Q3 2025 Steel Dynamics Inc Earnings Call

Speaker #4: Good day, and welcome to the Steel Dynamics third quarter 2025 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.

Operator: Good day, and welcome to the Steel Dynamics Inc. third quarter 2025 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, October 21, 2025, and your participation implies consent to our recording this call. If you do not agree to these terms, please disconnect. At this time, I would like to turn the conference over to David Lipschitz, Director of Investor Relations. Sir, please go ahead.

Speaker #4: And instructions will follow at that time. Please be advised, this call is being recorded today, October 21st, 2025, and your participants' employees' consent to our recording this call.

Speaker #4: 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.

Speaker #4: Sir, please go ahead.

Speaker #5: Thank you, Ali. Good morning, and welcome to Steel Dynamics' third quarter 2025 earnings conference call. As a reminder, today's call is being recorded and will be available on our website for replay later today.

David Lipschitz: Thank you, Ali. Good morning, and welcome to Steel Dynamics Inc. third quarter 2025 earnings conference call. As a reminder, today's call is being recorded and will be available on our website for replay later today. Leading today's call are Mark Millett, Chairman and Chief Executive Officer of Steel Dynamics Inc., Theresa Wagler, Executive Vice President and Chief Financial Officer, and Barry Schneider, President and Chief Operating Officer. The other members of our senior leadership team are joining us on the call individually. Some of today's statements, which speak only as of this date, may be forward-looking and predictive, typically preceded by believe, expect, anticipate, or words of similar meaning. They are intended to be protected by the Private Securities Litigation Reform Act of 1995, should actual results turn out differently.

Speaker #5: Leading today's call are Mark Millett, Chairman and Chief Executive Officer of STEEL DYNAMICS, Theresa Wagler, Executive Vice President and Chief Financial Officer, and Barry Schneider, President and Chief Operating Officer.

Speaker #5: The other members of our senior leadership team are joining us in the call individually. Some of today's statements, which speak only as of this date, may be forward-looking and predictive.

Speaker #5: Typically preceded by belief, 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.

Speaker #5: Such statements involve risks and uncertainties related to integrating or starting up new assets, the aluminum industry, the use of estimates and assumptions in connection with anticipated project returns, and our steel, metals recycling, and fabrication businesses, as well as to general business and economic conditions.

David Lipschitz: 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, metals recycling, and fabrication businesses, as well as to general business and economic conditions. Examples of these are described in the related press release, as well as in our annually filed SEC Form 10-K under the headings Forward-Looking Statements and Risk Factors, found on the internet at www.sec.gov, and, if applicable, in any later SEC Form 10-Q. You will also find any reference non-GAAP financial measures reconciled to the most directly compared GAAP measures in the press release issued yesterday entitled Steel Dynamics Inc. Reports Third Quarter 2025 Results. Now I'm pleased to turn the call over to Mark.

Speaker #5: Examples of these are described in the related press release, as well as in our annually filed SEC Form 10-K under the headings "Forward-Looking Statements" and "Risk Factors."

Speaker #5: Found on the internet, at www.sec.gov, and if applicable, in any later SEC Form 10-Q. You will also find any reference non-GAAP financial measures reconciled to the most directly compared GAAP measures in the press release issued yesterday entitled STEEL DYNAMICS Reports Third Quarter 2025 Results.

Speaker #5: And now I'm pleased to turn the call over to Mark.

Speaker #6: Super. Thank you, David. Well, good morning, everybody. Thank you for being with us on our third quarter 2025 earnings call. Some may suggest I hyperbole but I often said that we have the best teams on the planet, and they proved it once again in the third quarter.

Mark Millett: Super. Thank you, David. Good morning, everybody. Thank you for being with us on our third quarter 2025 earnings call. Some may suggest hyperbole, but I often said that we have the best teams on the planet, and they proved it once again in the third quarter. Operationally, they executed incredibly well while keeping each other safe and achieved pivotal successes in furthering our significant growth projects. Financially, even with some interim market headwinds and flat roll, we achieved a number of key operational milestones. We had a record steel shipment of 3.6 million tons. Revenues were $4.8 billion. Adjusted EBITDA was $664 million, and we had a healthy cash flow from operations of $723 million. At Sinton, we believe consistent operational execution has been achieved. It was a record quarter for shipments. Downstream coating and pre-paint product quality has matured, and the value-add product portfolio is expanding nicely.

Speaker #6: Operationally, they executed incredibly well, while keeping each other safe, and achieved pivotal successes in furthering our significant growth projects. Financially, even with some interim market headwinds and flat roll, we achieved a number of key operational milestones.

Speaker #6: We had a record steel shipments of 3.6 million tons. Revenues were 4.8 billion, adjusted EBITDA was 664 million, and we had a healthy cash flow from operations of 723 million.

Speaker #6: At Sinton, we believe consistent operational execution has been achieved. It was a record quarter for shipments; downstream coding and pre-paint product quality have matured, and the value-added product portfolio is expanding nicely.

Speaker #6: Industry participants are recognizing that this is the middle of the future. Our aluminum team continues to make strong progress in commissioning and ramping operations.

Mark Millett: Industry participants are recognizing that this is the metal of the future. Our aluminum team continues to make strong progress in commissioning and ramping operations, receiving a number of quality certifications in September and October. In particular, our can sheet has been performing extremely well, with equivalent results to competitive material. Much more to do, but incredibly exciting performance today. Our biocarbon team shipped their first product in September. We're extremely excited to have this new tool in our decarbonization journey that will further reduce our carbon footprint from an already industry-leading low level. I continue to be proud of the entire Steel Dynamics Inc. team because they are just the foundation of our company, and they continue to amaze me. We are laser-focused on providing the very best for their health and safety. It is an everyday conversation at every level.

Speaker #6: Receiving a number of quality certifications in September and October. In particular, our can sheet has been performing extremely well, with equivalent results to competitive material.

Speaker #6: Much more to do, but incredibly exciting performance today. In our biocarbon team, shipped their first product in September. We're extremely excited to have this new tool in our decarbonization journey that will further reduce our carbon footprint from an already industry-leading low level.

Speaker #6: I continue to be proud of the entire STEEL DYNAMICS team because they they are just the foundation of our company and they continue to amaze me.

Speaker #6: And so we're laser-focused on providing the very best for the health and safety. It is an everyday conversation at every level. Our world-class safety culture continues to mature, and our teams' dedication to our take control of safety program is extraordinary and continues to produce strong results.

Mark Millett: Our world-class safety culture continues to mature, and our team's dedication to our Take Control of Safety program is extraordinary and continues to produce strong results. Their commitment is inspiring. They consider themselves family and challenge the status quo each day to keep each other safe. There will always be more to do as we drive toward a zero-incident environment, as there is nothing more important for us. With that, I'll hand it to Theresa and to Barry to give some color to the quarter.

Speaker #6: Their commitment is inspiring, they consider themselves family, and challenge the status quo each day to keep each other safe. With that said, they will always be more to do as we drive toward a zero-incident environment, as there is nothing more important for us.

Speaker #6: So with that, I'll hand it to Theresa and to Barry to give some color to the quarter.

Speaker #7: Excellent. Thank you, Mark. Good morning, everyone. Thank you for joining us, and thanks to the teams for an exceptional performance. Our third quarter 2025 earnings prediluted share were $2.74, with adjusted EBITDA of 664 million.

Theresa Wagler: Excellent. Thank you, Mark. Good morning, everyone. Thank you for joining us, and thanks to the teams for an exceptional performance. Our third quarter 2025 earnings per diluted share were $2.74 with adjusted EBITDA of $664 million. Both third quarter 2025 revenue of $4.8 billion and operating income of $508 million were higher than the second quarter results, driven by record steel shipments and metal spread expansion as scrap raw material costs decline more than steel prices. As we discuss our business this morning, we continue to focus and execute on our transformational growth initiatives. Our steel operations generated operating income of $498 million in the third quarter, 30% higher sequentially based on record shipments, supported by an almost 20% improvement in shipments from Sinton and metal spread expansion. Average scrap costs declined $27 per ton, while average realized pricing only declined $15 per ton.

Speaker #7: Both third-quarter 2025 revenue of $4.8 billion and operating income of $58 million were higher than the second-quarter results, driven by record steel shipments and metal spread expansion, as scrap raw material costs declined more than steel prices.

Speaker #7: As we discuss our business this morning, we continue to focus and execute on our transformational growth initiatives. Our steel operations generated operating income of 498 million dollars in the third quarter, 30% higher sequentially based on record shipments, supported by an almost 20% improvement in shipments from Sinton, and metal spread expansion.

Speaker #7: Average scrap costs declined $27.00 per ton, while average realized pricing only declined $15.00 per ton. For modeling purposes, this quarter's hotband shipments were 1,097,000 tons, cold-rolled shipments were 120,000 tons, and finally coated shipments were 1,486,000 tons.

Theresa Wagler: For modeling purposes, this quarter's hotband shipments were 1,097,000 tons, cold-rolled shipments were 120,000 tons, and finally, coated shipments were 1,486,000 tons. Additionally, we also highlight that our three flat-rolled steel production divisions have planned maintenance outages in the fourth quarter, which could reduce volume by as much as 85,000 tons. For the third quarter, operating income from our metals recycling operations was $32 million, significantly above our sequential second quarter results, driven by near-record shipments, supported by domestic steel demand and steady non-ferrous volume, coupled with metal spread expansion. We are the largest North American metals recycling processing ferrous scrap and non-ferrous aluminum, copper, and other metals, and we are growing to support our increased steel capacity and aluminum flat-rolled operations through new and expanded supplier relationships and through the use of innovative separation technologies. Our metals recycling platform is a significant competitive advantage for all of our platforms.

Speaker #7: Additionally, we also highlight that our three flat-rolled steel production divisions have planned maintenance outages in the fourth quarter, which could reduce volume by as much as 85,000 tons.

Speaker #7: For the third quarter, operating income from our metals recycling operations was $32 million, significantly above our sequential second quarter results. This was driven by near-record shipments supported by domestic steel demand and steady non-ferrous volume, coupled with metal spread expansion.

Speaker #7: We're the largest North American metals recycling processor of ferrous scrap and non-ferrous aluminum, copper, and other metals, and we're growing to support our increased steel capacity and aluminum flat-rolled operations through new and expanded supplier relationships and the use of innovative separation technologies.

Speaker #7: Our metals recycling platform is a significant competitive advantage for all of our platforms. Our steel fabrication team achieved operating income of $107 million in the third quarter, 15% higher than second quarter sequential results due to increased volume, coupled with relatively flat metal spread.

Theresa Wagler: Our steel fabrication team achieved operating income of $107 million in the third quarter, 15% higher than second quarter sequential results due to increased volume coupled with relatively flat metal spread. Our joist index backlog extends through the first quarter of 2026 with solid pricing. Federal programs, manufacturing growth, and onshoring are expected to support domestic fixed asset investment and therefore related steel joist index consumption in the coming years. Congratulations to the aluminum teams in Columbus and San Luis Potosí, hitting so many early quality milestones. The energy and momentum are contagious. Related startup operating losses of $57 million were somewhat higher in the third quarter than previously expected, as the teams continued construction and commissioning of various areas while also accelerating testing for beverage can and automotive products. We currently estimate comparative losses to be in the range of $40 million for the fourth quarter of 2025.

Speaker #7: Our joists and deck backlog extends through the first quarter of 2026 with solid pricing. Federal programs, manufacturing growth, and onshoring are expected to support domestic fixed asset investment and, therefore, related steel joists and deck consumption in the coming years.

Speaker #7: Congratulations to the aluminum teams in Columbus and San Luis Potosí. Hitting so many early quality milestones, the energy and momentum are contagious. Related startup operating losses of 57 million dollars were somewhat higher in the third quarter than previously expected, as the teams continued construction and commissioning of various areas, while also accelerating testing for beverage can and automotive products.

Speaker #7: We currently estimate comparative losses to be in the range of $40 million for the fourth quarter of 2025. Based on current expectations, we continue to believe our aluminum operations will achieve monthly EBITDA break-even or better in the fourth quarter of this year.

Theresa Wagler: Based on current expectations, we continue to believe our aluminum operations will achieve monthly EBITDA breakeven or better in the fourth quarter of this year. During the third quarter of 2025, as Mark mentioned, we generated strong cash flow from operations of $723 million. Of that, operational working capital was a funding source of $126 million. We ended September with liquidity of over $2.2 billion. For the fourth quarter of 2025, we believe capital investments will be in the range of $200 million, and early estimates for capital expenditures for the full year 2026 are in the range of $500 to $600 million. During 2025, we've repurchased $661 million of our common stock or 3.4% of our outstanding shares. At September 30th, $1 billion remained available for share repurchases. Since 2017, we've increased our cash dividend per share by 223%, and we've repurchased $7.4 billion of our common stock.

Speaker #7: During the third quarter of 2025, as Mark mentioned, we generated strong cash flow from operations of $723 million. Of that, operational working capital was a funding source of $126 million.

Speaker #7: We ended September with liquidity of over $2.2 billion. For the fourth quarter of 2025, we believe capital investments will be in the range of $200 million, and early estimates for capital expenditures for the full year 2026 are in the range of $500 million to $600 million.

Speaker #7: During 2025, we've repurchased $661 million of our common stock, or 3.4% of our outstanding shares. At September 30th, $1 billion remained available for share repurchases.

Speaker #7: Since 2017, we've increased our cash dividend per share by 223%, and we've repurchased 7.4 billion dollars of our common stock. That's over a 40% of our outstanding shares.

Theresa Wagler: That's over 40% of our outstanding shares, all while maintaining investment-grade ratings and growing. These actions reflect the strength of our capital foundation and consistently strong cash flow generation capability. Our capital allocation strategy prioritizes high-return strategic growth with shareholder distributions comprised of a base positive dividend profile that's complemented with a variable share repurchase program, while we remain dedicated to preserving our investment-grade credit designation. Our free cash flow profile has fundamentally increased over the last five years to $3 billion, excluding our large strategic Sinton and aluminum investments. We've truly placed ourselves in a position of strength to have a sustainable capital foundation that provides the opportunity for meaningful strategic growth and strong shareholder returns. We recently announced that each of our company's steel mills achieved Global Steel Climate Council product certifications.

Speaker #7: All while maintaining investment-grade ratings and growing. These actions reflect the strength of our capital foundation and consistently strong cash flow generation capability. Our capital allocation strategy prioritizes high return strategic growth with shareholder distributions comprised of a base positive dividend profile that's complemented with a variable share repurchase program, while we remain dedicated to preserving our investment-grade credit designation.

Speaker #7: Our free cash flow profile has fundamentally increased over the last five years to $3 billion, excluding our large strategic Sinton and aluminum investments.

Speaker #7: We've truly placed ourselves in a position of strength. To have a sustainable capital foundation that provides the opportunity for meaningful strategic growth and strong shareholder returns.

Speaker #7: We recently announced that each of our company's steel mills achieved Global Steel Climate Council product certifications. For our customers, this means greater transparency and confidence when sourcing lower embodied carbon steel products from us.

Theresa Wagler: For our customers, this means greater transparency and confidence when sourcing lower-embodied carbon steel products from us. I'm incredibly proud and excited to announce that our biocarbon solution team safely produced and shipped their first biocarbon material in September, and it was successfully used as a carbon replacement at our Columbus flat-rolled steel division, providing an even lower carbon supply chain for our steel customers in the future. The team plans to continue to refine operations and increase production into the first quarter of next year. This achievement marks a pivotal step in our decarbonization journey and further demonstrates our ability to translate innovative concepts into tangible results. A personal thank you to all 73 biocarbon team members. Decarbonization is a meaningful part of our long-term value creation strategy, and we're dedicated to our people, our communities, and our environment.

Speaker #7: And I'm incredibly proud and excited to announce that our biocarbon solution teams safely produce and ship their first biocarbon material in September. And it was successfully used as a carbon replacement at our Columbus flat-rolled steel division, providing an even lower carbon supply chain for our steel customers in the future.

Speaker #7: The team plans to continue to refine operations and increase production into the first quarter of next year. This achievement marks a pivotal step in our decarbonization journey and further demonstrates our ability to translate innovative concepts into tangible results.

Speaker #7: A personal thank you to all 73 Biocarbon team members. Decarbonization is a meaningful part of our long-term value creation strategy, and we're dedicated to our people, our communities, and our environment.

Speaker #7: We are committed to operating our business with the highest integrity. We uniquely have an actionable path forward that's intentional and manageable, and we believe it is considerably less expensive than what may lay ahead for many of our peers.

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

Speaker #7: We're squarely positioned for the continuation of sustainable, optimized long-term value creation. Thank you, Barry.

Speaker #6: Thank you, Theresa. Our steel fabrication operations improved their sequential results as volumes increased 12% sequentially, more than offsetting slight metal spread compression. Order activity remained steady in the quarter, and our backlog now extends through the first quarter of 2026.

Barry Schneider: Thank you, Theresa. Our steel fabrication operations improved their sequential results as volumes increased 12% sequentially, more than offsetting slight metal spread compression. Order activity remained steady in the quarter, and our backlog now extends through the first quarter of 2026. Pricing for steel joist and deck bookings remained relatively stable throughout the quarter. We continue to be optimistic for our steel joist and deck platform based on the continued onshoring and manufacturing, continued announcements of significant privately funded manufacturing projects, and public funding for infrastructure and other fixed asset investment programs. The long-term uplift of this backdrop could be considerable for all of our platforms. Our steel fabrication platform provides meaningful volume support for our steel operations, critical in softer demand environments, allowing for higher through-cycle steel utilization compared to our peers. It also helps mitigate the impact of lower steel prices.

Speaker #6: Pricing for steel joists and deck bookings remained relatively stable throughout the quarter. We continue to be optimistic for our steel joists and deck platform, based on the continued onshoring and manufacturing, continued announcements of significant privately funded manufacturing projects, and public funding for infrastructure and other fixed asset investment programs.

Speaker #6: The long-term uplift of this backdrop could be considerable for all of our platforms. Our steel fabrication platform provides meaningful volume support for our steel operations, critical in softer demand environments.

Speaker #6: Allowing for higher through cycle steel utilization compared to our peers. It also helps mitigate the impact of lower steel prices. Earnings for our metals recycling operation were much higher in the third quarter, as metal spreads improved and shipments were at near record levels.

Barry Schneider: Earnings for our metals recycling operation were much higher in the third quarter as metal spreads improved and shipments were at near record levels. We believe ferrous scrap prices have stabilized and are likely to remain relatively steady throughout the rest of the year, aside from typical seasonal fluctuations. Additionally, the team continues to expand its access to recycled aluminum for our aluminum flat-rolled operations. The North American geographic footprint of our metals recycling platform provides a strategic competitive advantage for our steel, aluminum, and copper operations, and for our scrap-generating customers. Our metals recycling team partners closely with our metals production and manufacturing teams to expand scrap separation capabilities through advanced process and technology solutions. This collaboration helps mitigate supply risks by making more grades of ferrous and non-ferrous scrap usable for operating platforms and generally at a lower cost.

Speaker #6: We believe ferrous scrap prices have stabilized and are likely to remain relatively steady throughout the rest of the year, aside from typical seasonal fluctuations.

Speaker #6: Additionally, the team continues to expand its access to recycled aluminum for our aluminum flat-rolled operations. The North American geographic footprint of our metals recycling platform provides our strategic competitive advantage for our steel, aluminum, and copper operations.

Speaker #6: And for our scrap-generating customers, our metals recycling team partners closely with our metals production and manufacturing teams to expand scrap separation capabilities and to advance process and technology solutions.

Speaker #6: This collaboration helps mitigate supply risk by making more grades of ferrous and non-ferrous scrap usable for operating platforms, and generally at a lower cost.

Speaker #6: Additionally, it positions us to significantly increase the recycled content in our products, unlocking enhanced earnings capabilities. The steel team delivered a solid quarter with record shipments of 3.6 million tons.

Barry Schneider: Additionally, it positions us to significantly increase the recycled content in our products, unlocking enhanced earnings capabilities. The steel team delivered a solid quarter with record shipments of 3.6 million tons. In the third quarter of 2025, the domestic steel industry operated at an estimated production utilization rate of 78%, while our steel mills operated at a notably higher rate of 88%. This consistently higher utilization reflects our value-added steel product diversification, differentiated customer supply chain solutions, and strong support from our internal manufacturing businesses. Our elevated through-cycle utilization rate is a key competitive advantage, underpinning our growing cash generation capability. Overall, realized steel pricing slightly declined in the quarter due to lower flat-rolled steel pricing tied to lagging contracts, which more than offset increasing structural and railroad rail pricing. Overall, domestic steel inventories remain lean from a historical basis.

Speaker #6: In the third quarter of 2025, the domestic steel industry operated at an estimated production utilization rate of 78%. While our steel mills operated at a notably higher rate of 88%.

Speaker #6: This consistently higher utilization reflects our value-added steel product diversification, differentiated customer supply chain solutions, and strong support from our internal manufacturing businesses. Our elevated through-cycle utilization rate is a key competitive advantage, underpinning our growing cash generation capability.

Speaker #6: Overall realized steel pricing slightly declined in the quarter, due to lower flat-rolled steel pricing tied to lagging contracts. Which more than offset increasing structural and railroad rail pricing.

Speaker #6: Overall, domestic steel inventories remain lean from a historical basis. However, coated flat-rolled steel volume and pricing compressed during the quarter, due to an inventory overhang related to imports received earlier in the year, prior to the positive related trade rolling.

Barry Schneider: However, coated flat-rolled steel volume and pricing compressed during the quarter due to an inventory overhang related to imports received earlier in the year prior to the positive related trade ruling. We do believe that prices have bottomed out and will improve as we head into 2026. Last month, the ITC unanimously voted affirmatively on the final determination that imports of corrosion-resistant steel from 10 countries injured the U.S. steel industry. This uniquely positions us as we are the largest producer of non-automotive coated flat-rolled steel products in North America. Together with the announced Section 232 steel tariffs, these developments are expected to positively impact demand for lower carbon emission U.S.-produced steel products. The underlying steel demand remains steady. However, customers continue to exercise caution in placing orders due to ongoing changes in trade policies.

Speaker #6: We do believe that prices of bottomed out and will improve as we head into 2026. Last month, the ITC unanimously voted affirmatively on the final determination that imports of corrosion-resistant steel from 10 countries injured the US steel industry.

Speaker #6: This uniquely positions us as we are the largest producer of non-automotive coated flat-rolled steel products in North America. Together with the announced Section 232 steel tariffs, these developments are expected to positively impact demand for lower carbon-emission U.S.-produced steel products.

Speaker #6: The underlying steel demand remains steady, however, customers continued exercise caution in placing orders to ongoing changes in trade policies. That said, we believe steel prices have stabilized in the near term, with potential for upward movement in 2026.

Barry Schneider: That said, we believe steel prices have stabilized in the near term with potential for upward movement in 2026. Our Sinton, Texas flat-rolled steel mill achieved higher earnings in the third quarter, driven by record shipments and continued efficiency and quality gains. Congratulations to the team. The team continues to make improvements in yield, cost reduction, and quality. They are also continuing toward additional product development to expand our current flat-rolled steel capabilities. Meaningful progress has been made on unique high-quality API pipe grades, high-strength grade 100/110, pressure vessel quality, and OEM qualification packages for our automotive customers. We are seeing increased shipments from Sinton's value-added coating lines, which are strengthening the facility's product mix and boosting its through-cycle earnings capabilities. Regarding the steel market environment, North American automotive production estimates for 2026 were recently revised modestly upward, yet currently remain modestly below 2025 forecast.

Speaker #6: Our Sinton, Texas flat-rolled steel mill achieved higher earnings in the third quarter, driven by record shipments and continued efficiency and quality gains. Congratulations to the team.

Speaker #6: The team continues to make improvements in yield, cost reduction, and quality. They are also continuing toward additional product development to expand our current flat-rolled steel capabilities.

Speaker #6: Meaningful progress has been made on unique, high-quality API pipe grades, high strength grade 10110, pressure vessel quality, and OEM qualification packages for our automotive customers.

Speaker #6: We are seeing increased shipments from Sinton's value-added coating lines, which are strengthening the facility's product mix and boosting its through-cycle earnings capabilities. Regarding the steel market environment, North American automotive production estimates for 2026 have recently been revised modestly upward, yet currently remain modestly below the 2025 forecast.

Speaker #6: Fortunately, our specific automotive customer base has not only remained stable, but have provided opportunities for growth. We have become a supplier of choice for many US-based European and Asian automotive producers, due to our superior carbon content capabilities.

Barry Schneider: Fortunately, our specific automotive customer base has not only remained stable but has provided opportunities for growth. We have become a supplier of choice for many U.S.-based European and Asian automotive producers due to our superior carbon content capabilities. Additionally, numerous announcements have been made concerning a considerable volume of automotive production moving to the U.S. from foreign locations in the coming years. We continue to grow market share in both flat-rolled and SPQ steels within the automotive sector. Non-residential construction should benefit from ongoing onshoring activity, recently announced domestic manufacturing projects, and continued infrastructure spending that are expected to further support fixed asset investment and construction-related demand. In the energy sector, oil and gas activity remains steady, with solar continuing to be very strong as producers attempt to benefit from expiring incentives.

Speaker #6: Additionally, numerous announcements have been made concerning a considerable volume of automotive production moving to the U.S. from foreign locations in the coming years. We continue to grow market share in both flat-rolled and SBQ steels within the automotive sector.

Speaker #6: Non-residential construction should benefit from ongoing from ongoing onshoring activity, recently announced domestic manufacturing projects, and continued infrastructure spending that are expected to further support fixed asset investment and construction-related demand.

Speaker #6: In the energy sector, oil and gas activity remains steady, with solar continuing to be very strong, as producers attempt to benefit from expiring incentives.

Speaker #6: Overall, we remain extremely optimistic concerning steel demand and pricing dynamics for the domestic producers in the coming years, based on the expected demand from new manufacturing and US-produced steel content requirements.

Barry Schneider: Overall, we remain extremely optimistic concerning steel demand and pricing dynamics for the domestic producers in the coming years based on the expected demand from new manufacturing and U.S.-produced steel content requirements. With that, I'll return it to Mark Millett.

Speaker #6: With that, I'll return it to Mark Millett.

Speaker #3: Super, Mr. Schneider. I appreciate that. Thank you, Theresa. So, after many years, I think it's clearly evident that our performance-driven, team-based culture, in combination with a proven, diversified, and value-add business model, drives superior financial metrics.

Theresa Wagler: Super, Mr. Schneider. I appreciate that.

Mark Millett: Thank you, Theresa.

Theresa Wagler: After many years, I think it's clearly evident that our performance-driven team-based culture, in combination with a proven diversified and value-added business model, drives superior financial metrics. This consistently strong operating and financial performance continues to support our cash generation and growth investment strategies, allowing a very balanced cash allocation strategy that has delivered the highest shareholder returns, not only among our metals peers but the best of domestic manufacturers. Our disciplined investment approach continues to support a strong and growing cash generation profile while maintaining a best-in-class return on invested capital. Our aluminum investments are now a reality and are extremely compelling. Initial operations and commercial activity are confirming our initial investment premise. We believe we will enjoy a unique commercial position. Unlike our entry into the oversupplied steel market some years ago, there's a significant domestic supply deficit of over 1.4 million tons for aluminum sheet.

Speaker #3: This consistently strong operating and financial performance continues to support our cash generation and growth investment strategies. Allowing a very balanced cash allocation strategy that is delivered the highest shareholder returns, not only among our metals peers, but the best of domestic manufacturers.

Speaker #3: Our disciplined investment approach continues to support a strong and growing cash generation profile, while maintaining a best-in-class return on invested capital. Our aluminum investments are now a reality and are extremely compelling.

Speaker #3: Initial operations and commercial activity are confirming our initial investment premise. We believe we will enjoy a unique commercial position. Unlike our entry into the oversupplied steel market some years ago, there's a significant domestic supply deficit of over 1.4 million tons for aluminum sheet.

Speaker #3: And this deficit is forecasted to grow, even before tariffs. In 2024, that deficit was supplied through high-cost imports, which are now at an even higher cost as the tariffs increased from 10% in '24 to the current 50% level.

Theresa Wagler: This deficit is forecasted to grow even before tariffs. In 2024, that deficit was supplied through high-cost imports, which are now at an even higher cost as the tariffs increased from 10% in 2024 to the current 50% level. There's a clear alignment with many of SDI's core competencies. Construction capabilities have been once again proven. Both Columbus, Mississippi and San Luis Potosí, Mexico are state-of-the-art assets. If you just think about it for a second, we shipped our first coil within 24 months of groundbreaking. Here we stand today, 27 months from groundbreaking, and we're shipping a prime product to the can sheet and automotive markets. That's an absolutely incredible, incredible performance. My hat's off to the team down there, to Glen Pushes and to Greg Wiggum, everyone, for making that happen. It's an absolutely beautiful, beautiful facility, work of art.

Speaker #3: There's a clear alignment with many of STI's core competencies. Construction capabilities have been once again proven. Both Columbus and SLP are state-of-the-art assets. And if you just think about it for a second, we shipped our first coil within 24 months of groundbreaking.

Speaker #3: And here we stand today, 27 months from groundbreaking, and we're shipping a prime product to the can sheet and automotive markets. That's our absolutely incredible performance. My hats off to the team down there, to Glen Pushes and to Greg Wiggum, and everyone for making that happen.

Speaker #3: It's an absolutely beautiful, beautiful facility. Work of art. We've also levered our deep operational know-how, have an extensive and successful experience operating melting, casting, rolling type assets.

Theresa Wagler: We also lever our deep operational know-how, having extensive and successful experience operating melting, casting, rolling type assets. Our performance-driven culture will drive higher efficiency and lower cost operations, just as we did when we entered the steel industry some 30-plus years ago. It's demonstrated, and the teams will achieve it. We have an advantaged commercial position. Two-thirds of our carbon flat-rolled steel customers also consume and process aluminum flat-rolled sheet. Our growth and penetration into the automotive sector will complement our existing steel position and give customers product optionality. The canister beverage can market, which in conjunction with the more stable earnings profile experienced through the years within the aluminum space, will further enhance the consistency of our through-cycle cash generation. Our raw material platform will facilitate higher recycle content. We're the largest North American metal recycler, including aluminum.

Speaker #3: And our performance-driven culture, will drive higher efficiency and lower cost operations. Just as we did when we entered the steel industry some 30 plus years ago.

Speaker #3: It's demonstrated and the teams will achieve it. We have an advantaged commercial position. Two-thirds of our carbon flat-rolled steel customers also consume and process aluminum flat-rolled sheet.

Speaker #3: Our growth and penetration into the automotive sector will complement our existing steel position and give customers product optionality. The can is a cyclical beverage can market, which, in conjunction with the more stable earnings profile experienced through the years within the aluminum space, will further enhance the consistency of our through-cycle cash generation.

Speaker #3: Our raw material platform will facilitate higher recycle content. We are the largest North American metal recycler. Including aluminum, we recycle already around about half a billion pounds of aluminum per year.

Theresa Wagler: We recycle already around about half a billion pounds of aluminum per year. We've successfully developed new separation technologies, allowing us to have both more access to usable aluminum scrap at a lower cost. Operation experience thus far is confirming our earnings differentiation. We've advertised and do believe that through-cycle EBITDA of $650 million to $700 million is absolutely achievable, plus an additional $40 million to $50 million for OmniSource operations. The key areas of advantage remain labor efficiency, higher recycle content, higher yield, and optimized logistics, along with our low-cost culture. There's no doubt the strategic investment is a cost-effective and high-return growth opportunity, providing SDI with additional canister diversification, further stabilizing and growing our cash generation capabilities. For those that have been there, you understand it. The 650,000 metric ton project is no longer a vision. It's clearly here.

Speaker #3: And we've successfully developed new separation technologies. Allowing us to have both more access to usable aluminum scrap at a lower cost. Operation experience thus far is confirming our earnings differentiation.

Speaker #3: We've advertised and do believe that through-cycle EBITDA of $652 to $700 million is absolutely achievable, plus an additional $40 to $50 million for omni-operations.

Speaker #3: The key areas of advantage remain labor efficiency, higher recycle content, higher yield, and optimized logistics, along with our low-cost culture. There's no doubt the strategic investment is a cost-effective and high-return growth opportunity.

Speaker #3: Providing STI with additional canocyclical diversification, further stabilizing and growing our cash generation capabilities. And for those that have been there, you understand it.

Speaker #3: The 650 thousand metric ton project is no longer a vision, it's clearly here. As our aluminum growth has become a reality, and our reputation permeates the industry, aluminum professionals with vast experience have joined us in this exciting project.

Theresa Wagler: As our aluminum growth has become a reality and our reputation permeates the industry, aluminum professionals with vast experience have joined us in this exciting project. They see the vision and are energized by our culture, where they realize that they will be heard and can have a real impact. They've helped us build a phenomenal team that combines in-depth knowledge of aluminum flat-roll operations, commercial markets, process technology, and customer service, complementing our SDI professionals that bring our performance-driven entrepreneurial culture. We're finding the customer base is excited to have a new market entrant that's known to be innovative, customer-focused, and responsive to their needs. For us, as in with steel, business relationships are long-term, founded on trust and the continuous goal of creating mutual value, not simply financial value, but new supply chain solutions, new products, better quality, and better service. We're seen to react with surprising speed.

Speaker #3: They see the vision and are energized by our culture, where they realize that they will be heard and can have a real impact. They have helped us build a phenomenal team.

Speaker #3: That combines in-depth knowledge of aluminum flat-roll operations, commercial markets, process technology, and customer service, complementing our STI professionals who bring our performance-driven entrepreneurial culture.

Speaker #3: We're finding the customer base is excited to have a new market entrant that's known to be innovative, customer-focused, and responsive to their needs. For us, as with steel, business relationships are long-term.

Speaker #3: Founded on trust and the continuous goal of creating mutual value. Not simply financial value, but new supply chain solutions, new products, better quality, and better service.

Speaker #3: We are seen to react with surprising speed. Many customers have just seen that, with the recent supply side challenges in the market. The timing of our ramp-up has been fortuitous.

Theresa Wagler: Many customers have just seen that with the recent supply side challenges in the market. The timing of our ramp-up has been fortuitous, allowing us to help the market while accelerating our material qualification. We've received approvals for industrial and can sheet finished products and for automotive aluminum hotband earlier this month. This accelerated certification should allow us to shift our product mix to a higher margin mix in 2026, reaching optimization sometime in 2027. Three of the four mill cast houses are fully commissioned at Columbus and have produced 3,000, 5,000, and 6,000 series ingots for the industrial, can sheet, and automotive sectors for rolling mill commissioning, product development, and commercial shipment. The hot mill is completing its commissioning, having run 3003 and 5052 industrial, 3104 can sheet, and 5754 auto-grade material. The cold reversing mill is in startup and is successfully producing 3003, 5052, and 3104 alloys.

Speaker #3: Allowing us to help the market, while accelerating our material qualification. We've received approvals for industrial and can sheet finished products. And for automotive aluminum hotband, earlier this month.

Speaker #3: This accelerated certification should allow us to shift our product mix to a higher margin mix in 2026. Reaching optimization sometime in '27. Three of the four melt cast hoses are fully commissioned at Columbus, and have produced 3,500 and 6,00 series ingots.

Speaker #3: For the industrial can sheet and automotive sectors, for rolling mill commissioning, product development, and commercial shipment, the hot mill is completing its commissioning, having run 3W3 and 5052 industrial, 3104 can sheet, and 5754 auto grade material.

Speaker #3: The coat reversing mill is in startup and is successfully producing 3W3, 5052, and 3104 alloys. Tandem mill number one will be starting up in November, and then tandem mill number two and the cache line are on schedule to be available in the first quarter of 2026.

Theresa Wagler: Tandem mill number one will be starting up in November, and then tandem mill number two and the cast line are on schedule to be available in the first quarter of 2026. It is absolutely incredible if you walk through the plant because the team is incredibly excited with the earlier than anticipated product certification. It is a testament to the phenomenal talent that we have on the team, and it is great energy, great momentum. We anticipate exiting 2026 at a rate of 75% capability, and we expect to achieve monthly EBITDA breakeven sometime in the fourth quarter, increasing thereafter as we continue to ramp and optimize our product mix. Across our business, evolving market dynamics provide an opportunity for us to further enhance our earnings potential. The renewed focus on strategic mercantilist policies to ensure fair and sustainable competition will further improve market strength.

Speaker #3: And it's absolutely incredible if you walk through the plant, because the team is incredibly excited about the earlier than anticipated product certification. It is a testament to the phenomenal talent that we have on the team.

Speaker #3: And it is great energy and great momentum. We anticipate exiting 2026 at a rate of 75% capability, and we expect to achieve monthly EBITDA break-even sometime in the fourth quarter.

Theresa Wagler: A recent coated flat-rolled steel positive trade determination will further curb core and pre-paint imports. We're seeing that already. The administration will continue to hold a firm position on Section 232 tariffs on steel and aluminum imports. The inclusion of tariffs on steel content of derivative products, including fabricated structural steel, which has plagued the domestic industry for years, will be of substantial benefit. One has to consider that in 2024, some 30 to 35 million tons of steel came in through actual products. Last year, obviously, the successful sunset reviews of Section 201 and 301 trade cases will remain in place for some years, stopping dumped Chinese steel from accessing our markets. We will benefit from growing fixed asset investment, which correlates directly with increased steel demand. Risk mitigation to address numerous supply chain dislocations is accelerated, reassuring of manufacturing by many OEMs.

Theresa Wagler: AI and cloud computing will support the need for more non-residential construction, along with data centers, chip factories, and battery plants. We believe there obviously will be associated positive stimulus through the inevitable interest rate reductions that should happen this year and next. Finally, decarbonization will materially steepen the global cost curve, providing Steel Dynamics Inc. with a meaningful competitive advantage to gain market share and increase margins. More importantly, we continue to be impassioned by our current and future growth plans as they will continue to drive the high-return growth momentum we have consistently demonstrated over the years. The earnings growth of these new projects is compelling. The capital spending for Sinton, the four value-add lines, and Aluminum Dynamics is largely spent for the projected future through cycle EBITDA contribution of over $1.4 billion. Steel Dynamics Inc.

Theresa Wagler: has grown to an incredibly resilient, cash-generating business of scale and diversification, driven by the best teams, as I already said, in the world. The model has now demonstrated itself year after year, delivering financial metrics equivalent to best-in-class manufacturing companies. We are fortunate, and at the heart of that good fortune are our people. They are the foundation of everything we do, and I want to personally thank each of them for their passion, their commitment, and unwavering dedication. We are committed to them. I remind those listening today that safety for yourselves, your families, and each other is our highest priority, always. I would also be remiss not to express my gratitude to our loyal customers, many of whom have been with us since the beginning. These partnerships are built on mutual trust, keeping our word, and delivering innovative solutions that enhance your value.

Steel Dynamics has grown to an incredibly resilient cash generating business of scale and diversification driven by the best teams as they already said in the world.

The model has no demonstrated itself year after year delivering Financial metrics equivalent to best-in-class manufacturing companies.

We are fortunate and at the heart of that. Good fortune are our people.

They are the foundation of everything we do. And I want to personally thank each of them for their passion, commitment, and unwavering dedication.

And we're committed to them. I remind those listening today that safety for yourselves, your families, and each other is our highest priority.

Always.

And I would also be remiss. Not to express my gratitude to our loyal customers. Many of whom have been with us since the beginning.

Theresa Wagler: Our new aluminum partners can expect the same level of commitment and collaboration. To our suppliers and service providers, thank you. We value your continued support and the strong relationships we've built together. Our culture and business model continue to differentiate our performance, leading to best-in-class financial performance. As a circular metals business, we are uniquely positioned to offer lower carbon supply chain solutions, enhancing sustainability while helping to mitigate cash flow volatility through all market cycles. This positions us to deliver superior shareholder returns and create lasting value for all stakeholders. We look forward to creating new opportunities for all of us, today and in the years ahead. With that said, Ali, we would love to open the line for questions.

These partnerships are built on mutual trust, keeping our word, and delivering innovative solutions that enhance your value.

A new aluminum partner can expect the same level of commitment and collaboration.

And to our suppliers and service providers, thank you. We value your continued support and the strong relationships we've built together.

Our culture and business model continue to differentiate our performance leading in best-in-class financial performance.

And as a circular Metals business, you are uniquely positioned to offer lower carbon Supply Chain Solutions. Enhancing sustainability while helping to mitigate cash flow volatility through all Market Cycles.

And create lasting value. For all stakeholders.

So we look forward to creating new opportunities for all of us and today, and in the years ahead, and with that, said Ally, we would love to open the line for questions.

Operator: Thank you. If you would like to ask a question, please signal by pressing the STAR key followed by the digit one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. If you pressed STAR one earlier during today's call, please press STAR one again to ensure our equipment has captured your signal. Also, we ask that you please limit yourselves to one question to facilitate time for everyone. Any additional questions can be addressed upon reentering the queue. Thank you. Our first question is coming from Katja Jancic with BMO. Your line is live.

Thank you. If you would like to ask a question, please signal by pressing the star key, followed by the digit 1 on your telephone keypad.

If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.

If you pressed star 1 earlier during today's call, please press star 1 again to ensure our equipment has captured your signal.

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

Thank you.

Our first question is coming from Katya yanich with BMO your line is light.

Katja Jancic: Hi. Thank you for taking my question. Maybe starting on the aluminum rolling mill and the quality qualifications for the products you've received so far, can you talk a bit more what that means for your commercial activity? Specifically, does that open the door for you to start negotiating more longer-term contracts?

Hi. Thank you for taking my question, maybe starting on the aluminum Rolling Mill and the, uh, quality, uh, qualifications for your the products you received so far. Can you talk a bit more what that means for your commercial activities? Specifically, does that open the door for you to start negotiating more longer term contracts?

Mark Millett: Firstly, the accelerated qualifications that we've been receiving is absolutely incredible, given where we are on our learning curve, as you might recognize. Can sheet has been supplied to most of the principal can makers today for qualification. Early performance is, again, it's just incredible. When the team sent me a video of the very first coil going through a can line, flawlessly, it was something to behold. Obviously, we are also having some good progress within automotive. I think what it does, it accelerates the value or the product portfolio mix into next year. We've always said that we hit our target mix in 2027. I think we'll see that earlier in 2027 than we were expecting.

Well, I guess firstly, the, the, the, the the accelerated qual, uh, qualifications, that we've been receiving is, is absolutely incredible. Uh, given where we are on our learning curve as, uh, as as you might. Uh, might recognize

Um, you know, can she has been supplied to to most of the principal can make us today? Uh, for for qualification, uh, early early, uh, um, performance is, is again, it's just incredible. And, uh, when the, when the team sent me a video of the very first coil going through a can line.

With a flawlessly. It was it was it was something to be something to be hope. And obviously we also having uh some some good progress within within Automotive.

I think what it does. Uh,

it, it, it, it, it it accelerates, the, the, the value, or the, um, the, the product portfolio mix, uh,

Into into next year. And, uh, you know, we've always said that we hit our our Target mix in 2027. Uh, I, I think we'll see that earlier in 27. Then we, uh, we were expecting

Theresa Wagler: To answer your other question, Katja, we are negotiating longer-term contracts, both in the sheet, the can sheet, as well as in the automotive. Yes, that has helped, and we had considerable traction, I think, throughout the third quarter as we were starting up. More to follow on that.

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

Katja Jancic: Maybe if I can quickly squeeze one more on the 26th, how should we think about the mix between industrial, can, and auto?

Maybe if I just can quickly squeeze 1 more on the 26th? How should we think about the mix between industrial can and Auto

Theresa Wagler: The most significant difference, Katja, is that earlier on, we wouldn't have expected to have very much volume in automotive specifically. We have full confidence, and we were getting to, I think, an appropriate amount of mix as it relates to can sheet in 2026. As you all remember, the optimized mix for us is 35% automotive. I think, is it 40%, Mark? Sorry.

The the most significant difference katcha is that um, earlier on we wouldn't have expected to have very much volume and Automotive specifically and we have full confidence. And we were getting to I think appropriate amount of mix as it relates to can sheet in 2026. Um as you will remember the optimized mix for us is. Um, it's

Barry Schneider: 45%.

Theresa Wagler: 45% can sheet and the remainder industrial. We feel pretty confident in that can sheet mix for 2026. What has changed is we would expect to not reach full optimization in automotive in 2026, and we'll provide more feedback as we get further certified because, as Mark pointed out, for automotive right now, we're just certified on the hotband side.

35% automotive. Um, I think, is it 40%? Mark, can—sorry, 45%. 45% can sheet and the remainder in industrial. So we feel pretty confident in that can sheet mix for 2026. But what's changed is we would expect to not reach full optimization in automotive in 2026, but we'll provide more feedback as we get further certified. Because, as Mark pointed out, for automotive right now, we're just certified on the hot end side.

Katja Jancic: Perfect. Thank you.

Perfect, thank you.

Operator: Thank you. Our next question is coming from Tristan Gresser with BNP Paribas. Your line is live.

Thank you. Our next question is coming from Tristan Gresser with BNP Paribas. Your line is live.

Tristan Gresser: Yes. Hi. Thank you for taking my question. Just following up on the aluminum, if you could provide maybe an update on the target exit run rate for this year or maybe what you're expecting Q1 so we can get a better sense on what to expect in terms of volumes. I think you were initially expecting positive EBITDA in Q4. What drove the lower number? Any sorts of delay or anything you can share there, that'd be great.

Yes. Hi. Thank you for taking my question, just following up on the aluminum. If you could, um, provide maybe an update on the target, uh, exit, uh, run rate for this year, or maybe what are you expecting? Q1. So, we can get a better sense on what to expect in terms of volumes. Um, and I think you were initially expecting positive a bit down Q4. So, so what what drove the lower number, uh, any sorts of delay or anything? Uh, you can share that, that that'd be great.

Theresa Wagler: Tristan, I just want to clarify. We are still expecting to be EBITDA breakeven to positive in the fourth quarter. That hasn't changed. What has changed is the certification of the more complicated products is taking place more quickly than we expected. There are some higher costs associated with that. That was one of the things that I talked about in my opening comments as it relates to the third quarter impact. That said, we haven't been specific about how we're going to ramp in 2026. What we have done is provided substantiation that we still are very confident in exiting the year, at least at a 75% utilization rate. As it relates to 2025, there's just a lot of moving pieces right now. We don't want to get into utilization because it depends on the product mix to a large extent.

Um, what has changed is the certification of the more complicated products that's taking place more quickly than we expected. So, there are some higher costs associated with that. Um, so that was one of the things that I talked about in my opening comments as it relates to the third quarter impact. Um, that said, we haven't been specific about how we're going to ramp in 2026. Um, but what we have done is provided, um, substantiation that we still are very confident in asking the year at least at a 75% utilization rate. And as it relates to 2025, there's just a lot of moving pieces right now, so we don't want to get into utilization because, um, it depends on the product mix to a large extent.

Tristan Gresser: Okay. All right. That's fair. Maybe just a quick one on the free cash flow. I mean, you have a very strong free cash flow. If you can talk a little bit about your priority in terms of capital allocation into next year, you mentioned CapEx will be between $500 million, $600 million. Is growth on the agenda for next year? If so, what are the options you may consider? Is upstream steel, aluminum? Are you considering maybe different types of metallics assets that could be on play in the region? Any color there would be great. Thank you.

Okay. All right. That's, um, that's fair. And maybe just a quick 1 on the free cash flow. I mean, you you have a very, uh, strong free cash flow Outlook. Uh, what, what if you can talk a little bit about your priority in terms of capital allocation into next year? You mentioned capex, will be between 500, 600 million. Um, it is growing on the agenda for next year. And and if so, what what are the options you you may consider uh as Upstream still aluminum, uh, are you considering maybe different types of metallics asset that could be uh, on play in the region? So any color that would would be great. Thank you.

Theresa Wagler: Mark can speak to what things might look like, but just to give you some specificity around the $500 to $600 million, Tristan, as a reminder, our sustaining capital is generally around $200 to $250 million. We still will have a tail associated with the aluminum project and a little bit on the biocarbon project as well. It just depends on the timing as we proceed through the end of this year. That is a preliminary number. Mark, I don't know if you want to give any context to what other growth opportunities we might be looking toward.

Um, Mark can speak to what things might look like, but just to give you some specificity around the $500 to $600 million. Tristan.

As a reminder, our our sustaining capital is generally around 200 to 250 million dollars and then we still will have a tail um associated with um the aluminum project and a little bit on the biocarbon project as well. It just depends on the timing um as we proceed through the end of this year. Um so that that is a preliminary number. But Mark, I don't know if you want to give any context to what other growth opportunities, we might be looking towards.

Mark Millett: Generally on the cash allocation broadly, I think, with our strong liquidity position in the through-cycle cash generation that will come through next year and the years after, we can retain our balanced cash allocation profile. One can expect an increase in the dividend, I would think. Our positive profile will continue into next year. We feel that the company is selling at an incredible discount today relative to other potential investments one might make. We'll continue to buy our shares back. We're doing that not because necessarily our shareholders just want us to, or we think it's a flavor of the month. It really is buying a company that is discounted, a quality company that we know with a phenomenal team, phenomenal assets. Extending from that, we still have a team that is innovative and creative. They've got a pipeline of organic possibilities, both in steel and in aluminum.

let's just, let's just generally on the cash allocation uh,

broadly, I I think, you know, with our strong strong uh liquidity position in the the through cycle cash generation that uh will uh

Come through next year and in the years after, we can retain our balance cash allocation profile. So one can expect.

uh,

let's see an increase in the dividend. I would think, you know, a positive profile will continue into next year.

uh, we feel that

The the the the company is selling at an incredible discount today uh relative to other potential uh uh Investments. 1 might make, so we'll continue to to buy our shares back.

And again we're doing that not because necessarily our shares just want us to a horror where we think. It's a uh it's a flavor of the month. It really is buying a company that is discounted a quality company that we know with a phenomenal team phenomenal assets.

Uh extending from that, we still have a team that is innovative creative. Uh they've got a pipeline of uh

Mark Millett: That will access new products, new product lines for us. Those aren't massive $3 billion greenfield steel mills, but smaller projects, but very, very high return, high reward. Obviously, there's the possibility of an M&A activity out there. Just one highlight, I guess. You will continue to see us adhere to our disciplined investment approach. I think we have the highest return on invested capital in our space for a reason. We're disciplined, and we buy good assets with real return, real future return. You'll see that going forward.

Organic possibilities, both in steel and in aluminum.

And that will access.

New products, new product lines, for us now, those aren't massive uh uh 3 billion dollar, Green Field steel mills but uh smaller projects but but very, very high, high return, High reward.

And then obviously the there's there's the possibility of of an m&a activity out there.

But, but just 1 1 highlights, but you, you, you will continue to see us.

um,

Here to, to our our disciplined investment approach. I I think we have the the the highest return on invested capital in our space for a reason, uh, with disciplined. And we, we bought, we buy good assets with with, uh, with real return, real future return. And you, you'll see that going forward,

Tristan Gresser: All right, that's clear. Thanks a lot.

All right, that's pure. Thanks a lot.

Operator: Thank you. Our next question is coming from Timna Tanners with Wells Fargo. Your line is live.

Thank you. Our next question is coming from Timna Tanners with Wells Fargo. Your line is live.

Timna Tanners: Yeah. Good morning. I wanted to follow up if I could on the aluminum questions. You're starting up and getting qualified on hotband just when there's a player in the market that needs hotband. Could you address that ability to supply Novelis if possible? If you could just comment on the additional CapEx, I believe comparing the presentations that there's another $200 million that was attributed to the aluminum startup, if you could elaborate on that.

Man, just when there's a player in the market that needs hot bands.

Mark Millett: Timna, again, thanks for your questions. We will not comment on where our material is going. I think the aluminum space is a lot more shielded from a confidentiality standpoint relative to steel, and most of our relationships are under CA or NDAs. I can't really speak to that, other than it's absolutely phenomenal that the team in such a short period of time is accessing those sorts of markets. Relative to the CapEx, yeah, it did expand. In all honesty, it's kind of the wind down of the project and just clearing up all the construction contracts. I think more importantly, the last three months, in particular, it's been incredibly difficult to get electrical talent. With all the data centers, etc., being built, we found our contractors sort of drifting away from us. There was a substantial increase in the cost to cover that and maintain our schedule.

Again, thanks for your questions. Uh we we will not comment on we're on materials going. I I think the the aluminum space is uh is a lot more shielded from a confidentiality standpoint relative to steal.

Uh, and so most of our relationships are under, uh, uh, uh.

CA or ndas. So I can't really speak to that other than it's absolutely phenomenal. That uh, the team in such short period of time is is accessing those sorts of uh, sorts of markets rather relative to the capex. Yeah, it did expand. And again, in all honesty, it's it's kind of the the wind down of uh, of the project and and just clearing up all the uh, the the construction. Uh,

Contracts. But I think more, more importantly, the last, uh, 3 months. It has been in particular, it's been incredibly difficult to get, uh, electrical Talent.

Uh, with all the data centers, Etc being built, we we found uh our, our contractors sort of drifting away from us and there was a substantial increase in the cost to to uh to cover that and maintain our schedule.

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

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

Mark Millett: I think, obviously, if you're an aluminum consumer and you've seen the sort of supply chain risk that they've just gone through, you've got to ask that question. I think, and you've heard us say this before, as we got into the aluminum space and looking for, or just looking or doing our due diligence for the Aluminum Dynamics project, automotive makers would have actually consumed more aluminum over recent years if there was more supply. Are they questioning aluminum? I don't think so. Aluminum is an incredibly important material for their future plans. We coming into the marketplace will allow them optionality and greater redundancies through the supply chain. I think that issue or that question will sort of be mitigated going forward.

Well, I, I think obviously, if you, uh, if you're an aluminum consumer and you've seen the sort of supply chain risk that they've just gone through, you've got to ask that question.

Um, I think, and you've heard us say this before, as we got into the aluminum space and looking for, well, just...

Looking to do our due diligence for the ADI project.

Uh, Automotive makers would have actually consumed more aluminum.

Over recent years, if there was more supply.

um, so so it's a

Are the are the questioning, uh, Alum. I don't think so. Aluminum is is an incredibly important material for, uh, for their, uh, uh, for the future plans.

Uh, we coming on to, uh,

Or coming into the marketplace will allow them optionality.

And and create redundancies through the supply chain. So I I think that

Issue or that question will sort of mitigate to be mitigated going forward.

Timna Tanners: Got it. That's great. Thanks again.

Mark Millett: Thank you.

Got it. Great. Thanks again.

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

Thank you. Our next question is coming from Lawson, Winder with Bank of America, your line is live.

Lawson Winder: Great. Thank you very much, operator. Good morning, Mark, Theresa, and Barry. It's nice to hear from you. Thank you for the update and sincere congratulations on the success at Aluminum Dynamics. What I wanted to do is just follow up, Mark, on your comments on capital allocation and that you noted that M&A might be a possibility. Can you give us a flavor of where there might be opportunities to improve the business through M&A, whether that be in downstream or upstream or raw materials or otherwise?

Great, thank you very much, operator. And, uh, good morning. March 3rd. It's nice to hear from you. Thank you for the update, and a sincere congratulations on the success of Steel Dynamics.

And what I wanted to do is just follow up with Mark on your comments on capital allocation, and that you noted that, you know, MMA might be a possibility. Do you give us a flavor of...

Where there might be opportunities to improve the business through M&A, whether that be in downstream or upstream, or raw materials, or otherwise.

Mark Millett: We would steer away from raw materials, I do believe. I think it would be aligned or parallel our previous commentary in downstream strategic sort of pull-through volume type opportunities where we can either lever or exploit our core strengths. Downstream in coating, you know, the painting, those sorts of value-add opportunities for sure. In value-add sort of manufacturing to some degree, as long as the volumes are there and it makes sense. No, not upstream. Our raw material space with OmniSource, you know, with the largest North American recycler of ferrous and non-ferrous goods today, that's in great shape. You might see a little read from a regional standpoint, a yard here or there, but no major thing. Downstream value-add as we pursued in the past.

uh it uh if we we would um, steer away from from raw materials but

I, I do believe. Uh, I think it's...

Just, it would be aligned or parallel. Our previous commentary in downstream strategic, uh, sort of pull-through volume type opportunities.

Uh, where we can either.

Lever, you know or exploit our our our core strengths. So Downstream in uh coding you know the painting those those sorts of value add uh opportunities for sure.

um,

in in value, add, uh,

Sort of manufacturing to some degree as as long as the volumes are are there. And, and, and it makes sense. Um,

But no, not, uh, not upstream, uh, are...

Raw material space with, um, with with with Omni Source, you know, with the largest uh North American recycler of Ferris and uh uh, non-first Goods today that's in great shape. You might see a little, uh, uh, little read from a regional standpoint, or a, a, uh, a yard here or there. But but no, no, no major thing.

um,

so yeah, Downstream value add as as we pursued in the past,

Lawson Winder: Okay. Fantastic. Thank you.

Okay, fantastic. Thank you.

Operator: Thank you. Our next question is coming from Phil Gibbs with KeyBanc Capital Markets. Your line is live.

Thank you.

Our next question is coming from Fox Gibbs with keybanc capital markets, your line is live.

Phil Gibbs: Hey, good morning.

Mark Millett: Good morning, Phil.

Hey, good morning. Good morning. Phil

Phil Gibbs: Sounds like based on your comments that rail is pretty strong. Any context just broadly you can give on that market, and then maybe give us a feel for how much of the rail mix is a part of your structural shipments right now?

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

Barry Schneider: Phil, this is Barry. We committed many years ago to be in the rail market because it's essential that they have a reliable, high-quality supplier at all times. When wide flange is strong, you might see a smaller ratio. In general, we try to stay exactly where the customers need us to be. It remains within percentage points of where it always is coming out of Columbia City. We're resolving our contract relationships for next year right now. We anticipate growth in that segment. The team is doing an excellent job with availability of trains to get the product distributed easier, quicker. Quality-wise, they're working on even better products coming in the next year or so based on some trials they've been doing. It remains a good part of our business, in the window that we always keep it.

I feel this is Barry, uh,

We committed, uh, many years ago to be in the rail market, uh, because it's essential that they have a reliable, high-quality supplier at all times. So, uh, when wide flanges are strong, you might see a smaller ratio. But in general, we try to stay exactly where the customers need us to be. Um, it remains.

Barry Schneider: We try not to surge it too much one way or the other.

Within within percentage points of where it always is coming out of Columbia City and uh, we're resolving. Our contract relationships for next year, right now. But uh, we we anticipate growth in that segment. And the team is doing an excellent job with availability of trains to get the product distributed easier quicker. Uh, and quality-wise are working on, uh, even better products coming in the next year or so based on some trials, they've been doing, so it remains a good part of our business. Uh, but in the, in the window that we always keep it. So it, we try not to Surge it too much 1 way or the other.

Phil Gibbs: Thank you. I just have a follow-up on the flat-rolled side of the business, specifically at Sinton. Could you provide an update on how the downstream lines are running and how much yield improvement you have left there? Theresa, I also missed the comments you made on the flat-rolled mix. Thanks very much.

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

Thank you. And I I just have a follow-up on the the flat road side of the business and specifically at at sent in and just an update, maybe on how the downstream lines are running and and how much yield Improvement you have left there. And then Teresa, I also missed uh, the comments you made on the flat roll. Mix thanks very much.

Barry Schneider: I'll comment on the downstream units. We're very excited about the quality that the team is getting out of the new lines that are added, as well as the existing paint and galvanizing line. Galvalum is a very difficult product to make. The team has really risen to the occasion. There is a learning curve. We went through that earlier this year to the point where we are seeing excellent yields, excellent produce prime products. Our distribution system and our customer base is going through approvals. A lot of the product there goes into contract-type business with OEMs. Those trials are ongoing and very good. We believe Sinton will have the full breadth of a product mix to offer as the markets return. As I mentioned, there's a little overhang and the galvanized is still out there. We think that's diminished.

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

I'll comment on the downstream units. We're very excited about the quality that the team is getting out of the new lines added, as well as the existing paint and galvanizing line.

Barry Schneider: We think it's going to be behind us here in months. The imports coming in the country have substantially tapered off. We believe the playing field is going to be level. Based on good feelings, we think next year is going to be outstanding for Sinton to really realize all the hard work they've been putting in.

Galvalum is a very difficult product to make the team is really risen to the occasion. Uh, there is a learning curve and we went through that earlier this year, to the point where we are seeing excellent yields. Excellent, uh, produced Prime products, uh, and our distribution system, and our customer base is going through approvals, a lot of the product there goes into contract, type business with oems, and those trials are ongoing and very good. So, uh, we, we believe sin will have the full breadth of a product next to offer, uh, as as the markets return as, as I mentioned there's a little overhang on the, the galvanized still out there. Uh we think that's diminished. We think it's going to be behind us here in months. Uh the Imports coming in the country have substantially, uh, tapered off. So we believe the playing field is going to be level and uh based on

Uh, good feelings. We think next year is going to be outstanding for sending the really, uh, realize all the hard work they've been putting in.

Theresa Wagler: For the shipments, the hotband was 1,097,000, cold rolled 120,000, and coated 1,486,000.

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

Phil Gibbs: Thanks, everyone.

Theresa Wagler: Thanks, Phil.

Mark Millett: Phil, if I could just add, because the question around structural tended to be rail-centric. Just looking at the long products market in general, we're finding that to be incredibly strong and robust. I believe that will certainly continue. Non-residential is in great shape, and we see on the fabrication side there's a lot of engineering, permitting, and detailing work going on. It would be our view that come the first quarter in 2026, we're going to see a nice return of that volume as well.

Thanks everyone. Thanks Phil. Phil if I if I could just add uh um, because the question, right? Structural tended to be, uh, rail rail Centric. Just just looking at the the the long products Market in general, we're finding that to be incredibly strong and robust. And and believe that will uh, will certainly continue. Uh you know, non-residential is is is in great shape.

Um, and we see on the, you know, on the fabrication side. There's there's a lot of engineering uh, sort of Permitting detailing uh, work going on. And it would be off of you that come the first quarter in 26. We're going to see uh ah ah ah nice return of uh of that volume as well.

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

Carlos de Alba: Thank you very much. Good morning, everyone. I wanted to check, Mark, you mentioned that you saw some headwinds in the flat-rolled steel business. Has the situation improved as we get into the fourth quarter? If you can give us a little bit more color as to how that part of your steel business is shaping out.

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

Yeah, thank you very much. Good morning everyone. Uh, so, um, I wanted to check. Mark, you mentioned that the, you saw some headwinds in in the flow business. Um, has has the situation improved. Um, as we get into the fourth quarter, uh, if you can give us a little bit more color as as to how that, uh, part of your still business is is uh, is shaping out.

Mark Millett: Yeah. I think the headwind, obviously, was principally the inventory overhang, which has varied just.

Yeah, I think the

Mark Millett: It's eroding and should be depleted by the end of this fourth quarter. With the almost non-existent import profile, first quarter should be in good shape. I think you started to see that hot band pricing softened through the quarter, but yet in mid-September, it kind of turned up. I think we will see a sort of slow but positive move through the end of this year. As Barry said, we are quite optimistic or robust for Q1 and Q2 throughout the rest of 2026.

Which is Barry just uh, suggested is, uh, it's eroding and should be uh, depleted, uh, by the end of this, uh, this fourth quarter, uh, and with the almost non-existent, uh, import, uh, profile. Uh, first quarter should be in good shape. I think you, you, you started to see that, uh, you know, hotb pricing,

Softened through the quarter. But yet in mid-September, it kind of turned up. And I think, uh, we will see, uh, sort of.

Slow. But positive, uh, move through the end of this year. And as Barry said, uh, we are quite quite, uh, uh, optimistic or robust for, uh, for q1 and Q2, it's throughout the rest of the 26.

[Company Representative]: All right. Fair enough. Maybe complimenting on the growth ahead, given the early success that you have had on the aluminum business and your comments on demand being limited perhaps by supply, would you, I know that you didn't talk about potentially getting more into the aluminum business, is this something that you might consider? Is it too early? Yeah, any color there?

All right, fair enough, fair enough. And then just uh, maybe compliment. You know, on the growth ahead, um, given the, the early success that you have had on the aluminum business and, and you comments on On Demand Being limited. Perhaps, by by Supply, um,

Would you I know that you didn't talk about potentially getting more into the aluminum business? Um, is this something that you you might consider is is too early. Um, yeah, any color there.

Mark Millett: We want to make sure we walk before we run. I gotta say, the team down there is starting to sprint because they're incredibly excited. I'm, in honesty, incredibly excited by what those folks are doing. It's an incredible mill. There's absolute opportunity, Carlos, in aluminum. There's no doubt about it. We will see how things go over the next six, eight months or so. There is definitely growth opportunity there, both in downstream. We could envision, you know, sort of exploiting or leveraging our pre-paint capabilities. It's one of our highest margin product lines today. The team would be incredibly effective to coat the thousands or millions of pounds of alum that gets painted every year. We do believe there's still clear room for a larger mill asset.

Uh, well we we we want to make sure we uh, uh, walk before we run.

Uh, I got to say the team down there is starting to sprint.

because uh, the uh, that they're incredibly excited and

I'm in honesty, incredibly excited by what the those folks are doing? Uh, it's a, it's an incredible meal that there's absolute opportunity for us in aluminum, there's no doubt about it. Um,

We will see how things go over the next, uh, 6 to 8 months or so. But there is definitely.

Definitely growth opportunity there, both in Downstream.

Uh, we we could Envision, you know, sort of, uh, exploiting or leveraging our our, our prepaint, uh, capabilities. It's 1 of our highest margin, uh, product lines today and uh, the team would be uh, incredibly effective to, to coat the

Thousands or millions of pounds of alum, that gets painted every year.

And then we, we do believe there's still, uh,

Theresa Wagler: Yeah. Just as a reminder, Carlos, I know some of you would have this top of mind, but for those that may not, even prior to 50% tariffs, the deficit of flat-rolled sheet in the U.S. was over 1.5 million metric tons. We're only adding 650,000. I think there's another project that may add another incremental amount. That deficit's growing, and that's without tariffs. When you place that 50% tariff into the equation, it just really does, we would never invest based on that. The point is that there's a real need structurally independent of trade action.

Clear room for a larger, uh, a larger asset, the mill asset. Yeah. Just as a reminder, Carlos, and I know some of you would have this top of mind, but for those that may not, you know, even prior to 50% tariffs, the deficit of flat rolled sheet in the U.S. was over a million and a half metric tons.

Only adding $650,000. And then I think there's another project that might add another incremental amount. But that deficit is growing, and that's without tariffs. So then, when you place that 50% tariff into the equation, it just really does... um, we would never invest based on that. But the point is that there's a real need structurally independent of trade action.

[Analyst]: Thank you very much.

Thank you very much.

Operator: Thank you. Our next question is coming from Andrew Jones with UBS. Your line is live.

Thank you. Our next question is coming from Andruw Jones with UBS. Your line is nice.

David Lipschitz: Hi, all. A couple of questions. Just firstly, on sending, just to get an idea as to how much that's adding to the EBITDA. Can you give us any sort of breakdown for the profitability of that? I've got a second question on tax, if you want to start with first.

Theresa Wagler: Sorry, Andrew. As soon as you said taxes, both Barry and Mark looked away. I think I want to, Senton specifically, Andrew, as a reminder, we've said that their through-cycle EBITDA capability on an annual basis, but it's through cycle, so we're not making a determination, where the market is at this point in time, is between $475 million and $525 million. What I want to do is take a step back because I think there's a bigger picture item that would be helpful to discuss a little bit. Mark mentioned, and we've talked about in the past, that in the last five years, the fixed asset investments in aluminum, in Senton, and in the four flat-rolled steel coating lines has been over $5 billion, just about $5 billion. Associated with those three projects is about $1.4 billion of through-cycle EBITDA capability.

Hi, um, a couple of questions. Just firstly on send and just get an idea as to how much that's adding to the, um, to be able to give us any sort of breakout profitability at that. And I've got a second question on tax. If you, uh, want us back with first.

Sure, Andrew. And as soon as you said "taxes," both Barry and Mark looked away.

No, I think I want to, uh, specifically mention Andrew. As a reminder, we've said that there is a 3-cycle EBITDA capability on an annual basis, but it's through cycles. So we're not making a determination of where the market is at this point in time, which is between $475 million and $525 million.

And what I want to do is take a step back because I think there's a bigger picture, um, item that that we, it would be helpful to discuss a little bit. And that's that Mark mentioned, and we've talked about in the past that in the Last 5 Years, the fixed asset investments in aluminum in senton and in the 4 a flat roll. Um coating lines has been you know over 5 billion dollars just about 5 billion dollars.

Associated with those 3 projects.

Theresa Wagler: We really haven't been able to utilize that up until this point. As we think about 2026, and we think about where the facilities will be from a maturity standpoint, including the ramping of aluminum, of that incremental additional earnings power, we think that we should have the ability to access on a through-cycle basis. Again, we're not making a determination of what that market will be like. If it were through cycle, we really think we would have the ability to access somewhere at least no less than 60% to 65% of that number. There's a lot of earnings potential that people may not understand is incremental structurally to Steel Dynamics Inc. because of the investments we've made over the last five years.

26. And we think about where the facilities will be from a maturity standpoint, including the ramping of aluminum.

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

[Analyst]: That's why I'm asking the question, I guess. I'm just wondering, you know, what the annualized contribution was in the third quarter and therefore what's the delta of Senton specifically, going forward?

Yeah, no, no, that’s why I’m asking. I guess I’m just wondering, you know what the annualized contribution was of the third quarter and therefore what’s the delta of C and specifically, um, going forward?

Theresa Wagler: We won't give that specific information. To Vice to Taste, Senton was EBITDA positive, but not to the magnitude of that through-cycle number. You said you had a tax question?

Um, so we won't get that specific information. Suffice it to say, the send-in was EVA positive, but not to the magnitude of that through cycle number.

I mean, you said you had a tax option.

[Analyst]: Yeah, no, it's about the deferred tax movement on the cash flow, which boosted free cash this quarter. I'm just wondering if you could explain the origin of that and, you know, what the moving parts are in the coming quarters with regard to tax. 'Cause I guess you've got a few things, obviously. You've flagged this $250 million impact for the, you know, for the Aluminum Dynamics project. And you've also, I mean, there's obviously this big, beautiful bill, accelerated depreciation stuff going on. I mean, can you just give us an idea for how we should think about, like, effective tax rates and the actual cash tax profile in the coming quarters?

Yeah, no. It's it's it's about the the third tax uh, movement on the cash flow, which um, which boosted free cash for this quarter, just wondering if you could um Explain the origin of that and you know how your what the moving Parts aren't becoming quarters with regard to tax because I guess you've got a few things obviously.

Theresa Wagler: Yeah, certainly. It was a big boost to the third quarter, because that's when we were able to adjust for the tax bill changes, which included additional research and development benefits, as well as, most importantly, the acceleration in depreciation as our aluminum assets are getting placed into operations. That benefit of $147 million you're referring to, most of that was in the third quarter. You won't see that magnitude of increase in the fourth quarter. The way you should model cash taxes for 2025 is probably at a rate of about 8% to 9%. For 2026, I would model cash taxes closer to 15% to 16%, and the effective rate probably closer to 23%.

The flag is $250 million. Um, impact for the, you know, the alley project. And you've also, I mean there's obviously this big beautiful bill accelerated appreciation stuff going on. I mean, can you just give us an idea for how we should think about effective tax rates and the actual equivalent of the actual cash tax profile in the coming quarters?

Yes, certainly. So it was a big boost for that third quarter, um, because that's what...

Um, for the tax bill changes, which included additional, um, research and development. Um.

Benefits, as well as, most importantly, the acceleration and depreciation of our aluminum assets, are getting placed into the operations. So that benefit of $147 million you're referring to, um, most of that was in the third quarter. Um, you won't see that magnitude of increase in the fourth quarter. The way you should model cash taxes for 2025 is probably at a rate of about 8 to 9%.

And then for 2026, I would model cash taxes closer to 15% to 16%.

Um, and the effective rate is probably closer to 23%.

[Analyst]: Okay, that's super clear. All right, thank you.

Okay.

Theresa Wagler: Mm-hmm.

Let's see. Quickly I

Operator: Thank you. Our next question is coming from Mike Harris with Goldman Sachs. Your line is live.

Thank you. Our next question is coming from Mike Harris with Goldman Sachs. Your line is live.

Mark Millett: Yeah. Thanks for squeezing me in. As we look at you consuming more biocarbon material to lower your carbon footprint, how should we think about what that could potentially do to your cost structure?

Yeah, thanks for, uh, squeezing me in, uh,

As we look at you consuming more, um, biocarbon material to, uh, lower your carbon footprint, how should we think about what that could potentially do to your, uh,

Call structure.

Theresa Wagler: Oh, it's a good question, Mike. From a cost structure perspective, it really probably won't have a material impact for you to be able to observe from the outside in. It is a joint venture, so we are transacting as we would at a market price to our steel mills. The joint venture's with Aemium, who has the IP associated with it. What it does offer is an opportunity for us to offer an even lower carbon product. We do believe we're already seeing some customers that are providing premiums. Not something that we're talking about at this point more broadly in specifics, but we think it'll open the door for even more opportunity on market share, specifically in OEMs, specifically more in the flat-rolled side of the business. There's a lot more we'll talk about as it relates to biocarbon in the future.

Oh, it's a good question Mike. So from a, a cost structure perspective. Um, it really probably won't have a, a material impact for you to be able to observe from the outside in, um, it is a joint venture. So we are, you know, transacting as we would at a market price to our steel mills. Um, the joint ventures with, um, am who has the the IP associated with it, um, but what it does offer is an opportunity for us to offer an even lower carbon product. And we do believe, we're, we're already seeing some customers that are providing premiums. Um, not something that we're talking about at this point, more broadly and specifics, but we think it'll open the door for even more opportunity on market share, um, specifically and oems specifically more in the flat role side of the business. So there's a lot more, we'll talk.

Theresa Wagler: They should be operating continuously here starting in November. It'll take a minute before we're supplying as much into the steel mills as we'd like. You shouldn't see a dramatic impact on the cost side at this point.

About biocarbon, um, in the future, we should be operating, um, continuously here starting in November. So, it'll take a minute before we're supplying, you know, as much into the steel mills as we'd like, but you shouldn't see a dramatic impact on the cost side at this point.

Mark Millett: Okay. That's very helpful. Just one last one, if I could. Of the record shipments you saw in the third quarter, were there any material one-time sales included in that?

Okay, that's very helpful. And then just one last one. If I could, of the record shipments you saw in the third quarter, were there any material one-time sales included in that?

Theresa Wagler: No. Nope. It was just ramping up of Senton, and then we had some record shipments at a couple of other of our flat-rolled facilities, as well as really a lot of strength in demand, as Mark pointed out, in the structural arena.

No.

Nope.

Mark Millett: Okay. Perfect. Thanks a lot.

Theresa Wagler: Yep. Thanks, Mike.

Okay, perfect. Thanks a lot. Yep, thanks, Mike.

Operator: Thank you. Our next question is coming from Bill Peterson with JPMorgan. Your line is live.

Thank you. Our next question is coming from Bill Patterson with JP Morgan. Your line is live.

Mark Millett: Yeah. Hi. Good morning, and thanks, thanks for taking my question as well. I wanted to talk about the steel mill shipments in the fourth quarter. You called out the 85K planned maintenance, but I guess is there anything else that we should be taking under consideration, for example, you know, other things or seasonal trends or also taking into account imports, which seem to be at a very low level or maybe potentially abating further? Trying to get a sense on how to think about shipments relative to maybe the last five years of flat to down 5%.

Yeah. Hi good morning. Thanks, thanks for taking my questions as well. Um, wanted to talk about the steel mill. Uh, shipments in the fourth quarter, you called out the 85k plan maintenance, but I guess is there anything else that we should be taking under consideration? Uh, for example, you know, other things in seasonal Trends or also taking a account Imports, uh, which seem to be at a very low level or or maybe potentially a bathing further, trying to get a sense on how to think about shipments relative to maybe the Last 5 Years of flat to down 5%.

Theresa Wagler: You guys are so crafty. You always try to come at it from a different angle, and that's a compliment, Bill. For the fourth quarter, we just wanted to call out the maintenance because generally, we don't have all of the maintenance in the same quarter as we are this time. We felt like it was impactful enough to call out. We do still believe there's going to be seasonality. Whether it's the same as it's been the last five years, I can't really comment to that. You will see seasonality in the volumes in addition to what you're seeing from a maintenance perspective. Barry, Mark, do you have anything to add?

so, so

You guys are so crafty, you.

Theresa Wagler: The outages are just our regular attempt to keep our assets performing at the absolute tip-top condition. We plan them long in advance. This is strange that we have all the mills taking some time in the fourth quarter, but all are great projects that continue to make our shops the safest in the industry and most efficient possible.

Angle, um, and that's a compliment, Bill. Um, for the fourth quarter, we just wanted to call out the maintenance because generally we don't have all the maintenance in the same quarter, um, as we are this time. So we felt like it was impactful enough to call out. But, um, we do still believe there's going to be seasonality, whether it's the same as it's been the last five years. I can't really comment to that, but you will see seasonality in the volumes, in addition to what you're seeing from a maintenance perspective. Barry, Marc, do you have anything to add?

The outages are are just our regular uh attempt to keep our assets performing at the absolute Tip Top condition. Uh we play out of long and advanced. Um and and this is strange that we have all the all the bills taking some time in the fourth quarter. Uh but all are great projects that uh continue to make our shops, the safest in the industry and and uh, most efficient possible.

Mark Millett: Okay. Thanks for that. Not sure if this is crafty or not, but how should we think about your overall strategy in auto? I know you're an emerging player in aluminum, but thinking about your steel, is this a market where you're looking to gain share? If so, how should we think of that unfolding in the coming years? Or is this business really going to kind of grow with your existing partners, assuming they grow their U.S. footprint in order to avoid tariffs?

Theresa Wagler: We are real excited about the automotive business that we're doing. I think the opportunity for our customers to purchase a low carbon content product really enhanced our relationship early. Since starting to do business with us, our teams operate very efficiently, very smoothly, and without much bureaucracy. I believe our teams have a great position relationship. They've been working really hard this past year with all the tariff changes to allow us to continue to do what we do best for the automotive industry. We do see it growing. When we built Senton, that was part of the design to be close to the Mexican automotive base with some high-value steel products. The facility was designed with that in mind. As that ramps up and we have OEM packages in to all of our customers from that facility, we anticipate the growth organically happening.

Okay, thanks for that. I'm not sure if this is crafty or not, but I just want to think about your overall strategy in auto. Um, and I know you're an emerging player in aluminum, but thinking about your steel, is this a market where you're looking to gain share? If so, how should we think of that unfolding in the coming years? Is this really a business that’s going to kind of grow with your existing partners, assuming they grow their U.S. footprint in order to avoid tariffs?

Uh, we are a real excited about the automotive business that we're doing. I think the opportunity for uh, our customers to purchase a low carbon content product, really enhanced our relationship early. And since since starting to do business with us, our teams uh, operate very efficiently, very smoothly and without much bureaucracy. So I I believe our teams have a great position relationship. Uh, they've been working really hard this past year with all the Tariff changes to allow us to continue to do what we do best for the automotive industry. We do see it growing.

Theresa Wagler: We see it as good products, and we're appreciative that the customer base recognizes that. We received an outstanding award from Volkswagen in the second quarter, which was really a surprise, and we were absolutely thankful to receive that. It really highlights our position. We have a very low carbon footprint. We have a very engaging position going forward that doesn't change our cost structure. We've engaged on renewable energy and nuclear energy across our flat-rolled platforms. We are ideally situated to grow our business there, and we are going to grow it where it makes sense and listen to our customers and have great discussions with them.

When we built sin, that was part of the, the design to be close to, uh, the Mexican Automotive base with some high value steel products. Uh, the facility was designed with that in mind. So, as that ramps up and, uh, we have OEM packages in to all of our customers from that facility, we anticipate the growth, uh, organically happening, uh,

We see it as good products, and we're appreciative that the customer base recognizes that. We received an outstanding award from Volkswagen in the second quarter, which was really... uh,

Surprised and, uh, we were absolutely thankful to receive that, but it really highlights our position. We have a very low carbon footprint. We have a very, uh,

Engaging position going forward that doesn't change our cost structure. Uh, we've engaged in renewable energy and nuclear energy across our flat-roll platforms. So we are ideally situated to grow our business there. And, uh, we're going to grow it. We're going to make sense and, uh, listen to our customers and have great discussions with them.

Mark Millett: Yeah. Thanks, Barry, Theresa, and Mark, for all the great color on this call. Thanks again.

Theresa Wagler: Thank you.

[Analyst]: Thank you, Bill.

Yeah, thanks, Barry. Teresa, Mark, for all the great color on this call. Thanks again. Thank you.

Operator: Thank you. Our final question today will be coming from John Tumazos with Independent Research. Your line is live.

Thank you. Our final question today will be coming from John Tomasos with Independent Research. Your line is live.

Barry Schneider: Thank you.

Theresa Wagler: Hi, John.

Thank you.

Barry Schneider: Good afternoon. Could you explain the $27 drop in scrap costs given that the steel business is strong? Calvert, Alabama starts up a new melt shop right now, etc. Is it from lower iron ore and coal prices and China selling lots of slabs and other steel, etc.? Would a reasonable guess for aluminum be $2.40 to $2.50 a pound sales realization with the big Midwest premium and maybe $1.40 production cost with $0.93 UBCs?

Did you—um—good afternoon. Could you explain the 27 drop and scrap costs?

Given that the steel business is strong.

Caliber in Alabama.

Starts up a new Melt Shop right now. Etc! Is it from lower iron ore and coal prices and China selling? Lots of slabs and other steel, etc. And then second...

Sales realization with the big Midwest. Premium.

And maybe A14.

Production cost with 93 cent UBCs.

Mark Millett: Taking, number one, the scrap dropping off $27, obviously, John, as you know, scrap is, in my mind, the most transparent, fluid commodity out there. You know, it's just supply and demand. In honesty, whether it's the $27 in the broad scheme of things, it's more noise than anything else. Directionally, I think it's important, but it's more noise. You know, in the old days, $10, $15, $20 move would be monumental. Today, it's not too much. Again, in the dynamics of scrap with the segregation technologies out there today, the Shred One and all these things, there's greater optionality of flow. I think that's just bearing fruit.

Uh, well.

Taking a number 1, the the the uh, the scrap dropping off 27 bucks.

It. Uh,

Obviously, John, as you know, scrap is, in my mind, the most transparent fluid commodity out there, and it's just supplied the man.

um, the

The.

In in, in, in honestly, in, in 20, where there's the 27 dollars in the, in the broad scheme of things, uh, is, is, is not, it's more noise than than anything else. Uh, directionally. I think it's important, but it's more noise. Um, you know, in the old days

10 15. 20 move would be, uh, Monumental today. It, it's, uh, it it, it's not not too much. But again, in the, in the Dynamics of scrap, with the, uh, with the, the segregation Technologies out there today, the shred 1 and all these things, uh, that, that there's greater optionality of of flow. Uh, and I think that's that's just

Mark Millett: We've always said, or always suggested, that we don't have a major concern that the others have had over the years that, "Oh, my goodness, yeah, EAF flat roll is going to continue to grow, and scrap is going to be a problem." In fact, if you look at a lot of the new projects coming online, most of them anyway are having some CRI type, virgin iron associated with them. Even though the production capability of the domestic industry is increasing, the scrap consumption is not at that same rate. We still remain confident that scrap will remain at a reasonable level and that, going forward, spreads will remain very high, if not increase, to be honest, going forward. Relative to your question on aluminum, I will refrain. To be honest, it's a little bit more complicated, as you can appreciate also. You know, it depends on which grade.

Bearing fruit. And we've always said,

Uh, or or suggested that we we don't have a a major concern that the others have had over the years that oh my goodness. Uh yeah, EF flat roll is going to continue to to uh to grow and

Scrap is going to be a problem.

In fact, if you look at a lot of the new...

Projects coming online that they're uh the the most of them anyway are uh uh having some CRI type of Virgin iron associated with them. So even though

uh, the

the production capability of the domestic industry is increasing it. It's not uh, at uh, at the scrap consumption is not at that, same rate. So we still remain confident that

that, uh,

That scrap will remain at a reasonable level. And that going forward, uh,

Spreads will, uh, remain very high if not, uh, increase, to be honest, going forward.

Uh, relative to your question on aluminum, I will refrain.

to, to be honest and

Mark Millett: You know, is it automotive? Is it can sheet? Is it industrial? It's all over the map. Suffice it to say, we do believe that our returns that we've advertised are more than achievable.

It's, it's a little bit more complicated as you can appreciate. Also, you know, it depends on which which grade, you know, is it Automotive is it can sheet, is it industrial? Um, it it is all over the map.

Suffice it to say.

We we do believe that our, our returns that we've advertised uh, are are more than achievable.

Barry Schneider: I'm glad to be a shareholder. Thank you.

Theresa Wagler: Oh, thanks, John.

Mark Millett: John, we appreciate it.

Theresa Wagler: You're a compliment.

Mark Millett: We appreciate you being a shareholder all those years and challenging us, for sure. Just to finish up, I would like to thank all shareholders that support us, that are on the call. As I often joke to them, if you're not a shareholder, you should be, 'cause we will endeavor to perform and use your dollars just as though they were our dollars. Couple of just point-outs. Customers that are on the line, thank you. Thank you for your support. Particularly, would like to welcome any Aluminum Dynamics customers that are on the line. It's been a pleasure to engage with you. In the last three, four, five weeks of market chaos in your space, it really has been refreshing for us and hopefully refreshing to you because we do bring a different approach from a customer relationship standpoint. We truly will partner with you going forward.

I'm glad to be a shareholder. Thank you. Oh thanks John John. We uh we appreciate we we appreciate you being a chair to all those years and uh and challenging us for for sure. And I just to to to finish up uh

Would like to thank all shareholders, uh, that, that support us, that are on the call. And as, as I asked a joke to to them, uh, if you're not a shareholder, you should be, uh, because we will endeavor to to perform and and use uh, uh, your dollars just as though, there are other dollars.

Um, a couple couple of just, uh,

Point.

Its customers that are on the line. Thank you. Thank you for your support particularly uh would like to welcome any Ally customers that uh that are on the line. Uh it it it's been a pleasure to engage with you.

Mark Millett: Lastly, any Steel Dynamics Inc. folks on the call, absolutely, hats off to you. You do a phenomenal job each and every day. You do make a difference. You are the best steel, metals team on the planet. Just make sure you keep safe and keep each other safe. Thank you all.

And just in the last 3, 4 5 weeks of of Market chaos in your space. It really has been uh, refreshing for us and hopefully refreshing to you because we we do bring a different approach uh from from a, from a uh sort of a customer relationship standpoint. We truly will partner with you going forward. And lastly, any SDI, uh, focus on the core.

Absolutely hats off to you. You do a phenomenal job each and every day you do make a difference. You are the best deal, uh, Metals team in, in the, in the, on the planet. Uh, just make sure you keep safe and keep each other safe. Thank you all.

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

Thank you.

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