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F500-2021-319-Steel Dynamics

The steel production company based out of Fort Wayne, Ind. produced over 9 million tons of steel in 2020.

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The Fort Wayne, Ind. steel fabricator had a strong year and plans to expand with a new factory in Texas in 2020.

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Founded in 1993, Steel Dynamics, Inc. is a steel producer and metals recycler that operates across four segments—steel production, recycling, fabrication, and aluminum—with facilities in the U.S. and Mexico.

Q2 2026

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Steel Dynamics (STLD): Company Profile, Stock Price, News, Rankings

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Steel Dynamics

steel dynamics

Good day, and welcome to the Steel Dynamics First Quarter twenty twenty five 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, 04/23/2025, 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 Lipchitz, director, investor relations. Please go ahead.

Thank you, Holly. Good morning, and welcome to Steel Dynamics' first quarter twenty twenty five 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 Teresa Waggler, 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. 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 in 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 ks 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 referenced non GAAP financial measures reconciled to the most directly compared GAAP measures in the press release issued yesterday entitled Steel Dynamics Reports First Quarter twenty twenty five Results.

And now I'm pleased to turn the call over to Mark.

Well, thank you, David. Good morning, everyone. It's good to be with you, on our first quarter twenty five earnings call. I will apologize in advance. I got a crushing head code.

So, if I if I feel a little or sound a little rugged, please excuse that. But that said, our our teams achieved a solid financial and operational performance in the first quarter. It's continued, testament, I think, to our business model and performance driven culture. Highlights included record steel shipments of 3,500,000 tonnes and adjusted EBITDA of $448,000,000 And most importantly, our teams continue to operate safely. We've been successfully ramping up four new value add flat rolled steel coating lines with the expectation of full earnings benefit later this year.

These lines represent an additional 1,100,000 tonnes of higher margin product diversification, which further adds to our position of being the largest non automotive coater in North America. The Synton team gained considerable momentum in the quarter, running at around 86% of capacity and many times over 90%. The team also achieved positive EBITDA for the quarter with expectations of a steep acceleration of profitability for the remainder of this year. I'm very excited for the accomplishments that the team has made in the last six months, and there's absolutely no doubt it is the mill of the future. And Barry will go into some more detail during his opening comments.

Aluminum Dynamics, successfully cast its first aluminum ingot in January at our Columbus, Mississippi facility and in March at our Mexican satellite slab facility. We're extremely proud and excited for the teams. Everything is on schedule for the systematic commissioning of the rest of the lines with an expectation to ship commercial quality coils in June. Again, I'm a proud of the and I'm proud of the entire Steel Dynamics team. They are the foundation of our company, and they continue to amaze me.

We are singularly focused on providing the very best for their health and safety, and we continue building a world class safety culture. In particular, our team's dedication to our take control of safety program is extraordinary. We're actively engaged in safety at all times and at every level, keeping it top of mind in an active conversation each and every day. I'm continually inspired by the commitment our team members have for one another. They consider themselves family and challenge the status quo each day.

That said, there always will be more to do as we drive toward a zero incident environment. So, Teresa, would you like to give us some details on the quarter?

Thank you, Mark. Good morning, everyone, and thank you for joining us. I add my sincere thanks to the teams for another solid performance. Our first quarter twenty twenty five net income was $217,000,000 or $1.44 per diluted share with adjusted EBITDA of $448,000,000 First quarter 20 20 5 revenue of $4,400,000,000 was 13% higher than fourth quarter sequential results, primarily driven by record steel shipments. First quarter operating income of $275,000,000 was 16% higher than sequential results, also related to steel volumes.

As we discussed our business this morning, we continue to focus and execute on our transformational growth initiatives. Operations generated operating income of $230,000,000 in the first quarter, sequentially higher as record shipments more than offset metal spread contraction, with an average realized external steel price decline of $13 per ton and an average scrap price increase of $16 per ton. I do want to add my congratulations to the Sinton team. They've really turned a corner. I'm very excited for them.

From a steel price perspective as a reminder, approximately 75 to 80% of our flat rolled steel business is tied to lagging contracts, generally on average about a two months in arrears. So the more recent increases in flat rolled steel pricing will positively impact the second quarter. For modeling purposes, for the February, hot band shipments were 1,093,000 tons, cold rolled shipments were 116,000 tons, and coated shipments were 1,403,000 tons. And as a reminder, we'll continue to see that coated volume actually increase from a product mix perspective as the four new lines start to have full utilization. In the first quarter they were still only utilized on average around 50% to 55%.

For the first quarter operating income from Ramelle's recycling operations was $26,000,000 improving modestly as volumes in ferrous metal spreads increased. We're the largest nonferrous metals recycler processing and consuming ferrous scrap, nonferrous aluminum, copper, and other metals, And we're growing in support of our increased steel capacity and soon to be aluminum flat rolled operations through new and expanded supplier relationships and through the use of innovative new separation technologies. And I want to congratulate the Omnisource and NanoAl teams as they're increasing those separation technologies, and we're actually adding capacity in the coming months. Our steel fabrication team achieved first quarter operating income of $117,000,000 lower than sequential fourth quarter results as realized pricing declined a modest 4% and shipments seasonally decreased. Our steel joist and duct demand remained solid with good order activity.

March was our strongest order entry month in two years. Our backlog extends into the fourth quarter of twenty twenty five, and forward backlog pricing remains solid. Federal programs, manufacturing growth, and onshoring are expected to support domestic fixed asset investment, unrelated flat and long product steel, and steel enjoys demand in the coming years. Pitting to our aluminum operations, a quick reminder, as we finish constructing the aluminum facilities, noncapitalizable expenses are required to flow through SG and A. As a result, our SG and A in the first quarter was higher by approximately $37,000,000 We continue to have expectations to achieve positive EBITDA in the second half of twenty twenty five for the aluminum platform and plan to operate the rolling mill at approximately 30% for the full second half of the year with an exit rate of 5075% for the full year of 2026 with an exit rate of 85%.

Construction is coming to completion and commissioning progressing extremely well. Approximately $2,400,000,000 has already been invested through March of twenty twenty five with the remaining $300,000,000 forthcoming. During the February, we generated cash flow from operations of $153,000,000, which was reduced by an annual company wide profit sharing retirement distribution of $165,000,000. Excluding this payment, cash flow was $318,000,000 in the quarter with net working capital growing about $105,000,000 as steel prices increased later in the quarter. We ended the quarter with strong liquidity of $2,600,000,000 We invested $3.00 $6,000,000 in CapEx during the quarter.

For the full year of 2025, we still believe capital investments will be in the range of $800,000,000 to $1,000,000,000 with the majority related to the completion of our aluminum and biocarbon strategic growth investments. As a reminder, our sustaining or what some call maintenance capital requirements are conservatively in the range of 200 to $250,000,000 annually. Regarding Our cash generation is consistently strong based on our differentiated circular business model and highly variable low cost structure. And confidence in our future. Our capital allocation strategy prioritizes high return 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 track record is proven and recognized. In the last five years, our average excuse me. Our after tax return on invested capital was 23%, and this was in your time frame of transformational growth and strong shareholder returns. We opportunistically accessed the investment grade bond markets in March and issued $1,000,000,000 of unsecured notes comprised of a five and a quarter percent $600,000,000 10 year tranche and a five and three quarter percent $400,000,000 30 year tranche using the proceeds to prefund a $400,000,000 note that matures in June of twenty twenty five and for other corporate purposes. We really appreciate the receptiveness of the credit investors for our offering, allowing us an excellent outcome, and we sincerely thank you to all involved.

A quick forecasting comment. As Aluminum Dynamics ends construction, so will the associated interest expense capitalization in the second quarter. So net interest expense in the first quarter was around $12,000,000. In the second quarter, it'll be closer to $30,000,000, and therefore, $40,000,000 a quarter. Our free cash flow profile has fundamentally changed over the last five years from an annual average of 540,000,000 to most recently $3,000,000,000 if we exclude aluminum and Sinton. Even if we include aluminum

Sinton, it's still over $2,000,000,000 per year. We've placed ourselves in a position of strength to have a sustainable capital foundation that provides the opportunity for meaningful strategic growth and strong shareholder returns while maintaining investment grade metrics. We are squarely positioned for the continuation of sustainable, optimized long term value creation. Thank you. Barry?

Thank you, Theresa. Our steel fabrication operations had a solid performance in the first quarter. In fact, as Theresa mentioned, March represented the single highest month order entry volume in two years, with whom we met with the momentum continuing in April. Our order backlog extends into the fourth quarter with attractive pricing levels. We continue to have high expectations for the business due to strong quoting and order activity, continued onshoring of manufacturing, recently announced significant privately funded manufacturing projects, and public funding for the infrastructure and other fixed asset investment programs.

The long term uplift from this backdrop could be considerable for all of our platforms. Our steel fabrication platform provides meaningful volume support for our steel mills, critical and softer demand environments, allowing for higher through cycle steel utilization, but also mitigates the impact of lower steel prices. Our metals recycling operations improved earnings in the first quarter as demand from North American steel producers supported higher ferrous scrap volume. The team also continues to grow its access to recycled aluminum in advance of our aluminum flat rolled operations ramp up. Ferrous scrap prices increased each month in the first quarter of twenty twenty five before moderating approximately $40 per ton in April as weather improved, supporting higher scrap flows.

We currently expect prices to remain fairly stable throughout the year. The North American geographic footprint of our metals recycling platform provides a strategic competitive advantage for our steel mills and for our scrap generating customers. Our metals recycling team is also partnering even more closely with both our steel and aluminum teams to expand scrap separation capabilities through both process and technology solutions. This helps mitigate potential risk of supply as more grades of ferrous and nonferrous scrap become usable for our steel and aluminum operations. It also provides us with a significant advantage to materially increase the recycled content for our aluminum flat roll products and increase our earnings opportunities.

The steel team had a strong quarter, achieving record shipments of 3,500,000,000 tons. During the first quarter, the domestic steel industry operated at a utilization rate of approximately 75%, while our steel mills operated 89%. We consistently operated higher utilization rates due to our value added steel product diversification, our differentiated customer supply chain solutions, and the support of our internal manufacturing businesses. This higher through cycle utilization of our steel mills is a key competitive advantage, supporting our strong and growing cash generation capability and best in class financial metrics. Regarding the flat roll steel markets, pricing and order entry have stabilized at levels much higher than we saw in the second half of twenty twenty four.

However, there has been some hesitation with certain customers awaiting more market certainty. Overall, inventories remain historically lean, but increased imports kept incremental buying at bay in certain product areas, specifically for coated flat rolled steel products. We leveled we levied a trade case related to these products in the third quarter of twenty twenty four, and we recently received favorable preliminary countervailing and dumping rulings, which has already slowed the imports of unfairly priced coated steel flat rolled products. This along with the announced February tariffs should positively impact demand for lower carbon emission US produced steel products. This positions us incredibly well as we are the largest producer of nonautomotive coated flat roll steel products in North America.

As for the long product steel market, they also improved in the first quarter with demand for most sectors stable or improving. Prices have increased over the last several months with solid order entry and improving backlogs. Our Sinton, Texas flat rolled mills production and reliability continue to improve in the first quarter operating at 86% utilization and at times over 90%. As Mark said, they achieved positive EBITDA for the quarter. We expect to see significant increase in Sinton's earnings contributions as they continue in the second quarter and again the second half of the year.

As the team further improves yield, lowers their cost structure and improves the cost of quality, We also continue to hope to work on product development at Syntin to expand our existing flat roll product offerings. Currently, API pipe grades and high strength steels are, in various stages of development in the operations. Also, the additional two new value added coating lines are increasing volume, improving Sinton's value added product mix and through cycle earnings capabilities. Regarding the steel markets environment, North American automotive production estimates for 2025 recently revised lower with uncertainty due to the impact of recently discussed auto and auto part tariffs. However, there's ongoing discussions of these being softened as well.

Fortunately, our specific automotive customer base has remained stable with us growing automotive market share in both flat roll and SPQ steels. Nonresidential construction remains stable with slowdowns across some industries. However, as I mentioned earlier, we have seen price for structural beams, engineered bars, and merchant bars increase over the last several months with expanding backlogs. Additionally, onshoring large recently announced domestic manufacturing projects and infrastructure spending should provide further support to fixed asset investment and related construction oriented projects. As for the energy market, oil and gas activity remains steady with recent signs of increasing activity for both flat rolled steel and SBQ.

We also see ongoing, demand in the solar markets, which we are very active. Looking forward, we remain optimistic regarding steel demand and pricing dynamics for the remainder of 2025. With that, I'll surrender the microphone.

So surrendered. Okay. Thank you, Theresa. Thank you, Barry. Well, I think the the last six months, are a great example of the resiliency of our business model.

Our performance driven team based culture in combination with a proven, diversified, and value add business model drives superior through cycle financial metrics. Such 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 in our industry. Our disciplined investment approach continues to support a strong and growing through cycle cash generation profile, while maintaining the highest return on invested capital among our peers. Again, the four flat rolled steel coating lines are increasing volume and performing very well from a quality perspective. These types of high return investments are key to our value added product and supply chain differentiation strategies.

As we mentioned, Synton continues to perfect its operational reliability in downstream operations. They were EBITDA positive in the first quarter, with expectations for a material positive shift in financial contribution this year. And most recently, our aluminum growth strategy is months away from contributing to our earnings. I think the aluminum investment premise is especially compelling and parallels our disruptive entry into steel industry some thirty years ago. We see a market environment in aluminum similar to the domestic steel industry back then.

Older assets, high legacy cost burden, inefficient, high cost operations. They've had a difficulty earning their cost of capital and hence little additional investment in facilities and technologies taking place. No significant expansion in the past forty plus years. But unlike our entry into the oversupplied steel market back then, there's a significant North American supply deficit for aluminum sheet, and it's growing. There's clear business alignment between our steel and aluminum operations.

We're leveraging in construction and operational know how and exploiting that with our performance driven culture, driving higher efficiency, lowest cost operations. It also levers Omni's recycling footprint being the largest North American aluminum scrap recycler, along with its new separation technologies. This meaningful investment is a cost effective and high return growth and diversification opportunity for us. And the project is no longer just a vision, but it's a reality. Construction of the expansive mill in Columbus, Mississippi is nearing complete completion and is in commissioning phase, being executed at an extraordinary pace.

The aluminum industry is finally realizing we're here, and we will be a force to be reckoned with. The customer base across all sectors is excited to have a new market entrant that is known to be innovative, customer centric, and responsive to their needs. For us, business relationships are long term, founded on trust and the continuous goal of creating mutual value. We strive to be a differentiated supplier each and every day. 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.

And it's exciting to see. They see the vision and are excited by our culture where they see that they themselves can make a major contribution. They're helping us build a phenomenal team that combines in-depth knowledge of aluminum flat roll operations, commercial markets and process technology along with customer service, complementing our SDI professionals that will bring our performance driven culture to bear. As many of you know, the physical assets will be a state of the art 650,000 metric ton aluminum flat rolled facility in Columbus, Mississippi with about 300,000 ton of can sheet, 230,000 ton eventually of auto, and a 30,000 ton of industrial and construction products. We will, in in Columbus, have on-site melt cast slab capacity of around 600,000 metric tons supported by two satellite recycled aluminum slab casting centers located in UBC scrap regions.

Project scope includes additional scrap processing and new segregation technologies to maximize aluminum recycled content. The team is executing exceptionally well. The team successfully cast the first industrial and beverage can ingots in Columbus, Mississippi in January and have since then been developing practices for the 3,000, five thousand series alloys. And in St. Louis Potosi in March, they cast their first ingots also.

We plan to continue commissioning throughout the facilities during the coming months and to produce commercially viable products in June 2025. Production is expected to grow to an exit rate capacity of 50% this year and 75% capacity for the full year 2026. Relative to cost differentiation, We expect through cycle annual EBITDA of six fifty million to $700,000,000 plus 4 40,000,000 to $50,000,000 from metals recycling platform. The most significant savings relative to our competition center on four key areas, labor savings, high higher recycled content, significant process yield improvements, and logistics. And while walking the plant floor, you can feel the excitement as our teams recognize their ability to revolutionize the North American aluminum industry as we did in steel.

We're 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. Capital spending for Synton, the four value add lines and the Aluminum Dynamics facilities is largely spent with a projected future through cycle EBITDA contribution of some $1,400,000,000 or more. Steel Dynamics has grown to an incredibly resilient cash generating business of scale and diversification, driven by the best teams in the world. In the last five years, we've invested billions of dollars in organic strategic growth, earned a return on invested capital of 23% compared to the S and P five hundred at only 12%, and certainly way better than our industrial peers.

We've increased our cash dividend over 100%. We've repurchased over 30% of our outstanding shares and over 40% since 2017, all the while maintaining best in class investment grade credit metrics and creating outstanding value for our customers and suppliers, our teams, and our shareholders. I'm excited as investors clearly see now the power and consistency of our through cycle cash generation combined with our consistent and high return capital allocation strategy. It is our belief that the steel industry has undergone a paradigm shift in recent years. There's a pervasive sense of mercantilism that will provide a level playing field through continued and appropriate trade mechanisms.

We've seen that in the recent coated flat rolled steel positive trade determinations. Recent Trump administration steel and aluminum moves, the tariffs. Risk mitigation to address numerous supply chain dislocations have accelerated reshoring and manufacturing. AI and cloud computing will support nonresidential construction, data centers, chip factories, and battery plants, along with growing fixed asset investment associated with public and private dollars. Decarbonization will materially steepen the global cost curve, providing Steel Dynamics with a significant competitive advantage to gain market share and increase metal spreads.

This evolving metals business environment should amplify our earnings capability. So as you see, we are blessed with good fortune, our people being our foundation. I thank each of them for their passion and dedication. We are committed to them, and I remind those listening today that safety for yourselves, your families, and each of them is the highest priority. I'll be remiss not to thank our loyal customers, many of whom have supported us since our inception.

As I said earlier, these partnerships are based on trust on doing what we say we will do and creating new solutions to enhance their value proposition. Our new and aluminum partners will experience the same and also to our suppliers and service providers who we value and trust. Thank you. Our culture and business model continue to differentiate our performance, leading to best in class financial metrics. We're a circular metals business, providing enhanced lower carbon supply chain solutions and in turn mitigating volatility in cash flow generation through all market cycles, providing enhanced shareholder returns and value to all participants.

We look forward to creating new opportunities for all of us today and in the years ahead. So with that said, Holly, we'd love to open the lines for questions.

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

Please hold while we poll for questions. Your first question for today is from Katya Jancic with BMO.

Hi. Thank you for taking my questions. Maybe starting on your, raw materials or metallics needs, can you talk about how exposed you are to importing those?

Sure. And perhaps, Claudia, expand that a little bit because I'm sure the whole tariff and trade situation is is of interest to everyone. And I think the, generally tariff and trade actions today specific to steel and aluminum are extremely beneficial for us. One has to recognize even before that this, this present term, you know, that section two zero one, three zero one, anti circumvention, and other past cases are still firmly in place and prevent impact from China. And I think the the the recent core case, and I know I'm deviating from the raw materials, just giving you a a broad picture.

You know, the recent core case, which is the, trade action against, coated steels is is gonna be very impactful. In fact, it's already impactful. It covers, I think, about 10, yeah, 10 Asian countries and about three, four million tons of of dumped coated steels, and that that will be very beneficial to us. And I think the derivative products actions are extremely beneficial. There are, I think, some two to 3,000,000 tons of fabricated structural steel items coming through onto our shores.

And that's that's an appreciable volume. You know, that that that market is probably somewhere six to 8,000,000 tons, and suppressing that will have a major, major impact for our long products platform. And then just generally, the tariffs on supply chains already is providing, I think, a positive momentum from a reshoring standpoint. Relative to to raw materials in in in particular, obviously, scrap is is not included, today, and all my comments are are as of today. One doesn't know necessarily what, may happen, in the days, weeks, and and months ahead.

But the scrap, flowing across the border is is not a impact to us. We bring about 700,000 tonnes of scrap in from Canada and about, 400,000 tonnes up from from Mexico, but that that remains unaffected. P ten twenty, which will be consumed in our aluminum facilities, that tariffs tend to be absorbed through the Midwest Premium and passed on to the customer base, so that has little impact. We will have a little impact from tariffs on pig iron if if they remain in place. We just as we did at the onset of the Ukrainian war when pig iron pricing went skyrocketing and availability was was was challenged.

We we increased our our the prime scrap and more importantly, our sort of what we call shred one, our our low residual scrap and reduce that that pig iron content or or appetite so that that will be reduced. And then there will be some, impact on, slab aluminum slab coming up from Mexico. That'll be incremental, this year because of, obviously, we're ramping up and the volume is not gonna be very large. But I think in general, we are we are well positioned relative to to to our peers. And I think it it it sets the the stage for, the renegotiation.

You know, the USMCA gets renegotiated in 2026. I wouldn't be surprised if that got pulled forward, but I think there'll be a very, very positive outcome for the country, when that occurs.

Okay. Thank you. I'll hop back into the queue.

Your next question for today is from Timna Tanners with Wolfe Research.

Yeah. Hey. Good morning, and I hope you're feeling better soon. Wanted to ask if I could about what changed that sentence from prior guidance. You know, you talked about not being able to positive than it was.

And then if I could also, are you still looking to, produce exposed automotive eventually there? Any update, please, would be great. Thanks.

Hey, Timna. Real quick. Can you just, re, reask that first part of your question about what changed? Can you just clarify that a little bit?

Yes. So, initially, you had talked about Syntin not being profitable, I think, the mid quarter update. Then in the results, you talked about it being profitable. I just wanted to understand that and maybe what's improved there and can continue to improve going forward. Thanks.

Okay. Thank you. So from a change perspective, I'm gonna let Barry get into the details of Sutton because we are really excited. That's why we congratulate the team and hopefully somebody down there is listening. From the perspective of what changed, we were just really trying to see where the end of the quarter fell out.

Obviously they were more exposed to spot pricing than Columbus and Butler are so some of the price appreciation on the flat roll side was actually able to be captured in the March time frame where it will be more lagging at Butler and Columbus. So it was nothing that was significant, but it was very exciting for us to have an EBITDA positive quarter heading to operating income in the second quarter.

And really, the team maturing and bringing the line utilization rates higher has allowed us to capture that market quicker, as Teresa mentioned. With the long term projection of automotive exposed, we are very excited about the product we produce down there. I think it's it's early to be talking about exposed, but we are developing, really good practices so that we continue to make our customers happy as we ramp the facility up and we introduce new products. So I I wouldn't rule it out, but, it it's not something we're we're advertising at this minute.

Your next question for today is from Carlos De Alba with Morgan Stanley. Stanley. Carlos, your line is live.

Yeah. Sorry. I was on mute. Thank you very much. On the fabrication business, I think I've heard that the March had the strongest order entry in two years.

Does this mean that the volume that we saw in Q1 marked probably the bottom and should increase from here, and if not the second quarter, maybe the third quarter, because we did notice that the shipments the first quarter, and I understand the seasonality, but they were the lowest, I think, since 2015 or 2017 on a quarterly basis.

Thanks, Carlos. I'll let Barry add. What I would say is we've been talking about this. We talked about it kind of the whole quarter that for fabrication in the first quarter because there was still some hesitancy around what was happening with the administration, what steel costs would be, where interest rates were, that there was some hesitancy from a customer perspective of actually, you know, having those jobs proceed forward. And so we we knew there'd be some open patches, if you will, and those generally get filled with smaller projects, that have a little bit lower pricing dynamics.

So we definitely are seeing strength in the second half of the year, as it relates to fabrication, and that's the momentum you're seeing in March and April. But I'll let Barry further comment.

Yeah. The activity we're seeing is is, is robust, and it's the type of projects that we do very well in, with New Millennium. So, we do see those projects materializing, and we also see some of the projects that have been temporarily on hold status with the, uncertainty. Some of those are starting to free up. So, we anticipate, growing forward through second quarter and into the second half of the year as, what we see today, comes into realization.

Your next question is from Tristan Gresser with PNB Paragraphs.

Yes. Hi. Thank you for taking my question. Just a quick follow-up on the downstream side. Does that mean that with the visibility you have and backlogs into the end of the year, do you expect volumes to improve on a year on year basis starting Q2 or maybe in H2?

Kristen, yes. We do expect to see, based on what we can tell today and the order activity and the current macro environment that we're all watching day to day, we absolutely expect volumes to be higher year over year.

All right. Thank you. And my question then is more on the demand side of the equation. You discuss a little bit by end markets what has been the recent developments since the tariffs were announced in early April? You mentioned you had a strong Q1 and now there is some uncertainty.

So I'm curious to see the order activity, how it's been in the past two weeks? And also how how we should I mean, you had a very strong shipment figure in q one. How we should think about shipments into into q two?

Yeah. Tristan, we we continue to see a lot of real consumption out there. In spite of all the uncertainty out there, there are a lot of customers that are actually, looking to, you know, further their relationships with us. We've seen more growth in our longer longer term contracts, people trying to cement their supply chains. And when you look at specific marketplaces like, construction goods, our painted products are doing very well.

We see, resilient demand out there. We see opportunities for growth, with the, HVAC industry we support. We saw an uptick, February and March, and some of it we think was a little bit, buying ahead of uncertainty of tariffs. But now we're seeing some demand fill back in there. So we we continue to be, you know, pretty excited about what we see at HVAC.

The appliance business we do is pretty steady, And I think that much like automotive, depending where you're at in those industries, your vision of them might be different. So our appliance, vision is is pretty strong right now. We're also very strong with, automotive. The platforms that we are on are actually doing very well. So we saw q one kind of a surge, particularly with, you know, the North American players, that that we're associated with.

So we remain very excited about that. We're seeing a lot of activity for, pipe and tube, whether it's oil and gas or whether it's infrastructure. Those projects are starting to materialize, and, you know, there's real demand for for some of these activities that has just kind of been put off. So, we're excited about that. And some of the some of the rail, business we do is also very steady.

So last year was slow with the class one railroads, but we're starting to see that pick up again in, in 2025 here. So, again, we we see a lot of pockets where things are good. So in spite of the, perhaps perception of the industry, people are still trying to make things go. And, our team is really good. When things get tight like this, our relationships come back, and our relationships help support how we go forward.

So in times like this, we're excited about the opportunity to grow and to, you know, enrich those relationships we've worked so hard at building. So, all in all, with what we see today, we we're excited about where 2025 is going.

Alright. That's, that's very helpful. So just to to confirm, normal seasonality in q two seems a fair base case in terms of volumes?

I'm sorry, Tristan. Can you say that again?

Normal seasonality into q two for steel shipment seems like a a fair assumption.

So we've got a lot of different things happening right now to Barry's point. So we've got Sinton growing. We're gaining market share, and the the especially the core cases, can't be under discussed far as the positive impact. And since we're the largest coder of automotive flat rolled steel in North America, it's specifically impactful to us in a very positive way. So I would not expect to see shipments go backward if that's what you're asking.

Your next question is from Chris Lefimina with Jefferies.

Hi. Thanks for taking my question. I actually have a kind of more of a strategic question. You've obviously spent a lot of time on your existing organic growth that's sitting in the aluminum mill and the value add lines, all of which are getting close to the finish line now. So you're going to start to generate higher through cycle cash flows.

You've talked about being excited about your current growth plans as well as your future growth plans. And I'm wondering what happens next? I mean, you'll be presumably you're on a higher through cycle cash flow run rate. You've talked in the past about doing more in non steel recycling, including I think you talked about in copper, but copper and aluminum. You've obviously been buying back shares as well.

I mean, do we get into a situation where steel dynamics becomes an even bigger capital return story or is it about the next leg of growth? And then, sorry, secondly, on the next leg of growth, if you look at growing in The US steel industry, are you worried about investments from sparring steel mills building new capacity here to sort of circumvent tariffs and ultimately leaving little opportunity for you to grow in steel domestically. So really just kind of question around medium to longer term strategy. Thank you.

Well, I think, as I earlier, we were absolutely blessed. We have a great team and the strategic initiatives they've put in place over the last, five, ten, fifteen years is why we're we're here today. And as you you rightfully say, we're we're gonna have a very, very strong cash position moving forward as all these recent, projects, come to to to fruition. It's gonna allow us a continued sort of balanced cash allocation strategy. I I don't think you it's gonna change, and we will use all all the tools in our toolbox to to to improve shareholder value.

I I think you will see growth in a in aluminum for sure, as you've seen it in in steel. You know, a lot of the things that evolved through our our our life cycle in steel, you know, downstream value add processing, coating, painting, can can be done in in the aluminum, world as well. So that will continue. And steel itself, for sure, there's still plenty of still plenty of opportunity there. Our teams are incredibly innovative, and there there are market spaces and niches that we we we don't play in today, that we intend to to to penetrate.

We don't grow just to be big. We we always grow if you if you look at both our organic and our inorganic inorganic growth, we always differentiate ourselves, and you will continue to see that that value add sort of profile going forward.

I would just add to that. Right now, and the teams are doing it, we're in a in a period of execution and optimization of these larger growth projects that we've had. So we don't see billions of dollars of CapEx in the near term, but we do see the cash flow coming. So that will allow opportunities for shareholder returns to continue at a really strong rate. It also allows us, though, we don't wanna forget about the fact that we are acquisitive, so we do look at transactions from time to time as well.

We're just really disciplined, and that's what differentiates us from our peers. There's still a lot of opportunity for growth, while distributing, I know, strong shareholder returns on a through cycle basis.

I I guess I was also wondering in terms of the, the mechanism for capital returns. I mean, buybacks are nice, but, you know, having a higher through cycle dividend that could be funded by the higher through cycle cash flows might actually be an even more compelling point of differentiation. And how does the board and the management team think about the allocation of those capital returns? And is it is it possible that you just go you change the dividend payout model based on the higher through cycle cash flow? Thank you for answering my questions.

Yeah. No worries. So from a dividend perspective, I mean, we've increased our dividend by over a % in the last five years. So we definitely keep an eye on it, and we definitely know, that it's important. But we grow the dividend when our cash flow structure fundamentally grows on a through cycle basis.

Steel Dynamics (STLD) Q1 2025 Earnings Call Transcript

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