Q4 2021 Steel Dynamics Inc Earnings Call

Okay.

Good day and welcome to the steel dynamics fourth quarter and full year 2021 earnings conference call at.

Speaker 1: Good day and welcome to the Steel Dynamics fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode. After management's remarks, we will conduct a question and answer session and instructions to follow at that time. Please be advised, this call is being recorded today, January 25.

At this time all participants are in a listen only mode. After management's remarks, we will conduct a question and answer session and instructions will follow at that time.

Please be advised this call is being recorded.

January 25th.

Speaker 1: 2022 and your participation implies consent to our recording this call. If you do not agree to these terms, please disconnect.

V 22, and your participation implies consent to our recording this call. If you do not agree to these terms. Please disconnect.

Speaker 1: At this time, I would like to turn the conference over to David Lipschitz, Director and investor relations. Please go ahead.

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

Thank you Kate good morning, and welcome to steel dynamics fourth quarter and full year 2021 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 Miller, Chairman and Chief Executive Officer of steel dynamics, and Theresa Wagler Executive Vice President and Chief.

Speaker 2: Thank you, Kate. Good morning, and welcome to Steel Dynamics fourth quarter and full year 2021 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 Millet, Chairman and Chief Executive Officer of Steel Dynamics, and Theresa Waggler, Executive Vice President and Chief Financial Officer. The other members of our senior leadership team are joining us on the call individually.

Financial Officer other members of our senior leadership team are joining us on the call individually.

Speaker 2: 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 if actual results turn out differently. Such statements involve risks and uncertainties related to our steel, metal, recycling, and fabrication businesses, as well as the general business and economic development.

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 tended to be protected by the private Securities Litigation Reform Act of 1995 should actual results turned out differently such statements involve risks and uncertainties related to our steel metals recycling.

And with 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 Tom on the Internet at Www Dot SEC Dot Gov, and if applicable in any later SEC Form 10-Q .

Speaker 2: Examples of these are described in the related PRUS release, as well as in our annually filed FCC Form 10K under the headings forward-looking statements and risk factors found on the internet at www.fcc.gov and is applicable in any later FCC Form 10Q. You will also find any reference non-GAAP financial measures reconciled to the most directly compared GAAP measures in the press release issued yesterday entitled Field Dynamics Reports Record Fourth Quarter and Record Full Year 2021 results. Now I'm pleased to turn the call over to Mark. I'd like to thank the manymore regulators who have taken Because

You'll 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 record fourth quarter and record full year 2021 results now I am pleased to turn the call over to Mark.

Speaker 3: Thank you David and good morning everybody and happy 2022. Welcome to our fourth quarter of the fall year 2021 earnings call.

Thank you David and good morning, everybody will have in 2022.

To walk through our fourth quarter and full year 2021 earnings.

Nicole we will accrue.

Thank you Simon and thank you for joining us today.

Speaker 3: The entire IBLA language team delivered an exceptional performance in 2021 with record sales, earnings and cash flow generation.

The entire timberlands team delivered an exceptional performance in 'twenty, one with record sales earnings and cash flow generation.

Speaker 3: the team totally shattered previous four-year records. It was a tremendous achievement, certainly supported by strong market, but driven by the commitment and passion of our teams, executing on our long-term strategies that continue to grow through cycle-lending capabilities.

The team totally shattered the previous full year revenues it was a tremendous achievement.

Selling supported by strong market was driven by the commitment and passion of our teams executing on our long term strategies that continue to grow through cycle earnings capability.

Thank you team for your debt.

Speaker 3: Thank you team for your dedication to excellence in every pursuit. I'm proud to work alongside you.

Dedication to excellence in every pursue protocol ethanol side yet.

Due to the steadfast commitment of people will have to one another and their families while communities and so our customers were operating safely meets the extended time better.

Speaker 3: Due to this dead-top commitment, our people have to one another and their families, to our communities and to our customers, we are operating safely amidst the extended pandemic. The health and welfare of our team...

Health and welfare of our teams remain Paramount.

Record financial results with no import while teams did not remain safe.

Speaker 3: Record financial results are no import. Our teams did not remain safe.

Although our safety performance continues to be better than industry averages our safety performance deteriorated year over year.

Speaker 3: Although our safety performance continues to be better than industry averages, our safety performance deteriorated in year over year.

This is unacceptable trend.

Speaker 3: This is an unacceptable trend that it will work imilligently to resolve, as our intent will always...

Working diligently to resolve as our intent will always.

Zero.

Speaker 3: Since our founding over 25 years ago, we have been intentional in managing our resources' sustainability for the benefit of all our stakeholders.

As a family of five five years ago.

In international and managing our resources sustainably for the benefit of all stakeholders.

We are still industry, leading sustainability operating exclusively with electric arc furnace technology that differentiates us in the manufacturing business model.

Speaker 3: As our journey continues, we're committed to the reduction of our plan for...

As our journey continues we're committed to the reduction of our plan.

Including a practical and achievable goal for our steel mills to be carbon neutral by 2050.

Speaker 3: including a practical and achievable goal for our steel minerals to be carbon neutral.

Speaker 3: We are starting from a position of strength. We are starting from a position of strength.

We are starting from a position of strength.

Neutral.

Speaker 3: We're competitively positioned and focused towards generating long-term sustainable...

We're competitively positioned and focus towards generating long term sustainable growth.

But before I continue with additional market commentary I'd like to share insights.

Speaker 3: But before I continue with additional monthly commentary, I'd like Theresa to share insight as always. Thank you, Mark. Good morning.

Thanks Peter.

Good morning, everyone.

Speaker 4: I want to add my sincere appreciation and congratulations to the entire team. We continue to achieve new milestones throughout the business, obtaining record-able performance, with record revenues of $18.4 billion derived from strong product pricing and volumes across all of our operating slots.

I was.

Sure.

Congratulations entirely.

We continue to achieve new milestones throughout the business.

Okay.

With record revenues.

$4 million.

<unk> strong product volumes across all of our operating platform.

Speaker 4: Record operating income of $4.3 billion and net income of $3.2 billion, or $15.56 per diluted share. And record cash flow from operations of $2.2 billion and adjusted EBITDA of over $4.3 billion.

Record operating income of $4.

$3 billion.

Income from $3 2 billion or 50.

56 cents per diluted share and record cash flow from operations.

Okay.

And adjusted EBITDA.

Thanks.

Speaker 4: It's really an exceptional performance.

Certainly.

Sure.

Speaker 4: Regarding our fourth quarter 2021 results net income was $1.09 billion or $5.49 per

Regarding our first quarter 2021 results.

$19 billion.

$5 49.

Sure, which includes additional performance based company wide compensation.

Speaker 4: which includes additional performance-based, company-wide special compensation.

Speaker 4: of approximately $21 million, or $0.08 per huge share, which was awarded to all non-executive, eligible team members in recognition of their extraordinary.

Approximately $21 million.

Sure.

To all nonexecutive eligible team members in recognition of their extraordinary performance.

Speaker 4: A fourth-quarter contribution to the company's charitable foundation of $10 million, or $0.04 per dividend share, and cost of approximately $52 million, or $0.18 per dividend share, associated with the construction and start-up of our Sittin' Texas Flatwoods Demo. Excluding these items, fourth quarter 2021 adjusted net income for $1.15 billion, or $5.78 per dividend share.

Our fourth quarter contributions from nature.

Okay.

Yes.

Sure and cost of approximately $52 million or <unk> 18 cents per diluted share associated with the construction and startup of our Texas platform.

Excluding these items fourth quarter 2021, adjusted net income for example from $5 billion.

Sure.

Speaker 4: Our fourth quarter 2021 record revenue of 5.3 billion dollars were more percent higher than support for results driven by a higher green light selling value in our steel fabrication business and our flat was steel up.

Our fourth quarter 2020 with record revenues of $5 3 billion.

Corporate to acquire the sequential third quarter results driven by a higher <unk>.

At our steel fabrication business and our flat rolled steel operations.

Speaker 4: Our fourth quarter 2021 record operating income of $1.4 billion with 8% higher than sequential results driven by the continued demand strength in our steel fabric.

Our fourth quarter 2021 with record operating income of $1 $4 billion was 8% higher than sequential results were driven by the continued demand strength in our steel fabrication operations.

Speaker 4: As we discuss our business this morning, we see positive industry fundamentals for 2022, and we're going to support our continued transformational growth.

As we discuss our business in Florida.

Industry fundamentals for 2020.

This quarter continued transformational growth initiatives.

Our steel operations generated record operating income of $1 $4 billion.

Speaker 4: Our steel operations generated record operating income of $1.4 billion in fourth quarter, as increased relay selling values expanded margins across the steel platform. Offsetting...

Quarter as increased realized selling value expansion margins across the platform.

Offsetting seasonally lower volume.

Speaker 4: Our laggy flat-wool contract is represented approximately 80 to 85 percent of our total flat-wool volume is...

I think lateral contracting represented approximately 85% of our total.

Volume in this quarter.

Speaker 4: We have quarterly field shipments of 2.7 million tons with our field mills operating at 88% of your capability.

We are currently.

$2 7 million tonnes.

Operating at 80% of your capability.

Speaker 4: For the full year 2021, our seal operation numerous financial operational.

Full year 2021, our steel operations numerous phase for recreational brownstone platforms full year operating income was a record $4 4 million.

Speaker 4: The platform's full-year operating income was a record $4.4 billion, with record shipments of 11.2 million tons. Truly phenomenal.

Record shipments of $11 2 million.

Truly phenomenal performance.

Speaker 4: And as a reminder, we still have additional market opportunities, mostly within our long-products group and now with the start-up of our sit-in.

Now as a reminder, we still have additional market opportunity, mostly within our home products.

With the startup of our savings.

Speaker 4: Because based on our existing steel shipping capability, we have over 13 million tons of shipping capability on the steel side, and when it's fully ramped, it will be over 16 million.

It is based on our existing mutual steel shipping capability.

15 million tons.

Okay. Thank you.

Bye.

Fully ramp.

Speaker 4: Operating income from our metal detection operations for the 4th quarter will remain strong at $44 million based on the improved metal margins offsetting loan repair charges.

Operating income from our development and operations for the fourth quarter remained strong with $44 million based on the improved metal margins offsetting lower ferrous shipments.

Speaker 4: Many domestic steel mills have planned maintenance outages throughout the 4th quarter, lowering ferrous scrap demand. For the full year 2021, operating capital in most recycling operations was a record $195 million, driven by a meaningfully higher volume and average selling value for both ferrous and non-ferrous recyclables.

Any domestic steel mills, Pennsylvania maintenance outages throughout the fourth quarter.

Scott.

For the full year of 2021, and operating chemical recycling operations was a record $195 million driven by meaningfully higher volume and average selling values for both ferrous and nonferrous recycled.

The team continues to effectively leverage the strength of our platform is actually in our credit model.

Speaker 4: The team continues to effectively leverage the strength of our circular manufacturing and operating model, benefiting both our steel and metal recycling operations by providing higher quality scrap, which improves furnace efficiency and reduces company-wide working capacity.

Any book, our steel and our refining operations.

In operations by providing higher quality scrap we can produce furnace efficiency and reduced companywide.

Okay.

Speaker 4: Our steel fabrication operations also achieve record operating quality in this order.

Our steel fabrication operations also achieved record operating income in the quarter.

Speaker 4: $238 million, two-and-a-half times record zero-quarter results, driven by materially higher real-life selling values, which more than offset escalated average sales.

<unk> hundred $38 million, two and half times record third.

Third quarter results, driven by materially higher selling value, which more than offset escalated average deal.

Got it.

For the full year 2021, our steel fabrication platform kicked in another record year with operating income of $365 million will record volume of.

Speaker 4: For the full year 2021, our steel fabrication platform achieved another record year with operating income of $365M in record volumes of 789,000 tons, both eclipsing previous peaks. Congratulations to the team. Steel's voice in that domain remains very strong, as evidenced by continued robust order activity, resulting in another record order backlog extending throughout 2021.

789000 Boes.

Okay.

Congratulations to the team.

Steel demand and that demand remains very strong as.

Our continued robust order activity, resulting in another record order backlog.

We're extending throughout 2022 based on our backlog and customer sentiment, we expect fuel fabrication.

Speaker 4: Based on our backlog and customer sentiment, we expect field coverage earnings to continue to increase into 2020.

We did increase.

2020.

Speaker 4: Our Cast Federation continues to be strong based on our differentiated circular business model and highly variable...

Our cash generation continues to be strong based on our differentiated strengths included this model and highly variable cost structure at the end of the fourth quarter, we had liquidity of $2 4 billion comprised.

Speaker 4: At the end of the fourth quarter, we had liquidity of $2.4 billion, comprising cash of $1.2 billion, and a fully available and secure revolver of $1.2 billion.

Comprised of cash of $1 2 billion and a fully available unsecured revolver.

Yes.

Speaker 4: During the 4th quarter of 2021, we generated record cash flow from operations at 724 million dollars and 2.2 billion dollars for the full year. Also.

During the fourth quarter of 2020 were regenerating.

We generated record cash flow from operations of $724 million.

And $2 $2 billion for the full year also a record.

Speaker 4: Working capital grew $1.7 billion during the year due to higher selling value, resulting in increased customer account and inventory value.

Working capital grew to $1 $7 billion during the year due to higher selling that.

The increased customer accounts and interest rate.

Speaker 4: During 2021, we invested $1 billion in Capital Investments.

During 2021, and we invested $1 billion of capital investments of which 830 level within that.

Speaker 4: of which $831 million was invested in a new Texas bottle.

In East, Texas.

No.

Speaker 4: During 2022, we believe capital investments will be in the range of $750 million.

During 2022, we believe capital investment well.

With an increase of $750 million, the majority of which released four new collateral posting requirements.

Speaker 4: majority of which relates to four new flat wall coding lines to be placed in Sittins and Hartford.

It replaced.

Barclays.

Regarding shareholder distributions, we maintained our quarterly cash dividend of 26 cents per common share after increasing eight 4% in the first quarter of 2021.

Speaker 4: Regarding shareholder distributions, we maintained our quarterly cash dividend at $0.26 per common share after increasing it 4% in the first quarter of 2021. We also repurchased $330 million of our common stock in the fourth quarter.

<unk> repurchased $313 million of our common stock in the fourth quarter, representing 3% of that.

Speaker 4: At December 31st, we had $383 million dollars remaining on the rise for repurchase under

At December 31, we had $383 million remaining on our price for repurchased under that program.

Speaker 5: In the past five years, we've increased our cash given in per share by 86% and we've repurchased $2.3 billion of our common stock, covering 23% of our annual share. While during the same time frame, we achieved an investment credit rating and maintained our growth company program by investing $3.1 billion in organic capital assets and funding of almost $500 million in acquisitions.

In the past five years, we've increased our cash dividend per share is about 86% and we repurchased $2 $3 billion of our common stock representing 23%.

Partnering things quickly.

Critically we maintained our growth company.

That was $3 1 billion and organic capital investment funding.

Okay.

Okay.

Okay.

These actions reflect the strength of our capital Foundation and consistently strong cash flow generation.

Speaker 4: These actions reflect the strength of our capitol foundation and the consistently strong capitol generation, and the continued optimism and confidence in our future.

Optimism and confidence in our future.

Speaker 5: Our capital allocation strategy prioritizes strategic growth with shareholder distributions comprised of a base positive dividend profile that is complemented with a variable share repurchase program, while also dedicated to preserving our investment grade credit designation.

Our capital allocation strategy prioritizes strategic growth with shareholder shareholder distributions comprised about these positive dividend profile that is complemented with a variable share repurchase program. While also dedicated to preserving our investment grade credit designation.

Speaker 5: We are squarely positioned for the continuation of sustainable, optimized, long-term value.

We are squarely positioned for the continuation of sustainable optimized long term value creation.

Speaker 5: Sustainability is a part of this strategy, and we're dedicated to our people, our communities, and our environment. We're committed to operating our business with the highest level of integrity. Further committing to this path in 2021, we announced greenhouse gas reduction and renewable energy goals, including a goal for our steel mills to be carbon neutral by 2050.

Sustainability is a part of this strategy and we are dedicated to our people our communities and our environment, we're committed to operating our business with the highest level of integrity.

Or is there something into this path in 2021, we announced greenhouse gas reduction and renewable energy goals, including our goals for our steel mills to be carbon neutral by 2015, the increased transparency and accountability. We also have interim milestones for 2025 and 2030.

Speaker 5: To increase transparency and accountability, we also have interim milestones for 2025 and 2030.

Speaker 5: We've led the steel industry with an exclusive use of electric arc furnace steelmaking technology, circular manufacturing models, and innovative solutions to increase efficiency, reduce raw material usage, reuse secondary materials, and promote material conservation and recycling.

Lastly, steel industry with an exclusive use of electric arc furnace steelmaking technology circular manufacturing model and innovative solutions to increase efficiency reduce raw material usage, we use secondary materials and promote material conservation and recycling.

Speaker 5: We plan to sustain our leadership position by executing our climate goals to among other avenues, implementing emission reduction projects, improving energy management, increasing the use of renewable energy and developing and supporting new innovative technology.

We plan to sustain our leadership position by executing our climate goals to among other avenues implementing emission reduction projects.

Moving energy management, increasing the use of renewable energy and developing and supporting new innovative technology.

Speaker 5: We have an actionable path that is more manageable and we believe considerably less expensive than what may lay ahead for our tradition.

Have an actionable path that is more manageable and we believe considerably less expensive than what may lay ahead for our traditional blast furnace industry peers.

Speaker 5: Our sustainability and climate strategy is an ongoing journey, and we're moving forward with the intention to make a positive.

Our sustainability and climate strategy is an ongoing journey and we're moving forward with the intention to make a positive difference we plan to continue to address these matters and to play an industry leadership role moving forward.

Speaker 5: We plan to continue to address these matters and to play an industry leadership role moving forward.

Thank you Mike.

Super Thank you Teresa.

Speaker 3: Super. Thank you, Theresa. And as you said, our steel fabrication operations performed exceptionally well throughout 2021, achieving record volume and earnings.

As you said I'll steal time vacation operations performed exceptionally well through 2021, achieving record volume and earnings.

Speaker 3: The earnings power of this platform in a strong construction environment is yet to be completely displayed. At the end of the year, our steel joist and deck order backlog was at a record level for both volume and forward pricing, extending through March of 2022.

The earnings power of this platform and a strong construction environment is yet to be completely display.

At the end of the year, our steel joist and deck order backlog was at a record level for both volume and forward pricing extending through much of 2022.

Speaker 3: The non-residential construction market remains sound, especially in areas that support online retail, data centers, schools, and healthcare.

The nonresidential construction market remains there, especially in areas that support online retail data centers schools healthcare.

Speaker 3: specifically represented by construction of distribution warehouse facilities.

Specifically represented by construction of distribution warehouse facility.

Speaker 3: Our steel fabrication operations provide a powerful natural hedge to our steel production operations in a steady or softening steel pricing environment.

Our steel fabrication operations provide a powerful macro hedge to our steel production operations and a steady softening steel price environment.

Speaker 3: Our mails recycling operations also performed well this year, achieving record annual earnings and strong volume growth.

Our metals recycling operations also performed well this year achieving record annual earnings and strong volume growth.

The acquisition of the Mexican metals recycling company in August of 2020 has proven to be both a strategic supply and an excellent investment combining a great financial result, with the additional benefit of growing access the prime scrap.

Speaker 3: The acquisition of a Mexican metals reselling company in August of 2020 has proven to be both a strategic supply and an excellent investment, combining a great financial result with the additional benefit of growing access to prime scrap at North Central Mexico in support of our southern electric arc furnace flat, Rob Steelman.

North Central Mexico in support of our southern electric arc furnace flat rolled steel mills.

Speaker 3: Our metals recycling footprint provides a strategic competitive advantage for our EF steel mills and our scrap generating steel customers.

Our metals recycling footprint provides a strategic competitive advantage for us steel mills, and our scrap generating steel customers.

Speaker 3: We have ample access to the fairest scrap supply, including prime scrap, and believe this will remain the case in the future.

We have ample access the ferrous scrap supply, including prime scrap and believe this will remain the case in the future.

The steel team had an incredible year, achieving record volume and also record earnings of $4 4 billion.

Speaker 3: The steel team had an incredible year, achieving record volume and also record earnings of $4.4 billion, which had clipped.

Which eclipse previous peaks during.

Speaker 3: During 2021, the domestic steel industry operated at a production utilization rate of 81 percent, while our steel mills operated at a rate of 91 percent.

During 2021, the domestic steel industry operated in a production utilization rate of 81%, while our steel mills operated at a rate of 91%.

Speaker 3: We consistently operate at a higher utilization due to our value-added steel diversification, our differentiated custom supply chain solutions, and the support of our internal manufacturing business.

We consistently operate at the higher utilization on our value add steel from diversification of differentiated customer supply chain solutions and the support of our internal manufacturing businesses.

Speaker 3: As we suggested during our last earnings call, new capacity and moderate import growth has pressured the hot-rode coil prices.

As we suggested on our last earnings call new capacity and moderate import growth is pressured hot rolled coil prices.

Supply side issues have largely been resolved and lead times are back to manageable levels. After ballooning post COVID-19 as manufacturing steel demand recover much more quickly.

Speaker 3: Supply-side issues have largely been resolved and lead times are back to manageable levels after ballooning post-COVID, as manufacturing steel demand recovered much more quickly than expected by the end of

But by the industry.

Speaker 3: Hot-rolled coil pricing is moderated. But contrary to recent alarmist commentary, the magnitude of the price correction is in no way connected to any material which is in over-automatic.

Hot rolled coil pricing has moderated the country too.

Some enormous commentary the magnitude of the price correction, there's no way connected to any material.

Both Matt.

Inventory levels are certainly normalize the pre COVID-19 levels, but are more than appropriate for the present demand environment.

Speaker 3: Inventory levels have certainly normalized the pre-COVID levels but are more than appropriate for the present demand environment.

Speaker 3: December MSCI shipments dropped to approximately 2.4 million tons, but this is consistent with typical seasonality, not an abnormality.

December MSCI shipments dropped to approximately $2 4 million tonnes, but this is consistent with typical seasonality not an abnormality.

Speaker 3: Monthly import levels have undergone controlled growth in recent months, as the arbitrage expanded, but as anticipated, there has been no surge.

Monthly import levels have undergone controlled growth in recent months as the arbitrage expanded but as anticipated theres been no sook.

Speaker 3: The recent hot-roll oil price declines should effectively eradicate import volume growth in the months ahead.

The recent hot rolled coil price declines should effectively eradicate import volume growth in the months ahead.

These are natural market adjustments and are not structural changes.

Speaker 3: These are natural market adjustments and are not structural changes.

I don't recall transactions are currently consistent with published index numbers in the range of <unk> hundred $4800 per ton.

Speaker 3: Hot-roof oil transactions are currently consistent with published index numbers in the range of $1,300 to $1,400 per ton.

Speaker 3: There are a limited number of large volume spot hotband offerings that can be procured at lower numbers, but these are not prevalent or reflected.

There are a limited number of large volume spot hot band offerings that can be procured at lower numbers.

So these are not prevalent or reflective of the market in general.

One was recognized as a spot hot band market has diminished in size over recent years is contract business has increased across the industry.

It was not necessarily a true indicator of the whole market.

Speaker 3: Current hotmail spot offers are based on info values today, which are quickly drying up as the arbitrage trends.

Current heartburn spun off as a based on ample balance today, which had quickly drawing up as the arbitrage trades trade.

Speaker 3: Traders are reportedly finding it difficult to execute any business for second-quarter delivery.

<unk> reportedly finding it difficult to execute any business the second quarter delivery.

Speaker 3: Throughout our history, we have intentionally grown our value-added steel product portfolio and created valuable customer supply chain solutions to mitigate the impact of price volatility.

Throughout our history, we are intentionally grow our value added steel product portfolio and create a valuable customer supply chain solutions to mitigate the impact of price volatility.

Speaker 3: Today, over 7,000 steel sales are considered value-added.

Today, only about steel sales are considered value add.

Speaker 3: This differentiated business model will continue to provide best-in-class financial metrics and through-cycle cash generation.

This differentiated business model will continue to provide best in class financial metrics and through cycle cash generation.

Looking forward, we remain steadfast in our optimism for 2022.

Speaker 3: Looking forward, we remain steadfast in our optimism for 2022.

After a short period of seasonally lower steel demand in November and December .

Speaker 3: After a short period of seasonally lowered steel demand in November and December , our flat road order input rate in January was one of the best months ever, and backlogs are very helpful.

That road order input rate in January was one of the best months ever and backlogs are very healthy.

Automotive sectors steel consumption should grow year over year as the chips for diseases fueled by an extreme lack of dealer inventory, which is 60% lower than normal.

Speaker 3: Automotive sector steel consumption should grow year-over-year as the chip shortage eases, fueled by an extreme lack of dealer inventory, which is 60% lower than normal.

And strong pent up demand.

Speaker 3: The automotive sector operated at production rates lower than normalized levels in 20 and 21, around about 13 million units, and is expected to grow to 15 million units this year and 17 million units in 2023.

The automotive sector operated at production rates lower than normalized levels in 2020 . One around about 13 million units is expected to grow to 50 million units. This year 17 million units in 2023.

Nonresidential construction sector is strong as evidenced by the strength of shipments and backlogs that are structural and rail division and steel fabrication businesses.

Speaker 3: Non-residential construction sector is strong as evidenced by the strength of shipments and backlogs that our structural and rail division and steel fabrication business

Residential construction has also been robust, resulting in high demand for HVA seeing material appliance and other related products.

Speaker 3: Residential construction has also been reversed, resulting in high demand for HVAC material, appliance, and other related products.

Speaker 3: Stronger energy prices are now pushing up the rig camp and associated ERW pipe production.

Stronger energy prices are now pushing up the rig count and.

<unk> pipe production.

In aggregate, our steel backlogs and order input strength.

Speaker 3: In aggregate, our steel backlogs and our order input strength, coupled with broad optimistic customer commentary and general market momentum, drive us to conclude that steel market dynamics will remain strong through 2022.

With broad optimistic customer commentary and general market momentum drive us to conclude that steel market dynamics will remain strong through 2022.

Speaker 3: We anticipate steel demand increasing year over year, and with a likely retraction of import volumes, a possibly moderate rebound in prices.

We anticipate steel demand increasing year over year and was the likely retract retraction of import volumes.

Possibly moderate rebound in pricing.

Steel dynamics has a dynamic growth company, increasing through cycle earnings and cash flow to support continuous value creation.

Speaker 3: Steel Dynamics is a dynamic growth company increasing through cycle earnings and cash flow to support continuous value creation.

Speaker 3: Our new Stinton, Texas flat-row steel mill represents our most significant investment to date, providing the avenue for transformational growth and opportunity for ourselves and our customers.

Our new Sinton, Texas flat roll steel mill represents our most significant investment to date, providing the avenue for transformational growth and opportunity for ourselves and our customers.

This differentiated through investment facilitated significant through cycle operational and financial growth for all of our stakeholders from our teams and customers to our vendors and shareholders.

Speaker 3: This differentiated investment facilitates significant through-cycle operational and financial growth for all of our stakeholders, from our teams and customers to our vendors and shareholders.

Speaker 3: This EAF steel mill represents next-generation, lower-carbon-emitting steel production capabilities, providing differentiated products and supply chain solutions.

This eas steel mill represents next generation lower carbon emitting steel production capabilities, providing differentiated products and supply chain solutions.

Speaker 3: It's a 3 million ton state-of-the-art facility designed to have product capabilities beyond that of any existing electric arc furnace flat-row steel producer.

The 3 million tonnes steady on facility design designed to have product capabilities beyond that of any existing electric arc furnace flat rolled steel producers.

Speaker 3: competing even more effectively with higher carbon emitting integrated steel facilities and high carbon foreign competition.

<unk>, even more effectively with higher carbon emitting integrated steel facilities and high carbon foreign competition.

Speaker 3: It provides us with a more diverse steel product portfolio, and benefits our customers with an even broader climate-conscious supply chain.

It provides us with a more diverse product portfolio and benefits our customers with an even broader climate conscious supply option.

Speaker 3: The Finland construction team has experienced numerous challenges related to supply chain disruptions and COVID impact.

The cinema construction team has experienced numerous challenges related to supply chain disruptions and COVID-19 impacts these.

Speaker 3: These challenges resulted in hotside production shifting from the end of 2021 to a planned start before the end of February 22.

These challenges resulted in some production shifting from the end of 2021.

I would start before the end of February 22.

Speaker 3: group navigated through the challenge as well, and we're on the verge of seeing the significant benefits this facility will generate.

The <unk> group navigated through the challenges as well and we are on the verge of seeing the significant benefits of this facility will generate.

Speaker 3: Centum's strategic location is centralized in an underserved steel consumer region that represents over 27 million tons of relevant flat roll steel consumption in the U.S. and Mexico.

Since then the strategic location is centralized and underserved steel consumer region represents over 27 million tons of relevant flat roll steel consumption in the U S and Mexico.

These customers are excited to have a freight advantage regional flat roll steel supplier.

Speaker 3: These customers are excited to have the Freight Advantage Regional Flat Roll Steel Supplier.

Speaker 3: We have six customers committed to locate on our site, representing up to 1.8 million tons of annual flat-raw steel processing and consumption capability. Five of these customers...

We have six customers committed to locate on site, representing up to $1 8 million tons of annual flat rolled steel processing and consumption capability.

Five of these customers are already broke ground.

We can offer shorter delivery times, providing a superior customer supply chain solution to the region.

Speaker 3: We can offer shorter delivery times, providing a superior customer supply chain solution to the reef.

Speaker 3: We will also effectively compete with steel imports arriving in Houston and the West Coast.

We will also effectively compete with steel imports, arriving in Houston and the West Coast.

Speaker 3: Benefiting our customers in these areas with lower logistical

Benefiting our customers in these areas with lower logistics costs.

Removing risks associated with Ocean transit quality and delivery.

Speaker 3: Removing risks associated with ocean transit, quality, and delivery.

Speaker 3: We have also made considerable progress in sending our raw material procurement strategy to the mill. As I mentioned, the acquisition of a Mexican metals recycling company is a critical source of prime scrap supply.

We have also made considerable progress concerning our raw material procurement strategies from the mill as I mentioned the acquisition of the Mexican metals recycling company as a critical source of prime scrap supply.

Speaker 3: They're strategically located near high-volume industrial scrap sources throughout central and northern Mexico, and have already done a great job growing volume with a lot more to come.

They are strategically located near high volume industrial scrap sources throughout central and Northern Mexico and have already done a great job growing dollar volume with a lot more to come.

Speaker 3: Standard is not simply adding flat-row steel production capacity.

Then it is not simply adding flat roll steel production capacity.

Speaker 3: We have a differentiated product offering, a unique regional supply chain solution, a significant geographic freight and lead time advantage, and offer a sustainable alternative to import and region in need of options.

We have a differentiated product offering a unique regional supply chain solution.

Significant geographic freight and lead time advantage and offer a sustainable alternative to imports in the region in need of options.

Speaker 3: We're also going to build four additional value-added flat-rail coating lines comprised of two new paint lines and two new galvanizing lines with galvanizing coating capability.

We're also going to build four additional value added flat roll coating lines comprised of two new paint lines and two new galvanizing lines with government coating capability.

Our unique value added coated supply chain strategy has resulted in our existing mines consistently running at or near full capacity.

Speaker 3: Our unique value-added coded supply chain strategy has resulted in our existing lines consistently running at or near full capacity.

Speaker 3: Our existing customers are anxiously awaiting the volume from these new lines.

Our existing customers are anxiously awaiting the volume from these new lines.

Speaker 3: One galvanizing line and one paint line will be located on site at Centum, while the other two lines will be placed at a Heartland Flat Road division located in Terre Haute, Indiana.

One galvanizing line in one paint line will be located on slide a symptom while the other two lines will be placed at our Heartland Cyclone division located in Terre Haute, Indiana.

Speaker 3: Each site will increase flat roll capacity by 540,000 tons to further support our regional flat roll steel operations, providing them with more value-added product diversification to serve our customers.

Each site will increase flat rolled capacity by 540000 tonnes to further support our regional flat rolled steel operations, providing them with more value added product diversification to serve our customers.

Speaker 3: We expect these lines will begin operating mid-2023.

We expect these lines will begin operating mid 2023.

In closing our unique culture and the execution of our long term growth and capital allocation strategy continues to strengthen our financial position through strong cash flow generation and long term value creation.

Speaker 3: In closing, our unique culture and the execution of a long-term growth and capital allocation strategy continues to strengthen our financial position through strong cash flow generation and long-term value creation.

Our sustainable symbiotic operating platforms and customer centric supply solutions demonstrate our financial and operating stability differentiate us from any competition.

Speaker 3: Our sustainable, symbiotic operating platforms and customer-centric supply solutions demonstrate our financial and operating stability, differentiating us from any competition.

Speaker 3: We're excited to continue our growth with new value-creating opportunities.

We are excited to contribute.

Our growth with new value creating opportunities.

Speaker 3: Our people and their spirit of excellence provides the foundation for us.

Our people and the spirit of Excellence provides the foundation for our success.

Speaker 3: I thank each of you for your passion and dedication and remind you that safety is always our most critical priority.

I. Thank each of you for your passion and dedication and remind you that safety is always almost critical priority.

So everyone. Thank you for joining us today and K. We please open the line for questions.

Speaker 3: So everyone, thank you for joining us today. And Kate, will you please open the line for questions?

Thank you.

Speaker 1: Thank you. If you would like to ask a question, please signal by pressing the star key followed by the digit one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. If you press star one earlier during today's call.

If you would like to ask a question. Please signal by pressing the star key followed by the digit one on your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.

Press Star one earlier during today's call.

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Speaker 1: Also, we ask that you please limit yourselves to one question to facilitate time for everyone. Any additional questions can be addressed upon re-entering the

Also we ask that you. Please limit yourselves to one question to facilitate time for everyone. Any additional questions can be addressed upon re entering the queue.

Speaker 1: Our first question today is coming from Michael Glick at J.P. Morgan Securities. Your line is live, you may begin.

Our first question today is coming from Michael Glick at J P. Morgan Securities. Your line is live you may begin.

Good morning.

Speaker 6: Good morning. In your fabrication segment, could you give us a bit more color about how we should think about the trajectories of both pricing and margins moving through the year? Any ranges there?

And your fabrication segment could you give us a bit more color about how we should think about the trajectories.

Both pricing and margins moving through the year any ranges there would be helpful.

Thank you.

Good morning, Michael So I think on the last quarter call, we mentioned that.

Speaker 5: Good morning, Michael. I'm so I think on the last quarter call, we mentioned that we have firm expectations that the fabrication business is going to earn more.

We have firm expectation that the fabrication business is going to earn.

More.

Speaker 5: uh more earnings in the first half of 2022 than in the second half of 2021. We believe even more firmly in that so as I mentioned in my remarks there is an expectation that we see another improvement in the first quarter and in the second quarter as well based on the backlog so there's more visibility in fabrication.

More earnings in the first half of 2022 that in the second half of 2021.

We believe even more firmly in that so as I mentioned in my remark. There is an expectation that we'd see another improvement in the first quarter and in the second quarter as well based on the backlog, so theres more visibility and fabrication.

Speaker 5: Because the backlog is so lengthy, but also because of the pricing that we're seeing that we're able to achieve, as the demand remains incredibly strong. So as far as specifics, it's hard to give specifics. I will just tell you that first quarter will definitely be, I think, meaningfully higher than what we saw in the fourth quarter. And again, another step function increase in the second quarter.

Because the backlog is still lengthy but also because of the pricing that we're seeing that we're able to achieve as demand remains incredibly strong.

Specific it's hard to give specifics.

Telling you that first quarter will definitely be.

I think meaningfully higher than what we saw in the fourth quarter and again another.

A step function increase in the second quarter as well.

Got it that's helpful. Thank you.

Speaker 1: Thank you. Our next question today is coming from Emily Chang at Goldman Sachs. Your line is live.

Thank you. Our next question today is coming from Emily Chang at Goldman Sachs. Your line is live.

Speaker 7: Good morning, Mark and Teresa, and thank you for the update today. My question is just around growth. Now that, you know, Sinton is coming towards the end there and you've got a couple of coating lines and delve lines in the hopper, how do you think about other greenfield growth potential in your portfolio, particularly as it relates to the rebar segment? Do you have a view as to whether or not you need to see further capacity growth in the long product side from SIP Dynamics? Thank you.

Good morning, Mark and Theresa and thank you for the update today. My question is just around <unk>.

Now that has.

It's coming towards the end there and you've got a couple of cutting lines and golf lines in the Hopper. How do you think about other greenfield growth potential in your portfolio, particularly as it relates to the <unk> segment.

Do you have a view as to whether or not you need to see further capacity correct. The long product side from Stateline IMAX. Thank you.

Well thank you.

Question I think the.

We will continue to I think demonstrate our.

Speaker 3: We will continue to, I think, demonstrate our sort of organic growth opportunities. In all honesty, rebar is not a focus of ours. It certainly has given us diversification in our structural rail division and in our own bar division, and we'll reflect that as markets go up and down. But that rebar is not a target, so to speak.

Sort of organic growth opportunities.

In all honesty rebar is not a focus of ours. It certainly has given us a diversification on our structural rail division.

Ronald Bond Division, and we'll flex that as markets go up and down.

Rebound is not up.

Our target so to speak.

Any major growth.

Speaker 3: We will continue to grow in the value-added business. Obviously, I think we've demonstrated that the strategic path has been very intentional and very profitable for us. And more importantly, allows us.

We will continue to grow in the value added business honestly I think we've demonstrated.

That.

Strategic path has been very intentional.

And very very profitable for us and more importantly allows us.

Speaker 3: that diversity of product mix to sustain higher utilization levels through the cycle.

That diversity.

The product mix to sustain higher utilization levels through through the cycle. So I think the spin.

Speaker 3: So I think that there's still opportunity for further counting processing.

We'll still opportunity.

Further value add.

Processing.

The flat rolled side of things.

Speaker 3: Additionally, though, it's an intriguing marketplace out there and we're seeing a

Additionally, though.

It's an intriguing marketplace out there.

And we are seeing.

Pipeline that is.

Speaker 3: pipeline that is full of transactional opportunities today as well.

Full of transactional opportunities today as well.

Great. That's very helpful. Thank you.

Speaker 1: Thank you. Our next question today is coming from Tim Nataners at Wolf Research. Your line is live.

Thank you. Our next question today is coming from Timna Tanners at Wolfe Research. Your line is live.

Hey, good morning, and happy new year.

When you have to ask thanks, happy new year I wanted to ask a little bit more about what youre seeing in the first quarter in terms of volumes.

Clearly the softer spot market that prevailed as you mentioned in the fourth quarter with some of the lighter volumes has spilled over into the first quarter and wondering any early thoughts about what that could mean for shipments quarter over quarter and any thoughts on.

Speaker 1: So I'm wondering, you know, any early thoughts about what that could mean for shipments quarter over quarter? Any thoughts on...

What's driving that and what might cause that to stabilize.

Well I think we certainly saw the seasonality.

Speaker 3: Well, I think we certainly saw the seasonality, and as I said earlier, you know, there's one headline that.

Seasonality.

And as I said earlier.

Those one headline that.

Speaker 3: MSCI ships were down 17% compared to August and December . Well, if you look at it, each year in history, it always does that. And it's just that the seasonal adjustment is going to sort of disappear in the fourth quarter, I mean, first quarter year. The shipping volumes we would anticipate will increase accordingly.

MSA EMS C&I shouldn't so down 17%.

August and December well, if you look at it each year.

It always does.

Seasonal seasonal adjustment is going to disappear in the fourth quarter.

First quarter here.

The shipping volumes, we would anticipate will increase accordingly.

Speaker 8: Do you expect normal increase from the fourth quarter to the first quarter in your shipping volumes across the board? Pretty much, yeah.

Do you expect normal increase from the fourth quarter to the first quarter on your shipping volumes across the board.

Pretty much yes.

Okay interesting. Thank you again.

We're not seeing.

Speaker 3: People I think are relating a little bit of pricing softness here with demand. And as I stated earlier, demand through our lens is incredibly strong and will remain so throughout the year.

People with people I think are relating that.

A little bit of pricing softness here with with demand and as I stated earlier.

Demand.

Through our lens is incredibly strong and will remain so through it throughout the year.

Speaker 5: I would add just to that, Simna, that we actually experienced, at the end of the fourth quarter, some logistics issues as well, which I'm sure people are experiencing outside the steel industry as well as trucking and rail, and things have been disrupted. So there were shipments that we expected to actually deliver in December that were not able to be delivered, so it's more of a timing issue. So that's going to benefit the first quarter.

I would add just to that.

That we actually experienced at the end of the fourth quarter.

So logistics issues as well, which I'm sure people are experiencing outside the steel industry as well as trucking and rail and things have been disrupted. So there were shipments that we expected it to actually deliver in December that.

We're not able to be delivered so it's more of a timing issue. So that's going to benefit the first quarter as well.

Okay I'll get back in the queue. Thanks.

Speaker 1: Thank you. Our next question today is coming from Seth Rosenfeld at Exane BNP Paribas. Your line is live.

Thank you. Our next question today is coming from Seth Rosenfeld at Exane BNP Paribas. Your line is live.

Good afternoon.

Speaker 9: I can follow up please with the outlook for free cash flow and in particular the role of working capital. Obviously the last year in particular Q4 saw a lot of investment in working capital. There were some delays sent in ramp up. Wondering if that was one reason particularly elevated investment in Q4. With that in mind, can you give us a bit of color on expectations both for upcoming Q1 and for the year ahead? Is it reasonable to assume that with SINTA and ramp up, a likely decline in ASPs for SEAP, we could expect a meaningful working capital release?

I can follow up please with the outlook for free cash flow and in particular the role of working capital obviously the last year in Q4, so a lot of investment in working capital.

There were some delays in sinton ramp up wondering if that was one reason, particularly elevated investments in Q4 and with that in mind could you give us a bit of color on expectations.

In Q1 and for the year ahead.

Is it reasonable to assume that with symptom ramp up likely decline in asps for sheet I would expect a meaningful working capital release. Thank you.

Good morning, Thanks for the question. So yes, working capital we did see significant growth during 2021, most of which is associated with the value growth in our steel products and as the increased volume.

Speaker 5: Good morning, Seth. Thanks for the question. So, yes, working capital, we did see significant growth during 2021, most of which is associated with the value growth in our steel products and in the increased volume and product pricing growth in our fabrication.

Pricing growth in our fabrication business.

Speaker 5: Sinton, at the end of the year, had about $150 million of working capital, and we would expect to see that grow by probably another $150 million during 2022, during the first half of the year. So there's still some structural growth attached to that, but otherwise, as we see product pricing ease.

At the end of the year had about $150 million of working capital and we would expect to see that grow by probably another $150 million. During 2022 during the first half of the year. So there's still some structural growth attached to that but otherwise as we see.

Product pricing.

<unk>.

Speaker 5: and we see the strength in volumes, we would expect to see valuations come down which should have a pretty significant working capital release during the entirety of the year. You might not see as much of it in the first half but definitely in the second half.

And we see the strength in volumes, we would expect to see valuations come down which should have a pretty significant working capital release during the entirety of the year you might not see as much of it in the first half, but definitely in the second half of the year.

Okay. Thank you very much.

Thank you. Our next question today is coming from Andreas spoken Hooser at UBS. Your line is live.

Speaker 1: Thank you. Our next question today is coming from Andreas Bokenhuser at UBS. Your line is live.

Thank you just a question on inflation I mean, obviously, it's a bit of an inflationary environment how are you.

Speaker 3: Thank you. Just a question on inflation. I mean obviously it's a bit of an inflationary environment. How are you kind of thinking about inflation this year? Is there anything you kind of got on the table that can kind of mitigate inflation in looking at energy, even scrap? I mean you've already integrated some scrapyards. Is there room for more scrapyard integration and acquisition there? That's the question on inflation.

You're kind of thinking about inflation. This year I'd say anything you've kind of got on the table that can kind of mitigate inflation and looking at energy.

Even scrap I mean, you've already integrated some scrap yards.

The room for more scrap yard integration and acquisition that that's the question on inflation. Thank you very much.

Speaker 3: I think we can't speak to the overall impact of inflation on the domestic economy, but relative to SDI, I think we're not impacted dramatically. Obviously, scrap will react to the market.

Well I think the.

We can't speak to that.

The impact of inflation.

On the domestic economy, but relative to SDI.

We're not impacted dramatically obsolete scrap.

We will react to the marketplace.

Speaker 3: from a cost of sort of conversion, we're relatively under control. We have been impacted a little by alloy costs.

But from a from a cost of conversion.

We're relatively under control.

Have been impacted a little by our call.

Speaker 3: And we've been impacted by, you know, the zinc cost over the last 12, 18 months moving up, most of which has passed through.

And we've been impacted by.

The zinc cost over the last 12 18 months moving up most of which is passed through.

Speaker 3: You know, the alloy cost, which certainly is higher at our engineered bond division than any other mill, again, that tends to be passed through to the customer. So we're not seeing a massive inflationary impact.

The alloy costs.

So it is higher at our engineered bar division than any other mill.

Against that.

To be passed through to the customer so we're not seeing a massive inflationary impact to our <unk>.

Cost structure.

I would add and I wondered I know you.

Speaker 5: And I would add, and Andres, I know you know this, as it relates to wages, where a lot of people are seeing a really significant increase, because we have so much of our compensation across the entire team, so that's performance-based, and it naturally fluctuates, so we're not seeing the same pressure from a wage perspective, because there's so much of the performance-bonus compensation.

As it relates to wages, where a lot of people are seeing a really significant increase because we have so much of our compensation across the entire team that's performance base.

Naturally fluctuate so we're not seeing the same pressure from a wage perspective, because theres. So much of the performance earnings compensation.

Speaker 5: Um, that's structurally in place. So I think Mark said it perfectly that we're not seeing a lot of pressure that With items that are passed through the press door And then

Structurally in place so I think Mark said it.

Perfectly that we're not seeing a lot of pressure.

With items that are passed through to the customer.

And then one.

Yeah go ahead, sorry, one additional comment.

Speaker 3: And one additional comment, I think we may have made this same comment in the last call. But as you reflect on our results, it's amazing how the teams throughout our organization just continue to break productivity records.

One additional comment I think we may have made this same comment on the last call.

As you as.

As we reflect on our results.

It's amazing hire the teams throughout an organization just continuing to break productivity records.

Speaker 3: And as such, over the years, we've found our conversion costs actually incredibly stable or consistent.

And as such over the years, we've found our conversion costs actually incredibly stable or consistent.

Given that the additional volume.

Speaker 6: given that the additional volume, you know, reduces our fixed cost, the overhead cost.

We're <unk>.

Fixed cost overhead costs.

Which sort.

Speaker 3: sort of absorbs any additional sort of inflationary pricing on alloys.

Sort of absorbs any additional sort of inflationary pricing on alloys.

So.

Speaker 6: Through, it's amazing, we just did a study, to be honest, for our board last November . It's absolutely amazing how our conversion costs remain very, very, very stable.

Through its amazing we just do the studies to be honest for our board last November it's absolutely amazing higher conversion costs remained very very stable.

True true.

The cycle.

Yeah Youre performance based structure is a good point. Thank you very much I appreciate the insights.

Speaker 10: your performance-based structures is a good point. Thank you very much. I appreciate the insights.

Thank you.

Speaker 1: Our next question today is coming from Kurt Woodworth at Credit Suisse. Your line is live.

Our next question today is coming from Curt Woodworth at Credit Suisse. Your line is live.

Yeah. Thanks, good morning Barton safer.

Speaker 11: First question is just with regards to the sit-in ramp-up, I was wondering if you could help us understand sort of the cadence of volume growth the next couple quarters and what level of startup costs we should expect. And then you noted, I think, 1.8 million of on-site captive supply. When would you expect that to be?

First question is just with regards to the sudden ramp up I was wondering if you could help us understand sort of the cadence of <unk>.

Both the next couple of quarters and what level.

Startup costs, we should expect and then you noted I think $1 $8 million of onsite captive supply what when would you expect that to be.

Fully functional.

Speaker 6: Well, obviously we are anticipating the final.

Well, obviously, we are anticipating the final.

Speaker 3: piece of the jigsaw to be put in place here in the next few days, if not the next week or so, so that the actual specific ramp over the next three months is difficult to predict.

A piece of the jigsaw to be put in place here in the next few days if not the next week or so.

So the actual specific ramp over the next three months.

It's difficult to predict.

But we.

Feel.

Should demonstrate.

Speaker 6: demonstrate a performance no less than others starting at the mills.

Demonstrated performance no nonetheless.

Those.

Summing up the mills here in the last.

Five to 10 years, so we would anticipate at least 2 million tonnes.

Speaker 3: five, 10 years, so we would anticipate at least 2 million tons of shipments this year.

Shipments.

This year.

Speaker 12: of reaching capacity, essential capacity, you know, in the late third quarter, probably fourth quarter.

Reaching capacity.

Capacity.

Late third quarter.

Probably fourth quarter.

Speaker 11: Okay, and then in terms of the on-site supply, when would you expect that to be?

Okay.

And then in terms of the on site supply when would you expect that to be.

At that consumption rate.

Well I think it will come on in concert with with our mill in all honesty.

Speaker 6: Well, I think it will come on in concert with our mill, in all honesty. We have one facility that's actually operating currently.

We have one facility that's actually operating currently.

Speaker 6: There is one very large facility that will be operational in the next couple of months, but it's... I'm not saying it was totally intentional, but by luck, if nothing else, those facilities are going to ramp up nicely in concert with steel mills.

There is one very large facility that will be operational in the next couple of months.

But it's.

I'm not saying it was totally intentional.

Bye bye.

If I look if nothing else.

These facilities are going to ramp up nicely in concert with <unk>.

Steel mill.

Speaker 6: On the value-add side, on the value-add side, I think we've suggested in the past, the paint line, coating line, is doing extremely well. The Garballoom... ... ... ... ... ...

On the value add side.

On the value add side.

I think we've.

Suggested in the past the paint line coating line is doing extremely well.

Garble the Gulf Bloom.

Speaker 6: capability comes online here, I think, in a couple of weeks.

Capability comes online here in a couple of weeks.

Speaker 12: So the finishing facilities have performed well.

Finishing facilities.

Performing extremely well.

Speaker 6: The hot strip mill is essentially.

The Hot strip mill is essentially.

Commission.

Speaker 6: We bought slabs from third parties and we also transferred intermediate slabs from our own facilities.

We bought slabs from third parties and we also transferred.

Mediate slabs from our own facilities took.

Speaker 6: took them down and sort of preheated them in the tunnel furnace, and they've driven them through the mill quite successfully. So a lot of the parts are in great, great shape, which is waiting on the cast.

Took them down so pre heated.

The telephone us.

Driven them through the mill quite successfully so.

A lot of the parts are in great shape, which is waiting on the Costco.

Okay and then my follow up is just maybe get a little bit more color on sort of market dynamics last few months I mean, it seems like between Covid seasonality.

Speaker 11: OK, and then my follow up is just maybe get a little bit more color on sort of market dynamics last few months. I mean, it seems like between COVID-19 seasonality.

Speaker 9: um, de-stocking, rising supply. There's a lot of moving pieces here and it seemed like you're indicating that your January order book definitely strengthened relative to November and December . I think you had a comment that you said that inventories were normal, but, you know, some service centers saying they've got way too much, others don't. So I'm just curious, um,

Destocking rising supply, there's a lot of moving pieces here and it seems like you're indicating that your January order book definitely strengthened relative to November and December I think you had a comment that you said that inventories were at normal but.

Some service centers, saying, they've got way too much others down so I'm just curious.

Speaker 9: Is your sense that the inventory level in the industry is generally getting right-sized pretty quickly at this point? And then in terms of sort of the volume trends you saw in the fourth quarter, was it more concentrated on, say, the service center side of your business or on the OEM side? Thank you.

Is your sense that the inventory level in the industry is generally getting right size pretty quickly at this point and then in terms of sort of the volume trends you saw in the fourth quarter was it more concentrated on say the service center side of your business or on the OEM side. Thank you.

I think when I say.

Speaker 6: The inventories have normalized. I'm just going by history. I mean, it's quite simple. If you look the last five or six years for sure, but you go back in time longer than that.

Inventories are normalized I'm, just going by history.

I mean, it's quite simple if you look.

The last <unk>.

That's five years to six years for sure, but you go back in time longer than that.

Levels are appropriate.

Speaker 6: levels appropriate, and have they grown? Absolutely. But they grew from an absolute historic low.

As a grown absolutely will they grew from an absolute historic lows.

Speaker 3: And as I indicated, our belief is that they are appropriate for the band cycle of a Goinsberg.

And as I indicated.

Belief is that they are appropriate for the.

Yes.

Demand cycle that we're going through.

The third.

Speaker 6: So a little bit of a lull, I do believe in it.

But a little lull I do believe in it.

Speaker 12: You've got to live through a few of these cycles in the past, and our team is fortunate to have that experience.

You've got to live through a few of these cycles in the past and our team is fortunate to have that.

That experience.

Speaker 6: But you hit COVID, the whole industry ground to a halt. Things started up much more rapidly.

But you hit Covid.

Whole industry ground to a halt.

Things started up much more rapidly.

Speaker 12: And, you know, there's chaos there, absolutely, in the industry.

And those payoffs there absolutely.

And the industry.

Speaker 6: proving ourselves to some degree, to catch up. And then when you catch up, what happens? Well, our industry is not perfect in general. It overshoots a little bit. And in November , December , you saw things catching up. And all of a sudden, people are getting their supply.

Food and ourselves.

To some degree.

To catch up and then when you catch up what will happen as well.

Industry is not perfect and in general it Overshoots Little blip and in November December you saw things catching up and all of a some people are getting the supply.

Speaker 3: simultaneously from two to three mils. So you get that little overshoot, which I think was seen in November to September . Those in the automotive space probably saw it more than most. And so you had that.

Simultaneously from two to three 3 million so you've got that little overshoot, which I think was seen in November December .

Those in the automotive space.

Probably saw more than most.

And so you have that.

<unk>.

Speaker 12: softness, but particularly in hot banded.

Softness tick.

Particularly.

And hot band itself.

Speaker 12: That will resolve itself as I said earlier we don't see any

That will resolve itself.

Suddenly we don't see any.

Speaker 12: any change in the underlying consumption of steel currently, and nor do we see that happening over, you know,

Any change in the underlying consumption.

Steel.

Currently nor do we see that happening.

Over the months and quarters.

Speaker 12: You just have a little kind of a spike of supply there that came through.

You just have a little kind of a <unk>.

<unk>.

Supply that came through.

The seasonality.

So again.

Speaker 6: But again, we're incredibly optimistic for 2020.

We are incredibly optimistic for 2022.

Thank you. Our next question today is coming from Carlos de Alba at Morgan Stanley . Your line is live.

Speaker 1: Thank you. Our next question today is coming from Carlos D'Alba at Morgan Stanley . Your line is live.

Speaker 13: Yeah, thank you very much. And just, I guess, following up on the last point, so how should we reconcile, then, Mark, the fact that the lead times in the industry, the information that is publicly available, have continued to come down, but you, as you said, you are extremely constructive on how your other book is looking like and demand expectations. Is it just the supply that you mentioned that picked up in recent months?

Thank you very much.

I guess following up on the last point, so how should we reconcile Denmark the fact that.

The lead times in the industry that information that historically available have continued to come down.

But as you said you are generally constructive on how your order book is looking like and demand expectation.

Is it just the supply that you mentioned that picked up in recent months.

Speaker 13: now be absorbed by the demand, or is it that steel and ammonium is gaining market share versus competitors, and therefore what you're seeing may be different to what the industry statistics that we have.

That will be absorbed by the match or exceed that steel dynamics is gaining market share.

Competitors and therefore, what you see.

You may be referring to what the industry statistics.

We have access to.

Speaker 3: Well, I think we're certainly seeing market share in certain markets. We've certainly gained dramatic traction in the automotive sphere, for instance. And fortunately, that traction was with automotive producers that weren't as impacted by the chip shortages as maybe the U.S. domestic producers.

Well I think we're certainly seeing some market share in certain markets.

We've certainly seen the dramatic traction in.

And the only automotive for.

For instance, unfortunately that traction with.

Automotive reduces that wasn't as impacted by the chip shortages.

Maybe the U S domestic producers.

Speaker 6: So yeah, we are gaining sort of incremental market share there.

So, yes, we are gaining incremental market share that.

<unk>.

Speaker 12: Again, we have phenomenally supportive, loyal customers.

Again, we have the nominally.

So supported loyal customers.

Whether at times like this.

Speaker 12: where there are times like this, will support us and bring their orders to us. Our overall business model, though, again, with the diverse product portfolio that we have.

Will support us and bring their orders to us.

Overall business model loan again again with a diverse product portfolio that we have.

Speaker 12: So we have differentiated supply chain solutions in our coated and pre-paint business is just different and it provides phenomenal value for the customer.

So we have differentiated supply chain solutions.

Coated.

<unk> business is just different.

It provides phenomenal value for the customer.

Speaker 12: and that those businesses remain strong. And we think that the coded value-added market in general is going to remain very, very, very solid going forward. All you have is a little bit of a seasonality, sort of catch-up moment in hot balance, which pressured the spot price.

And that those businesses remain strong and we think that the coated value add market in general is going to remain very very very solid going forward.

All you have is.

A little bit of a seasonality.

So we'll catch up moment.

Which pressured the spot pricing.

Speaker 6: If you can envision, and I envision, that the import volumes that picked up in the last three or four months, because of a massive arbitrage for us,

If you can envision and I envision that the.

The import volumes have picked up in the last three or four months because of a massive arbitrage.

Okay.

Speaker 12: If you envision that that can moderate, which I think is the arbitrage is shrinking, and as we listen to traders out there having difficulty sustaining business for, you know, late second quarter this year, if the imports do

Do you envision that that moderate which I think is the arbitrage is shrinking and as we listened to traders.

Having difficulty sustaining.

Sustaining.

Business for late second quarter this year.

The inputs do.

Speaker 6: fall off a little, you're going to get the man pressure.

Fall off a little.

Youre going to get demand pressure again.

Speaker 12: And it wouldn't be unexpected on our part if you saw a little rebound in pricing.

It wouldn't be unexpected on our part if you saw.

It will rebound in pricing.

Alright excellent. Thank you very much Mike.

Thank you. Our next question today is coming from David Gagliano at BMO capital markets. Your line is live you may have.

Speaker 1: Our next question today is coming from David Gagliano at BMO Capital Markets. Your line is live, you may begin.

Begin.

Speaker 14: Great. Thanks for taking my questions. I'll just ask you a couple of quick ones here. Just on the commentary around 85% of flat load lagged pricing in the fourth quarter, can you just give a sense so we can, you know, tighten up the models a little bit for first quarter? You know, what was that average lag duration wise? And is that, are those reasonable proxies for, you know, for the first quarter as well?

Great. Thanks for taking my questions I'll, just ask a couple of quick ones here just on the commentary around 85% of firewall lagged.

Pricing in the fourth quarter can you just give a sense. So we can tighten up the model's a little bit for first quarter, what was that average lag duration wise and is that are those reasonable proxies for.

For the first quarter as well.

Speaker 5: Yeah, the contract business, David, the fourth quarter was that 80 to 85% and it's likely to stay in that range at least through the first half of the year as we're servicing our contract customers.

Yes. The contract. This is David in the fourth quarter was that 80% to 85% and it's likely to stay in that range at least through the first half of the year.

As for servicing our contract customers and then as certain comes online more strongly in the second half of the year, that's naturally going to decline to a certain degree because of the shift in mix.

Speaker 14: And then as SITN comes online, you know, more strongly in the second half of the year, that's naturally going to decline to a certain degree, just because of the shift in this. But we're expecting that to be maintained. As it relates to the lag, it's really about, you know, on average, a two-month lag on the flatware pricing, and it's generally tied to the TRU index. Okay, and that's...

But we're expecting that to be maintained as it relates to lag.

It's really about on average a two month lag.

On the power pricing and it generally tied to.

The tier uhm.

Okay.

Yes.

A reasonable proxy for the first quarter as well two month lag.

Yes, that's correct.

Speaker 14: Okay, perfect. Thanks. And this last question for me, the CapEx, it went up a little bit, 700 prior guide to 750. What was the reason behind that?

Okay perfect. Thanks, and then just last question for me in the Capex went up a little bit 700. Prior guide to 750, what was the reason behind that.

Speaker 5: Well, it was simply that we went through the extensive study that we do every year, and that generally takes place in the November timeframe. So we approved additional projects and those projects as kind of attested to by our return on capital metrics are really efficiency and growth oriented, but they're just smaller in nature. So there's nothing individually to call out for the reasons being increased. These are some really nice projects came to light.

Well it is simply that we went through the extensive study that we get every year and that generally takes place in the November timeframe. So we approved additional projects and those projects.

Kind of a test approved by our return on invested capital metrics are really efficiency and biosimilars.

But they're just smaller in nature, so theres nothing individually to call out for the reasons for the increase.

Really nice projects in flight.

Okay perfect that's helpful. Thanks.

Thank you.

Speaker 1: Our next question today is coming from Phil Gibbs at KeyBank Capital Markets. Your line is live.

Our next question today is coming from Phil Gibbs at Keybanc capital markets. Your line is live.

Hey, Thanks, very much good morning.

Good morning, Phil.

Speaker 15: Hey, Teresa, can you provide the sheet shipments by product grade?

Teresa can you provide the shipments by.

By product grade.

Speaker 5: I can and I apologize. I'm smiling because I did miss that. The hot meal and, you know, shipments for the fourth quarter were six hundred and ninety three thousand tons. Cold rolls with one hundred and thirty six thousand tons. And finally, the coded products were nine hundred and ninety four thousand tons.

Hi, Ken and I apologize I'm smiling.

I did miss that.

Hotmail and shipments for the fourth quarter were 693000 tons cold rolled with 136000 tons and finally, the coated products were 994000 tons.

Perfect.

Speaker 14: And then I remember last quarter you had, Mark, I think you had talked about Yellow Goods having a having a decent outlook and we obviously know your feelings on automotive.

I remember last quarter, you had mark I think you had talked about yellow goods, having having a decent outlook.

And we obviously know your feelings on on automotive.

What's what's the.

Speaker 15: What's the future look like, in your opinion, for SBQ this year and Engineer Bar?

The future looks like in your opinion for.

<unk> this year and engineered bar.

I think.

Speaker 6: I think for an engineer, BAR is relatively steady.

For engineered bar is relatively steady.

Speaker 12: I think we'll gain some volume as the automotive picks up, because again, we're 15, 20% more auto with an engine of balance, I do believe.

I think we'll gain some volume as automotive picks up again.

20% auto with.

Giovanni I do believe.

Speaker 6: So they're going to gain on the automotive side. They are going to lose a little bit of volume, not much, as a result.

So they're going to gain on the automotive side.

They're going to lose a little bit of volume not much.

As.

This is Harper and has come off folks are switching from seamless pipe over to U W pipe.

Speaker 12: As hot land has come off, folks are switching from seamless pipe over to W-pipe, and so they lose a little bit of volume there. For us, though, generally, it's going to benefit...we're already seeing the benefit down in Columbus, to be honest, as we're picking up energy orders there, and one large pipe mill is starting back up.

And so there was a little bit of volume there.

First though generally.

Benefit.

And the benefit then in Columbus to be honest.

As we're picking up energy.

Energy orders there.

One large mill pipe mill.

Started back up.

Can you talk about those dynamics, a little bit more on the energy side in terms of the switch that it has to do with that.

The trade case that was filed.

Yes.

It's from our understanding is it's more just the.

Speaker 12: From our understanding, it's more just a cost issue.

A cost issue.

<unk>.

Speaker 12: you know, taking a slug, you know, engineered bar slug and piercing it and producing Siemens pipe.

Taking.

A slug engineered bar slug in pursing, it and producing seamless pipe.

Speaker 12: It's more expensive today now that hot band has come off so people are switching to

Is more expensive today, neither hot band has come off and.

So people are switching to <unk>.

Yeah.

Thank you so much.

Speaker 1: Thank you. Our next question today is coming from Andrew Cosgrove at Bloomberg Intelligence. Your line is live.

Thank you. Our next question today is coming from Andrew Cosgrove at Bloomberg Intelligence. Your line is live.

Speaker 14: hi thanks for taking my question and he said conversion costs had been kept in check and the team has done a pretty good job uh... i was just a little bit curious as to you know if you take the raw material spread and then the access on top of that looks like it picked up ten to fifteen percent quarter-on-quarter uh... i was just curious if that anything to do with having to buy more hot band because sin was not up and running in the finishing lines were uh... or anything else that you could add on that particular front

Hi, Thanks for taking my question.

I know you said conversion costs had been kept in check and the team has done a pretty good job.

It was just a little bit curious as to if you take the raw materials spread and then the excess on top of that it looks like it ticked up 10%, 15% quarter on quarter.

I was just curious if that anything to do with having to buy more hot band because certain was not up and running in the finishing lines were.

Or anything else that you could add on that particular front.

Speaker 6: Great, great question and yes.

Great Great question and yes.

Yeah.

Speaker 6: The convert, as I indicated earlier, the conversion cost under control is actually, you know, through our, through our lines specifically. But as as.

The convertible as I indicated earlier the conversion costs under control is actually true through our lines specifically.

But as is.

Speaker 6: our conversion businesses. Today, one has to remember what we're purchasing, 1.7, 1.8 million tons of substrate from others to support the techs in Pittsburgh. We buy from third parties for our new million fabrication business. You've got your steel supply. You have our own facility.

Our conversion businesses and.

Today, one has to remember.

Purchasing because of 171 8 million tons of substrate from others.

To support our.

<unk> and Pittsburgh.

We buy from third parties for Ron Union fabrication business.

<unk> got U S steel supply you have.

So it will be.

No.

Speaker 12: Yes, the added substrate, or the substrate cost moving through, does impact the perceived...

Yes.

The added substrate or the substrate cost movements fruit does impact the perceived.

Yes.

Alright, Okay, and then just lastly could you just give us a little bit of an idea.

Speaker 15: And then, just lastly, could you just give us a little bit of an idea how much it costs to move things geographically, say, from the Gulf up to the Midwest or from where you guys are situated at in the middle of the country to the western part? And then, I guess along the same lines would be, are you still planning on sending 30 percent of shipments to Mexico?

How much it cost to move things geographically.

<unk> from the Gulf up to the Midwest or from where you guys are situated in the middle of the country to the western part.

And then I guess, along the same lines would be are you still planning on sending 30% of citizens.

Shipments to Mexico.

Speaker 12: Well, several questions there, I guess, or several answers to give. From the Midwest, you mentioned Midwest to the West Coast, very little material moves from Midwest or east through the Rockies to the West Coast. It's quite an exorbitant freight rate, and that's why one of the many advantages of Syntem is actually the freight rate.

Well several questions there I guess suraj to give.

From the Midwest you mentioned Midwest.

The West Coast.

Very little material moves from Midwest or through the Rockies to the West coast.

Clinton exorbitant.

Freight rate.

That's why one of the one of the many advantages of symptom is actually the freight rate.

Speaker 12: believe it or not, all the way to the West Coast to compete with the InfoMod.

Believe it or not all the way to the west coast to compete with the infill market.

I think they'll freight rate there.

The $5 a ton or thereabouts.

It is the cheapest freight rate.

Any mill.

To the West coast.

So to sort of calibrate traits.

Speaker 12: to sort of calibrate traits.

<unk>.

Northern freight.

Speaker 6: You know, northern freight, you know, folks in northern Indiana are shipping down to Mexico.

Focused in northern Indiana or shipping down in Mexico.

Speaker 6: and that's in the order of, I do believe, 95 to $110 a ton.

And that's in the order of I do believe.

Five to $110 a ton.

Speaker 6: or is from Sinton into Mexico, into Monterey, it's going to be likely $37-ish a ton.

Or is from sinton into Mexico into into Monterrey is going to be likely 37 ish dollars a ton.

<unk>.

Speaker 12: So the sentence facility itself has a phenomenal sort of geographic advantage there to move that material into Mexico. And you're right.

So the sinton facility itself.

As a phenomenon.

Geographic advantage, there to move that material into Mexico, and you're right.

Yes.

30%, or so 1 million tonnes or thereabouts.

Speaker 3: 30% or so, a million tons or terabytes should flow into Mexico from a sentient facility.

Should should flow into into Mexico for NUCYNTA facility.

Okay, great. Thank you.

Thank you. Our next question today is coming from John Tumazos at John Tumazos, very independent research. Your line is live.

Speaker 1: Thank you. Our next question today is coming from John Tomazos at John Tomazos Very Independent Research.

Speaker 16: Congratulations on all the customers on your campus at SIT.

Congratulations on all the customers on your campus at Sinton with.

Speaker 16: with prime metals in the coding lines and then those customers it's i guess close to four million tons of potential demand

With prime metals in the coding lines and then those customers since I guess close to 4 million tonnes of potential demand.

Speaker 16: Do you expect to have the six more vacant lots for new customers filled?

Do you expect to have six more vacant lots for new customers filled.

Does it make sense to build a second mill next to the first one is the demand is good.

Speaker 16: Does it make sense to build a second mill next to the first one if the demand is this good?

Speaker 16: Is it possible, from an engineering standpoint, to add another caster to increase the capacity itself?

Is it possible from an engineering standpoint to add another caster.

Increase the capacity at certain above 3 million tonnes Kevin.

Speaker 16: given how much the customers seem to love it.

How much the customers seem to love it.

Speaker 6: Well John , your independent research is on target as always, so thank you, and thank you for the kind words on the team's performance, because they did a phenomenal job last year.

Well, John Youre independent researches.

Is on target as always.

And thank you for the kind words on the team's performance.

They did a phenomenal job last year.

Sure.

I would suggest that.

Speaker 6: I would suggest that, you know, symptoms.

The symptom.

Speaker 3: is a jewel. The reception we've had there thus far, and for those six customers to come and be building even before the plant is running, I think is testament to the vacuum of, or the impact of a vacuum of steel, you know, primary steel production.

As of June .

The reception, we've had thus far and for those six calls to.

To come and be building, even before the plant is running I think is testament to the vacuum of or the impact of a vacuum of steel.

Primary steel production data.

Speaker 12: So SIEM is a much-needed asset for our industry, and it's definitely differentiated.

So soon as a much needed asset for our industry and it's definitely differentiated.

The.

The addition of a second caster.

Speaker 12: The addition of a second CASTA.

<unk>.

Speaker 3: Well, likely is unlikely, but we have designed that facility to add somewhere between a million to a million and a half tons of additional capacity.

We'll likely is unlikely.

But we have designed that facility too to.

At somewhere between a $1 1 million tons of additional capacity.

Speaker 6: So expansion of that facility, the capability is definitely there.

So expansion of that facility.

The capability is.

Definitely.

I think we.

Speaker 16: I think we will too.

What is the limiting factor is the capacity of the plant is it the caster are the surrounding infrastructure.

The.

Speaker 12: The hot strip mill, like our other mills, has the ability, given the width-gauge combination that we can produce there, has, you know, four and a half million tons of capacity.

The cash flow the hot strip mill like our other mills.

The ability.

Given the width gauge combinations that we can produce.

Four 5 million tons of capacity.

Thank you my son, one on Sinton sure in November you joined the Merit Ken.

Speaker 16: My son went on a sit-in tour in November , he joined the American...

Speaker 16: AIST, American Iron and Steel Technology Group, and he was telling me how great it was and sent me along his notes.

Yes.

Ken Iron Steel technology group.

And he was telling me how great. It was sent me a longest notes so not all of that aside from Mark I learned from the younger generation.

Speaker 16: Yeah, I know, John , and I don't know how that happened, but we were glad that he was there, I guess. ...conference in September of AIST and six, nine other trade associations in Pittsburgh, and has his own friends in the engineering departments of all these steel companies.

Yeah, I know John I don't know how that happened.

Yeah.

But we believe we're glad that he was there I guess ship conference in September .

And a six nine other trade associations in Pittsburgh and has its own friends in the engineering departments of all of the steel companies now.

Speaker 6: Yeah, well, that's good. But no, thanks for your continued support of us, John . I appreciate it.

Yeah, well that's good.

Thanks for your.

Continued support of as Don I appreciate it Mike.

Speaker 1: Thank you. Our next question today is a follow-up from Tim Nataners. Your line is live.

Thank you. Our next question today is a follow up from Timna Tanners. Your line is live.

Speaker 8: okay i think that i'm speaking and i i don't think there's a lot about question about that fabricating business and if you look at starkly uh... you know the profitability in that division for you to talk with and it's been pretty consistently uh...

Hey, guys. Thanks for squeezing me in I, just think there's a lot of question about the fabricating business and if you look historically.

<unk> ability in that division for EBITDA per ton has been pretty consistently.

50 to 200 Bucks for just to give you a broad range of course.

Speaker 8: to give you a broad range of course and you know prices went up a thousand bucks a ton, EBITDA per ton exploded and you say it's going to be sustained there.

Prices went up thousand Bucks, a ton EBITDA per ton exploding and you say, it's going to be sustained there. So just just like to understand a little bit.

Speaker 8: I'd just like to understand a little bit, you know, is this a new normal in terms of earnings? Is this out-earning? What's driving that? Are customers not kind of pushing back at all on the big increases in light of falling underlying steel prices? If any further color would you like to add?

Is this a new normal in terms of earnings of this out, earning whats driving that or customers.

Kind of pushing back at all on the big increases in light of falling underlying steel prices just any further color would be really helpful.

But it depends on.

Speaker 3: But it depends on what time period you're calibrating to, Tim, I guess. You know, that industry, since last peak, has changed and consolidated to a large degree. And at the same time, you know, currently the actual market demand...

What time period, you're calibrating to Timna I guess that industry.

Since the last peak.

This change in consolidated.

So the answer Greg.

And at the same time.

Currently the actual market.

Demand is at a historical high.

Speaker 5: The visibility that we have isn't predicated upon falling steel prices, it's predicated upon the forward pricing that we know we have in the order book for

Certainly the.

The visibility that we have is it predicated upon falling steel prices. It's predicated upon the forward pricing that we know we have an order book for steel.

Steel joist and deck and the team's done a really good job of managing the steel raw material input. So that's why we have more certainty I would not fit into the new normal no.

Speaker 5: The team has done a really good job of managing the steel raw material.

Speaker 5: So that's why we have more certainty. I would not say this is a new normal, no. This is an extraordinary time for them, but to Mark's point, we're gaining market share as well.

Ordinary time for them, but to Mark's point, we're gaining market share as well as.

Speaker 5: The team's been doing some really interesting things on the operational side. We've added shifts. The unique thing about our fabrication business is we can really achieve whatever volume demands will allow us to have just by adding people rather than adding assets, which is a very powerful tool. If we add volume, it really drops the bottom line.

The team's been doing some really interesting things on the operational side. We added ship unique thing about our fabrication business as we can really achieve whatever volume demand will allow us to have just by adding people rather than adding assets, which is a very powerful tool we added volume it really.

Bottom line.

Speaker 5: And so that's why, again, we feel really confident about, you know, 2022 for the fabrication, but it shouldn't be our expectation that this is something that is the new.

And so that's why again, we feel really confident about 2022 for the fabrication, but it shouldnt be our expectation that this is something that is the new normal.

Speaker 1: Thank you. Our final question for today is a follow-up from Seth Rosenfeld. Your line is live.

Thank you.

Our final question for today is a follow up from Seth Rosenfeld. Your line is live.

Thank you again for taking our questions. One final one of mine for shareholder returns.

Speaker 15: In the past, you've talked about the completion of Sinton as a potential catalyst to increase the base dividend. Can you talk us through the timeline in terms of the de-risking of Sinton that you would want to secure before making that step? When we think about the scale of any potential increase, how should we consider that versus historical strategy? Thank you.

In the past you've talked about the completion of <unk> as a potential catalyst to increase the base dividend.

Can you talk us through the timeline in terms of the Derisking absent from that you would want to secure before making that step and we think about the scale of any potential increase in hodgkin's.

Historical strategy. Thank you.

So I think we mentioned it on the last quarter conference call as well is that there is.

Speaker 5: So I think we mentioned it on the last quarter conference call as well, Seth, there is definitely the impetus from the board and from the senior leadership team to increase the dividend when we have through cycle cash earnings that are increased.

Definitely.

The <unk>.

Impetus from the board and from the senior leadership team to increase the dividend when we have through cycle cash earnings that are increasing and so that definitely is Vincent we.

Speaker 5: And so that definitely is been, we generally have our increases in the first order. I can't tell you what that will look like. I would expect to see it sometime in the first half of the year. But again, that's a board decision to make. They're very supportive of this substantial increase. We have a target of a net income payout ratio of at least thirty five percent.

We generally have our increases in the first quarter I can't tell you what that will look like.

We expect to see sometime in the first half of the year again, Thats a board decision to make.

We're very supportive of this.

Natural increase.

We have a target of a net income payout ratio of at least 35%.

Speaker 5: So that's something that we'll take into consideration as we look at the cycle earnings percentage and what that dividend increase will look like. But in the meantime, we're using the share buyback program as a.

And so that's something that we'll take into consideration as we look at through cycle earnings.

And with that dividend increase will look like but in the meantime, we're using the share buyback program is a complement that's something that we believe is very powerful for shareholder returns as well.

Speaker 4: That's something that we believe is very powerful for shareholder returns as well.

Thank you that was our final question for today.

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

Speaker 1: That concludes our question and answer session. I'd like to turn the call back over to Mr. Millett for any closing remarks.

Thanks, Kirk just quite simply for those on the lineup of course, thank you for that support for sure.

Speaker 6: Thanks, Kate. Just quite simply, for those on the line that support us, thank you for that support, for sure. Any customers, again, my heartfelt thanks to you. You make us who we are, in all honesty. And to our team.

Any customers.

Again, my heartfelt thanks to you you make us.

Who we are in all honesty.

And so our team guys.

Speaker 6: Guys and girls, you absolutely shattered any previous performance by a long margin. And yeah, the market helped, but what you do each and every day makes us different.

<unk>, you're absolutely shattered any previous.

Formants by a long margin and yet the market help but what you do each and every day it makes us different.

Speaker 6: Proud to be part of you. But lastly though.

I'm proud to be part of you.

Lastly, though.

Phenomenal performance from a from a volume and from a profitability standpoint, but we need that to buckle down.

Speaker 6: phenomenal performance from a volume and from a profitability standpoint that we need to buckle down.

Speaker 6: double back down on our safety and get that trend going back in that downward trajectory as we have in the past. But again, thank you each and every one of you. Make it a great day. Bye-bye.

Double back then almost safety and give that trend going back in that.

With.

The trajectory as we have in the past, but again, thank you to each and every one of you make it a great day bye bye.

Okay.

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

Speaker 1: Thank you, ladies and gentlemen. That concludes today's call. Thank you for your participation and have a great and safe day.

Got it.