Q1 2024 Steel Dynamics Inc Earnings Call

Operator: Good day, and welcome to the Steel Dynamics first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After management's remarks, we'll conduct a question and answer session, and instructions will follow at that time. Please be advised that this call is being recorded today, April 24th, 2024, and your participation implies consent to our recording of this call. If you do not agree to these terms, please disconnect. At this time, I'd like to turn the conference over to David Lipschitz, Director and Head of Relations. Please go ahead.

Good day and welcome to steel dynamics first quarter 2024 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 will follow at that time.

Please be advised this call is being recorded today April 24th 2024, and your participation implies consent to our recording of this call.

If you do not agree to these terms please disconnect.

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

David Lipschitz: Thank you, Matthew. Good morning, and welcome to Steel Dynamics' first quarter 2024 earnings conference call. As a reminder, today's call is being recorded and will be available on our website for replay later today. Leading today's call are Mark Millett, Chairman and Chief Executive Officer of Steel Dynamics, Theresa Wagler, Executive Vice President, and Barry Schneider, President and Chief Operating Officer. 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.

David Lipschitz: Thank you Matthew good morning, and welcome to steel dynamics first quarter 2024 earnings Conference call. As a reminder, today's call is being recorded and will be available on our website for replay later today, leading today's call are Mark Millett, Chairman and Chief Executive Officer of Steel dynamics, Theresa Wagler Executive Vice President.

Theresa E. Wagler: And Chief Financial Officer, and Barry Schneider, President and Chief operating officer. The other members of our senior leadership team are joining us on the call individually.

Theresa E. Wagler: Some of today's statements, which speak only as of this date may be forward looking and predictive typically preceded by believe expect anticipate or words of similar meaning they are intended to be protected by the private Securities Litigation Reform Act of 1995 should actual results turn out differently such statements involve risks and uncertainties related to integrating are starting up new assets.

David Lipschitz: They are intended to be protected by the Private Securities Litigation Reform Act of 1995 should actual results turn out differently. Such statements involve risk and uncertainties related to integrating or starting up new assets, the aluminum industry, the use of estimates and assumptions in connection with anticipated project returns, and our steel, metal recycling, and fabrication businesses, as well as 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 heading Forward-Looking Statements and Risk Factors, found on the internet at www.sec.gov and, if applicable, in any later SEC Form 10-Q.

Theresa E. Wagler: The aluminum industry, the use of estimates and assumptions in connection with anticipated project returns at our steel metals recycling and fabrication businesses as well as to general business and economic conditions.

Ample of these are described in the related press release as well as in our annually filed SEC Form 10-K under the heading forward looking statements and risk factors found on the Internet at Www Dot FCC Dot Gov, and if applicable in any later SEC Form 10-Q, you'll also find any referenced non-GAAP financial measures reconciled to the most directly comparable GAAP measure.

David Lipschitz: 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' First Quarter 2024 Results. Now I'm pleased to turn the call over to Mark.

Theresa E. Wagler: In the press release issued yesterday entitled Steel Dynamics reports first quarter 2024 results now I'm pleased to turn the call over to Mark.

Mark D. Millett: Thanks, David. Good morning, everybody.

Mark D. Millett: Okay. Thanks, David and good morning, everybody. It's good to be with you for our first quarter, a 24 earnings call today.

Mark D. Millett: It's good to be with you on our first quarter 24 earnings call today. Once again, our teams achieved a strong first quarter financial and operational performance. Quarterly steel shipments were a new record 3.3 million tons.

Mark D. Millett: Once again, our teams achieved a strong first quarter financial and operational performance.

Mark D. Millett: Steel shipments with a near record $3 3 million tons.

Mark D. Millett: The team successfully began operating our four new value-added flat-roll steel coating lines, which adds about 1.1 million tons of higher-margin product diversification to our portfolio. The Sinton team continues to make significant headway, hitting record milestones and achieving positive EBITDA for the quarter, with significant improvements on the way. And we're also making fast progress on our aluminum flat roll investment. There continues to be strong commercial support for a new and innovative supply chain solution provided by Steel Dynamics, as well as well-known and highly regarded metals producers.

The team successfully began operating our four new value added flat roll steel coating lines, which adds about $1 1 million tons of higher margin product diversification to our portfolio.

Mark D. Millett: The syndrome team continues to make significant headway hitting record milestones in achieving positive EBITDA for the quarter with significant improvements on the way.

Mark D. Millett: And we are also making fast progress on our aluminum flat roll investments.

Mark D. Millett: Tim.

Mark D. Millett: There continues to be strong commercial support for new and innovative supply chain solutions provided by steel dynamics as.

Mark D. Millett: We're a well known and highly regarded metals producer.

Mark D. Millett: And financially, the team continues to excel. They consistently achieve superior financial metrics and a best-in-class return on invested capital. The product of our passionate, can-do, performance-driven culture and our high-margin value-added growth strategy. The most stark and persuasive indicator of the effectiveness of our business model is our relative EBITDA per employee generation, which is substantially higher than any of our competitions. I'm incredibly proud of the Steel Dynamics team; they are the foundation of our company, and they drive our success, and I'm proud to stand among them.

Mark D. Millett: And financially the team continues to excel they consistently achieve superior financial metrics and best in class return on invested capital.

Mark D. Millett: The product of the passionate can do performance driven culture, and a high margin value added growth strategy.

Mark D. Millett: Stock and persuasive indicator of the effectiveness of our business model is a relative EBITDA per employee generation, which is substantially higher than any of our competition.

Speaker Change: I'm incredibly proud of the steel dynamics team. They are the foundation of our company and they drive our success and I'm proud to stand among them.

Mark D. Millett: They are special, and we're focused on providing the very best for their health, safety, and welfare. We're actively engaged in safety at all times and at every level of our company, keeping safety top of mind and an active conversation each and every day. Despite excellent safety performance compared to industry peers, there is more to do. We will not rest until we consistently achieve our goal of zero injury.

Speaker Change: They are special and we're focused on providing the very best for their health safety and welfare.

Speaker Change: We're actively engaged in safety at all times and at every level of our company keeping.

Speaker Change: Keeping safety top of mind and enacted conversation each and every day.

Speaker Change: Despite excellent safety performance compared to industry peers. There is more to do we will not rest until we consistently achieve our goal of zero injuries injuries.

Theresa E. Wagler: But with that, Theresa, would you like to give us some color on the quarter? Thanks, Mark. Good morning. I really appreciate it.

Speaker Change: But with that.

Speaker Change: Teresa would you like to give us some color on the quarter.

Theresa E. Wagler: Thanks Mark. Good morning everyone.

Teresa: Thanks, Mark and good morning, everyone. Thanks for joining us.

Theresa E. Wagler: Thanks for joining us. I add my sincere thanks to our teams for another strong performance. Our first quarter 2024 net income was $584 million, or $3.67 per diluted share, with adjusted EBITDA of $879 million. First quarter 2024 revenue was $4.7 billion, 11% higher than sequential fourth quarter results, supported by strong volume and higher realized selling values across the steel platform. Our first quarter operating income of $751 million was 45% higher than fourth quarter results driven by steel metal spread expansion, especially within our flat rolled operations.

Teresa: I add my sincere thanks to our teams for another strong performance, our first quarter 2020 of where net income was $584 million or $3 67 per diluted share with adjusted EBITDA of $879 million first quarter, 2020, where revenue of $4 $7 billion was 11%.

Teresa: Higher than sequential fourth quarter results supported by strong volume and higher realized selling values across the steel platform.

Teresa: Our first quarter operating income of $751 million with 45% higher than fourth quarter results driven by steel metal spread expansion, especially within our flat rolled operations. A quick note as we construct the aluminum facilities non capitalized expenses are required to flow through SG&A until startup.

Theresa E. Wagler: A quick note, as we construct the aluminum facilities, non-capitalilizable expenses are required to flow through SG&A until startup, so you will see increased costs in that line item as we start operations in mid-2025. In the first quarter, that additional amount was about $14 million.

Teresa: So what you will see increased costs in that line item as we start operations mid 2025 in the first quarter that additional amount was about $14 million.

Theresa E. Wagler: As we discuss our business this morning, we see positive industry fundamentals for 2024 and beyond, and we're focused on our continued transformational growth initiative. Our Sit-in Texas flat-rolled steel division operated close to 70% of capacity for the quarter and, as Mark said, generated positive earnings. Our steel operations generated strong operating income of $675 million in the first quarter, supported by near-record shipments and increased realized product pricing. For those of you who track flat-rolled products by type, in the first quarter, hot-rolled shipments were 1,062,000 tons, cold-rolled shipments were 130,000 tons, and coated shipments were 1,220,000.

Teresa: As we discuss our business. This morning, we see positive industry fundamentals for 2024 and beyond and we're focused toward our continued transformational growth initiatives.

Teresa: Sinton, Texas flat rolled steel division operated close to 70% of capacity for the quarter and as Mark said generated positive earnings are.

Our steel operations generated strong operating income of $675 million in the first quarter supported by near record shipments and increased realized product pricing for those of you who track flat rolled products by type in the first quarter Hot rolled shipments were 1.062 million tons cold rolled shipments.

Teresa: 130000 tons and coated shipments were 1.220 million times.

Teresa: Operating income from our metals recycling operations with $23 million significantly higher than sequential fourth quarter results as increased domestic steel demand supported higher volume.

Teresa: As many of you already know where the largest north American metals, recycler processing and consuming ferrous scrap in nonferrous aluminum copper and other metals. The team continues to effectively lever the strength of our cellular manufacturing model benefiting both our steel and metals recycling operations as well as shortly our aluminum flat rolled operations.

Theresa E. Wagler: Operating income from Armel's recycling operations was $23 million, significantly higher than sequential fourth-quarter results as increased domestic steel demand supported higher volumes. As many of you already know, we are the largest North American metals recycler, processing and consuming ferrous scrap and non-ferrous aluminum, copper, and other metals. The team continues to effectively leverage the strength of our circular manufacturing model, benefiting both our steel and metals recycling operations as well as, shortly, our aluminum flat-world operations.

Teresa: Our steel fabrication segment achieved strong operating income of $178 million in the first quarter lower than sequential fourth quarter results due to weather impacted and seasonally lower shipments and metal spread compression as realized pricing declined and steel raw material input cost increase.

And that backlog extends through the third quarter 2024 with strong forward pricing and.

Teresa: And pricing has stabilized at historically strong levels during the quarter.

Theresa E. Wagler: Our steel fabrication segment achieved strong operating income of $178 million in the first quarter, although lower than sequential fourth quarter results due to weather-impacted seasonally lower shipments and metal spread compression as realized pricing declined and steel raw material input costs increased.

Teresa: Infrastructure Ablation reduction Act and D O a D O E de carbonization support and manufacturing onshoring are expected to increase domestic fixed asset investment later this year and into next year, which will support our steel operations in our fabrication business.

Teresa: Our cash generation continues to be strong based on our differentiated circular business model and highly variable cost structure. During the first quarter of 2024, we generated cash flow from operations of $355 million, which was reduced by an annual company wide profit sharing contribution of $265 million. We ended the call.

Theresa E. Wagler: Our Joyce Index backlog extends through the third quarter of 2024 with strong forward pricing, and pricing has stabilized at historically strong levels during the quarter. The Infrastructure Inflation Reduction Act and DOE decarbonization support in manufacturing on shoring are expected to increase domestic fixed asset investments later this year and into next year, which will support our steel operations and our fabrication business. Our cash generation continues to be strong based on our differentiated circular business model and highly variable cost structure. During the first quarter of 2024, we generated cashflow from operations of $355 million, which was reduced by an annual company-wide profit-sharing contribution of $265 million. We ended the quarter with strong liquidity of $3.1 billion.

Teresa: Order with strong liquidity of $3 $1 billion.

Teresa: For 2024, we believe full year capital investments will be in the range of $2 billion of which approximately one 4 billion relates to our aluminum flat rolled investments and $175 million toward our bio carbon facility.

Teresa: February we increased our cash dividend, 8% to <unk> 46 cents per common share continuing our increasing dividend profile as through cycle cash flow grows we also repurchased $298 million of our common stock representing one 5% of our outstanding shares at March 31st 1.1 billion.

Teresa: <unk> remained available for share repurchases under our new one $5 billion plan.

Teresa: Our capital allocation strategy Prioritizes high return strategic growth with shareholder distributions comprised of a base positive dividend profile that is complemented with a variable share repurchase program. While we remain dedicated to preserving our investment grade credit designation, our free cash flow profile has fundamentally changed over the last five.

Theresa E. Wagler: For 2024, we believe full-year capital investments will be in the range of $2 billion, of which approximately $1.4 billion relates to our aluminum flat-rolled investments and $175 million toward our biocarbon facility. In February, we increased our cash dividend 8% to $0.46 per common share, continuing our increasing dividend profile as through-cycle cash flow grows. We also repurchased $298 million of our common stock, representing 1.5% of our outstanding shares. As of March 31, $1.1 billion remained available for our share of purchases under our new $1.5 billion plan.

Teresa: Five years from an annual average of $540 million from 2011 to 2015 to currently $2.9 billion.

Teresa: We are strategically placed ourselves in a position of strength to have a sustainable capital Foundation that provides the opportunity for meaningful strategic growth and strong shareholder returns, while maintaining investment grade metrics. We believe our track record proves itself with an average three year after tax return on invested capital of 32%.

Theresa E. Wagler: Our capital allocation strategy prioritizes high-return strategic growth with shareholder distributions comprised of a base positive dividend profile that's complemented by a variable share repurchase program. While we remain dedicated to preserving our investment-grade credit designation, our free cash flow profile has fundamentally changed over the last five years from an annual average of $540 million from 2011 to 2015 to currently $2.9 billion. We've strategically placed ourselves in a position of strength to have a sustainable capital foundation that provides the opportunity for meaningful strategic growth and strong shareholder returns while maintaining investment-grade metrics.

Teresa: Nearly a best in class performance across industries, we're squarely positioned for the continuation of sustainable optimized long term value creation.

Sustainability is also a significant part of our long term value creation strategy and we're dedicated to our people our communities and our environment. We're committed to operating our business with the highest integrity in that regard we remain excited about our joint venture with Amy I'm, a leading producer of renewable bio carbon products.

Teresa: We believe our first joint venture facility, which we plan to start operating late in the fourth quarter could decrease our steel scope, one greenhouse gas emissions by as much as 35%.

Teresa: We have an actionable path towards carbon neutrality that is more manageable and we believe considerably less expensive than may lay ahead for many of our industry peers, our sustainability and carbon reduction 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.

Theresa E. Wagler: We believe our track record proves itself with an average three-year after-tax return on invested capital of 32%, clearly a best-in-class performance across industries. We're squarely positioned for the continuation of sustainable, optimized, long-term value creation. Sustainability is also a significant part of our long-term value creation strategy, and we're dedicated to our people, our communities, and our environment. We're committed to operating our business with the highest integrity. In that regard, we remain excited about our joint venture with Amium, a leading producer of renewable biocarbon products.

Teresa: And continue our leadership role moving forward.

Teresa: Barry.

Barry T. Schneider: Thanks Teresa.

Speaker Change: Our steel fabrication operations performed well in the first quarter achieving strong earnings at the end of the first quarter, our steel joist and deck order backlog was solid extending through the third quarter of 2024. Additionally.

Additionally, current pricing has stabilized at historically high levels during the first quarter.

Speaker Change: We continue to have high expectations for the business continued onshoring of manufacturing coupled with infrastructure spending and fixed asset investment related to the IRA programs should provide momentum for additional construction spending later this year and through 2025.

Speaker Change: The fabrication platform provides meaningful volume support for our steel mills critical and softer demand environment, allowing for higher through cycle steel utilization compared to our peers. It also helps to mitigate the financial risk of lower steel prices.

Theresa E. Wagler: We believe our first joint venture facility, which we plan to start operating late in the fourth quarter, could decrease our Steel Scope 1 greenhouse gas emissions by as much as 35%. We have an actionable path toward carbon neutrality that is more manageable and, we believe, considerably less expensive than may lay ahead for many of our industry peers. Our sustainability and carbon reduction 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 continue our leadership role moving forward.

Speaker Change: Our metals recycling operations improved earnings in the first quarter as increased demand from North American steel producers supported higher ferrous scrap volume and the team continues to grow our volume and recycled aluminum and advanced with starting a new aluminum flat rolled operations.

Speaker Change: The North American geographic footprint of our metals recycling platform provides a strategic competitive advantage for our steel mills and for our scrap generating customers in particular, our Mexican recycling operations competitively advantage, our Columbus and certain raw material positions. We also strategically support increased procurement of aluminum scrap for our.

Theresa E. Wagler: Our steel fabrication operations performed well in the first quarter, achieving strong earnings. At the end of the first quarter, our steel joist and deck order backlog was solid, extending through the third quarter of 2024. Additionally, current pricing has stabilized at historically high levels during the first quarter.

Speaker Change: Future flat rolled aluminum operations.

Speaker Change: Our metals recycling team is partnering even more closely with both our steel and aluminum teams to expand scrap separation capabilities through process and technology solutions. This will help mitigate potential prime ferrous scrap supply issues in the future. We will also provide us with a significant advantage to materially increase the recycled content.

Theresa E. Wagler: We continue to have high expectations for the business. Continued onshoring of manufacturing, coupled with infrastructure spending and fixed asset investment related to the IRA programs, should provide momentum for additional construction spending later this year and through 2025. Our fabrication platform provides meaningful volume support for our steel mills, critical in softer demand environments, allowing for higher through-cycle steel utilization compared to our peers. It also helps mitigate the financial risk of lower steel prices.

Speaker Change: In our aluminum flat rolled products and increase our earnings opportunities.

Speaker Change: The steel team had a strong quarter, achieving near record shipments of $3 3 million tonnes during.

Speaker Change: During the first quarter of 2020 for the domestic steel industry operated and had estimated production utilization rate of 77%, while our steel mills operated at 87%.

<unk> consistently operated at higher utilization rates due to our valued value added steel product diversification, our differentiated customer supply chain solutions and the support of our internal manufacturing businesses.

Theresa E. Wagler: Our metals recycling operations improved earnings in the first quarter, as increased demand from North American steel producers supported higher fair scrap volume, and the team continues to grow our volume of recycled aluminum in advance of us starting our new aluminum flat-rolled operations. The North American geographic footprint of our metals recycling platform provides a strategic competitive advantage for our steel mills and for our scrap generating customers. In particular, our Mexican recycling operations competitively advantage our Columbus and Sinton raw materials.

Speaker Change: The higher through cycle utilization of our steel mills is a key competitive advantage supporting our strong and growing cash generation capability and best in class financial metrics.

Speaker Change: Our realized steel pricing improved across our product portfolios. However.

Speaker Change: However spot oil prices weakened early in the first quarter before recovering in March and April.

Speaker Change: Value add flat roll steel pricing spreads are incredibly resilient actually expanding during the same timeframe.

Speaker Change: Underlying demand remained steady with customers are managing to a lower inventory level, which can cause some volatility in spot prices as order activity increased quarter over quarter. Our steel backlogs also improved nicely from December to March across the platform.

Speaker Change: As a percent and the team continues to make significant improvements in operating efficiency and consistently consistency the average around 70% of capability for the quarter breaking monthly utilization records across the lines in March.

Theresa E. Wagler: They also strategically support increased procurement of aluminum scrap for our future flat-rolled aluminum operation. Our metals recycling team is partnering even more closely with both our steel and aluminum teams to expand scrap separation capabilities through process and technology solutions. This will help mitigate potential prime ferrous scrap supply issues in the future. It will also provide us with a significant advantage to materially increase the recycled content in our aluminum flat roll products and increase our earnings opportunities. The steel team had a strong quarter, achieving year-record shipments of 3.3 million tons.

Speaker Change: We are planning a person to see additional improvements in production as the team took several maintenance days in April.

Speaker Change: Among other things.

The outage, we resolve certain transformer limitations, which will allow us to access 100% of our melting capacity versus the previous 80% also the additional two new value added coating lines was successfully commissioned and have commenced operations with excellent results.

Speaker Change: These additional lines will support increased volume and margins as we head through this year.

Speaker Change: Regarding the steel market environment, North American automotive production estimates for 2024 of them were recently revised higher to just over 16 million units with continued growth expected in 2025 and 2026.

Theresa E. Wagler: During the first quarter of 2024, the domestic steel industry operated at an estimated production utilization rate of 77%, while our steel mills operated at 87%. We consistently operate at higher utilization rates due to our value-added steel product diversification, our differentiated customer supply chain solutions, and the support of our internal manufacturing business. The higher through-cycle utilization of our steel mills is a key competitive advantage, supporting our strong and growing cash generation capability and best-in-class financial management.

Speaker Change: Proof forecast.

Speaker Change: This is based on demand resilience and stronger production results.

Speaker Change: As supply chain constraints continued to dissipate across the automotive supply chain automotive dealer inventories are also continuing to remain below historical norms.

Speaker Change: Nonresidential construction remains solid.

Speaker Change: Supported by the increased sequentially quarterly order activity and shipments at our structural and rail division.

Speaker Change: Additionally, onshoring in infrastructure spending should provide further meaningful support to fixed asset investment and related construction oriented projects in the coming years.

Speaker Change: As for the energy markets the solar industry continues to grow in oil and gas activity steady however, increasing.

Speaker Change: Oc <unk> and line pipe imports created a challenging first quarter environment for the domestic producer.

Speaker Change: Looking forward, we are optimistic regarding steel demand and pricing demands for 2024.

Theresa E. Wagler: I realize steel pricing improved across our product portfolio. However, spot roll prices weakened early in the first quarter before recovering in March. Value add, flat roll steel pricing spreads were incredibly resilient, actually expanding during this same time. Underlying demand remains steady, but customers are managing to a lower inventory level, which can cause some volatility and spot prices. As order activity increased quarter over quarter, our steel backlogs also improved nicely from December to March across the platform.

Speaker Change: Okay, well, thanks, Barbara Thanks Theresa.

Speaker Change: While our consistently strong through cycle operating and financial performance continues to support our cash generation and growth investment strategies.

Speaker Change: As mentioned the full value added flat roll steel coating lines are now online and in various modes of startup and the certainly the the line incentive was an absolute unqualified success.

Speaker Change: Jim has done a phenomenal job though.

Speaker Change: And send it should see a step function improvement in operations and profitability.

Speaker Change: Those two new lines ramp up after the April maintenance, which occurred actually to two weeks ago.

Theresa E. Wagler: As for SITN, the team continues to make significant improvements in operating efficiency and consistency. They average around 70% of capability for the quarter, breaking monthly utilization records across the lines in March. We are planning to see additional improvements in production as the team took several maintenance days in April. Among other things during the outage, we resolved certain transformer limitations which will allow us to access 100% of our melting capacity versus the previous 80%.

Speaker Change: They are up and running again.

Speaker Change: The aluminum strategy, our growth is especially compelling responses from existing and new customers across all markets remains incredible.

Speaker Change: And only strengthening as we move forward.

We are currently in discussions with numerous customers, who wish to locate on site with us.

Speaker Change: And this is co location strategy provides a sustainably.

Speaker Change: Competitive model for all of us conserving time money and reducing emissions across the supply chain.

Speaker Change: And this model has already proven itself tremendously successful incentives.

Theresa E. Wagler: Also, the additional two new value-added coating lines were successfully commissioned and have commenced operations with excellent results. These additional lines will support increased volume and margins as we head through this year. Regarding the steel market environment, North American automotive production estimates for 2024 were recently revised higher to just over 16 million units, with continued growth expected in 2025 and 2026. This is a proof forecast, based on demand resilience and stronger production results, as supply chain constraints continue to dissipate across the automotive supply chain. Automotive dealer inventories are also continuing to remain below historical norms.

Speaker Change: And two just the sort of review the project itself 650000 metric tons of aluminum flat roll capability in our Columbus, Mississippi.

Speaker Change: The state of the art plant.

Speaker Change: The sustainable beverage and packaging.

Speaker Change: Sector, automotive and industrial markets as well.

Speaker Change: 300000 metric tonnes of Europe.

Speaker Change: Can stock about 200000 tons of water and 150000 tons of industrial and construction.

Speaker Change: Actually at the site in Columbus, Ohio, the melt cost slab capacity of around 600000 metric tonnes.

Speaker Change: And that will be supported by two satellite facilities, one out west right.

Speaker Change: Are you a band in one in Central Mexico.

Barry T. Schneider: Non-residential construction remains solid, as supported by the increased sequentially quarterly order activity and shipments at our structural and rail division. Additionally, on-shoring and infrastructure spending should provide further meaningful support to fixed-asset investment and related construction-oriented projects in the coming years. As for the energy markets, the solar industry continues to grow, and oil and gas activity is steady. However, increasing OCTG and Line Pipe imports create a challenging first core environment for the domestic producer. Looking forward, we are optimistic regarding steel demand and pricing demands for 2024.

Speaker Change: As you are located in scrap rich regions, we can capture the scrap.

Speaker Change: Turn it into kind of slab and transport it very very effectively and cost efficiently to the mill itself.

Speaker Change: Expanded the project scope to include additional scrap processing on treatment to maximize aluminum recycled content.

Speaker Change: Our metals recycling team has also developed a commercially viable sorting solution and volume for 5000 6000 series aluminum scrap.

Speaker Change: It represents an incredible competitive advantage for us.

Speaker Change: I'll start our plans have not changed our rolling mill.

Speaker Change: Good B operate in mid 2025.

Speaker Change: The Mexico slabs center at the end of 'twenty four.

Speaker Change: Then I, Arizona mid 'twenty five.

Speaker Change: The total project cost, including the recycled slab centers remains at $2 7 billion.

Speaker Change: With virtually all equipment and construction contracts complete we feel confident in the expected amount of investment.

David Lipschitz: Thanks, Barry. Thanks, Theresa.

Speaker Change: We also are confident in the.

Mark D. Millett: Well, consistently strong through-cycle operating and financial performance continues to support cash generation and growth investment strategies. As mentioned, the four Valuad FlatRail steel coating lines are now online and in various modes of startup. And certainly, the line in Sinton was an absolute unqualified success.

Speaker Change: But they will add around about $650 to $700 million of through cycle annual EBITDA, plus our initial $40 million to $50 million from from the on the from the on the platform as well.

Speaker Change: The investment premise, if you think about it.

Speaker Change: The market environment is similar to the domestic steel industry.

Speaker Change: We started SDI 30 years ago.

Speaker Change: They have older assets.

Speaker Change: They've had the.

Mark D. Millett: The team has done a phenomenal job, and Cine should see a step function improvement in operations and profitability as those two new lines ramp up after the April maintenance, which occurred actually two weeks ago. They're up and running again.

Speaker Change: Difficulty, earning their cost of capital. So there has been little reinvestment heavy legacy costs inefficient and the operations are typically high cost.

Speaker Change: And also a significant aluminum flat roll supply deficit that exists in North America, which is expected to grow on this will be the first time, we've ever enter the market.

Mark D. Millett: The aluminum strategy, our growth is especially compelling, responses from existing and new customers across all markets remain incredible and only strengthening as we move forward. We are currently in discussions with numerous customers who wish to locate on site with us. And this co-location strategy provides a sustainably competitive model for all of us, conserving time, money, and reducing emissions across the supply chain. And this model has already proven tremendously successful, and to just sort of review the project itself, 650,000 metric tons of aluminum flat roll capability in Columbus, Mississippi. It's a state-of-the-art plant.

Speaker Change: There is.

Supply demand gap.

Speaker Change: Pretty positive positive for us for sure.

Speaker Change: We have business alignment that we can leverage our core competencies of construction and operational knowhow.

Speaker Change: We can lever our omnis recycling footprint.

Speaker Change: Many of you know we're the largest.

Speaker Change: <unk> scrubbed recycler in North America.

Speaker Change: And again, we are developing some pretty exciting new separation technologies.

Speaker Change: So it's going to be cost effective very very high return growth for us.

Speaker Change: So moving on we are in passion I think by our future growth plans as they will continue to drive the high return growth momentum we have consistently demonstrated over the years.

Speaker Change: The highest and most recent five year average after tax return on investment invested capital within the S&P 500 and materials companies.

Mark D. Millett: It has served the sustainable beverage and packaging sector, as well as the automotive and industrial markets as well, roughly 300,000 metric tons a year. Canstock, about 200,000 tons of auto and 150,000 tons of industrial and construction. Actually, at the site in Columbus, we'll have a milk cast lab capacity of around 600,000 metric tons, and that will be supported by two satellite facilities, one west around Gila Bend and one in central Mexico, which are located in scrap-rich regions.

Speaker Change: Most recent three years, we have had an average of after tax return on investment invested capital of 32%.

Speaker Change: Which I think is a stunning number.

Speaker Change: Affirmation of the ability of all of our team.

Speaker Change: Our disciplined and intentional growth strategy focused on differentiated value added supply chain solutions.

Speaker Change: To provide a sustainable and growing cash generation.

Speaker Change: And we will continue to do so in the future so I'm incredibly optimistic moving forward.

Speaker Change: I believe the market dynamics are in place to support increased demand across all operating platforms in 'twenty four.

Speaker Change: North America will benefit from continued onshoring of manufacturing businesses in the U S will benefit from the allocation of public monies from the infrastructure program the inflation, a reduction act and other public programs.

Mark D. Millett: We can capture the scrap, turn it into a cast slab, and transport it very, very effectively and cost-efficiently to the mill itself. The Metals Recycling Team has also developed a commercially viable sorting solution, at volume, for 5,000 and 6,000 series aluminum scrap, which represents an incredible competitive advantage for us.

Speaker Change: Steel dynamics is levered to benefit from those programs through increased steel joist and deck demand flat and long product steel demand.

Speaker Change: The associated higher demand for recycled scrap aluminum.

Speaker Change: As I said earlier, our teams are all foundation I, thank each and every one of them for their passion and their dedication.

Speaker Change: We're committed to them.

Speaker Change: Those listening today, the safety for yourselves and your families and each other.

Speaker Change: Highest priority.

Mark D. Millett: Our start-up plans have not changed. The Rolling Mill should be operating mid-2025. The Mexico Slab Center, end of 2024. And then Arizona, mid-2025. The total project cost, including the recycled slab centers, remains at $2.7 billion.

Speaker Change: Our culture and business model continued to positively differentiate our performance.

Speaker Change: Even the best in class operating and financial metrics.

Speaker Change: We're no longer a simple steel company.

Speaker Change: We're an industrial metals business, providing enhanced supply chain solutions to numerous industries that are essential to global economies.

Speaker Change: This differentiation and diversification mitigates cash generation volatility in all market cycles as we've just seen in this past quarter.

Mark D. Millett: With virtually all equipment and construction contracts complete, we feel confident in the expected amount of investment. We are also confident that it will add around $650 million to $700 million of through-cycle annual EBITDA, plus an initial $40 million to $50 million from the Omni platform as well. The investment premise, if you think about it, the market environment is similar to the domestic steel industry when we started SDI 30 years ago. They have older assets.

Speaker Change: We are competitively positioned and continue to focus on providing superior value for all companies for our customers team members and shareholders alike and.

Speaker Change: And we look forward to creating new opportunities for all of US today. Many years ahead.

Speaker Change: So that said Matthew could you open the lineup for questions. Please.

Matthew: Thank you if you'd like to ask a question. Please signal by pressing the star key followed by the digit one on your telephone keypad.

Mark D. Millett: They've had difficulty earning their cost of capital, so there's been little reinvestment, heavy legacy costs, inefficient operations, and operations are typically high cost. And also, a significant aluminum flat-rolled supply deficit exists in North America, which is expected to grow. And this will be the first time we've ever entered a market where there's a supply-demand gap. Pretty positive for us, for sure.

Matthew: If you're using a speaker phone. Please make sure your mute function is turned off to allow your signal to reach our equipment.

Matthew: If you press star one earlier during todays call. Please press star one again to ensure our equipment has captured your signal.

Matthew: Also we'd like to you to please limit yourself to one question to facilitate time for everyone.

Mark D. Millett: We have business alignment, and we can leverage our core competencies of construction and operational know-how. We can leverage Omni's recycling footprint. As many of you know, we're the largest aluminum scrap recycler in North America. And again, we are developing some pretty exciting new separation technology. So it's going to be cost effective.

Matthew: Any additional questions can be addressed upon reentering the queue.

Matthew: Your first question is coming from Martin Engler from Seaport Research Partners. Your line is live.

Martin John Englert: Hello, Good morning, everyone.

Martin John Englert: Within steel conversion costs appear to have declined quarter on quarter, taking into account and citizens continue to ramp up and substrate costs going into <unk> would you anticipate a comparable reduction.

Mark D. Millett: It's a very, very high return on growth for us. Moving on, we are impassioned, I think, by our future growth plans, as they will continue to drive the high return growth momentum we have consistently demonstrated over the years. We have the highest recent five-year average after-tax return on invested capital within the S&P 500 materials companies. In the most recent three years, we have had an average after-tax return on invested capital of 32%, which I think is a stunning number and an... Affirmation of the Ability of All Artificials.

Martin John Englert: In the current quarter.

Speaker Change: Martin the way that that you and others are able to actually calculate what you call conversion cost is a little bit difficult but.

Speaker Change: But yes with the increasing production at Sydney, which we expect to continue to improve into the second quarter than the second half of the year you will see that the additional volume will help compress costs across the spectrum, but product mix is also something that you need to take into consideration. When you think about flat versus long, but we would expect to see that that the.

Mark D. Millett: A disciplined and intentional growth strategy focused on differentiated value-added supply chain solutions has provided sustainable and growing cash generation, and we'll continue to do so in the future, so I'm incredibly optimistic moving forward. I believe the market dynamics are in place to support increased demand across our operating platforms in 2024. North America will benefit from continued on-shoring of manufacturing businesses, and the U.S. will benefit from the allocation of public monies from the Infrastructure Program, the Inflation Reduction Act, and other public programs. Steel Dynamics is levered to benefit from those programs through increased steel joist and deck demand, flat and long product steel demand, and the associated higher demand for recycled scrap and aluminum.

Speaker Change: Oregon rate as you calculate it we continue to reduce.

Speaker Change: Can't speak to the exact magnitude thereof.

Speaker Change: Okay. Appreciate that thank you and congratulations on the results.

Speaker Change: Thank you.

Speaker Change: Thank you. Your next question is coming from Curt Woodworth from UBS. Your line is locked.

Curtis Rogers Woodworth: Yes. Thank you good morning, Mark and Theresa a couple of questions on the Greenfield aluminum project can you kind of give us a timeline on where when do you think you can get to more of the EBITDA breakeven level.

On the facility and what type of utilization rate you think you would need to achieve that and then can you just speak to what level of commercial commitments or arrangements that you've been able.

Curtis Rogers Woodworth: To achieve at this point and then just lastly, I thought you kept the capex guidance flat at $2 7 billion, but obviously theres been some concern just around general inflationary pressures, but do you feel are.

Operator: As I said earlier, our teams are our foundation. I thank each and every one of them for their passion and their dedication. We're committed to them, and I remind those listening today that safety for yourselves, your families, and each other is our highest priority. Our culture and business model continue to positively differentiate our performance, leading to best-in-class operating and financial metrics. We're no longer a simple steel company. We're an industrial metals business providing enhanced supply chain solutions to numerous industries that are essential to the global economy.

Curtis Rogers Woodworth: Are you seeing any upward pressure on the Capex number and are you pretty confident in on keeping that number at $2 seven going forward.

Curtis Rogers Woodworth: From a I'll go backwards.

Curtis Rogers Woodworth: Anyway.

Curtis Rogers Woodworth: From a capex standpoint, as I mentioned in my sort of preliminary thoughts.

Curtis Rogers Woodworth: Virtually everything is now contracted there we.

Speaker Change: We did.

Speaker Change: You saw here some months ago, we did bump it up to about $2 7 billion with the.

Operator: This differentiation and diversification mitigates cash generation volatility in all market cycles, as we've just seen in this past quarter. We are competitively positioned and continue to focus on providing superior value for our companies, for our customers, team members, and shareholders alike. And we look forward to creating new opportunities for all of us today and in the many years ahead. With that said, Matthew, could you open the line up for questions? Thank you. If you'd like to ask a question, please signal by pressing the star key followed by the digit 1 on your telephone keypad. If you're using a speakerphone, please make sure that it is muted.

Speaker Change: With the knowledge of some inflationary pressures.

Those are all baked into that to that $2 7 billion and we see no no expansion on that number going going forward.

Speaker Change: From a commercial arrangement perspective.

Speaker Change: We've been working obviously with the.

Speaker Change: The major sort of bill can although the beverage can consumers, we've been working with the automotive as well.

Speaker Change: And we're pretty confident that we have the ability to match.

Speaker Change: Our customer demand with the ramp up curve.

Operator: Thank you. If you'd like to ask a question, please signal by pressing the star key followed by the digit 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. If you pressed Star 1 earlier during today's call, please press Star 1 again to ensure our equipment has captured your signal. Also, we'd like you to please limit yourself to one question to facilitate time for everyone. Any additional questions can be addressed upon re-entering the queue. Your first question is coming from Martin Englert from Seaport Research Partners. Your line is live. Hello, good morning, everyone.

Speaker Change: And as we are we also mentioned.

Speaker Change: Operations should start mid 'twenty five.

Speaker Change: There'll be some qualifications.

Speaker Change: Early on but we were confident that we can match.

Speaker Change: The demand from those customers with that startup ramp.

Speaker Change: One point of EBITDA breakeven.

Speaker Change: I would imagine that.

Speaker Change: From the end of the year I would hopefully in that position.

Speaker Change: Okay, and then just a quick follow up on on fabrication like last quarter you talked about.

Speaker Change: Order entry improving and pricing continues to be stable, but obviously, there's still downward pressure in that business can you just give us a sense for maybe volume metrically, how you see things performing into <unk> I know <unk> is always seasonally weak and there were some weather related disruption that deep do you think you can get close to getting back.

Barry T. Schneider: Martin, the way that you and others are able to actually calculate what you call conversion costs is a little bit difficult. But yes, with the increasing production at Sitton, which we expect to continue to improve into the second quarter and second half of the year, you will see that the additional volume will help compress costs across the spectrum. But product mix is also something that you need to take into consideration when you think about flat versus long. But we would expect to see that the conversion rate, as you calculate it, would continue to decline. I can't speak to the exact magnitude of that.

Speaker Change: The positive growth in fabrication, and then just and joist and deck in general can you give us a sense for maybe how those products.

Speaker Change: And if some of these federal programs in terms of the chips Act IRA battery plants in or do you see any new sources of growth that could mitigate what's been somewhat of an air pocket on the warehouse side. Thank you.

Speaker Change: Yeah, I guess from my perspective.

Speaker Change: And I will let Teresa and Barry jump in here in a little bit but.

Operator: Thank you. Your next question is coming from Kurt Woodworth from UBS. Your line is locked.

Speaker Change: Yes from a shipment standpoint.

Speaker Change: And in Q4, and early Q1 shipments kind of leveled off at pre Covid levels.

Curtis Rogers Woodworth: Yeah. Thank you. Good morning, Mark and Theresa.

Mark D. Millett: A couple of questions on the Greenfield Aluminum project. Can you kind of give us a timeline on when you think you could get to more of an EBITDA break-even level on the facility and what type of utilization rate you think you would need to achieve that? And then can you speak to, you know, what level of commercial commitments or arrangements that you've been able to achieve at this point? And then, just lastly, I thought you kept the cutbacks and guidance flat at $2.7 billion.

Speaker Change: We've seen some general seasonality and there's some regional weather impacts here and there.

Speaker Change: The booking rates increased in March and are up again meaningfully in April backlogs are round about six months.

Speaker Change: We personally.

Speaker Change: Consider that to be kind of a volume trough and we think things are going to move up.

Speaker Change: Volume wise in the second quarter and to the rest of the the rest of the year.

Speaker Change: And I think the the thing to emphasize.

Speaker Change: Theres only been slight quarter over quarter price erosion.

Mark D. Millett: But obviously, there's been, you know, some concern just around general inflationary pressures. But do you feel, you know, are you seeing any upward pressure on the CapEx number? And are you pretty confident on keeping that number at $2.7 going forward?

Speaker Change: And so for them to or that market strength to be there I think it confirms our thesis that there has been a paradigm shift in through cycle spreads.

Speaker Change: And I think we've got a very very very constructive view of the long term.

Mark D. Millett: I'll go backwards. It's the easier way.

Mark D. Millett: From a CAPEX standpoint, as I mentioned in my preliminary thoughts, virtually everything is now contracted out. We did, and you saw here some months ago, we did bump it up to $2.7 billion with the knowledge of some inflationary pressures. Those are all baked into that $2.7 billion, and we see no expansion on that number going forward.

Speaker Change: Prospects for the fabrication.

Speaker Change: I think something that I would point out in addition to what Mark said, if you look at and take into consideration that volumes are to Mark's point at a pre COVID-19 level, but earnings were so from an operating income perspective about over $200 per ton.

Speaker Change: Historically in a very strong market that number might have been 150 to $200 per ton.

Mark D. Millett: From a commercial arrangement perspective. We've been working, obviously, with... The major sort of beer can or beverage can consumers, we've been working with the automotive industry as well, and we're pretty confident that we have the ability to match our customer demand with the ramp-up curve. And as we also mentioned, you know, operations should start mid-25. There will be some qualifications, you know, early on, but we're confident that we can match the demand from those customers with that startup round. From the standpoint of Ibra breakeven, I would imagine that, by the end of the year, I would hope we'd be in that position.

Speaker Change: Structurally there has been a significant difference and it is proving out the theory that we know that theres a structural shift.

Speaker Change: Maybe you want to talk a little bit about how the program is actually go into the public dollars.

Speaker Change: Although these these are public.

Speaker Change: The chips act to the IRS.

Speaker Change: There's a lot of work that has to happen upfront and once those projects are.

Speaker Change: Owners are identified and engineering companies are identified that's when it started flowing into.

Speaker Change: All the steel products, but specifically when we look at the joist and deck once its a concrete.

Speaker Change: Kind of a plan of what's going to be built.

Mark D. Millett: Okay. And then just a quick follow-up on fabrication. Last quarter, you talked about, you know, order entry improving, and pricing continuing to be stable, but obviously, you know, there's still downward pressure in the business. Can you just give us a sense for, maybe volumetrically, how you see things performing in 2Q? I know 1Q is always seasonally weak, and there was some, you know, weather-related disruption, but do you think you can get close to, you know, getting back to positive growth in fabrication?

Speaker Change: The timeline is actually pretty quick so when those orders start being in place its typically in a kind of a three to six month window when they start shipping. So so we're encouraged by what we hear what we communicated through the general contractors fabricators out in the marketplace.

Speaker Change: Again, where we have good reason to believe the second half of the year fills up nicely with these projects as they start.

Speaker Change: Moving from conceptual phase to actually entering construction phases.

Speaker Change: Okay. Thank you very much.

Speaker Change: Thank you. Your next question is coming from Carlos de Alba from Morgan Stanley. Your line is live.

Speaker Change: Yeah, Good morning Theresa.

Mark D. Millett: And then just on Joyce & Dec in general, can you give us a sense for maybe how those products fit into some of these federal programs in terms of, you know, the CHIPS Act, IRA battery plants, you know, do you see any new sources of growth that could, you know, mitigate what's been, you know, somewhat of an air pocket on the warehouse side? Thank you.

Speaker Change: Uh huh.

Speaker Change: Even with the discussion the long steel volumes declined quite.

Speaker Change: Sharply or meaningfully year on year can you maybe provide more color as to the different end.

In markets, we think construction and infrastructure that may be leading to these to this decline I mean, clearly the backdrop for the coming years for sure is quite solid but at least in the first quarter. The numbers just just wherein there so any color on the different construction end markets will be great.

Mark D. Millett: Yeah, I guess, from our perspective, and I will let Theresa and Barry chip in here a little bit, but from a shipment standpoint, in Q4 and early Q1, shipments kind of leveled off at pre-COVID levels. You know, we've seen some general seasonality, and there are some regional weather impacts here and there. But booking rates increased in March and are up again meaningfully in April. Backlogs are around for about six months.

Carlos I would say as you look at the mix across long products.

Carlos: As we make sections that are that are lighter sections.

Carlos: That's more responsive with the marketplaces right now so.

Speaker Change: We've had a pretty robust level of order input.

Mark D. Millett: So, we personally consider that to be kind of a volume trough, and we think things are going to move up volume-wise in the second quarter and throughout the rest of the year. And I think the thing to emphasize is, you know, there's only been slight quarter-over-quarter price erosion. And so for that to, or that market strength to be there, I think it confirms our thesis that there's been a paradigm shift in through cycle spreads. And I think we've got a very, very, very constructive view of the long-term prospects for fabrication.

Carlos: Structural rail has performed pretty well, we tend to balance between our rail production and our structural production.

Carlos: And I think.

Carlos: In general I would say the market space has changed from one of where a lot more fabricators are directly going to mills to more of a service center type relationship.

Carlos: And that's again, a more historical way to go into the market at.

Carlos: After the busy year for the last the last several years with construction spending so so we see.

Theresa E. Wagler: I think something that I would point out, in addition to what Mark said, if you look at and take into consideration that volumes are, to Mark's point, at a pre-COVID level, but earnings were still, from an operating income perspective, about over $1,200 per ton. If you looked historically at a very strong market, that number might have been $150 to $200 per ton. So, structurally, there has been a significant difference, and it is proving out the theory that we had, that there is a structural shift. Barry, maybe you want to talk a little bit about how the programs actually go into public dollars.

Carlos: Good response from our customer base, and we have healthy backlogs in our long products right now.

Speaker Change: Alright, Thank you Barry.

Speaker Change: If I may ask another one on the aluminum.

Speaker Change: The project.

Speaker Change: Have you been able to already secure contracts with some of your customers or does still undergoing in terms of discussions with them.

Speaker Change: Paul is still under discussion obviously.

Speaker Change: It's a new mill and so there's a balance between them, making sure that they feel confident that the the the.

Speaker Change: The volume is going to be there.

Speaker Change: But as I said earlier, we have commitments in place that will support.

Barry T. Schneider: A lot of these public, the CHIPS Act and the IRA Act, there's a lot of work that has to happen up front. And once those projects are identified, owners are identified, and engineering companies are identified. That's when it starts flowing into all the steel products, but specifically when we look at the joist and deck, once it's a concrete, you know, kind of a plan of what's going to be built, the timeline is actually pretty quick.

Speaker Change: In large part support the first 12 months to 18 months of ramp up.

Speaker Change: Thank you, Mike and good luck.

Speaker Change: Thank you.

Speaker Change: Thank you. Your next question is coming from Timna Tanners from Wolfe Research Your line is live.

Timna Beth Tanners: Hey, good morning, guys.

Timna Beth Tanners: Can I ask Carlos <unk> question, a different way if you don't mind on the long product side.

Barry T. Schneider: So when those orders start being placed, it's typically in a kind of a three to six month window when they start shipping. So we're encouraged by what we hear, what we communicate with the general contractors, and the fabricators out in the marketplace. So again, we have good reason to believe the second half of the year fills up nicely with these projects as they start moving from the conceptual phase to actually entering construction.

Timna Beth Tanners: Volume since ICM were sharply down from last year in the year ago period, and the first quarter. So I guess it sounds like from the answer you are still seeing quite strong demand. So I guess I'm sure.

Timna Beth Tanners: Should we expect that this was a blip and that maybe there was some weather related reasons and the rest of the year could be more consistent with the past.

Timna Beth Tanners: Past few years or is there something that's changed in your outlook for that long products across structural as far as those all those divisions would be really helpful. Thanks.

Operator: Okay, thank you very much.

Operator: Thank you. Your next question is coming from Carlos de Alba from Morgan Stanley. Your line is live. Yeah.

Carlos De Alba: Good morning, Theresa and Mark. Just continuing with the discussion, long steel volumes declined quite sharply or meaningfully year on year. Can you maybe provide more color as to the different end markets within construction and infrastructure that may be leading to this decline? Clearly, the backdrop for the coming years is quite solid, but at least in the first quarter, the numbers just weren't there. So any color on the different constructions and markets will be great.

Speaker Change: But I think it's in large part.

Speaker Change: The seasonality and the weather related issues Timna.

Speaker Change:

Speaker Change: And you saw.

Speaker Change: Some some price adjustment.

Speaker Change: Just on here are in the marketplace whatever that was.

Speaker Change: Three months ago.

Speaker Change: Six weeks eight weeks ago, and again that wasn't necessarily.

Speaker Change: Market pressure that was just.

Speaker Change: Absorbing some.

Speaker Change: The leaked into the to the marketplace over the prior month two months.

Barry T. Schneider: Carlos, I would say as you look at the mix across long products, you know, as we make sections that are lighter sections, that's more of a response to what the marketplace is right now. So we've had a pretty robust level of order input, and structural rail has performed pretty well. We tend to balance between our rail production and our structural production, and I think, in general, I would say the market space has changed from one where a lot more fabricators are directly going to mills to more of a service center type relationship, and that's again a more historical way of going to the market after the busy years for the last several years with construction spending. So we see, you know, good response from our customer base, and we have healthy back Thank you, Barry.

Speaker Change: We feel confident moving forward for the rest of the year.

Speaker Change: And in that space.

Speaker Change: Okay, So maybe particularly challenging first quarter and rest of the year it looks like solid it sounds like.

Speaker Change: Alright, and then my other question if I could was just if you could remind us about the cadence of contribution from the four new lines, the paint lines and the gals lines and how to think about.

Speaker Change: Increasing volume and profitability would be great. Thank you.

Speaker Change: Yes timna.

Speaker Change: All four of the process lines at this point are actually run product.

Speaker Change: We staged the startup to best utilize our teams and also to.

Timna Beth Tanners: To really focus on improving.

Timna Beth Tanners: Startup process for the other lines so.

Timna Beth Tanners: Our paint line in Terre Haute is is.

Barry T. Schneider: Thank you, Barry. And if I may ask another question on the aluminum project. Have you been able to secure contracts with some of your customers already, or is that still ongoing in terms of discussions with them?

Timna Beth Tanners: It is up and running well shipping prime product, we expect that that ramps up.

Timna Beth Tanners: Second quarter third quarter, getting closer and closer to what the final production will be.

Timna Beth Tanners: On the converse.

Timna Beth Tanners: The Gallup the new Galvanizing line down in Sinton actually started up very well and started up in January is solidly contributing at a very high rate already.

Mark D. Millett: Still on the discussion, obviously. It's a, you know, we're a new mill. And so there's a balance between them making sure that they feel confident that the volume is going to be there, but as I said earlier, we have commitments in place that will, in large part, support the first 12 to 18 months of our ramp-up.

Timna Beth Tanners: Which as Mark has said the team has done.

Timna Beth Tanners: Fabulous job getting that line, making quality like that so quickly.

Timna Beth Tanners: Have an all hands on deck approach. So all the other mills are supporting the team.

Timna Beth Tanners: We're we're continually moving people through to keep the energy high.

Operator: Thank you. Your next question is coming from Timna Tanners from Wolf Research. Your line is live.

Timna Beth Tanners: So I see the second galvanizing line in Terre Haute coming up.

Timna Beth Tanners: Q2, and the more operational status.

Timna Beth Tanners: Hey, good morning guys. I'm going to ask Carlos's question a different way if you don't mind on the long product side. The volumes, as I see them, were sharply down from last year and a year ago in the first quarter. So I guess, from the answer, you're still seeing quite strong demand. So should we expect that this was a blip and that maybe there was some weather-related reasons and the rest of the year could be more consistent with past years, or is there something that's changed in your outlook for the long products across structurals, bars, those Thanks.

Timna Beth Tanners: And progressing through the end of the year the paint line.

Timna Beth Tanners: Through Q2, Q3, and Terre Haute and then the new paint line in Texas will actually be maturing through the end of the year. So all four units will be contributing soundly in second quarter.

Timna Beth Tanners: And progressing through third and fourth quarter.

Speaker Change: Okay. Thanks again.

Thank you. Your next question is coming from catcher <unk> from BMO capital markets. Your line is live.

Catcher: Hi, Thank you for taking my question.

On Sinton can you provide a bit more color, how we should think about the utilization rates in the rest of the year.

Catcher: So as we had talked we.

Catcher: We're about 70% through first quarter.

Mark D. Millett: But I think it's in large part sort of the seasonality and just the weather-related issues, Timna. And you saw, you know, some price adjustment here in the marketplace, whatever that was. Two months ago? Six weeks, eight weeks ago? And again, that wasn't necessarily market pressure that was just absorbing sort of some discounting that had leaked into the marketplace over the prior month, two months. We feel confident moving forward for the rest of the year in that space.

Catcher: Did take some time for a significant outage in April that was planned to among.

Catcher: Among other things address the.

Catcher: The power problem, we had with the primary side voltages to plant.

So we see a really good path to 80% progressing through operational.

Catcher: By the end of the year getting up into the capacity.

In front of US, we see better and better performance routine performance every day, so as the team encountered challenges they worked through them quicker.

Operator: Okay, so maybe a particularly challenging first quarter and the rest of the year looks solid, it sounds like. All right, and my other question, if I could, was just if you could remind us about the cadence of contribution from the four new lines, the paint lines and the galvanized lines, and how to think about increasing volume and profitability would be great. Yeah, Timna, the...

Catcher: Through all of this they remain a very safe operation, which is so so important during startup. So the teams in place the new assets will allow us to provide the best mix possible upstream so that the efficiency of the plant can really be explored further so we continue to be very robust on where we're going.

Barry T. Schneider: Yeah, Timna, all four of the process lines at this point have actually run the product. We staged the startup to best utilize our teams and also to really focus on improving the startup process for the other lines.

Catcher: And the success of the team.

Catcher: Maybe I missed this but was there a power issue during the first quarter.

Catcher: We had talked about the primary side power last year, and having some transfers that needed to be.

Barry T. Schneider: So a paint line in Terre Haute is up and running well, shipping prime product. We expect that that to ramp up through the second quarter and third quarter, getting closer and closer to what the final production will be. On the converse, the new galvanizing line down in Sitton actually started up very well. It started up in January and is solidly contributing at a very high rate already, which, as Mark had said, the team has done a fabulous job getting that line up and making quality like that so quickly. We have an all-hands-on-deck approach, so all the other mills are supporting the team.

Catcher: Replace.

Catcher: And that equipment is very long lead times, our team was able to secure some shorter term solutions that.

Catcher: We've engineered into place and then the construction so now that the outages over we could we can put that equipment in with the power off.

Catcher: We look to bring that that new transformer support.

Catcher: So that the plant has full operational capacity, we have been internally limited at about 80% of the power capability on the melting furnaces. So at this point now this will help to remove that restriction.

Barry T. Schneider: And we're continually moving people through to keep the energy high. So I see the second galvanizing line at Terre Haute coming up in Q2 into more operational status and progressing to the end of the year. The paint line through Q2 through Q3 at Terre Haute. And then the new paint line in Sitton, Texas, will actually be maturing to the end of the year.

When it's finally utilized will be somewhere between now and the end of May.

Catcher: But this April outage was key to to give us the opportunity to get the construction done due to work on the high voltage bus requires the whole plant to be.

Catcher: As the power off so.

Barry T. Schneider: So all four units will be contributing soundly in the second quarter and progressing through the third and fourth quarter. Okay, thanks again. Thank you. Your next question is coming from Katja.

Catcher: Again, great work happening. It's unfortunate these are long lead time items and we've we've remedied the situation that we believe contributed to it. So we're very excited this problem will be behind us here shortly.

Operator: Thank you. Your next question is coming from Katja Jancic from BMO Capital Markets. Your line is live. Hi. Thank you for taking my question.

Speaker Change: Okay. Thank you.

Speaker Change: Thank you. Your next question is coming from Lawson Winder from Bank of America. Your line is live.

Speaker Change: Okay.

Lawson Winder: Thank you operator, and good morning, Mark Theresa Barry Thank you for today's update.

Katja Jancic: As we talked, we were about 70% through the first quarter. We did take some time for a significant outage in April that was planned to, among other things, address the power problem we had with the primary side voltage at the plant. So we see a really good path to 80% progressing through operational by the end of the year and getting up in capacity. In front of us, we see better and better performance, and routine performance every day. So as the team encounters challenges, they work through them quicker.

Lawson Winder: Could you share with us your views on the CRC herc spread spreads that have been.

Lawson Winder: Quite robust recently, what are your thoughts on what's driving that and I know you don't like to add.

Lawson Winder: The pricing what are your I'll try this one and ask what your thoughts are on what that might look like going forward.

Speaker Change: Well I will start and I will.

Speaker Change: I'll just reiterate what I've always said in past calls.

Speaker Change: Coated products are gaining more and more market share. It just just generally.

Speaker Change: And there are some.

Speaker Change: Dynamic changes within the marketplace that are even add to that if you think about the solar.

Barry T. Schneider: And through all this, they remain a very safe operation, which is so important during startup. So the team's in place, and the new assets will allow us to provide the best mix possible upstream so that the efficiency of the plant can really be explored further. So we continue to be very confident about where we're going and the success of the team. Maybe I missed this, but was there a power issue during the first quarter?

Speaker Change: The solar market, which is absolutely huge huge today.

Speaker Change: Youre consuming around about 25.

Speaker Change: 25 tons of coated product per megawatt.

Speaker Change: And again, we're selling next tracker and a whole bunch of folks I think it was something like 300000 tons, a year or thereabouts or even higher.

Barry T. Schneider: We talked about the primary side power last year and having some transformers that needed to be replaced, and that equipment has very long lead times. Our team was able to secure some shorter-term solutions that we engineered into place and did the construction. So now that the outage is over, we could put that equipment in with the power off. We look to bring that new transformer support so that the plant has full operational capacity.

Speaker Change: And to that marketplace.

Speaker Change: Yes.

Speaker Change: Coated flat roll.

Speaker Change: Turn that into an.

Speaker Change: Tubes for the support structure of solar so there are more and more.

Speaker Change: Applications being sued by by coated products today.

Speaker Change: It's a tight market.

Speaker Change: It's supporting the higher highest spread.

Speaker Change: I'd like to add to that Mark too that the.

Barry T. Schneider: We've been internally limited at about 80% of the power capability on the melting furnace, so at this point now, this will help remove that restriction. When it's finally utilized, it'll be somewhere between now and the end of May. But this April outage was key to give us the opportunity to get the construction done, to work on the high-voltage bus, which requires the whole plant to be shut down.

Speaker Change: The teams have been diversifying our coated profile so.

Speaker Change: We have many different kinds of coatings that we offer and those various product lines.

Speaker Change: Provide a very good supply solution to our customers. So the whole supply chain has been maturing for these products and it allows us to move our tons to balance our production needs as well as.

Barry T. Schneider: So again, great work is happening. It's unfortunate. These are long lead times, and we've remedied the situation that we believe contributed to it. So we're very excited this problem will be behind us here shortly.

Speaker Change: Where the markets are interesting so.

Speaker Change: We continue to believe that the spreads between coated and hot roll or are will be attractive.

Operator: Thank you. Your next question is coming from Lawson Wender from Bank of America. Your line is live.

Speaker Change: And it's an area, where we've really invested quite a bit of money over the last.

Speaker Change: For several years to make sure we have the right.

Lawson Wender: Thank you, operator. Good morning, Mark, Theresa, Barry, thank you for today's update. Could you share with us your views on the CRC HRC spreads that have been quite robust recently? What are your thoughts on what's driving that? And I know you don't like to guide to pricing, but what are your thoughts on what that might look like going forward?

Speaker Change: Capabilities at our disposal and the right.

Speaker Change: <unk> chain solutions for the customers are asking for.

Speaker Change: Maybe if I can just add ask a follow up on your <unk>.

Speaker Change: <unk> provided some commentary on fabrication.

Speaker Change: Order backlog and in the pricing of that in.

Mark D. Millett: But I will stop and I would just reiterate what I've always said in past calls, you know, coded products are gaining more and more market share just generally. And there are some pretty dynamic changes within the marketplace that are even added to that. If you think about the solar... the solar market, which is absolutely huge, huge today, you know, you're consuming around about 25, 25 tons of coded product per megawatt. And again, we're selling Nextracker to a whole bunch of folks.

Speaker Change: You indicated it was above pre COVID-19 levels.

Speaker Change: Maybe if I can just try to get a little bit more color on that.

Speaker Change: Would it be fair to say that.

Speaker Change: Pricing in your new bookings and backlog at least are converging some level and perhaps ask how that might compare to.

Speaker Change: Slide 23 levels.

Speaker Change: Lawson I don't think that when we are talking about comparing to 2023 levels I don't know if youre speaking specifically about pricing. If you were speaking about.

Mark D. Millett: I think we're selling like 300,000 tons a year or thereabouts or even higher into that marketplace. And that's coated flat roll; people turn that into tubes for the support structure of solar panels. So there are more and more applications being served by coated products today. It's a tight market, and it's supporting that higher spread.

Lawson Winder: Volume, but the pricing that's in the backlog and the current spot pricing that we have they are converging to your point, which would be expected as pricing stabilizes.

Lawson Winder: Okay.

Lawson Winder: Exactly what I was looking for thank you very much.

Speaker Change: Thank you. Your next question is coming from interest in Gresser from <unk> Paradise. Your line is live.

Gresser: Yes, hi, Thank you for taking my questions.

Barry T. Schneider: I'd like to add to that, Mark, too, that the teams have been diversifying our coded profile. We have many different kinds of coatings that we offer, and those various product lines provide a very good supply solution to our customers. So the whole supply chain has been maturing for these products, and it allows us to move tons to balance our production needs as well as where the markets are interesting. So we continue to believe that the spreads between coated and hot roll will be attractive, and it's an area where we've really invested quite a bit of money over the last several years to make sure we have the right capabilities at our disposal and the right supply chain solutions for what the customers are asking for.

Gresser: Maybe a quick follow up just on the fab business.

Ines Gresser: It was my understanding we should have seen some further moderation in ISP into Q2.

Gresser: You took about the backlog stability and forward pricing et cetera. So.

Gresser: Is it still the base case and that we should see another leg down in Q2 before we stabilize.

Gresser: Yeah.

Gresser: Interest in Hi, this is Teresa and where we're not specifically, giving guidance on any of our segments from an earnings perspective.

Teresa: We don't do it all but I will talk to you about certain leather. So we do expect as Mark said earlier and you would see this normally but we will have higher <unk>.

Teresa: Suppose across you know fabrication steel and metals recycling as we move through the year, which is generally the case in the second third quarter environment as you move out of the seasonality into stronger demand periods. So we absolutely expect to see that Theres also the potential for additional support that we believe will be there.

Lawson Wender: Maybe if I could just add up ask a follow up on your you've provided some commentary on the fabrication Order backlog and then the pricing on that, and you indicated it was above pre-COVID levels. Maybe if I could just try to get a little bit more color on that. Would it be fair to say that, you know, pricing for your new bookings and backlog at least is converging to some level, and perhaps ask how that might compare to 2023 levels?

Teresa: Rates to the public funding.

Teresa: Probably more specifically in the second half of the year and then even more impactful at least my opinion in 2025, which will help provide demand.

Teresa: Exactly a demand driven increase.

Theresa E. Wagler: Lawson, I don't think that we're talking about comparing to 2023 levels. I don't know if you were speaking specifically about pricing, or if you were speaking about volume, but the pricing that's in the backlog and the current spot pricing that we have are converging to your point, which would be expected as pricing stabilizes.

Teresa: Increases in volumes.

Teresa: It relates to the pricing and fabrication, we find that the change or the differential in pricing should start to diminish as it's been stabilized really started stabilizing middle of the fourth quarter.

Teresa: Certainly.

Teresa: Remain so and kind of January March February sorry January February March timeframe. So you need to take a view on that price differential that we've kind of just help explain and then on the steel input costs. So they keep about eight weeks, Barry probably about eight weeks of inventory.

Lawson Wender: That's exactly what I was looking for. Thank you very much.

Operator: Thank you. Your next question is coming from Tristan Gresser from PNB Paradis. Your line is live.

Tristan Gresser: Yes, hi. Thank you for taking my question. Maybe a quick follow-up just on the fab business.

Teresa: I believe flat rolled on the ground so as that pricing has changed in the first quarter. There was input cost will move into the second quarter as well.

Theresa E. Wagler: It was my understanding we should have seen some further moderation in ASP into Q2. You talk about the backlog, stability in forward pricing, etc. So is this still the base case and that we should see another leg down in Q2 before we stabilize?

Okay.

That's really helpful. Thank you.

Speaker Change: And maybe another question on the situation in Mexico.

Theresa E. Wagler: Tristan, hi, this is Theresa. We're not specifically giving guidance on any of our segments from an earnings perspective. We don't do that, but I'll talk to you about certain levers. So we do expect, as Mark said earlier, and you would normally see this, but we will have higher volumes both across, you know, fabrication, steel, and metals recycling as we move through the year, which is generally the case in the second and third quarters as you move out of the seasonality into stronger demand periods.

Speaker Change: You kind of have a unique perspective, there you sell quite some believes in country you're building in the country, but he also U S steel producer for so.

Speaker Change: I mean, the situation in the U S Mexico situation kind of worsened a bit on the trade front talks.

Speaker Change: <unk> a serious retaliation so what's your view on the latest development do you believe that this situation could worsen and what's what are kind of your option if it if it does happen.

Theresa E. Wagler: So we absolutely expect to see that. There's also the potential for additional support that we believe will be there as it relates to public funding, probably more specifically in the second half of the year, and then even more impactful, at least in my opinion, in 2025, which will help provide demand. And then on steel input costs, so they keep about eight weeks, probably about eight weeks of inventory principally flat rolled on the ground. So as that pricing has changed in the first quarter, those input costs will move into the second quarter as well.

Speaker Change: But today, we haven't seen any I don't believe barring any direct impact to our business.

Speaker Change: We grew our substantial market share in Mexico last year, we shipped I think 600 600000 tons or so Donna.

Speaker Change: I think it's more of a wait and see.

Speaker Change: The situation is.

Operator: That's really helpful. Thank you.

Speaker Change: Sort of a.

Speaker Change: But a tit for tat going back and forth, but I think again.

Tristan Gresser: And maybe another question on the situation in Mexico. You kind of have a unique perspective there. You sell quite a few volumes in the country. You're building plants in the country, but you're also a US steel producer first. So, I mean, the situation between the US and Mexico has kind of worsened a bit on the trade front. Talks of tariffs, retaliation. So, what's your view on the latest development? Do you believe that the situation could worsen? And what are your options if it does happen?

Speaker Change: Just as you saw with the Usmc some some years ago.

Speaker Change: The.

Speaker Change: The U S Mexico, a huge trading partners and these things get worked out.

Speaker Change: Alright.

Speaker Change: That's clear.

Speaker Change: And maybe just.

Speaker Change: The last one that you mentioned in your outlook in your prepared remarks that you expect lower inputs.

Can you discuss that a little bit and.

Speaker Change: There have been some discussion that the high level between the U S and Europe of potential carbon based cherish.

Mark D. Millett: Well, today, we haven't seen any, I don't believe Barry, any direct impact on our business. You know, we grew a substantial market share in Mexico last year; we shipped, I think 600, 600,000 tons or so down there.

Speaker Change: Do you believe that still on the table.

Speaker Change: It could potentially materialize.

Speaker Change: Depending on who the next president in the United States. Thank you.

Speaker Change: Well I think our position on the carbon border adjustment mechanisms, we don't see any meaningful.

Mark D. Millett: I think it's more of a wait-and-see situation. It's sort of a... a tit-for-tat, going back and forth, but I think again. Just as you saw with the USMCA some years ago, the U.S. and Mexico are huge trading partners, and these things get worked out.

Speaker Change: Change in American policy, there definitely is a lot of interest in Europe and in the EU will continue to do.

Speaker Change: To go forward with their plans.

Barry T. Schneider: All right, that's, that's, that's clear. And maybe just the last one that you mentioned in your outlook and in your prepared remarks that you expect lower imports. Can you discuss that a little bit? And, you know, there's been some discussion at the high level between the US and Europe of potential carbon-based tariffs. Do you believe that it's still on the table? And that it could potentially materialize? Depending on who's who's the next president in the United States? Thank you. Well, I think our position...

Speaker Change: After the election, we would expect that there will be some kind of.

A united front to.

Speaker Change: To find out how to keep keep trading with Europe. We do believe that's a good thing for us as these develop particularly with our incredibly low sustainability.

Speaker Change: Position. So we have a great position to lead into these these kind of tariffs.

We do see certain coated products moving into the country.

Speaker Change: That are concerning.

Speaker Change: As we address those to our downstream distribution and our customer base.

Barry T. Schneider: Well, I think our position on the carbon border adjustment mechanism doesn't see any meaningful change in American policy. There definitely is a lot of interest in Europe, and the EU will continue to go forward with their plans. After the election, we would expect that there would be some kind of a united front to find out how to keep trading with Europe.

Speaker Change: We are aware of where certain products are moving in the country and we do see certain areas, where it's elevated.

Speaker Change: And we're doing our best respond to that competitive challenge as other other economies.

Speaker Change: Kind of flush towards us win win when they get software. They are so we're always monitoring it through solutions will look at.

Speaker Change: <unk>.

Operator: We do believe that's a good thing for us as these develop, particularly with our incredibly low sustainability position. So we have a great position to lead into these kinds of tariffs. We do see certain coded products moving into the country that are concerning, and as we address those through our downstream distribution and our customer base, we are aware of where certain products are moving in the country, and we do see certain areas where it's elevated.

Speaker Change: We take that on a day by day basis.

Speaker Change: Alright, thank you.

Speaker Change: Thank you. Your next question is coming from Bill Peterson from Jpmorgan. Your line is live.

William Chapman Peterson: Yes, hi, good morning, and a nice job on the quarterly execution.

William Chapman Peterson: Wanted to talk about.

William Chapman Peterson: Some of the re shoring trends, but and also the data center build outs, you've obviously seen a big uptick in data center, but.

William Chapman Peterson: On the same side, we've seen obviously warehouses continue to kind of remain negative. So I guess the question is what is the typical steel intensity you see of data centers and how does that opportunity compared.

Operator: We're doing our best to respond to that competitive challenge; other economies kind of flush towards us when they get soft where they are. So, we're always monitoring it. There are solutions we'll look at. You know, we take that on a day-by-day basis.

William Chapman Peterson: To a warehouse opportunity that again since that's kind of normalized share recently.

Bill This is Barry I think.

William Chapman Peterson: Thank you. Your next question is coming from Bill Peterson from J.P. Morgan. Your line is live.

Barry T. Schneider: Each project is so different theres, a lot of variables and we provide materials to all these different types of projects. So depending on what the owners looking for where that where the data center might be located that will affect the steel intensity.

Barry T. Schneider: Yeah, hi, good morning, and nice job on the quarterly execution. I wanted to talk about some of the reshoring trends and also the data center build outs. We've obviously seen a big uptick in data centers, but on the same side, we've seen, obviously, warehouses continue to kind of remain negative. So I guess the question is, what is the typical steel intensity you see in data centers and how does that opportunity compare to a warehouse opportunity, again, since that's kind of normalized here?

Barry T. Schneider: But generally the.

Barry T. Schneider: The packages aren't wildly different and warehousing.

Barry T. Schneider: And it really depends on where they're going to go and who's designing it so that flexibility in providing.

Barry T. Schneider: Bill, this is Barry. I think each project is so different. There are a lot of variables, and we provide materials to all these different types of projects. So, depending on what the owner is looking for, where the data center might be located, that will affect the steel intensity. But generally, the packages aren't wildly different than warehousing.

The way, we look at lots of different general contractors and lots of different engineering firms.

Barry T. Schneider: We have solutions for each of them so.

Barry T. Schneider: As they go and they might be maybe think of it maybe it's a less steel intensive job, but it might have more.

Barry T. Schneider: Design work involved and the opposite May be true, where it's a straightforward design work and bigger tons. So it's really a broad.

Barry T. Schneider: And it really depends on where they're going to go and who's designing it. So, that flexibility in providing, you know, the way we look at lots of different general contractors and lots of different engineering firms; we have solutions for each of them. So, as they go, it might be a, maybe think of it, maybe it's a less steel-intensive job, but it might have more design work involved. And the opposite may be true, where it's straightforward design work in bigger tons.

Barry T. Schneider: Spectrum across these different projects.

Barry T. Schneider: So depending on each one it's really hard to say.

Barry T. Schneider: But it is definitely an area, where there continues to be interest because of the our artificial intelligence.

The other thoughts about what's going to be needed for that cloud computing and so we remain very interested in there trying to provide good solutions to the various.

Barry T. Schneider: So, it's really a broad spectrum across these different projects. So, depending on each one, it's really hard to say, but it is definitely an area where there continues to be interest because of the artificial intelligence, you know, all the thoughts about what's going to be needed for that cloud computing. And so, we remain very interested in them, trying to provide good solutions to the various stakeholders who are building those.

Barry T. Schneider: Stakeholders, who are building those facilities.

Speaker Change: Okay. So I guess it just really depends on the project.

Speaker Change: If I can ask a second question maybe to Teresa So capex came in a bit lower than expected, but I guess, how should we think about the cadence of capex through the remainder of the year.

Teresa: <unk> reached the 2 billion number you provided in the past.

Teresa: Yeah good morning.

Teresa: Biggest chunk of capital will relate to obviously, the alumina investment and we would expect to see those tick up in the second and third quarter.

Theresa E. Wagler: Okay, so I guess it just really depends on the project. If I could ask a second question, maybe to Theresa, about CapEx coming in a bit lower than expected. But I guess, how should we think about the cadence of CapEx through the remainder of the year, presumably to reach the two billion number you've provided in the past?

Teresa: <unk> equipment continues to arrive and they hit certain milestones. So you should see the bulk of that additional capex or remaining capex being the second and the third quarter, probably about equal and then probably go down to about the same level you saw in the first quarter and the fourth quarter.

Theresa E. Wagler: Yeah, good morning. The biggest chunk of capital will relate to obviously the aluminum investments, and we would expect to see those tick up in the second and third quarters as equipment continues to arrive and they hit certain milestones. So, you should see the bulk of that additional CapEx or remaining CapEx be in the second and third quarters, probably about equal, and then probably go down to about the same level you saw in the first quarter and the fourth quarter.

Speaker Change: Okay. Thanks for that.

Speaker Change: Youre welcome.

Speaker Change: Thank you. Your next question is coming from John Tumazos from John Tumazos, very independent research. Your line is live.

John Charles Tumazos: Thank you.

John Charles Tumazos: I see.

John Charles Tumazos: That you are not.

John Charles Tumazos: Staggering.

John Charles Tumazos: <unk> aluminum slab melt shops.

Operator: Okay, thanks so much, Lisa. You're welcome.

John Charles Tumazos:

John Charles Tumazos: One or two of them to fall off.

John Charles Tumazos: Thank you. Your next question is coming from John Tumazos from John Tumazos's Very Independent Research. Your line is live.

Uh huh.

John Charles Tumazos: Does that mean that you have.

John Charles Tumazos: Uh huh.

Mark D. Millett: I see that you're not. Staggering the Three Aluminum Slab Melt Chops, with one or two of them to follow. Does that mean that you have a lot of customers pent up already for the aluminum rolling mill and that you're concerned that you need the raw material because it might sell out fast? Or is Mexico's slab mill getting sequenced first? because your scrap collection is very advanced in Mexico. And is there a concern that it might take a little longer to develop the scrap flow in Arizona or Mississippi?

John Charles Tumazos: A lot of customers pent up already for the aluminum Rolling mill.

John Charles Tumazos: And then you're concerned you need the raw material because it might settle out fast.

John Charles Tumazos: Or.

John Charles Tumazos: As Mexico's slab mill getting sequenced first.

John Charles Tumazos: Because your scrap collection is.

John Charles Tumazos: Very advanced in Mexico.

John Charles Tumazos: And is there a concern that.

John Charles Tumazos: Might take a little longer to develop the scrap flow in Arizona or in Mississippi.

John Charles Tumazos: Well.

I I wish it was the absolute strategic but some of it is just luck or bad luck Jonathan.

Mark D. Millett: Well, I wish it was all absolute strategic, but some of it is just luck or bad luck, John. But firstly, the satellite mills will, or slab plants will be pretty well focused on UBC, and so the Columbus mill itself will have to produce the 5,000, 6,000 automotive stuff and some of the industrial stuff. So, the Columbus Mail Shop, at least one or two of the furnaces will come up reasonably early. We're focused on SLP or the Mexican facility, to be honest, because that one, the property was purchased first, everything went incredibly well, the permitting went incredibly well, and it's just in line. Our property in Arizona, to be honest, had some initial permitting, I would say, slowdown. I mean, it was just a bureaucracy that delayed that process and facility by several months.

John Charles Tumazos: But firstly the satellite mills will.

John Charles Tumazos: Slide plants will be pretty.

John Charles Tumazos: Pretty well focused on UBC.

John Charles Tumazos: And so the the Columbus mill itself. It will we will have to produce.

John Charles Tumazos: The 5000, 6000 automotive stuff and some of the industrial stuff.

John Charles Tumazos: So so the Columbus mill shop.

John Charles Tumazos: At least one or two of the phone as it will come up reasonably early.

John Charles Tumazos: We're focused on.

SLP or the Mexican facility to be honest because that.

John Charles Tumazos: That when the property was.

John Charles Tumazos: Just first everything went incredibly well the permitting went incredibly well and it's just is that in line.

John Charles Tumazos: The Ah in Arizona to be honest.

Some initial permitting.

John Charles Tumazos: I would say slowdown I mean, it was just the bureaucracy.

John Charles Tumazos: Delay that.

John Charles Tumazos: Delay that.

John Charles Tumazos: <unk> bye bye several months.

Mark D. Millett: So it's better to be lucky than smart. I've been, uh...

Speaker Change: So it's fair to be lucky than smart.

Speaker Change: Hi, Ben.

Mark D. Millett: I won't tell you the language my dad used some time ago, but he called me a lucky critter. Let's just put it that way. And I've been lucky all my life, and you need luck in life. And the biggest luck I have is being surrounded by a phenomenal team, to be honest.

Ben: I won't tell you that the language my dad used some time ago, but.

Speaker Change: Call me.

Speaker Change: Lucky Lucky Critter, let's just put it that way.

Speaker Change: <unk> been Lucky all my life and you need you need luck in life, so and.

Speaker Change: And the biggest luck I'll have is being surrounded by a phenomenal team to be honest itself.

Operator: Thank you very much. Thanks, John. Thanks for your support, as always.

Speaker Change: Thank you very much.

Speaker Change: Thanks, John Thanks for your support as always.

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

Speaker Change: Thank you that concludes our question and answer session I would like to turn the call back over to Mr. Millett for any closing remarks.

Mark D. Millett: Super, thank you Matthew, and thank you to those that remain on the call, and even greater thanks for those that support us and our shareholders. For us, hopefully, we've articulated that we have a very, very constructive near term in the markets, the startup at Centum, and other sort of growth opportunities, the four lines. I think what makes us even more excited, to be honest, is just our long-term competitive position.

Speaker Change: Super Thank you Matthew and thank you for those that remain on the call and even greater thanks for those that support us and our shareholders.

Super: Hopefully we've we've articulated that we are all very very constructive near term on the markets.

Speaker Change: Start up at center, and other sort of growth opportunities the four lines.

Speaker Change: Think what makes us even even more excited to be honest, there's just a long term competitive position.

Mark D. Millett: You know, we are one of the most efficient, lowest-cost producers in the world. We have a very balanced, I think, product portfolio and a very balanced kind of circular manufacturing profile. So we get a lot of pull-through volume from our downstream, from fabrication, and from our conversion plants. So that amounts to about 2 million tons a year today.

Speaker Change: We are the one of the most efficient lowest cost producers.

Speaker Change: And in the World.

Speaker Change: We have a very balanced I think product portfolio.

Speaker Change: And a very balanced kind of circling manufacturing.

Speaker Change: Profile. So we got a lot of pull through volume from our downstream from fabrication and from a conversion plants.

Speaker Change: And that amounts to about 2 million tonnes.

Mark D. Millett: So the pull-through volume is very, very strong, and that allows us for higher and more uniform cash generation through the cycle. I think Barry said, you know, we were at 87% utilization when the industry was at 77%, and that's been a historical norm for us, and I believe our position, from a sustainability carbon footprint perspective, is a huge, huge advantage. I don't believe everyone understands that.

Speaker Change: Here today.

Speaker Change: So the pull through volume.

Speaker Change: <unk> is very very strong allows us for that are the highest.

Speaker Change: And more uniform cash generation through the through cycle.

Speaker Change: I think what I said.

Speaker Change: We were at 87% utilization when when the industry is at 77% and that's been a historical norm for us.

Speaker Change: And I believe the.

Speaker Change: Our position in <unk>.

Speaker Change: From a from a sustainability carbon footprint perspective is a huge huge advantage.

Speaker Change: I don't I don't believe everyone understands it flat.

Mark D. Millett: Our flat roll mills are reportedly, not us reporting it, but our automotive, European automotive manufacturers are suggesting that our two current mills, Butler and Columbus, likely have the lowest carbon footprint of any sheep producers in the world, and Texas is going to be somewhat similar. So that's allowing us to gain huge market traction, certainly in the automotive sector. We actually have more..., more interest than we can support today in that arena. And if you look at the fact that we're already here, and the rest of the world is spending billions and billions of dollars to get to where we are, and recent discussions with a couple of different European companies suggested to us that just their conversion from blast furnace to electric arc furnace and their DRI facilities are likely going to increase their conversion cost by $200-$250 a

Speaker Change: Flat rolled mills are reportedly not us reporting out but our automotive.

Speaker Change: European automotive manufacturers are suggesting that the there are two current mills Butler.

Speaker Change: Columbus.

Speaker Change: Clearly the lowest carbon footprint of any.

Speaker Change: Producers in the World and Texas is going to be somewhat similar.

Speaker Change: So that's allowing us to gain huge market traction certainly in.

Speaker Change: In automotive.

Speaker Change: We actually have more.

Speaker Change: More interest than we can support today.

Speaker Change: And in that arena.

Speaker Change: And if you look at the the fact that we're already here.

Speaker Change: And the rest of the world is spending billions and billions of dollars to get to where we are.

Speaker Change: In recent discussions with a couple of different European companies.

Speaker Change: Suggested to us that.

Speaker Change: Just the conversion from blast furnace to <unk>.

Speaker Change: So electric arc furnace in the.

Speaker Change: Facilities.

Speaker Change: It's likely going to increase the conversion cost by 200 $250 a ton.

Mark D. Millett: And if you think about where that puts us on the global cost curve, we will be absolutely at the very bottom, and that's a very envious position to be. But most importantly, long term, we would suggest that it supports much higher through-cycle spread. We've seen it in recent years, that's going to continue, and our earnings are going to be positively impacted by it. Incredibly excited for SDI going forward.

Speaker Change: And if you think about where that.

Speaker Change: Puts us on the global cost curve.

Speaker Change: We will be absolutely.

Speaker Change: Very bottom I know, it's a very envious position to be the most importantly long term.

Speaker Change: We would suggest that it supports much higher through cycle spreads.

Speaker Change: We've seen it in recent years, that's going to continue our earnings are going to be.

Speaker Change: Be positively impacted by it so.

Incredibly excited for STI going forward.

Mark D. Millett: For those, again, employees on the call, thank you, each and every one of you, for everything you do each and every day. We can't be here doing what we do without you. And you all put in a tremendous quarter and truly... truly sort of punctuated the positive combination of culture and technology and created the best financial metrics of any steel company in the world. Thanks to our customers again; we can't do it without you and our service providers and everyone else. Just thank you for your support. Have a great day!

Speaker Change: For.

Speaker Change: Well those are again our employees on the on the call. Thank you each and every one of you for everything you do each and every day.

We can't be here doing what we do without you.

Speaker Change: And you all put in a tremendous quarter.

Speaker Change: Truly <unk>.

Speaker Change: Truly sort of punctuated.

Speaker Change: <unk>.

Speaker Change: The positive.

Speaker Change: Combination of culture, and technology, and creating the best financial metrics of any steel company I think in the world.

So our customers again, we can't do it without you and all service providers.

Speaker Change: And everyone else just thank you for your support have a great day.

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

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

Speaker Change: Okay.