Thank you, Holly. Good morning, and welcome to Steel Dynamics fourth quarter and full year 2023 earnings conference call.

As a reminder, today’s call is being recorded and will be available on our website for replay later today. Leading today’s call are Mark Millett, Chairman and Chief Executive Officer of Steel Dynamics; Theresa Wagler, Executive Vice President and 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 maybe forward-looking and predictive, specifically 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 out new assets in the aluminum industry, the use of estimates and assumptions in connection with anticipated project returns and our steel metal recycling and fabrication businesses as well as to general business and economic conditions.

Examples of these are described in the related press release as well as in our annual filed SEC Form 10-K under the heading Forward-Looking Statements and Risk Factors found on the Internet at www.sec.gov, and if applicable, in any later SEC Form 10-Q. You also find any referenced non-GAAP financial measures reconciled to the most directly comparable GAAP measures in the press release issued yesterday entitled Steel Dynamics Reports Fourth Quarter and Full Year 2023 Results.

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

Thank you, David. Good morning, everyone.

Thank you for being with us on our fourth quarter and full year 2023 earnings call. As you saw on our release, our teams achieved a strong annual 2023 financial and operational performance.

I think most gratifying was achieving our best safety year with the lowest recordable incident rate ever. I want to applaud and congratulate all the teams because that it was a monumental effort put into get it.

Steel shipments were record 12.8 million tons. I think, it needs to be emphasized that we've got 3 million tons yet of additional shipping capability to leverage.

We have the second best year for revenues at $18.8 billion and cash flow from operations of $3.5 billion. Adjusted EBITDA was $3.7 billion.

I think, the year clearly demonstrated the through cycle earnings resilience of our business model. It's manifest by a diverse value add product portfolio supported by a superior operating culture, driving world class low cost operations.

I can be more pleased at Sinton. Sinton is showing significant operating improvement was EBITDA positive in December, with a clear path to profitability in the first quarter of 2024 and thereafter.

We're also achieving fast paced progress on our aluminum flat rolled investments. There continues to be strong commercial support for a new and innovative supply chain solution from Steel Dynamics.

So the aluminum industry is considering a well-known and highly regarded metals producer. I'm incredibly proud of the Steel Dynamics team.

They're the foundation of our company and they drive our success. And to be honest, they inspire me.

Feeling they were esprit de core and commitment to the SDI family during the recent holiday parties was absolutely just simply humbling. And that is why we were so focused on providing the very best for their health, safety and welfare.

They'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. As I already suggested, with that focus, the team's safety performance was a record low incident rate in 2023.

Obviously, though there's more to do, we will not rest until we consistently achieve our goal of zero injuries. So that said, I will hand it to Theresa, who will then bet the ball to Barry and then back to me to finish up.

So Theresa?

Thank you, Mark. Good morning everyone.

Thank you for being with us today. In addition to the achievements Mark just mentioned, the teams also achieved our third best year for operating income of $3.2 billion and net income of $2.5 billion or $14.64 per diluted share.

Cash flow from operations and liquidity of $3.5 billion and a three year after tax return on invested capital of 32%. A truly great performance, my sincere thank you and congratulations to our entire team.

As for the fourth quarter of 2023, net income was $424 million, or $2.61 per diluted share with adjusted EBITDA of $659 million. Fourth quarter 2023 revenues of $4.2 billion, an operating income of $519 million were lower than sequential third quarter results driven by seasonally lower volume and realized steel and steel fabrication pricing.

Our steel operations generated operating income of $365 million in the fourth quarter lower than sequential third quarter results due to lower realized flat rolled Steel pricing. Our steel shipments remain steady at 3.1 million tons.

Our four new flat rolled coating lines have or will begin operating this quarter, increasing our higher margin value added product mix by an additional 1 million tons, making our capacity in value added and flat roll at 7 million tons on the coating lines. For the full year of 2023, operating income from our steel operations was $1.9 billion with record annual shipments of 12.8 million tons.

For those of you that track our flat rolled shipments in more specificity, hot rolled coil and P&O shipments were 927,000 tons. Cold rolled shipments, 124,000 tons and coated shipments of 1,192,000 tons.

For metals recycling fourth quarter operating income was $6 million due to seasonally lower volume in nonferrous metal spread compression. For the full year, operating income from our metals recycling operations was $108 million lower than prior year results based on decreased ferrous scrap pricing more than offsetting higher volume.

We're the largest nonferrous and ferrous metals recycler in all of North America, recycling aluminum, copper, and other metals. The team continues to lever our circular manufacturing operating model, providing high quality, low cost scrap to our steel mills, which improves furnace efficiency and reduces company-wide working capital.

Our steel fabrication operations achieved operating income of $250 million in the fourth quarter, lower than sequential third quarter results, yet historically strong due to lower pricing and seasonally lower shipments. Our steel fabrication platform had another great year in 2023 with operating income of $1.6 billion.

Congratulations to the team. Our steel joists and deck demand remained solid with good order activity.

Our backlog extends through the first half of 2024 and forward pricing remains strong. Infrastructure Inflation Reduction Act, the DOE decarbonization support and manufacturing onshoring are expected to support domestic fixed asset investment and related flat and long product steel consumption and related joists and deck consumption as well.

During the fourth quarter of 2023, we generated strong cash flow from operations of $865 million. For the full year, we achieved our second best annual cash flow of $3.5 billion.

Our cash generation is consistently strong based on our differentiated circular business model and highly variable low cost structure. At the end of the year, we had liquidity of $3.5 billion.

During 2023, we invested $1.7 billion in capital investments, of which almost 60% related to the construction of our aluminum flat rolled investments. For 2024, we believe capital investments will be in the range of $2 billion, of which approximately $1.4 billion relates to aluminum investments.

During the fourth quarter, we maintained our cash dividend at $0.425 per common share after increasing at 25% in the first quarter of 2023. During the full year of 2023, we paid cash dividends of $271 million and repurchased $1.5 billion or 8% of our outstanding shares, representing a 62% net income shareholder distribution rate.

The Board also authorized an additional $1.5 billion share repurchase program in November, and $1.4 billion remained available at the end of the year. Since 2017, we've increased our cash dividend per share by 174%, and we've repurchased $5.5 billion of our common stock or 37% of our outstanding shares.

These actions reflect the strength of our capital foundation and consistently strong cash flow generation capability and the continued optimism 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 complimented with the variable share of purchase program, while we remain dedicated to preserving our investment grade credit designation. Our free cash flow profile has fundamentally changed over the last five years from an annual average of $540 million to $2.8 billion.

We are squarely positioned for the continuation of sustainable, optimized long-term value creation. Our three-year after-tax return on invested capital of 32% as a testament to our profitable growth.

Sustainability is also a significant part of our long-term value creation strategy, and we're dedicated to our people, our communities, and our environment. We're committed to operating our business with the highest integrity.

We have an actionable path forward to carbon neutrality that has more manageable and we believe considerably less expensive, that then lay ahead for many of our industry peers. Our sustainability and carbon reduction strategy is an ongoing journey, and we're moving forward with the intention to make a positive difference.

Thank you for your time this morning, Barry?

Thanks, Theresa. Our steel fabrication operations performed exceptionally well throughout 2023, achieving historically strong earnings.

At the end of the year, our steel joists and deck order backlog was solid extending to the first half of 2024. We continued to have high expectations for the business, continued onshoring and manufacturing, coupled with infrastructure spending and fixed asset investment related to the IRA programs could continue to provide momentum for additional construction spending.

Equally important, our customers tell us demand remains solid and share our optimism. Current pricing is stabilized at historically higher levels and order entry has improved.

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

Our metals recycling operations also perform well this year, considering the challenge of declining scrap prices throughout much of 2023. 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.

Particular our Mexican locations competitively advantage our Columbus and Sinton raw material positions. They will strategically support aluminum scrap procurement for our future flat rolled aluminum investments.

Our metals recycling team is also partnering even more closely with both our steel and aluminum teams to expand our scrap separation capabilities through process and technology solutions. This will help mitigate potential prime fair scrap supply issues in the future.

It will also provide us with significant advantage to materially increase recycled content for our aluminum flat roll products and increase the earnings opportunities. The steel team had another strong year achieving record volume of 12.8 million tons.

During 2023, the domestic steel industry operated at an estimated production utilization rate of 76%, while our steel mills operated at a rate of 93% excluding the Sinton plant. We consistently operate a higher utilization due to our value added steel product diversification, our differentiated customer supply chain, and the support of our internal manufacturing businesses.

This higher through cycle utilization of all our steel mills is a key competitive advantage, supporting our strong and growing cash generation capability and best-in-class financial metrics. Regarding the steel markets, steel pricing improved in the fourth quarter 2023 and into January.

Customer order entry rate has been strong and lead times have been extended, while their inventory levels remained at historically low amounts. In fact, our flat wheel steel operations have experienced one of the strongest order entry environments in January, especially for our value added products.

Additionally, steel imports have generally remained at a manageable level with expectations of this to continue. As Sinton and the team has achieved significant improvements in operating efficiency and consistency.

They average about 65% of capability in November, December, and have been running even stronger rates here in January. We are planning for Sinton additional improvements in production after the team makes changes to certain transformers at the end of this first quarter, 2024, while we allow access to a 100% of our mill capacity versus the current 80% capacity.

Additionally, the two new value added coating lines will begin operating in the first quarter, supporting increased volume and margins. Regarding the steel market environment, automotive production estimates for 2024 or estimated 16 million units, while automotive dealer inventories remain below historical norms.

Non-residential construction remains solid as evidenced by the strength of shipments and backlogs at our structural rail division, and customer inventory levels are low. Additionally, onshoring and infrastructure spending should provide meaningful support to fixed asset investment in related construction oriented projects in the coming years.

As for the energy market, oil and gas activity is strong, driving approved orders for OCTG and solar, those areas all grow. Looking forward, we are optimistic regarding steel demand and pricing dynamics for 2024.

With that, Mark?

Thanks Barry. Thanks Theresa.

I think, our consistently strong through cycle operating and financial performance continues to support our cash generation and growth investment strategies. As Barry mentioned, the four value add flat roll steel coating lines are starting this quarter, and Sinton should see a step function improvement hitting its stride in the second quarter of this year.

Our aluminum growth strategy is especially compelling, responses from existing and new customers across all markets remain incredible, only strengthening as we move forward. Many customers have already indicated they would like to build facilities on our rolling mill site in Columbus, Mississippi, and this core location strategy provides a sustainably competitive model for all of us, conserving time, money, and reducing emissions across the supply chain and has already proven itself clearly in Sinton.

The project itself was 650,000 metric ton aluminum flat rolled facility located in Columbus, Mississippi. It's going to be a state-of-the-art plant, obviously, serving the sustainable beverage and packaging both the ore body and then TAM, automotive and industrial sectors.

Roughly 300,000 metric tons of Canstar, which is about 45% of the output roughly 200,000 tons of auto and 150,000 metric tons of industrial and construction products. The onsite metal cast slab capability of 600,000 metric tons will be supported by two satellite recycled aluminum slab casting centers located in UBC scrap rich regions, one in West, and one in Central Mexico.

The expanded product scope is including additional scrap processing and treatment to maximize aluminum recycled content. Our plans are on schedule, rolling mill should be mid-'25, the Mexico slab center at the end of '24, and then Arizona slab center around mid-'25.

The total project cost, as you saw in the release, including the recycled slab centers has risen to $2.7 billion. The installation cost for the rolling mill has expanded due to inflationary installation costs that we are all facing.

So with virtually all equipment and construction contracts complete, we are confident in this final budget. As we've said before, 100% to be funded with cash.

And the expectation is to have a through cycle annual EBITDA of around $650 million to $700 million from the [aluminum] facility with an additional $40 million to $50 million from [indiscernible]. I think we're definitely going to see superior financial metrics relative to our competition.

The -- as we see it, the market environment is similar to the domestic steel industry when we started SDI 30 years ago, other assets, little reinvestment, heavy legacy costs with inefficient high-cost operations. We're confident, we can emulate the performance-driven high-efficiency, low-cost model that drove our success in steel to drive superior financial metrics.

Our organizational mill structure to just advanced layout and technology and our performance-driven sort of speed core culture will drive a census of around about 750 people versus typically 2,000 or more in a similar competitor out there. We will have higher yield through the system.

We will leverage OmniSource's market position and their separation technologies to ensure higher recycled content. We obviously won't have the legacy burden that others have.

We will have production cost efficiencies and along with the customer co-location. In the end, we also have a preferred sustainability profile.

If you put it all together, we're confident that our earnings profile is going to be far superior to the industry today. We've developed the best financial metrics in the steel industry.

And as I said, we have confidence we can do the same in aluminum. We're poised for continued growth.

We have an additional 3 million tons, as I said earlier, have shipping capability that will be leveraged through our new processing lines, new products and new supply chains. And we are on passion by our future growth plans as they will continue to drive the high return growth momentum we have consistently demonstrated over the years.

We have the highest average five year after-tax return on invested capital within the S&P 500 materials companies. In the last three years, we had an average after-tax ROIC of 32%.

I'm going to say that just doesn't happen. Our disciplined, intentional organic and acquisition strategy focused on differentiated value-added supply chain solutions is providing sustainable cash generation and strong returns.

I continue to be optimistic moving forward. I believe the market dynamics are in place to support increased demand across our operating platforms in 2024 and the years ahead.

North America will benefit from continued onshoring and manufacturing businesses. And the U.S.

will benefit from the allocation of public monies from the infrastructure program, Inflation Reduction Act and other public programs. Fuel dynamics is levered to benefit from those programs through increased steel joists and deck demand, flat and long product steel demand and the associated higher demand for recycled scrap and aluminum.

In closing, there is no doubt our teams are our foundation. And I thank each of them for their passion and dedication.

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

Our culture and business model continue to positively differentiate our performance, leading to best-in-class financial metrics. We are no longer a pure steel company, but an integrated metals business providing enhanced supply chain solutions to the industry and, in turn, mitigating volatility in cash flow generation through all market cycles.

We're competitively positioned and continue to focus on providing superior value for our company, customers, team members and shareholders alike. We look forward to creating new opportunities for everyone, today and the years ahead.

So with that said, Holly, I would love for you to open it up for questions.

Quick question on steel conversion. Costs were estimated around $5.30 per ton in the fourth quarter and kind of average around there for the year.

Looking ahead at 1Q, taking that point of reference into account, should we expect some decline there based on the ramping of Sinton further and some better fixed cost leverage?

As the way that the information that you guys can use to back into our conversion costs, I know it's a little difficult, but you hit the primary driver with Sinton and ramping up as significantly as we're expecting them to do in the first quarter and as they are doing right now in January already, we would expect to see that overall as you calculate it conversion costs come down absent any other factors, correct?

Okay. And any goalpost as far as when we think about what that could potentially decline on a sequential basis?

And I understand there might be other offsets there with substrate that's flowing kind of flowing through there as well. But.

No, it is really hard for us to give you guidance, as you know, Martin, as it relates to the conversion costs as you're calculating it. As conversion costs really stand within the steel operations themselves, the two conversion costs are very stable.

We don't expect to see a lot of movement except for Sinton again because of the additional volumes. The substrate does have an impact, as you mentioned, but we don't expect to see that mix of processing versus production be dramatically different in the first quarter.

Okay. If I could one follow-up on steel fabrication in the release, you noted improved activity as well as well price backlog extending through first half of '24.

On average, is the backlog price higher or lower than the fourth quarter ASP of $3,500 per ton?

Martin, the backlog prices held in very steadily. There's not a dramatic difference.

And again, we don't give specific sense to the backlog pricing for fabrication or for other operations. But the resiliency and the price, both what we're seeing now and in that backlog is very steady.

I would just add, in the fourth quarter, and our belief is that the fabrication is kind of troughed in large part. But in the fourth quarter, we had the highest order input rate of the prior six quarters.

So volumes are -- will turn. Obviously, you've got a little seasonality in Q1, but the expectation is things will go upward thereafter.

Your comment on you believe that its trough, does that pertain to volumes or price or volumes and price?

I would say that for sure, volume and pricing appears to have stabilized.

The first one is kind of a follow-up on the fabrication guidance, maybe on the volumes. If we look at the shipments you had in Q4, it's probably the lowest fab shipments we've seen in five years, and you mentioned you've seen that trough, but could you explain a little bit what is been holding you back there of late.

And if we look at 2024, what kind of growth expectation do you foresee for the business? I know you provided some guidance last year on a half-on-half basis.

So anything there would be helpful. That would be my first question.

I guess, I would just leave it as already stated, the order input rate increased in Q4. That will flow through this year.

You all have as you -- I know you appreciate sort of seasonality in this first quarter with the winter months and construction being a little inhibited by the weather. But I think we will certainly see a turn into the second quarter and through the rest of the year.

All right. That's fair.

And my second question is more on the CapEx hikes or the project budget hikes. I think you mentioned the aluminum, but I think the biocarbon project also the CapEx has been high.

So what drove that? And when we look at this, let's say, $300 million budget hike versus prior, how should it be spread out between 2024 and 2025.

I know you provided some insight on the budget for 2024, around $2 billion but there is a significant drop in consensus expectation into 2025. So it'd be helpful to get a sense of how much is flowing into 2025 for those projects?

And also, do you -- when you look at this elevated CapEx budget for next year and your expectation for your several businesses, do you expect to be free cash flow positive for 2024?

Thanks, Tristan. So the biocarbon project hasn't increased in cost.

It's stayed put. It stayed the same.

It's $260 million. We did expect at one point in time to possibly get some tax credits that became unavailable once the definitions kind of became more precise from the administration.

But otherwise, the capital cost of $260 million remains what we thought it would be. And that project is still online to be completed and to start before the end of 2024 which, as a reminder, is incredibly additive to our decarbonization path, and it's going to really help our customer base as you look at the carbon content across our steel operations with the benefit of using the biocarbon.

So incredibly excited and the team is doing a fantastic job in Mississippi getting that up and running. So that will be spent primarily in 2024.

And that $2 billion is a number that I would have given you last quarter as well. So that stayed the same for total CapEx in 2024.

As it relates to the aluminum project, most of the incremental and it rounded to $200 million, but it was less than that in actuality. But most of that will be spent in 2024.

So I gave you the spend for aluminum of about $1.4 billion. This year, and it would be our expectation.

And then there would be a trailing, call it, $150 million to $200 million remaining to be spent in 2025 related to the aluminum projects. And so really nothing significant has changed on the capital front, except for that incremental addition in the aluminum project itself -- I'm sorry, I forgot, I had to look at my notes.

You asked a lot of questions, Tristan. The last one was related to consensus for 2025.

And I would just -- and free cash flow. I would just point out for everyone on the call.

So for the last two years, unfortunately, Sinton has been negative from an EBITDA perspective. And Mark said on the call this morning that we will be EBITDA positive in the first quarter and thereafter, that's a significant swing in just earnings itself just as it relates to the ramp-up of Sinton.

In addition to that, you have the four value-add flat roll lines that are coming online in 2024, which are significant additional opportunity for contribution to earnings on the value-added side as well as that's where the demand is today is in the painted products and the Galvalume products. And then if you couple that with the fact that we've been increasing and will continue to increase volumes in our metals recycling segment, both related to the collection of nonferrous scrap, specifically aluminum and to help service our steel mills on the ferrous side of the equation.

And then finally, in 2025, we will be starting our aluminum mill, midyear is the current forecast. So that's contributing to earnings, as Mark mentioned, not we believe through cycle earnings of $650 million to $700 million.

So I think everybody maybe needs to take a step back and kind of look at the opportunities that we have from an earnings perspective. And yes, we do expect to generate cash in 2024, and we expect to continue -- we plan to continue with our share repurchase program.

Just one added point. Although we are disappointed with the CapEx creep there at Sinton.

We are very, very confident -- I mean, sorry, sorry, in Columbus aluminum. We're confident that that's the final creep, but it has no impact to schedule.

To be honest, it is going at a breadth taking place, absolutely phenomenal job by the team down there. And there's no doubt we'll be up and running midyear of '25.

My question is on the aluminum project. I don't know if you could maybe give a little bit of color as to what extent have you been able to contract some of the volumes that will come online in mid-2025?

And what type of pricing mechanism or structure even at just high level and on a qualitative basis, have you been able to use to implement in those contracts, if you have done so?

Thank you, Carlos. The commercial team, in all honesty, has only been put together over the last, I would say, two months.

They're very, very active with our customer base and all honestly, we all are at every level. And the reception is incredibly high.

And I would suggest that we have total confidence that we're going to be able to support the ramp-up in '25 into '26.

And if I may ask on the -- what is the expected ramp-up and EBITDA contribution for the four quarter lines? I mean, I think two of them will start in the first quarter.

As far as the ramp-up, I'll let Barry address how quickly they ramp up. I would tell you from a financial perspective, the coating lines, they are in totality, all four, around $600 million and they tend to have a 2.5 to 3-year payback.

So it's very nice returns.

Yes, this is Barry. I'd just like to add the teams, the personnel are in place.

They've been training, building the lines. That's our culture to be part of the construction.

So the teams are already very familiar with the equipment. Two of the lines have actually run first coils, one at Heartland, the paint line and a coating line down in Sinton.

So that's great news. That's always exhilarating for the teams to get that point.

The next two lines are in hot commissioning now, and we anticipate those running first coils in the March time frame. So the ramp-up, keep product for them, we're pretty aggressive in what we do typically, and we anticipate these will be contributing to our customers here in the near future.

I envision prime sales in Q1 from the two lines that have run first coils, and we see all four of the lines making and shipping salable goods into the marketplace in Q2. So we anticipate our experience and our culture will allow these startups to be very, very seamless.

And we're very responsible to our customers to make sure the product that's leaving is nothing less than the best they expect from us.

When you think about the four lines or particularly the two lines in Sinton, obviously, it's going to expand our value-add sort of product portfolio down there and enhance the margin directly there. But as importantly, it will allow us to fully utilize the downstream lines.

So yes, the team has done a phenomenal job on the hot side. The -- you're going to see great gains there through increased utilization.

As Barry said, we're knocking on 75% utilization today in January and 80% is right around the corner. But downstream, when you take that product, you pickle it, you put it through the time mill and other lines.

Having the additional what is 300,000, 400,000 tons of downstream. That's going to allow probably loading of those downstream lines and obviously a dilution of the cost structure.

So it's a very, very important and effective impact to some here in the next three or four or five months.

I wanted to ask about -- I wanted to follow -up and just -- I know you mentioned that you thought volumes had hit bottom and prices were stabilizing. Do we have kind of the effect of the higher price from the -- into the fourth quarter hitting in the first quarter?

Or is that more of a second quarter phenomenon? So that was my first question -- asking about costs from throughput from the hot-rolled side.

Okay. Yes.

So [indiscernible] though, you were talking about fabrication, you're actually talking about flat roll. So the -- we're operating contract business lagging, let's call it, two to three months.

So the increased pricing that we saw in flat roll in the fourth quarter is going to be benefiting the first quarter from a contract perspective. And the 80% is -- it's really been pretty consistent all year for the flat roll operations.

So we'll see that benefit Q1.

Okay. That's actually really helpful, but I was asking about fabrication and the throughput of flat-rolled price increases and the impact on margins on downstream.

So if you could actually answer that as well, that would be great.

Sorry, I'll get this right eventually. From a cost perspective for the substrate for fabrication, they tend to have anywhere between call it, eight to ten weeks of inventory on the ground.

That's the same thing that they would have had coming into the first quarter. So you're going to see some of that incremental price hike in the first quarter but you would have seen some of it in the fourth quarter as well.

And then if I could, just one last one. I know Barry talked about and Mark talked about customer inventories being low.

So I just don't understand that because I know that at least SMU actually had some really high inventories for December. So is that just not aligned with what you're seeing?

Or can you help me understand why the difference of narrative there?

Well, Timna, this is Barry. I think a lot of our relationships, especially with the galvanized and the pain at are very directly with customers.

So we see our supply chains still needing to fill orders at a really good rate. So the MSCI inventories still are traditionally pretty low.

But more to the point or specific OEM relationships are still pulling tons from us. And when we have conversations, the lead times haven't changed at all with a vast majority of the business we do that is on these contract relationships.

So I think what we're seeing out there and the nature of our inquiries make us feel like that there is a real demand out there still underneath everything we're doing.

And just to add to that. I think generally, we believe we are just very, very constructive for 2024 relative to steel demand.

And everyone gets a little excited by maybe a little backing off of hot-band pricing here of late. But for us, flat roll continues to be very, very solid.

And maybe the macro indicators may not be overly constructive right now. The order input rate in January for us has been incredibly strong.

And we would, as Barry said, suggest that supply chain inventories, not just MSCI or SMU, but just supply chain in general is relatively tight. And imports are not a material factor today and won't be.

We're booked out for coated and prepayment, right? It's very, very strong for us.

And I think the -- again, when you look at the -- just the hot band pricing because coated, prepaint is all very, very, very strong still. It's just like recent cycles, and its more emotion than anything else, but you get that steep climb.

You have exuberance hence to overshoot the market a little bit, and it just sort of retrenches itself a little bit. And I think that's where we are today.

And it's not a signal as it used to be. It's not a signal as the underlying -- the structural underlying demand because there's so little spot material transacted today.

Just because you have a slight erosion in hot band price, it doesn't mean to say that that's reflective of where the demand is. So for us, demand is, as I said, very, very solid throughout our sheet mills.

And I also see that long products is in a very, very solid territory. Would like to congratulate the team.

They had record earnings and record volumes in 2023. They've done an incredible job.

They've changed the commercial approach somewhat. They've expanded their product portfolio, and that's going to support higher through-cycle volumes going forward for the long product platform as well.

So I think for us, [indiscernible] quite rosy.

Just wanted to follow-up on the fab pricing dynamic. I think at the start or maybe at the end of the first quarter of '23, you talked about pricing in the back half of the year being down 10% to 15%, and you came in down 22%.

And then I think for now two quarters in a row, you have talked about price stabilization. And obviously, you mentioned the order entry getting better.

So would you be willing to provide any directional color on pricing? Like should we assume that the first half -- that the backlog you've priced for the first half of this year is somewhat similar to where you were in the fourth quarter, which would be consistent with kind of what you've said in the past two quarters, that pricing has stabilized?

Well, I never do well in Vegas. So I don't think that given a projection is solid projection is perhaps sorry -- perhaps right.

But directionally, I do believe, again, that the underlying structural demand is there. If you look at -- literally the last 18 to 24 months, you've seen these hot band pricing cycles, and they have not been driven by demand.

They've been driven by motion, whether it be the threat or the anticipation of high interest rates and inflation and recession and all these sorts of things. They've been emotional pivots as opposed to demand for us.

And all we can say is that we do believe strongly that the underlying demand is going to be sustained through the year, and that should support pricing.

Okay. And then in terms of -- I think you noted the order entry in fab was the highest you've seen in the past six quarters, which is a pretty healthy statement.

So I'm just curious, like what's driving that? A lot of the data we've seen in terms of warehouse starts is still somewhat negative.

I know data centers is growing in other areas. But how do you characterize kind of the composition of your end market composition of fabrication demand today versus maybe how that looked 18 months ago.

Here you may have additional commentary as well, but we're seeing a lot of incremental demand on the manufacturing side. We've been talking about onshoring that is actually happening, and that does have a good impact on the steel joists and deck market.

We're also seeing a lot of activity in the education side as well as in the, I'll call it, pharma or health care. And then anecdotally, you have to separate warehouses from data centers.

We're continuing to see really good strength in the data center arena as well. Barry, I don't know if there's anything I'm missing.

No, I'd just say that the mix is -- it's a good mix for them on the engineering side of the business to keep up with their lead times. So it -- isn't substantially different than the typical business flow that comes through it's small changes in the segments that we're serving through fabrication.

Just quickly on the aluminum segment, you started disclosing the operating loss. Can you provide some color how we should think about the cost there over the next few quarters or how it should impact you?

Katja, we did break out. So aluminum, because of the investment size, we will have a separate segment going forward.

The -- we can't really give you projections on start-up losses. We expect them during 2024 to not be of significant size, and you will be able to see them.

The one thing I'd note that you should recognize though, it's kind of an odd thing that's required from an accounting perspective, but those start-up losses actually get reflected in our SG&A amount. So if you see SG&A fluctuating, and maybe being higher than it is normally, it's because those start-up losses during construction are actually included in that line.

But is it a fair -- fair to assume that they should come up. I think in the fourth quarter, they were around $11 million?

Or is that a fair assumption over the next few quarters?

We do have a good contingent of people on the ground now. But yes, during the year because we'll be expecting to actually still start up, as Mark said, in mid-2025, you're going to be seeing headcount increase as well as additional construction activity.

So yes, you should expect to see those costs rise during 2024.

On Sinton, how much of Sinton's output is currently being sold into Mexico, if I remember correctly, you were targeting something like 30% before that mill started up?

Yes, we've had a very good ability to move product into Mexico. We have a very established team down there that's been serviced in our Flat Roll Group for a while, but we added a warehouse capability in Monterrey.

And last year, we moved about 600,000 tons into Mexico in various industries altogether. But we're very pleased with how the business is moving.

We are welcoming -- being welcomed by the customer base in Mexico. And in many cases, we've had relationships and haven't had the ability to get the tons there.

Sinton provides us the opportunity not just through proximity, but through the advanced product features that we have. So we have wider, we have heavier products than we would typically have.

And these products are being very well received in the various industries. I would tell you that the continued near-shoring of manufacturing in the United States is very apparent with the investments we see in Mexico and the customer base there.

So it continues to go along with our strategy as being a great place to do business, and we're excited about it.

Thanks, Barry. And then just a follow-up, if I may, on the ally rolling mill.

How comfortable are you with your ability to source 900,000 tons of scrap or how much you need. I'm not as familiar with the ally scrap market, but it doesn't seem like there's particularly a lot of excess scrap.

And I guess like how much -- just for context, how much does OmniSource handle today, how many tons?

Great question. Obviously, I think we're advantaged by having OmniSource recycled platform because today, not only are they the largest or second largest ferrous scrap recycler that they are clearly the largest nonferrous recycler and they're recycling somewhere around 500 million pounds of aluminum.

We also have a secondary aluminum operation here in Fort Wayne that we're making, I don't know, 260 million pounds or thereabouts of secondary aluminum. So we're not -- it's not a new environment for us.

I think we've got a great team. We've actually hired some incredible talent to supplement our already incredible talent.

And so sourcing the material is not a -- we don't believe a major issue. If you look at our strategy, there are two principal kind of scrap streams, you might say.

One is for the automotive industrial base. The other is for Comstock and the UBC scrap is -- well, it's highly available in California.

They're a deposit state. So there's a lot of aluminum UBC scrap generated up and down the West Coast, currently either moving to Asia or to the Midwest.

And similarly, in Mexico, a sort of a UBC scrap arena, so that's why we're locating two facilities, two satellite facilities in those scrap-rich areas, like the scrap at the source, molded in the freight of then moving big solid slab versus scrap to the Midwest is at around about half the price. And so we're not only advantaging ourselves on the scrap collection side but economically on getting that aluminum to the mill.

Okay. Just one follow-up, if I may.

This is probably a really dumb question, but I assume the facility can handle primary as well, if required.

We certainly will. And you don't -- because you've got 900,000 tons of just to be clear, of cash need because the yield loss through the system, and when I say yield loss, it's not what we call of loss.

This appears is just sort of a circular within the mill, you still only need roughly 650,000 tons of total input, 20% of which is primary.

Just on Sinton, I think you mentioned hitting stride in the second quarter. How should we think about utilization for the full year?

If I recall correctly, I think you had expected on 80% for the full year at the last quarterly earnings call. Is that still the target?

Or should we assume a bit lower?

It's my target, Barry?

No. We continue to strive for 80%.

We the team is doing, as Mark said, a phenomenal job. It's a big challenge of bringing such a big asset up all at once.

Transporter problems have been unfortunate, but we have several fixes in the works. Approaching the problem for both resiliency is also is getting back to full power capacity.

So we remain confident that the operational levels we're going to see 80% is the target the whole team is aware of. We're all incentive to make that happen.

And not to complicate the math. But if you think about it in January, we're approaching 75% utilization right now, that's 75% of ultimate even though the team is handcuffed because of the lower power input.

So we are quite confident to get to that 80% for the year.

Okay. We'll plug in 84%.

No, just joking. Just on the -- I guess, things like onshore and the infrastructure bill.

You said this is an expectation to benefit in 2024. I guess have you seen orders.

When do you expect to see orders, should we think of this more as a second half '24 to really kind of benefit you? And then between, I guess, onshoring and infrastructure, specifically, which you've seen being more impactful for you this year?

Just from a sort of a product mix, so to speak, the infrastructure growth. On the solar, it's already -- the solar has exploded.

Renewables exploded last year, continues to grow dramatically. We were advantaged hugely both structural for the TOR tubes and also for flat roll for the support tubing.

We're starting to see -- I don't think we can be specific on how that ramps up. But directionally, we're starting to see orders from bridge makers currently.

And so that's -- the start, at least from my perspective, the start of a ramp-up in spend.

We also see in the long products, a lot of, let's call it, foundational type structural sales. And even though it's a smaller division, Steel of West Virginia is very, very full with us right now with stuff that is tangential, whether it's solar fields, the support deal that goes in the ground or fork trucks and things like that, that go into these new factories and these new warehouses and data centers.

So we do see a good bounce from that. We also see the pipeline industry in the states is picking up orders some cases for carbon sequestration lines as well as some major pipelines.

So those markets are awake, and we see a lot of inquiry activity that is very exciting for us ultimately.

And just I want to encourage that there are some of you on the phone right now that may not understand that the infrastructure program and the IRA and anything related to the roads and bridges and construction, they don't really benefit long products. They benefit long products, they certainly benefit our steel & joist and deck operations.

But additionally, the front roll operations have exposure to that as well, whether it's through HVAC systems or pipe and tube, like Barry just mentioned there's a lot of impact on the flat rolled side, and I would encourage you to think about that perspective as well.

Could you give us a little feedback on the potential 2025 CapEx. And with Sinton and the four coating lines in the aluminum and the carbon projects behind us, what are some of the leading candidates for the next capital investments going forward.

And in particular, could you talk about growth in recycling where aluminum, copper, zinc have much lower global recycling rates than steel, in particular.

Yes, we do have projects in mind for 2025. I'm not sure that we're prepared to go into that today.

I would say from the perspective of capital spending, as I mentioned earlier on the call, aluminum will probably have a tail of somewhere between, call it, $200 million and $250 million. Our teams are consistently bringing us wonderful ideas that have high returns associated with them.

Again, I'll point back to our ROIC. They do a good job of giving us those projects that have really great returns.

So the number for 2025, I would say would be a minimum of probably $500 million, something like that, because you do still have some sustaining capital as well, which for us is very low at around $160 million, but there's still some benefit there. Mark, I don't know if you want to add any addition to that?

[Indiscernible] The deal just to get the CapEx part, not the whole thing. But no, John -- and Theresa has just mentioned, we have an absolutely incredible team that continues to be innovative.

And if you were to -- I don't know, just be with us or be with that team. It's incredible.

We have a new digital planning technology that we're exploiting, again, not big dollars, but it's going to be an incredibly, incredibly high-margin niche business. We have two -- suffice it to say, two product segments that we're not in today in flat roll that we're exploring and they have a couple of innovative things there.

So the pipeline in steel is still there, for sure. I think also -- and we've got to walk before we run.

But in aluminum, I see that growth kind of paralleling the growth in steel, yes. We get on the front end, make the basic substrate, so to speak.

And then from a processing standpoint, for instance, there's a massive, massive amount of the aluminum that gets prepaid today. That's an expertise of ours.

You can see growth and expansion there. So I think you witnessed it, John, almost personally over the years and shared our history, but we've clearly demonstrated the ability to be innovative and grow.

I would emphasize grow in a very disciplined, intentional manner. That's the only way you can get the return on invested capital numbers that we achieve.

So both organically, but also through acquisition will continue to be opportunity there. But you will see us remain very, very disciplined, very, very intentional.

We're not going to overpay for anything, and we're going to retain the best financial metrics in our industry.

As we build our financial models, if in 2025, the CapEx fell to somewhere, let's just say, for discussion in the range of $500 million to $1 billion, should we be increasing the share buyback dollars from the levels of the last several years given the drop in CapEx?

So John, we want to be super clear that we see the share buyback program is a very good tool for us to be able to use and you've seen that. So very much the dividend, we've been increasing and we increased it with increases in our structural through-cycle cash flow generation when projects come online and then we do it pretty aggressively.

We want to keep that positive momentum. But then we use that share buyback program during periods of excess cash flow when we maybe have less growth in mind, but we still are very much a growth company.

To Mark's point, whether that's through greenfield assets or whether that's through acquisitions. But at the same time, we have the luxury that we don't have to sacrifice the share repurchase program.

We absolutely can execute on all of those things. And that's what you'll continue to see us do in 2024 and 2025, absent extraneous things.

Thank you very much. I'm a happy shareholder.

I appreciate the time for the follow-up. Just two quick ones here.

Over the last four years, seasonal sequential 1Q gain in external steel volumes averaged about 7% quarter-on-quarter based on what you're seeing with order intake in the new year here, and then also taking into account the continued ramp in Sinton and value-added lines. Should we expect something at the core, similar on a sequential basis, around 7% and then layer in the additional volumes from ramping assets.

Martin, we can't give directionality. Obviously, we had outages in the fourth quarter at two of our steel mills, and we won't have those in the first quarter.

We've just mentioned that Sinton's going to be ramping up aggressively in the first quarter. So all in all, absent any significant market moves, you should expect to see incremental volume from our steel operations.

And as Barry pointed out, with the additional value-added lines, you're going to start to see that product mix get richer and richer. So it will go more into the processing lines.

You'll eventually see some really great spread enhancement throughout the year as well?

What were the outages in 4Q? And assume that you mentioned it because it did have an adverse impact on volumes?

Martin, they weren't -- they were just normal outages. We take outages at our foot roll mills and in our long product mills.

They weren't anything that were -- we didn't note them as far as from a volume perspective. But yes, obviously, when you have outages that does impact volume, but there was nothing of significance to note.

One last one, if I could, on the aluminum project. Based on the two cycle estimate to give implied EBITDA of around $900 to $1,000 per ton, when you were coming up with that analysis, are you able to share what you think the bottom and top quartile of profitability might look like when we think about peak to trough?

No, Martin, we're not. We do mid-cycle through cycle.

And as we get more familiar, we just -- we don't provide that type of information.

Well, thank you, everyone, and thank you, Holly, and thank you, everyone, on the call. I guess, as John noted, he's a happy shareholder.

To be honest, everyone at SDI are happy shareholders because we all are equity holders and as part of the compensation for each and every one of us. Collectively, we do own a reasonable amount of our stock.

And I would just emphasize that we treat your dollars just like they are our own. And we're absolutely focused on continuing to outstrip our competition relative to shareholder value creation through the cycle but we can't do it on our own.

So any customers listening at thank you for your support. We have loyal support, and it takes us through the cycles suppliers can do it without you and got to stress.

We have the best metals team in the world. Our people are absolutely phenomenal.

Thank you for what you do each and every day. For those that are owners on the call as well.

Thank you for your support. Have a great day.

Bye-bye.