The paragraph is an introduction to the Steel Dynamics First Quarter 2025 Earnings Conference Call, which is being recorded and held on April 23, 2025. The call is led by Mark Millett, Theresa Wagler, and Barry Schneider, with other senior leaders also participating. The call includes forward-looking statements, which may involve risks and uncertainties related to new assets, the aluminum industry, estimates of project returns, and general business and economic conditions. These statements are protected under the Private Securities Litigation Reform Act of 1995.

In the paragraph, Mark Millett begins the first quarter 2025 earnings call by acknowledging the company's strong financial and operational outcomes, despite having a head cold. Key achievements include record steel shipments of 3.5 million tons and an adjusted EBITDA of $448 million. The company successfully ramped up its new flat-rolled steel coating lines, which are expected to contribute fully to earnings later in the year. These additions reinforce the company's position as the largest non-automotive coater in North America. The Sinton team also performed well, operating at approximately 86% capacity and achieving positive EBITDA, with anticipated profitability growth. Millett expresses excitement about these accomplishments, calling it the "mill of the future," and notes that Barry will provide further details.

Aluminum Dynamics successfully produced its first aluminum ingots at facilities in the U.S. and Mexico, with plans to deliver commercial-quality coils by June. The company is committed to creating a safety-oriented culture, aiming for a zero-incident environment. Theresa Wagler reports first quarter 2025 financial results, highlighting a net income of $217 million and revenue of $4.4 billion, reflecting a 13% increase from the previous quarter. The growth is attributed to record steel shipments, with steel operations generating $230 million in operating income, despite some metal spread contraction.

The paragraph discusses the steel and metals operations of a company, highlighting a decline in external steel prices and an increase in scrap prices. Despite these price fluctuations, the Sinton team is praised for their progress. The business's flat-rolled steel segment, largely tied to contracts two months in arrears, is expected to see positive impacts from recent price increases in the second quarter. First quarter 2025 shipments include 1,093,000 tons of hot band, 116,000 tons of cold rolled, and 1,403,000 tons of coated steel, with the new coating lines expected to increase output as utilization improves from 50% to 55%. Operating income from metals recycling was $26 million, boosted by increased volumes and ferrous metal spreads. The company is the largest non-ferrous metals recycler, enhancing capabilities and supplier relationships to support steel and upcoming aluminum operations. The Omnisource and NanoWell teams are recognized for advancing separation technologies, with capacity expansion planned. Steel fabrication's operating income was $117 million, slightly lower due to a 4% price decline and seasonal shipment decreases, but steel joist and deck demand remained robust, with March seeing the highest order entry in two years.

The company expects strong future demand for steel and aluminum due to federal programs and manufacturing growth. They anticipate positive EBITDA for their aluminum operations by late 2025, with increased production levels through 2026. Construction of aluminum facilities is nearing completion, with $2.4 billion already invested and $300 million pending. In Q1 2025, cash flow from operations was impacted by a profit-sharing payment, leading to an adjusted cash flow of $318 million. The company maintains strong liquidity at $2.6 billion and invested $306 million in capital expenditures during the quarter. They project $800 million to $1 billion in capital investments for full-year 2025, primarily for aluminum and biocarbon projects, with maintenance capital needs at $200 to $250 million annually.

The paragraph discusses the company's strong cash generation and sound capital allocation strategy, emphasizing a focus on high-return growth and shareholder distributions through dividends and a share repurchase program. The company maintains an investment-grade credit rating and has achieved a 23% average after-tax return on invested capital over the past five years. Recently, they issued $1 billion in unsecured notes to pre-fund upcoming debt and support corporate purposes, expressing gratitude for investor support. As a forecasting note, they mention increased net interest expenses in upcoming quarters. Their free cash flow has significantly increased, positioning them for sustainable growth and robust shareholder returns while maintaining strong financial metrics.

The article highlights strong performance and optimistic outlooks for steel fabrication and metal recycling operations. Barry Schneider notes a significant increase in order volumes and a robust backlog extending into the fourth quarter. The business benefits from onshoring trends, new manufacturing projects, and public infrastructure funding, potentially boosting all platforms. Steel fabrication supports steel mills in weak demand periods and mitigates lower steel prices' impact. Metal recycling saw improved earnings with increased ferrous scrap demand and pricing. The operations are strategically positioned geographically, offering advantages to both steel mills and scrap customers. Furthermore, the recycling team is enhancing scrap separation capabilities collaboratively with steel and aluminum teams.

The paragraph discusses the company's strategic advantages in the steel and aluminum markets, highlighting their ability to use various scrap grades to boost recycled content and earnings. Their steel mills, operating at higher utilization rates than the industry average due to product diversification and internal support, contribute to strong cash generation. In the flat-rolled steel market, prices have stabilized, but some market hesitancy persists. Inventory levels are low, though imports have limited buying. A recent favorable trade ruling and upcoming tariffs are expected to benefit demand for US-produced steel products. The company is well-positioned as a leading non-automotive coated flat roll steel producer in North America, and the long product steel market shows stable or improving demand.

The paragraph discusses recent developments and future expectations for a Texas flat roll mill. Prices have risen recently due to strong order entries and improving backlogs. The mill is operating at high utilization rates, achieving positive EBITDA. Sinton's earnings are expected to grow as they improve yield, reduce costs, and develop new products like API pipe grades and high-strength steels. New coating lines at Sinton are enhancing their product mix and earnings potential. The North American automotive market faces uncertainties due to revised production estimates and potential tariffs, but the company's automotive market share is growing. Nonresidential construction is stable, with price increases in structural beams and bars. Onshoring domestic projects and infrastructure spending may boost construction. The energy sector shows steady oil and gas activity, with signs of increased demand for flat roll and SBQ steel.

The paragraph discusses the company's optimism for steel demand and pricing in 2025, highlighting a resilient business model characterized by a performance-driven, team-based culture, and a diversified strategy that has yielded high shareholder returns and cash generation. Their disciplined investment approach ensures strong returns on capital and supports their value-added product and supply chain strategies. The company is seeing positive developments in its steel operations and anticipates a significant contribution from its aluminum growth strategy, viewing it as a promising parallel to its past entry into the steel market, given current market inefficiencies and lack of investment in aluminum facilities and technologies.

The paragraph highlights a significant expansion and investment by SDI into the North American aluminum market, leveraging their steel and recycling expertise. The construction of a new aluminum mill in Columbus, Mississippi, is nearly complete, marking SDI's transition from vision to reality. This move addresses a growing aluminum supply deficit and offers a high-return diversification opportunity. The company is gaining recognition for its innovative, customer-focused approach, attracting experienced aluminum industry professionals to join their team. They aim to build strong, long-term business relationships based on trust and mutual value, with a focus on efficiency and differentiation in the market.

The paragraph discusses a new state-of-the-art aluminum flat rolled facility in Columbus, Mississippi, with a significant production capacity for can sheets, foil, and industrial products. The facility also includes advanced recycling and segregation technologies to maximize recycled aluminum content, supported by two satellite recycling centers. The team has already started casting alloys and aims for commercial production by June 2025, with expected production growth to full capacity by 2026. The anticipated annual EBITDA is between $650 and $700 million, plus additional earnings from metals recycling. The facility aims to achieve cost advantages through labor savings, increased recycled content, improved process yields, and efficient logistics. The paragraph highlights the team's passion and commitment to revolutionizing the North American aluminum industry, building on past successes in the steel sector.

The paragraph highlights Steel Dynamics' impressive growth and financial performance, driven by strategic investments and a high-return capital allocation strategy. The company has surpassed the S&P 500 and its industrial peers in return on invested capital and has significantly increased dividends and share repurchases while maintaining strong credit metrics. Steel Dynamics is positioned to benefit from recent shifts in the steel industry, supported by trade policies, reshoring, and investments in technology and infrastructure. The company also sees opportunities in decarbonization, which will enhance its competitive edge and ability to gain market share.

The paragraph discusses the company's commitment to safety, its appreciation for employees, customers, suppliers, and partners, and its dedication to providing innovative and sustainable solutions in the metals industry. The business model promotes stability and enhanced shareholder returns through a circular and lower carbon supply chain. The speaker expresses gratitude towards loyal customers and partners and shows enthusiasm for future opportunities. The paragraph concludes with an invitation for questions from conference call participants.

Mark Millett discusses the impact of tariffs and trade actions on steel and aluminum imports, noting that these measures are beneficial for their company. Past cases, such as section 201 and 301 and anti-circumvention, protect against Chinese imports. A recent court case targeting dumped coated steel from ten Asian countries will significantly benefit them, as will actions on derivative products like fabricated structural steel. Millett highlights that tariffs on supply chains support reshoring efforts positively. Concerning raw materials, scrap imports from Canada and Mexico, totaling 800,000 tons, remain unaffected by current trade policies.

The paragraph discusses the impact of tariffs on various materials used in aluminum facilities, particularly P1020, pig iron, and aluminum slabs from Mexico. The tariffs are mostly absorbed and passed on to customers, with minimal impact on overall operations. The company has adapted to changes in pig iron availability and pricing by altering their scrap usage. Additionally, there's mention of future USMCA renegotiations, which are expected to be favorable. The conversation then shifts to a Q&A where Timna Tanners from Wolfe Research inquires about the changes in profitability at the Sinton facility, which was reported to be profitable contrary to previous guidance. Theresa Wagler asks for clarification on the question before addressing it.

The paragraph features a discussion between Theresa Wagler and Barry Schneider about recent developments at Sinton. Theresa highlights that Sinton was able to capitalize on spot pricing better than other locations like Columbus and Butler, leading to an EBITDA positive quarter. Barry adds that the team at Sinton is improving line utilization rates and is excited about their automotive-exposed product offerings. He mentions that while they are developing good practices, it’s too early to heavily advertise these new products. The paragraph closes with Carlos de Alba from Morgan Stanley asking about the fabrication business, noting that March had the strongest order entry in two years.

The paragraph discusses the potential for increased volume in the fabrication industry following a low point in Q1. Theresa Wagler attributes the Q1 dip to customer hesitancy due to factors such as administrative changes, steel costs, and interest rates, resulting in smaller projects with lower pricing. However, both Wagler and Barry Schneider express optimism for stronger activity in the second half of the year, with projects previously on hold beginning to move forward. Carlos de Alba and Tristan Gresser inquire about future growth, to which Wagler confirms an expectation of improved year-on-year volumes starting in Q2 or the second half of the year.

The paragraph discusses the company's optimistic outlook on volume growth despite current uncertainties and recent tariff announcements. Tristan Gresser inquires about the impact on demand across various end markets. Barry Schneider responds by highlighting strong demand and growth in long-term contracts, particularly in construction goods, HVAC, appliances, and automotive industries. He notes resilience and opportunities in these markets, with HVAC rebounding post-tariff announcement and strong performance in appliances and automotive sectors during Q1, especially among North American partners.

The paragraph discusses the positive momentum in the pipe, tube, and rail sectors, with growing demand in the oil, gas, and infrastructure projects, as well as a recovery in the rail business. Despite a slow previous year with class one railroads, there is an optimistic outlook for 2025. Relationships are credited as a key factor in navigating tight market conditions and supporting growth opportunities. Tristan Gresser asks about the normal seasonality of steel shipments in Q2, and Theresa Wagler confirms that, due to market share growth and their position as the largest coater of non-automotive flat-rolled steel in North America, they do not expect shipments to decline. The operator then transitions to a question from Christ LaFemina of Jefferies.

The paragraph discusses Steel Dynamics' strategic growth and financial plans, highlighting the anticipated increase in cash flow due to their recent projects in aluminum and value-added lines nearing completion. The company, known for its organic growth and shareholder value strategies, is contemplating its next steps, which might involve expanding into non-steel recycling areas like copper and aluminum. The CEO, Mark Millett, emphasizes their strong cash position and balanced cash allocation strategy, hinting at potential growth in the aluminum sector, mirroring their past success in steel. There is also consideration of domestic steel industry challenges, such as new capacity investments by competitors.

The paragraph discusses the ongoing opportunities for growth in the steel industry, highlighting the company's focus on innovation and market expansion. Theresa Wagler notes that while they don't foresee large capital expenditures soon, they expect substantial cash flow, enabling strong shareholder returns and potential acquisitions. Chris LaFemina inquires about the company's approach to capital returns, suggesting the possibility of adjusting the dividend payout model to align with increased cash flows. Wagler responds by emphasizing the company's disciplined strategy, noting a significant dividend increase over the past five years and its commitment to growing dividends only when cash flow consistently supports it.

The paragraph discusses expectations for dividend growth due to increased cash flow opportunities from organic and transactional growth, such as aluminum operations and the Sinton facility. The company plans to maintain meaningful yet conservative dividends while complementing them with share buybacks to ensure financial responsibility. Bill Peterson from JPMorgan asks about downstream margins, focusing on the impact of lagging input costs and higher steel prices on pricing stabilization and improvements. Theresa Wagler responds, noting that while the company does not provide specific guidance, escalating flat-rolled steel prices could justify higher input costs and potentially increase profitability or pricing stability. She emphasizes that substantial growth opportunities may arise later in the year, although the exact timing is uncertain.

In this paragraph, the discussion centers around the impact of volume on fabrication operations, with Bill Peterson asking about specific guidance, which remains general but positive for the year. Mike Harris from Goldman Sachs inquires about the $19 million in unrealized gains/losses under non-cash adjustments related to adjusted EBITDA. Theresa Wagler explains that this figure is due to unrealized losses from risk management activities regarding non-ferrous materials like scrap copper and aluminum, primarily stemming from sharp pricing changes. She notes that these losses are typically balanced out in subsequent quarters, suggesting it's a timing issue that levels out over a year or more.

In a discussion led by Andrew Jones from UBS, Barry Schneider addresses a question about the company's strategy regarding metallic exposure and the use of pig iron. Schneider explains that the company continually evaluates its raw material charges and employs advanced sorting techniques to optimize the use of scrap materials. The use of pig iron varies between 8% to 25%, depending on market prices and operational needs. He highlights the Iron Dynamics facility in Butler, Indiana, which enhances independence by producing iron from waste materials. This flexibility extends to other facilities, such as Sinton and Columbus, which adjust their product mix and cost strategies accordingly.

The paragraph discusses the company's supply and pricing strategies for pig iron and other metallics sourced from offshore suppliers. The speaker expresses confidence in maintaining competitive pricing and effective usage of materials in the face of changing market conditions. It is noted that flatbed mills import pig iron, while long product mills rely entirely on scrap. In response to a question about working capital increases, Theresa Wagler clarifies that most of the increase is tied to pricing movements, particularly in steel, and the company feels well-positioned with its current raw material and product-selling strategies despite existing tariffs.

In the paragraph, a discussion is taking place during an investor call about the current economics of an aluminum mill in relation to tariffs and input-output analysis. John Tumazos, a private investor, inquires if the current economics are better, the same, or worse than the original business plan due to changes in tariffs and premium prices. Mark Millett responds that, apart from the potential impact of tariffs on slabs coming from Mexico, the economics remain consistent with the original plan. He mentions that the current tariff situation is temporary. Tumazos then asks about newer competitors in the aluminum rolling mill industry in North America. Theresa Wagler seeks clarification on whether he refers to mills younger than thirty years, and Tumazos confirms, mentioning Alaris as an example.

In the paragraph, Mark Millett expresses confidence in their company's technological advancements, scale, efficiency, and culture, stating there are no close competitors. He highlights the company's commitment to maximizing efficiency and metal spread, comparing it to historical industry expansions. He thanks employees, customers, service providers, and shareholders for their support, emphasizing their shared interests as large shareholders themselves. The call ends with well-wishes for safety to all participants.

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