The paragraph outlines the introduction of the Steel Dynamics Fourth Quarter and Full Year 2024 Earnings Conference Call held on January 23, 2025. It is managed by David Lipschitz, Director of Investor Relations, and features remarks from Mark Millett, Chairman and CEO, Theresa Wagler, Executive Vice President and CFO, and Barry Schneider, President and COO. The call, which is being recorded for later availability, will include a question-and-answer session. It also contains forward-looking statements protected by the Private Securities Litigation Reform Act of 1995, and mentions risks and uncertainties related to new projects and general business conditions.

The paragraph is from Steel Dynamics' fourth quarter and full year 2024 earnings call, where Mark Millett highlights the company's strong financial and operational performance despite challenging market conditions. Key achievements include the second-highest annual steel shipments (12.7 million tons), cash from operations ($1.8 billion), adjusted EBITDA ($2.5 billion), and the safest year on record. The company is ramping up four new flat rolled steel coating lines to enhance product diversification, with full earnings expected in 2025. The Sinton team is increasing capacity and approaching profitability. Aluminum Dynamics recently cast its first aluminum ingot at the Columbus facility, with plans for commercial shipments by June.

The Steel Dynamics team is praised for their role in the company's success, particularly in achieving a record year for safety with the lowest recordable injury and lost time rates in their history. Their dedication to the Take Control of Safety program is highlighted, with efforts such as core safety teams visiting 85% of locations and significant percentages of locations reporting zero injuries and incidents. Despite these achievements, the company aims for a zero-incident goal. Theresa Wagler adds financial highlights for 2024, reporting operating and net incomes of $1.9 billion and $1.5 billion, respectively, and strong liquidity at $2.2 billion. The fourth quarter shows a net income of $207 million and an adjusted EBITDA of $372 million.

In the fourth quarter of 2024, the company's effective tax rate received a $13 million benefit from state adjustments and reserve items. Revenues were $3.9 billion, with operating income $238 million lower than the third quarter due to decreased steel pricing and seasonal volume reductions. Steel operations generated $165 million in operating income amid lower pricing and a 5% decline in shipments, including a 50,000-ton outage in the Butler division. For the year, steel operations achieved $1.6 billion in operating income. The company reclassified some financial impacts, moving $15 million of income from Metals Recycling to a new Aluminum segment. Metals Recycling's operating income was $23 million in the fourth quarter, with an annual total of $77 million, boosted by improved nonferrous metal spreads and overall volume.

The paragraph discusses the achievements and future expectations of a major North American metals recycler and fabricator. The company processes and consumes various metals and is expanding its operations, focusing on innovative technologies and supplier relationships. Despite a slight decline in steel fabrication income in the fourth quarter of 2024 due to pricing and shipment decreases, the platform reported strong annual earnings of $667 million. Solid demand for steel joists and decks is expected to increase with the support of legislative and manufacturing trends. In aluminum operations, construction is progressing, with non-capital expenses affecting SG&A in 2024. The company plans to be EBITDA positive by late 2025, with the rolling mill operating at partial capacity. Investments in facilities have reached $2.2 billion, with further funding planned. The company generated substantial cash flow from operations in 2024.

In the fourth quarter, the company's working capital increased by approximately $100 million due to improved performance and startup preparations at certain facilities. The company maintained strong cash generation, ending the year with $2.2 billion in liquidity. In 2024, it invested $1.9 billion in capital investments, primarily in aluminum flat rolled projects, with some funding shifted to 2025, raising annual capital investment estimates to nearly $1 billion. The company repurchased $295 million in common stock during the fourth quarter and $1.2 billion for the year, representing 6% of shares, with $194 million remaining authorized for repurchase. This reflects a strong capital foundation and confidence in future growth, with a strategy focused on high-return growth, shareholder distributions, and maintaining investment-grade credit ratings.

The paragraph highlights the company's strong financial performance, including a significant increase in free cash flow and a solid return on invested capital over three years. It emphasizes the company's strategic focus on sustainable growth and shareholder value while maintaining investment-grade metrics. The company has set science-based greenhouse gas emissions targets aligned with the Paris Agreement, with interim goals for 2030 and aims for 2050, as part of its long-term decarbonization strategy. The company recently received recognition from Corporate Knights as one of the world's most sustainable companies, ranking 29th and being the only steel company on the list, an achievement credited to the efforts of its teams.

In 2024, Barry Schneider reports strong performance in steel fabrication, with a solid order backlog extending into 2025 and contributing to robust steel mill utilization despite softer demand and lower steel prices. A positive macro environment, including moderating interest rates and public infrastructure funding, boosts expectations. The company's metals recycling, despite facing declining scrap prices, offers strategic advantages with facilities in key locations such as Mexico. Their collaborative approach enhances scrap separation capabilities and positions them well for future increases in recycled content and earnings, with ferrous scrap prices showing stability and an increase in January.

The paragraph discusses the steel industry's performance and outlook, highlighting that prices are expected to remain high due to cold weather and reduced scrap flows. The domestic steel industry operated at a 77% utilization rate in 2024, with one company achieving 86%, excluding one of its mills. This company attributes its higher utilization to product diversification, supply chain solutions, and internal business support, leading to strong cash generation and financial metrics. Flat rolled steel market prices stabilized late in the year, with strong customer orders entering 2025, despite lean inventories and increased imports impacting certain areas. A trade case was launched to address unfair imports, with favorable rulings anticipated. Long product steel markets faced seasonal challenges, but improvements in order activity are expected as 2025 progresses.

The paragraph discusses the anticipated demand for rail products in 2025 and improvements in production reliability at the Sinton, Texas steel mills. Sinton's utilization rate has increased, nearing 90%, despite ongoing quality and yield issues that are expected to reduce costs in the coming months. Product development is underway, supported by two new coating lines enhancing operational efficiency and product offerings. Though North American automotive production estimates for 2025 have been slightly revised down, dealer inventories remain low and the aging US auto fleet suggests continued demand. Nonresidential construction is stable, with expectations that moderating interest rates and infrastructure spending will unlock new projects and investment opportunities by 2025.

The paragraph discusses the positive outlook for the energy market, highlighting growth in the solar industry and steady activity in the oil and gas sectors. The company remains optimistic about steel demand and pricing dynamics moving into 2025 and emphasizes its strong performance driven by a team-based culture and a diversified, value-added business model. This approach has resulted in superior financial metrics, strong cash generation, and high shareholder returns. Investments in flat rolled steel coating lines and improvements at the Sinton facility are enhancing production quality and reliability. Additionally, the company's aluminum growth strategy is promising, drawing parallels to its successful disruption in the steel industry three decades ago, addressing similar market conditions of outdated assets and high operational costs.

The company is strategically investing in developing facilities and technology to address the North American aluminum sheet supply deficit, leveraging its competencies and recycling capabilities. The construction of their mill in Columbus, Mississippi, is progressing rapidly, with operational capabilities expected by March or April. The company's focus is on innovation, efficiency, and responding to customer needs, positioning itself as a strong market entrant. They highlight the synergies with SDI and OmniSource, and the project's high potential for growth and return.

The paragraph outlines the company's commitment to providing exceptional service and becoming a leading supplier in the aluminum industry. It highlights strategic developments, such as the establishment of an onsite industrial park in Sinton for aluminum processing, including a partnership with Klockner and negotiations for additional capacity. The company is actively hiring experienced aluminum professionals to join its team and combine their expertise with the existing culture. The state-of-the-art aluminum plant in Columbus, Mississippi is described, with a focus on its production capabilities, including a mix of canned stock, automotive material, and industrial products. The project also emphasizes the importance of recycling and processing aluminum scrap efficiently.

The company has successfully started casting industrial and beverage can ingots and plans to continue commissioning the facility to produce commercially viable products by mid-2025, aiming for significant production growth and profitability by the end of 2025 and into 2026. They anticipate annual EBITDA between $650 million to $750 million and highlight key savings areas such as labor, recycled content, yield improvements, and logistics. The excitement is high, particularly at the Mississippi and San Luis Potosi sites, as they aim to revolutionize the North American aluminum industry, similar to their impact on the steel industry. The company has demonstrated high return growth, with substantial capital investments yielding significant future EBITDA contributions and earning a 24% return on invested capital, significantly outperforming the S&P 500 and their steel peers. They've also increased their cash dividend by over 90% in the past five years.

The company has repurchased a significant portion of its shares while maintaining strong financial metrics and delivering value to stakeholders. The steel industry is experiencing a paradigm shift, with factors like trade mechanisms, re-shoring, AI, cloud computing, and decarbonization shaping the market. These changes position the company to enhance its earnings and market share, particularly due to its low-carbon footprint metals. The company values its employees and emphasizes safety, while also expressing gratitude to loyal customers for their long-standing partnerships based on trust and innovation.

The paragraph discusses the company's operational resilience in the face of weather challenges and outlines their commitment to maintaining steady operations. Barry Schneider acknowledges that weather conditions can affect scrap movement but mentions minimal impact on their energy operations due to strong relationships with utilities and communities. He notes that their teams adapt to working in cold weather. Tristan Gresser from BNP Paribas asks about volume expectations for the company's steel and fabrication businesses in Q1, but Schneider asks for a repetition of the question, indicating a need for further clarification.

The paragraph is a discussion among Theresa Wagler, Tristan Gresser, and Mark Millett about their expectations for future market performance and the status of a trade case regarding hot dip galvanized imports. Wagler mentions that despite recent disruptions, they anticipate higher volumes in the first quarter and are focused on long-term growth through 2025, supported by increased consumption, reduced imports, and a robust construction environment. Gresser inquires about the delay in the trade case investigation, which Millett explains is a routine procedural matter due to the complexity and volume of data involved. He also notes a recent increase in imports ahead of potential tariffs, despite storage limitations.

The paragraph discusses the progress at Sinton and the associated finishing lines, focusing on their utilization and profitability. Despite Sinton operating at 80% in the last quarter, profitability hasn't increased as expected. Barry Schneider highlights the excellent progress on the hot side and attributes this to effective teamwork and mentoring from experienced professionals at other steel plants. The improvements in throughput are seen as key to reducing costs and enhancing operations, with the organization's culture and collaboration being significant factors in their achievements.

The paragraph discusses the impact of decision-making on improving machine reliability and productivity within a facility. It highlights the significant costs associated with enhancing maintenance and system redundancies to boost machine reliability, which, in turn, affects product quality and financial outcomes. The focus is on increasing throughput and prime rates, particularly in downstream units, to drive up the mixed average selling price. The plant has outperformed other locations, such as Butler and Columbus, in producing high-value, prime shipments. Additionally, there is an emphasis on product development to expand and enhance the product offerings, ensuring they meet customer needs without compromise.

The paragraph discusses the progress and challenges in commissioning two new production lines at the Sinton mill, which have made the mill more efficient. It highlights the costs involved in the commissioning and approval processes, but notes a significant improvement in performance, with the mill recently operating at over 90% capacity and achieving high production rates. Although the mill did not make money in the fourth quarter, profitability is expected by the second quarter. Theresa Wagler emphasizes that despite being in startup mode, the facility is on track to become fully mature and profitable, drawing parallels with past performance in challenging economic conditions.

The paragraph features a question and answer session between Lawson Winder from Bank of America and executives from Steel Dynamics, including Mark Millett and Theresa Wagler. Winder inquires about the company's capital allocation priorities as they anticipate significant free cash flow by 2025. He asks if there are new projects or acquisitions planned. Mark Millett responds, highlighting that their current focus is on executing existing projects, like their Sinton facility and Aluminum Dynamics, rather than pursuing large-scale organic growth or acquisitions. He assures that while they keep an eye out for M&A opportunities, there's nothing imminent. Theresa Wagler adds that the company's consistent cash flow allows them to maintain investment-grade metrics and provide substantial shareholder returns, despite a lack of immediate new growth projects or acquisitions.

The paragraph discusses a company's strategy and financial performance in recent years and expectations for the future. The company plans to focus on execution, share buybacks, and maintaining a positive dividend profile. Alexander Hacking from Citi inquires about the production expectations for an aluminum mill, with clarifications provided that 50% utilization is expected by the end of 2025 and 75% by 2026. He also asks about the stability of margins in the fab segment, noting that EBITDA margins have stabilized between 37% to 40%, which is higher than pre-COVID levels but lower than peak COVID years. Theresa Wagler responds that the industry has undergone a commercial change in pricing, reflecting a newfound recognition of the value and engineering involved in the products and services, resulting in low volumes in 2024, even compared to pre-COVID levels.

The paragraph discusses the current state and future expectations for scrap markets, particularly in the context of increased demand due to new rolling mills and China's recent policy changes on scrap imports. Mark Millett does not anticipate the current tightness in UBC scrap spreads to become a permanent trend, as both aluminum and steel scrap markets are generally efficient. He notes that there might be some temporary market disruptions but expects normalization over time. The paragraph also outlines expected scrap utilization rates for different product groups, with can stock at about 95% recycled content and automotive grades around 60-65%. OmniSource, a leading aluminum recycler in North America, is highlighted for its advanced sorting and segregation capabilities, indicating a commitment to maintaining a leading position in scrap recycling.

In the paragraph, an unidentified analyst asks about future loss projections, noting past guidance of around $25 million per quarter, and questioning whether this will increase. Theresa Wagler responds that losses are expected to rise to $30 million to $35 million in the first quarter due to initial operational expenses, with sales expected to offset these costs around June. John Tumazos then inquires about the contrasting startup processes between an aluminum project and another project in Sinton, questioning the differences in equipment suppliers, product mix, and operational challenges. Mark Millett explains that the two projects are quite different, emphasizing that Sinton involves new technologies on the caster.

The paragraph discusses advancements in steel mill technology, focusing on a cutting-edge facility that leads globally in innovation, attracting interest from Europe and Asia. This continuous process, from metal refining to hot strip milling, poses risks, as any issues can halt production. Unlike this, aluminum mills, while advanced, follow established technology, particularly widespread in Asia, with the SMS equipment being commonly used. The aluminum plants operate more efficiently and are adaptable, minimizing disruption if individual units fail. The speaker anticipates a rapid startup due to their distributed setup. Barry Schneider adds that the Sinton plant's high-strength steel production is meeting demand in the U.S., highlighting successful product development that contributes to lighter materials.

The paragraph discusses positive developments in a steelmaking plant, highlighting improvements in melting processes and overall steelmaking quality. The team has become better at decision-making, leading to significant gains, and there's optimism about product development, especially if there's increased demand for pipes and tubes. Despite challenges, continuous improvements in technology and mill capabilities are enabling the sales team to expand into new markets. In a follow-up question, Timna Tanners inquires about the company's financial position, noting low cash and short-term investment levels compared to a decade ago and questioning the continuity of stock buybacks. Theresa Wagler responds by expressing confidence in the company's capital structure, mentioning plans to refinance maturing notes in the second quarter.

The paragraph discusses the company's strategy of maintaining an active share repurchase program and increasing dividends as they anticipate seeing benefits from their investments in organic growth by 2025. The speaker, Mark Millett, emphasizes the company's long-term value creation strategy and notes their impressive total shareholder return over various periods, significantly outperforming industry peers and the S&P 500 index. Millett concludes by thanking shareholders and analysts who recognize and support the company's long-term business model and success.

The speaker expresses gratitude to all employees for their hard work and emphasizes safety, followed by the operator concluding the call and thanking participants.

This summary was generated with AI and may contain some inaccuracies.