluminum business, and your comments on demand being limited perhaps by supply. Would you -- I know that you didn't talk about potentially getting more into the aluminum business. Is this something that you might consider? Is it too early? Any color there?

Well, we want to make sure we walk before we run. I got to say here, the team down there is starting to Sprint because they're incredibly excited. And I'm on to see incredibly excited by what those folks are doing is an incredible mill. There's absolute opportunity, call us in alumina.

There's no doubt about it. We will see how things go over the next a month or so, but there is definitely growth opportunity there, both in downstream we could envision sort of exploiting or leveraging our pre-paint capabilities. It's one of our highest margin product lines today, and the team would be incredibly effective to coat the thousands or millions of pounds of alum that gets painted every year.

And then we do believe there's still clear room for a larger asset, the mill asset.

Yes. Just as a reminder, Carlos, and I know some of you would have this top of mind, but for those that may not even prior to 50% tariffs, the deficit of flat-rolled sheet in the U.S. was over 1.5 million metric tons. We're only adding $650,000. And I think there's another project that may add another incremental amount, but that deficits growing, and that's without tariffs.

So then when you place that 50% tariff into the equation, it just really does we would never invest based on that. But the point is that there's a real need structurally independent of trade action.

Our next question is coming from Andrew Jones with UBS.

A couple of questions. Just firstly, on [indiscernible] idea as to how much that's adding to the EBITDA. Can you give us any sort of breakout for the profitability of that? And I've got a second question on tax, if you want that first.

Sure, Andrew. And as soon as you said, taxes, both Barry and Mark looked away No, I think I want to -- so symptoms specifically, Andrew, as a reminder, we've said that they're through-cycle EBITDA capability on an annual basis but it's through cycle. So we're not making a determination where the market is at this point in time is between $475 million and $525 million.

And what I want to do is take a step back because I think there's a bigger picture item that we -- it would be helpful to discuss a little bit. And that's -- Mark mentioned and we've talked about in the past that in the last 5 years, the fixed asset investments in aluminum, in Sinton and in the floor flat-rolled coating lines has been over $5 billion, just about $5 billion. Associated with those 3 projects is about $1.4 billion of through-cycle EBITDA capability.

And we really haven't been able to utilize that up until this point. And so as we think about 2026, and we think about where the facilities will be from a maturity standpoint, including the ramping of aluminum. Of that incremental additional earnings power we think that we should have the ability to access on a through-cycle basis.

So again, we're not making a determination of what that market will be like. But if it were through cycle, we really think we would have the ability to access it somewhere at least no less than 60% to 65% of that number. So there's a lot of earnings potential that people may not understand is incremental structurally to Steel Dynamics because of the investments we've made over the last 5 years.

Yes. No, that's why I ask [indiscernible] I guess, I'm just wondering what the annualized contribution was in the third quarter, and therefore, what's the delta of Sinton specifically going forward?

So we won't give that specific information. Suffice to say, Sinton was EBITDA positive, but not to the magnitude of that through cycle number. And then you said you had a tax question?

Yes. No, it's about the deferred tax movement on the cash flow, which boost to free cash this quarter. Just wondering if you could explain the origin about and how you're -- what the moving parts are in the coming quarters with regard to tax? Because I guess you've got a few things, obviously, you flagged this $250 million impact the Vale project and you've also -- I mean, there's obviously this big beautiful bill, accelerate depreciation stuff going on.

I mean can you just give us an idea of how we should think about like effective tax rates and the actual equivalent of the actual cash tax profile in the coming quarters?

Yes, certainly. So it was a big boost to the third quarter because that's when we were able to adjust for the tax bill changes. Which included additional research and development benefits as well as most importantly, the acceleration and depreciation as our aluminum assets are getting placed into operations, so that benefit of $147 million you're referring to.

Most of that was in the third quarter. You won't see that magnitude of increase in the fourth quarter. the way you should model cash taxes for 2025 is probably at a rate of about 8% to 9%. And then for 2026, I would model cash taxes closer to 15% to 16%. And the effective rate, probably closer to 23%.

Our next question is coming from Mike Harris with Goldman Sachs.

Yes. As we look at you consuming more biocarbon material to lower your carbon footprint. How should we think about what that could potentially do to your cost structure?

It's a good question, Mike. So from a cost structure perspective, it really probably won't have a material impact for you to be able to observe from the outside in. It is a joint venture, so we are transacting as we would at a market price to our steel mills. The joint ventures with [indiscernible] who has the IP associated with it. But what it does offer is an opportunity for us to offer an even lower carbon product.

And we do believe we're already seeing some customers that are providing premiums, not something that we're talking about at this point more broadly in specifics, but we think it will open the door for even more opportunity on market share, specifically in OEMs, specifically more in the flat rolled side of the business. So there's a lot more we'll talk about as it relates to biocarbon in the future.

They should be operating continuously here starting in November. So it will take a minute before we're supplying as much into the steel mills as we'd like. But you shouldn't see a dramatic impact on the cost side at this point.

Okay. That's very helpful. And then just one last one, if I could. Of the record shipments you saw in the third quarter, were there any material onetime sales included in that?

No. So it was just ramping up of Sinton and then we had some record shipments at a couple of them under of our flat-rolled facilities as well as really a lot of strength in demand, as Mark pointed out, in the structural arena.

Our next question is coming from Bill Peterson with JPMorgan.

I wanted to talk about the steel mill shipments in the fourth quarter. You called out the 85,000 planned maintenance. But I guess is there anything else that we should be taking under consideration for example, other things seasonal trends or also take into account imports, which seem to be at a very low level or maybe potentially abate in further trying to get a sense of how to think about shipments relative to maybe the last 5 years of flat to down 5%.

You guys are so crafty. You always try to come at it from a different angle. And that's a complement, Bill. For the fourth quarter, we just wanted to call out the maintenance because generally, we don't have all the maintenance same quarter as we are this time. So we felt like it was impactful enough to call out.

But we do still believe there's going to be seasonality, whether it's the same as it's been in the last 5 years. I can't really comment to that. But you will see seasonality in the volumes in addition to what you're seeing from a maintenance perspective. Barry, Mark, do you have anything to add?

The outages are just our regular attempt to keep our assets performing at the absolute tiptop condition. We play out long in advance. And this is strange that we have all the mills taking some time in the fourth quarter but all are great projects that continue to make our shops, the safest in the industry and the most efficient possible.

Okay. And I'm not sure if this is crafty or not, but I think about your overall strategy in auto. I know you're an emerging player in aluminum, but thinking about your steel, is this -- is this a market where you're looking to gain share?

And if so, how should we think of that unfolding in the coming years? Or is really this business going to kind of grow with your existing partners, assuming they grow their U.S. footprint in order to avoid tariffs.

We are really excited about the automotive business that we're doing. I think the opportunity for our customers to purchase a low carbon content product, really enhance our relationship early. And since starting to do business with us, our teams operate very efficiently, very smoothly and without much bureaucracy.

So I believe our teams have a great position relationship -- they've been working really hard this past year with all the tariff changes to allow us to continue to do what we do best for the automotive industry. We do see it growing when we built in.

That was part of the design to be close to the Mexican automotive base with some high-value steel products. The facility was designed with that in mind. So as that ramps up and we have OEM packages into all of our customers from that facility. We anticipate the growth organically happening.

We see it as good products. And we're appreciative that the customer base recognizes that. We received an outstanding award from Volkswagen in the second quarter, which was really surprised and we were absolutely thankful to receive that, but it really highlights our position. We have a very low carbon footprint. We

have a very engaging position going forward that doesn't change our cost structure. We've engaged on renewable energy and nuclear energy across our flat-rolled platforms. So we are ideally situated to grow our business there. And we're going to grow it where it makes sense and listen to our customers and have great discussions with them.

Our final question today will be coming from John Tumazos with Independent Research.

Could you explain the $27 drop in scrap costs given that the steel business is strong, Calvert, Alabama, starts up a new melt shop right now, et cetera. Is it from lower iron ore and coal prices and China selling lots of swabs and other steel, et cetera?

And then second, would a reasonable guess for aluminum be $2.40 to $2.50 a pound sales realization with the big Midwest premium and maybe $40 a production cost with 93 sets UBCs?

Well, taking number one, the scrap dropping off $27. It -- obviously, John, as you know, scrap is the -- in my mind, the most transparent fluid commodity out there, and it's just supply and demand. And honestly, in '20, whether it's the $27 in the broad scheme of things is not it's more noise than anything else.

Directionally, I think it's important, but it's more noise. In the old days, $10, $15, $20 move would be monumental today, it's not too much. But again, in the dynamics of scrapped with the segregation technologies out there today, the Shred 1 and all these things, there's greater optionality of flow. And I think that's just bearing fruit. And we've always said, I always suggested that we don't have a major concern that others have had over the years that, oh, my goodness, flat roll is going to continue to grow and scrap is going to be a problem.

In fact, if you look at a lot of the new projects coming online, most of them anyway are having some CRI type virgin iron associated with them. So even though the the production capability of the domestic industry is increasing. It's not a -- the scrap consumption is not at that same rate.

So we still remain confident that scrap will remain in reasonable -- at a reasonable level and that going forward, spreads will remain very high, if not increase, to be honest, going forward. Relative to your question on aluminum, I will refrain. To be honest, it's a little bit more complicated as you can appreciate also.

It depends on which grade -- is it automotive? Is it can sheet? Is it industrial? It is all over the map. Suffice it to say, we do believe that our returns that we've advertised are more than achievable.

I'm glad to be a shareholder.

John, we appreciate you being a shareholder all those years and challenging us for sure. And just to finish up, I would like to thank all shareholders that support us that are on the call. As I asked to joke to them, if you're not a shareholder, you should be because we will endeavor to perform and use your dollars just as though they were our dollars.

A couple of just point. I've had customers that are on the line, thank you. Thank you for your support. Particularly, I would like to welcome any ally customers that are on the line. It's been a pleasure to engage with you and just in the last 3, 4, 5 weeks of market chaos, in the space. It really has been refreshing for us and hopefully refreshing to you because we do bring a different approach from a sort of customer relationship standpoint.

We truly will partner with you going forward. And lastly, any SDI folks on the call, absolutely hats off to you. You do a phenomenal job each and every day, you do make a difference. You are the best deal metals team in -- on the planet. Just make sure you keep safe and keep each other safe. Thank you all.

Thank you. Once again, ladies and gentlemen, this does conclude today's call. We thank you for your participation, and have a great and safe day.