Steel Dynamics Q4 2025 Earnings Call - Aluminum startup hits EBITDA positive in December, targeting 90% run-rate by end-2026

Ellie, Conference Call Operator: day and welcome to the Steel Dynamics fourth quarter and full year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After management’s remarks, we will conduct a question-and-answer session, and instructions will follow at that time. Please be advised this call is being recorded today, January 26th, 2026, 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 Mr. David Lipschitz, Director, Investor Relations. Please go ahead.

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

Such statements involve risk and uncertainties related to integrating or starting up new assets, the aluminum industry, the use of estimates and assumptions in connection with anticipated project returns, and our steel, metal recycling, and fabrication businesses, as well as to general business and economic conditions. Examples of these are described in the related press release as well as in our annually filed SEC Form 10-K under the headings Forward-Looking Statements and Risk Factors, found on the internet at www.sec.gov and, if applicable, in any later SEC Form 10-Q. You will also find any referenced non-GAAP financial measures reconciled to the most directly comparable GAAP measures in the press release issued this morning entitled Steel Dynamics Reports Fourth Quarter and Full Year 2025 Results. Now I’m pleased to turn the call over to Mark.

Mark Millett, Chairman and Chief Executive Officer, Steel Dynamics: Super. Thank you, David, and good morning, everyone. I hope you’re all a little warmer than we are in the Midwest and Indiana here in Fort Wayne. Nonetheless, we appreciate you taking the time to join us for our fourth quarter and full year 2025 earnings call. As you’ve seen, our teams achieved a solid 2025 financial and operational performance in what was a challenging market environment through the year. This is a testament to our diversification, the scale, and circular manufacturing business model that we have. The highlights were record annual steel shipments of 13.7 million tons, cash from operations of $1.4 billion and adjusted EBITDA of $2.2 billion, and most importantly, we had another strong year in terms of safety. At Sinton, consistent operational execution has been achieved. The downstream value-add coating and prepaint product quality has matured.

At Aluminum Dynamics, we have produced and shipped finished aluminum flat roll products for the industrial and beverage can markets, as well as hot band for the automotive sector. Although there’s still work ahead, the team has strong momentum positioned as well as commissioning continues in operations around. As always, I’m extremely proud of the entire Steel Dynamics team. They are the foundation of our company, and there’s no doubt their passion, innovative spirit, and commitment drive our success, and they inspire me each and every day. I’m also very excited, actually, to welcome our new team members joining us through the final acquisition of New Process Steel, which occurred this past December. We are certainly excited to grow with you. As I mentioned, the most gratifying achievement was having a strong safety performance.

Our world-class safety culture continues to evolve, and our team’s dedication to take control of safety philosophy is extraordinary. I’m continually inspired by the commitment they have for one another. They consider themselves family and challenge the status quo each and every day. That said, we will never be satisfied, though, until we achieve a zero-incident environment. Before I transition the call to Theresa and Barry, I’d like to provide some perspectives arising from the press release and investor presentation we posted on Monday, January 5th, related to the proposed BlueScope transaction. During the past five years, we have focused on strategic organic investments in steel and aluminum products. The associated additional free cash flow generation is meaningful and, as you know, very close at hand.

We are well positioned with substantial liquidity, low leverage, and significant expected free cash flow generation to support the continuation of our consistent, disciplined, and balanced capital allocation strategy. Our criteria for growth has not changed. We grow to differentiate our product offerings, supply chains, and to create value for all our stakeholders. Our long-standing track record of best-in-class return on invested capital and other return metrics is testament to our disciplined approach to both greenfield and acquisition growth. We have a well-deserved reputation for excellent execution, clear long-term strategy, a business model that enables strong cash flow generation through market cycles, and a culture second to none. Our actions are intentional and strategic, not opportunistic. We pay fair value for good businesses that enhance value for all constituents. In December 2025, we submitted an offer to purchase BlueScope together with our Australian partner, SGH.

The offer proposed SGH acquire 100% of BlueScope on an all-cash basis with a subsequent on-sale of the U.S. assets to Steel Dynamics, providing all BlueScope shareholders with a tax-effective cash realization opportunity. The proposal was the most recent in a series of constructive approaches to provide BlueScope shareholders the opportunity to unlock the trapped value of the North American businesses and to find the right home for their businesses in Australia, New Zealand, and Asia. That home is clearly with SGH, given their track record of value creation across the industrial space, which closely mirrors the focus on delivery, capital allocation, and free cash flow generation of SDI. The offer is compelling, reflecting the value of BlueScope’s business appropriately, and is significantly higher than the value its shares have ever realized in over 15 years. The deal construct is simple and straightforward.

We requested a customary but short 30-day due diligence period, which provides the opportunity for an effective and speedy process. However, our offer was rejected by the BlueScope board without any engagement. The commentary within BlueScope’s subsequent public releases regarding the proposal has to be seen as very disappointing. The premise for the board’s rejection was principally based on insufficient value, yet they provided shareholders with no reasonable executable alternative strategy that would provide the same certainty of similar shareholder return. Our cash offer is certain, immediate, and tax-effective, with no financing contingency. It eliminates the significant execution risk and hopes that financial improvement might come from improved market spreads and currency exchange rates that are far from predictable. We agree that the North American assets and their operating teams are of quality, as we know them well.

In fact, for many years, our steel operators have frequently worked closely with the BlueScope teams, exchanging best operating practices and safety initiatives. The BlueScope North American assets, teams, and senior leadership are not the problem. Rather, BlueScope’s long-term financial and share price underperformance are the result of conservative, incomplete growth strategies. As a case in point, North Star BlueScope and the recently acquired coating businesses are at severe structural disadvantages. The steel mill is essentially a stranded asset and does not have the physical structural capability to provide the necessary value-add products required to supply the geographically disparate coil coating operations. They are missing essential equipment, at a minimum, cold rolling and galvanizing. The required investment today could be as much as AUD 1.5 billion-AUD 2 billion, not to mention the years of waiting on equipment and the construction risks.

In February 2024, BlueScope publicly discussed an associated plan to invest, at that time, $1.2 billion, about AUD 1.8 billion today, for a greenfield project to achieve a similar outcome. Yet they officially deferred the project a year later in February 2025 due to market uncertainty and a pivot to acquisitions. Recently, BlueScope wrote down the asset value of nearly AUD 500 million associated with its recent 2022 acquisition of the North American coatings business, noting that the business was not achieving expectations. More recently, rather than investing for long-term growth, the board announced a one-time, tax-ineffective, non-recurring, unfranked special dividend of AUD 453 million, providing no recurring long-term benefit to shareholders. We would suggest the North American BlueScope strategy isn’t working. Steel Dynamics’ operational interactions with the BlueScope organization spanned over 20 years.

Discussions with senior leadership have explored various value-creating concepts along the way. We have both enjoyed considerable business interaction through the sale of scrap, coated coils, joists, and construction products to the BlueScope business, and we’ve purchased substantial steel from North Star BlueScope. Suffice it to say, we have a unique and clearly qualified perspective on BlueScope’s North American strategy and business model, along with the associated earnings capability of their assets. Our respective leadership teams have long understood that industrial logic of combining our businesses. Our proposal to purchase BlueScope, along with SGH, is not an opportunistic foray to acquire assets on the cheap. It represents a long-standing desire to maximize shareholder value for all stakeholders. Our investment premise is straightforward. SDI is the logical owner of the North American assets as we can unlock the latent value. Currently, North Star BlueScope is a stranded, commodity-centric single-site steel mill.

It will be pressured by additional hot-rolled coil production capacity coming online in the U.S. within the next 24 months. Product diversification is critical for it to sustain earnings power and an imperative for the desired value creation within their acquired coating business. These challenges are self-evident from the recent massive asset breakdown that I mentioned earlier. The scale, supply chains, and business model of SDI would provide immediate resolution. Additionally, BlueScope has publicly emphasized the monetization of industrial and rural land located in remote regions of Australia and New Zealand. We believe there are likely significant zoning and environmental challenges, not to mention development timelines spanning what could be decades. BlueScope’s plan for earnings uplift will take considerable time to realize with substantial execution and market risks. For us, Steel Dynamics, our pipeline for growth investments is robust. Our track record of delivering profitable growth is without comparison.

The acquisition of BlueScope North America makes sense for Steel Dynamics strategically, but we will be led by our focus on value creation and will be guided by rationale and not hope, and we will remain disciplined as always. With all that said, and given the public nature of how this has evolved, we won’t be making any further comments or taking questions related to the BlueScope transaction after our commentary, and we thank you for appreciating and respecting that request. With all that said, I’d love to talk about the exciting things going on within Steel Dynamics. So, Theresa. Thank you, Mark. Happy New Year, everyone. Thanks for being on the call. I am going to be brief with my comments today. In 2025, we achieved operating income of $1.5 billion and net income of $1.2 billion, or $7.99 per diluted share.

Cash flow from operations was $1.4 billion, and liquidity remained strong at over $2.2 billion as we continued strong shareholder returns and near the completion of a significant organic growth phase with the associated cash flow close at hand. For the fourth quarter, specifically, our net income was $266 million, or $1.82 per diluted share. As some of you noted, our effective tax rate benefited the quarter by approximately $15 million due to state adjustments and other benefits related to certain reserve items. Fourth quarter 2025 revenue was $4.4 billion, and operating income was $310 million, lower than sequential third-quarter results driven by lower realized deal pricing and lower volume. For the full year 2025, operating income from our steel operations was $1.4 billion versus prior year income of $1.6. Record steel shipments, as Mark mentioned, of 13.7 million tons were more than offset by compressed flat-rolled steel metal margins.

In the fourth quarter, our steel operations generated operating income of $322 million, sequentially lower driven by seasonally lower shipments combined with planned maintenance outages at our three flat-rolled steel mills. Barry will provide more context regarding the outages in a moment. For those of you tracking the flat-rolled shipments for your models, fourth quarter hot-rolled shipments were 942,000 tons, cold-rolled 122,000 tons, and coated products were 1,395,000 tons. For the full year 2025, operating income from our mills recycling operations, it was $97 million, almost 30% higher than 2024 results based on improved pricing and volume and gains the team continues to achieve in operating efficiencies. For the fourth quarter, operating income actually declined about $13 million from a sequential basis based on lower pricing and seasonally lower shipments.

Our mills recycling platform provides a significant competitive advantage for our steel, aluminum, and copper operations, using innovative new separation technologies and growing supplier relationships to support their customers and our growing internal needs. For the full year 2025 earnings from our steel fabrication platform, they were $407 million, representing a solid year, yet lower than the prior year earnings as average realized pricing and volume declined. However, pricing and metal margins actually moderately expanded in the fourth quarter as our steel fabrication team achieved operating income of $91 million. Our steel joists and deck demand remained solid with good order activity. December was one of the strongest activity months in 2025, setting up 2026 very well. We’re incredibly excited for our aluminum team’s operational and commercial progress.

Mark will provide specifics later on this call, but as planned, the team was EBITDA positive in December based on 10,000 metric tons of shipments and improving cost structures, a true achievement as there is still ongoing construction and equipment commissioning in various parts of the operations. For the full year and fourth quarter 2025, we generated cash flow from operations of $1.4 billion and $273 million, respectively. Of note, there was a structural increase in working capital related to our new aluminum investments, which reduced full year cash flow by approximately $450 million and fourth quarter cash flow by approximately $155 million. 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 over $2.2 billion.

On November 21st, 2025, we did issue $800 million in investment-grade unsecured notes comprised of $650 million of 4% notes due 2028 and $150 million of 5.25% notes due in 2035. The net proceeds from the notes were used to redeem our $400 million notes due 2026 and for other general corporate purposes. During 2025, we invested $948 million in capital investments. We currently believe capital investments for 2026 will be in the range of $600 million. Some of the aluminum CapEx did shift from the fourth quarter into the first quarter just from a timing perspective. We also completed the purchase of the remaining 55% equity interest in New Process Steel effective December 1st, as Mark mentioned, and I also want to welcome the teams. In 2025, we purchased $900 million of our common stock, or over 4% of our outstanding shares, and $240 million during the fourth quarter.

At December 31st, we still had $801 million remaining authorized for share repurchases. 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 complemented with a variable share repurchase program, while we remain dedicated to maintaining 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 per year for the five-year period 2011 to 2015 to $2.2 billion for the most recent five-year period. And if you exclude the recent investments in Sinton and aluminum, it actually would be $3.2 billion per year. There’s still more coming. We’ve invested over $5 billion in three primary organic growth investments.

These projects have estimated through-cycle annual EBITDA capability of approximately $1.4 billion. 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 performed well throughout 2025, achieving strong earnings. At the end of the year, our steel joists and deck order backlog was solid, with December being the third strongest bookings month of the year. The backlog extends through the first half of 2026. We continue to have high expectations for this business this year due to the positive customer sentiment and quoting activity, moderating interest rates, continued manufacturing onshoring, and public funding for infrastructure and other fixed asset investment programs.

The uplift from this macro environment could be considerable. Our steel fabrication platform provides meaningful volume support for our steel mills, critical in softer demand environments, allowing for higher through-cycle steel mill utilization compared to our peers. It also helps mitigate the financial risks of lower steel prices. Our metals recycling operations also performed well this year, increasing operating income by almost 30%. Congratulations to the team. The North American geographic footprint of our metals recycling platform provides a strategic competitive advantage for our steel mills and for our scrap-generating customers. In particular, our Mexican locations competitively advantage our Columbus and Sinton raw material positions. They also strategically support aluminum scrap procurement for our flat-rolled aluminum investments. Our metals recycling team is also partnering even more closely with both our steel and aluminum teams to expand scrap separation capabilities through process and technology solutions.

This will help mitigate potential prime grade scrap supply issues in the future. It will also provide us with a significant advantage to materially increase the recycled content for our aluminum flat-rolled products and increase our earnings opportunities. The steel team had another solid year with record shipments of 13.7 million tons. During 2025, the domestic steel industry operated at an estimated production utilization rate of 77%, while our steel mills operated at 86%. We consistently operate at higher utilization due to our value-added steel product diversification, our comprehensive 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. Operationally, we did have some downtime in the fourth quarter related to planned outages at our three flat-rolled steel mills.

There were some additional delays, which inhibited production by 140,000-150,000 tons. Regarding the flat-rolled steel markets, prices have recently improved, supported by stable demand and lower imports. Lead times have extended, and customers remain optimistic about the outlook. Long-product steel markets were a highlight throughout 2025, and we expect another solid year as demand and pricing remain strong, particularly in structural steel and railroad rail. Regarding the steel market environment, North American automotive production estimates for 2026 are expected to be similar to 2025. Automotive dealer inventories continue to remain below historical norms and actually declined further in December. Our specific automotive customer base has not only remained stable but has provided opportunities for growth. We have become a supplier of choice for many U.S.-based, European, and Asian automotive producers due in part to our lower carbon content capabilities.

Non-residential construction should benefit from ongoing onshoring activity, recently announced domestic manufacturing projects, and continued infrastructure spending. In the energy sector, oil and gas remain steady, with solar continuing to be very strong. Overall, we remain optimistic concerning demand for our diversified value-added steel products in the coming year. With that, back to you, Mark. Super. Well, thank you, Theresa. Thank you, Barry. I think everyone can appreciate sustaining such positive results don’t just happen. They result from the strategies implemented and executed by the teams over time. We have invested strategically to provide scale, product, and market diversification, unique customer supply chains, and linked operating platforms to optimize market opportunities throughout market cycles. When combined with our performance-driven culture, we consistently achieve at the highest levels. We optimize cash generation allowing for a consistent and balanced cash allocation strategy that has delivered strong shareholder returns.

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 industrial peers. In aluminum, we just grow more and more excited each and every day as we watch the aluminum teams execute, moving from construction through commissioning to serving the customers with high-quality products. I believe we enjoy a unique market environment. There is a significant domestic supply deficit of over 1.4 million tons for aluminum sheet, and this deficit is forecasted to grow along with demand. In 2024, that deficit was supplied through high-cost imports, which are now even higher cost as the tariffs increased from 10% in 2024 to the current 50% level. We’ve seen that there’s clear alignment with many of our SDI’s core competencies. Our construction capabilities have once again been proven, both Columbus and San Luis Potosí are state-of-the-art facilities.

We’re using our deep operational know-how in combination with the technical expertise of aluminum industry experts that have joined us. Our proven performance-driven culture will drive higher efficiency and low-cost operations as compared to our peers. We believe we have an advantaged commercial position. Two-thirds of our existing carbon flat-rolled steel customers also consume and process aluminum flat-rolled sheet. Our growth in the automotive sector will complement our existing steel position and provide customer material optionality. The beverage can market provides countercyclical market diversification. The more stable earnings profile within the aluminum space will further enhance the consistency of our through-cycle cash generation. Our raw material platform will facilitate higher recycled content. We’re the largest North American metals recycler, which includes aluminum.

That team has done an incredible job successfully developing new separation technologies, allowing us to have both more access to usable aluminum scrap and at a lower cost. Production today, even in its early stages, is already confirming our expected earnings differentiation. Through-cycle EBITDA expectation remains clearly at $650 million-$700 million for the mill itself, plus another $40 million-$50 million for the Omni platform. As we’ve spoken in the past, the four key areas of advantage being labor efficiency, the higher recycled content, a higher yield through the process, and optimized logistics, all of which are driven by our low-cost culture. The strategic investment is a cost-effective and high-return growth opportunity, providing SDI with additional countercyclical diversification, further stabilizing and growing our cash generation capabilities. As the industry already knows, the 650,000 metric ton project is no longer a vision.

It’s clearly here and clearly having a positive impact in the industry. The customer base is excited to have a new market entrant that is known to be innovative, customer-focused, and responsive to their needs. For us, business relationships are long-term, founded on trust, with a continuous goal of creating mutual value. And that’s not just simply financial value, but new supply chain solutions, new products, better quality, and better service. And we are seeing the reaction at surprising speed. Many customers have seen that with recent supply-side challenges in the aluminum flat-rolled products market, the timing of our ramp-up has been fortuitous, allowing us to help the market while accelerating our material qualifications. Startups have their challenges, and I would like to thank our customers for their patience as we fine-tune our operations. Today, those customers have been very responsive, and thank you for that.

We have received certification from many customers for industrial and can sheet finished products and for automotive aluminum hot band. This accelerated certification should allow us to shift our product mix to a higher margin mix in 2026, reaching optimization sometime in 2027 as compared to our earlier expectation of 2028. Three of the four mill casthouses are fully commissioned and have produced all 3,000, 5,000, and 6,000 series ingots for industrial, can sheet, and automotive sectors, for rolling mill commissioning, product development, and commercial shipments. And the team there is doing an absolutely phenomenal job, actually, as they are through the whole mill, I guess. The hot mill is completely commissioning, having around 3003, 5052 industrial, 3104 can sheet, 5754, and 5182 automotive-grade material. The cold reversing mill is successfully producing 3003, 5052, and 3104. The first tandem mill is in commissioning and starting to produce.

The second tandem cold mill and the first of two C.A.S.H. lines are on schedule to be operating before the end of the first quarter of 2026. The team is incredibly excited with the earlier-than-anticipated product certifications, for sure. It’s a testament to the phenomenal talent we have embedded in the team, and there’s so much great energy and momentum throughout the mill. We’re extremely excited by the physical production and quality capability of the mill this early in the startup, and our focus on achieving optimal consistency. We ended the year shipping 10,000 tons in December, which is about 20% of our eventual capability. I’m confident we will be exiting 2026 at a rate approaching 90% capacity. 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. The capital spending for Sinton, the four value-add lines, and Aluminum Dynamics is largely spent with a projected future through-cycle EBITDA contribution of over $1.4 billion. I’m excited as investors recognize the power and the consistency of our strong cash generation, combined with our disciplined high-return capital allocation strategy. It is our belief that the steel industry has undergone a paradigm shift in recent years, supported by a pervasive sense of mercantilism that will provide a level playing field through continued and appropriate trade mechanisms. Fixed asset investment will continue to grow, which directly correlates with increased metal products demand. Continued reassuring AI and cloud computing will support non-residential construction. Decarbonization will materially steepen the global cost curve, providing Steel Dynamics with a huge competitive advantage to gain market share and increase metal spreads.

Our highly diversified value product capabilities provide us with a very unique advantage to leverage this evolving metals business environment and will amplify our relative earnings capability. In closing, as I always say and always believe, our people are our foundation. I thank them, some 14,000 of our teammates, and when you include the partners in life, their spouses, and their children, there are 63,000 people in the SDI family. I thank each and every one of them for their passion and their dedication. We’re committed to them. I remind those listening today that safety for yourselves and your families and each other is the highest priority. I’d be remiss not to thank our loyal customers, many of whom have supported us since our inception.

These partnerships are based on trust, on doing what we say we will do, and creating new solutions to enhance the value proposition. And our new aluminum partners will experience the same. And as I said earlier, I appreciate their patience as we work together to get Columbus up and running. And finally, to our suppliers and service providers who we value and trust, and thank you. We can’t do what we do without you. We look forward to creating new opportunities for all of us today and the years ahead. And with that, Ellie, we would love to take questions. Thank you. If you would like to ask a question, please signal by pressing the star key followed by the digit one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment.

If you pressed star one earlier during today’s call, please press star one again to ensure our equipment has captured your signal. Also, we ask that you please limit yourself to one question to facilitate time for everyone. Any additional questions can be addressed upon re-entering the queue. Our first question today is coming from Katja Jancic with BMO Capital Markets. Your line is live. Hi. Thank you for taking my questions. Maybe starting on the aluminum rolling mill. Mark, I think you said that the mill is expected to reach 90% utilization by the end of 2026. Is that correct? That’s correct. And that’s a little sooner than we’ve, I think, talked in the past. But what we’re seeing from the team and from the equipment, it’s given us a strong confidence that that can be achieved.

And then, given that the mill reached or was EBITDA positive in December, and when looking at the current aluminum and the Midwest premium environment, how should we think about the profitability over the next few quarters? Well, I would hope we anticipated that that positive EBITDA profile will continue through the year. So, Katja, we’re going to be ramping up. So there’s still, as Mark mentioned on his opening remarks, we’re still commissioning and constructing some of the downstream facilities, if you will. And so that will have an impact the first half of the year. But we do expect to remain and be improving EBITDA throughout the first half of the year. And then the second half of the year really is about product mix optimization. Okay. Thank you. Thank you. Our next question is coming from Lawson Winder with Bank of America Securities. Your line is live.

Thank you very much, operator. Good morning, Mark, Theresa, and Barry. Thank you for today’s update. You’re welcome. What I’d like to do is just kind of ask a question along the lines of investment, and not necessarily M&A, but into growth too. When you think about your balance sheet and the amount of debt that you could potentially take on, whether for some sort of acquisition or for a major investment into new capacity, where do you kind of see the upper limits of your comfort level? Thanks for the question, Lawson. So we do have a balance sheet that actually has a considerable amount of capacity.

When we look at where we’d like to be on a through-cycle basis, we’re very direct about being less than 2x on net realized basis, and we’re well under 2x today as we stand from a liquidity and debt perspective. There is room to move. That is also in light of the fact that our structural EBITDA is actually improving. That $1.4 billion that we talk about associated with aluminum and sitting in the four value-added lines hasn’t really begun to be realized in any meaningful way yet. All of that is adding extra capacity to the balance sheet as well. We are incredibly committed to the investment-grade markets, but there’s a lot of room in our ratings to be able to add that capacity. I won’t talk about necessarily a top range.

I’ll just say on a through-cycle basis, we definitely will remain under a 2x net levered basis. Okay. Thank you for those comments, Theresa. Thank you. Our next question is coming from Tristan Gresser with BNP Paribas. Your line is live. Yes, hi. Thank you for taking my question. Just a quick follow-up on the aluminum. If you expect to reach kind of targeted utilization rate by year-end, and I understand your product mix might not be fully optimal by then, but given the current pricing environment, is it fair that by year-end this year, you should get to at least to your targeted margin profile into Q4, at least those months in Q4? If you’re referring to the through-cycle $650 million-$700 million EBITDA estimate, is that what you’re trying to? Yes. Yeah.

So what we’ve said in the past is that actually the margins that we’re achieving, not achieving today, the margins on a market basis that are available today are actually higher than what we projected on a through-cycle basis for the investment itself, just given where the Midwest transaction price is, etc. So there is that opportunity, I think, more quickly. Yet we’re still working through startup. We’re still working through all of those items. So we’re not prepared today to talk about what profitability might look like in the fourth quarter of this coming year, but all the market factors are positioned to actually give us a significant advantage over what we had modeled on a through-cycle basis. All right. That’s clear. And if you allow me a quick follow-up, just on Sinton, if you can give us an update.

I think there were a press report of some incident in January. And if you could talk a little bit about the volume up into Q1 for the steel business, that would be also appreciated. Thank you. Lawson is Barry. With regards to the incident here at the beginning of the year, we did have a transformer failure at the Sinton facility. It was one of the high-voltage transformers in the yard. This was an original transformer. And I think as we talked about publicly, we had some transformer issues at that facility we were starting up. We believe this transformer was subjected to some of that stress on the system early. So we had been monitoring it. We took the opportunity a couple of years ago to actually go out and buy significant amounts of other transformers that we have engineered into the system.

So we don’t have any concerns of ongoing problems. We believe we’ve rectified the original engineering and locational challenges we had down there. So all in all, it was a great job by the Sinton Fire Department. It was rather demonstrative, the failure. But nobody was injured. The damage was limited to the transformer itself. And operations resumed shortly after the plant was safe, which was within the 12 hours or so of the incident. So we don’t expect any ongoing concerns. And the team has done a good job of getting the backup resources. It’s very difficult to get transformers in this world. So they acted quickly a couple of years ago to make sure we had the right stuff spared and installed. So we feel good about where we’re going. And it was unfortunate, but onward, upward with Sinton. Thank you.

Our next question is coming from Tim Tanners with Wells Fargo. Your line is live. Yeah. Hey, good morning. Regarding the $1.4 billion structural contribution, I feel like we talked about aluminum. But just can you give us any updated thoughts on the status of the four value-add lines that have been ramping up? And just remind us where Sinton is. I know it’s still that the slide nine shows us that it’s still running a little lighter than the rest of your operations. When can we expect that to maybe converge? Thanks. Yeah. Thank you. It’s good to talk to you again, Tim. So from the perspective of the 1.4, just to outline where that is on a through-cycle basis, Sinton represents $475 million-$525 million of that. As we mentioned, aluminum is $650 million-$700 million.

And then, generally on the value-added lines, we think about it more like maybe $50 million per line. So that would be like around $200 million. So the value-added lines last year for the whole year were operating each one differently, but around 60% of their capability, the four lines. Somewhat higher. And then as far as Sinton, Sinton still had a lot of the additional costs to product quality embedded in 2025 that have since been resolved kind of in that fourth quarter, first part of this year timeframe. So Sinton really has the capability now, like all of our other facilities, to operate wherever the market will drive it. Theresa, if I could add a little color to that. The four value-added lines, two galvanizing lines, and two paint lines are actually operating very well.

As you are aware, we had the core cases that we had filed a couple of years ago. Those core cases were against corrosion-resistant steels that were being dumped into this country. 10 different countries were at play. We won substantial awards against those countries that will continue to limit the ability for those countries to just dump material into the United States. And the new process lines really were pressured because of that dumped material. We had excess of 1 million tons that have already been removed from the market that had been coming from these 10 countries around the world. So as we’ve ramped through that, we’ve fine-tuned our quality, and we’ve made sure that the customer base is excited about the product they’re receiving from those lines. They are operating full at this point in time.

And because of our supply chain being able to take bands, hot rolled coil, and convert them into galvanized and painted coils, it’s really structurally helped respond quickly as markets change. Our supply chain was the innovation with painting, and it remains our strength and the quality and innovation of the product. So we’re real excited about what those lines will do now for us, that we aren’t competing with the dumped tons from all across the world. Got it. Thanks, Barry and Theresa. Thank you. Our next question is coming from Bill Peterson with J.P. Morgan. Your line is live. Yeah. Hi. Good morning. Thanks for taking the questions, and thanks for all the details we’ve heard. I guess I’d like to follow up on an earlier question on Sinton, but broaden that a little bit.

It sounds like the Sinton impact here in the current quarter was fairly modest in terms of impact, but I understand there may have been some other outages in your network in the late fourth quarter. Just trying to get a sense, can you help us quantify the impact on outages? And maybe more broadly, is there any planned maintenance in the first quarter that may impact your shipment profile? Bill, this is Barry. Our outages, we’re really good in making a priority to take care of our equipment. As you can imagine, our major flat roll mills are of different ages, with Butler at 30 and Columbus around 20 and Sinton brand new. There’s different things we do at all these plants. It’s part of our long-term strategic plans to take care of our assets. In some cases, we add capabilities.

In other cases, it’s just good old-fashioned maintenance. It just coincided that all three of these, the three big flat roll mills, had outages in the fourth quarter. We typically do one or two outages a year, depending on what our projects have. So quarter one, we don’t have anything on the table for us. We’re looking more towards the second quarter right now for our planning. So we got a lot of good work done. A lot of that is, as I said, it’s making sure that we continue to make state-of-the-art products for our customers and that the machines are running as well as possible. So outside of that, nothing structurally different for what we do. Thank you. Our next question is coming from Phil Gibbs with KeyBank Capital Markets. Your line is live. Hey, good morning. Good morning, Phil. Hey, Mark.

I understand you don’t want to talk further about the BlueScope deal. It obviously appears very compelling, but curious if you’re prohibited from buying back stock for any reason, given there’s now a potential deal that’s been publicly disclosed. There’s nothing that is regulatory or structural in place, Phil. No. Okay. And then just a follow-up, just on kind of the energy cost wildness we’ve seen. I know you don’t use a lot of natural gas relative to electricity, but perhaps there is a little bit of a knock-on effect on electricity as well. I know it’s been ramping in some parts of the country, at least for consumers. So just curious in terms of how you’re thinking about your energy cost basket heading into the early stages of the year here. Phil is Barry. I think with energy, we have very unique contracts everywhere.

Even here in Indiana, we have three different electrical contracts. We try to be a good response in the market. So we buy smart. We take market signals for when we buy. And sometimes we do take small downtime to help the system grids. With regard to electricity, we really haven’t seen anything meaningful. There are times of the day. There are times of the week that it might get expensive. Many of our operations don’t see that short term. Some do, and they plan for that. With regard to natural gas, we typically don’t. We take positions, future buys, and we make sure that what we’re doing is responsible. When we see cold weather coming, we make sure we buy our transportation so that we can’t be interrupted.

And typically, as we get into the winter, where it’s prudent, we’ll make sure more of that product is prepaid or pre-bought. So we don’t see huge swings with energy. We do see local impacts. But in general, we have good relationships with our providers. And as you’re sure you know, the mini mill process, we use considerably less natural gas per ton because in the flat roll mills, when we cast, it goes directly into a rolling mill shortly after it’s cast. So that’s the efficiency we get, which helps us with energy quite a bit. Thank you so much. And Phil, just to add on there, just to sort of calibrate where our energy cost or percentage of energy cost is, it’s running around about 10% of our production cost. Both, that’s gas and electricity. So even some fluctuation isn’t a material impact to us. Thank you.

Our next question is coming from John Tumazos with John Tumazos Very Independent Research. Your line is live. Thank you very much. I’m unfamiliar with what are hot rolled aluminum automotive products. I’m sort of asking an innocent question. I don’t want to make it sound like I’m skeptical. I’m just unaware. What are finished applications on a car for hot rolled aluminum? And is it possible that you’re also selling hot rolled aluminum to another aluminum roller whose cold rolling capacity is bigger than their hot rolled capacity and for whom you have quality specs they can’t make? Your question, as always, is on point, John. And I wouldn’t say it’s naive in any way, shape, or form. There’s not a real market for direct hot-band aluminum going into an automobile. It does get converted.

That conversion is being done by others today because we don’t have the full downstream capability, and we don’t have the C.A.S.H. line. So others in the industry are converting that. And I think it’s been part of just a great sort of entrance into the whole aluminum market itself. Obviously, that market has been challenged on the supply side. And we have gone out, and wherever we can, we’re helping the industry generally. And part of that is supplying hot band to folks. When will you—excuse me, Mark—when will you have all the capabilities to coat and cold roll the automotive aluminum to sell the final product 100% on your own? The restriction is essentially the C.A.S.H. line. And the first C.A.S.H. line is due to be operational at the end of the first quarter. And C.A.S.H. stands for what? What does the acronym mean? Excuse me.

Continuous anneal surface hardening. It’s a final heat treatment so that it can be the right strength when it goes to the mill. I thought we took cash for the bank, but you will. Yeah. Well, John, in my naivety, I thought it was C-A-C-H-E for the longest time, so. Congratulations. Sounds great. Thank you. Thank you. As a reminder, ladies and gentlemen, if you have any further questions, please press star one on your telephone keypad. Our next question is coming from Lawson Winder with Bank of America Securities. Your line is live. Oh, thank you, operator. And thank you for taking the follow-up, guys. I want to get your assent. Yeah, yeah.

When you look at the aluminum market today and the success you’ve had so far with the startup, and you look out maybe a couple of years, do you see the potential for Steel Dynamics to add additional aluminum rolling capacity? There’s absolutely no doubt that aluminum will be a growth platform for us going forward. That’s not to substitute or replace growth opportunities in steel or any of our other businesses. Just in general, you’ve got to compliment, or I compliment, our team. They do a phenomenal job ensuring that we’ve got a pipeline of really effective value-add opportunities. So, yeah, we will continue to expand in steel. Obviously, aluminum is a new platform for us. And given kind of the profile of that industry, there’s a lot of, and the supply-demand dislocation, there’s certainly phenomenal opportunities there for us. Okay. Fantastic.

If I could also just ask on your thoughts or prescriptions for the dividend this year, you would normally look to update your thinking on the dividend in March. At this point, do you see any other investment considerations that might constrain the extent to which the dividend could be increased this year, particularly when thinking about the very significant positive free cash flow inflection that’s anticipated at Steel Dynamics in 2026? So Lawson, the capital allocation strategy that we use for shareholder distributions is to keep the dividend growing as we have structural growth in cash flow. We have increased the dividend very significantly already for the advent of Sinton starting up, etc. So as we have further structural changes, we will increase the dividend appropriately. So aluminum could be part of that this year, or maybe it’s next year. But we’ll let you know.

In the absence of that, we definitely lean in with the variable share repurchase program. Thank you all very much. Thank you. Our next question is coming from Phil Gibbs with KeyBank Capital Markets. Your line is live. Thank you. You mentioned aluminum expected to be running at 90% by year-end 2026. I think your previous view was 75%. What’s given you the added confidence to, I guess, say that this morning and also meaning kind of what’s changed? Well, I think given our experience in Sinton, we’ve been sort of retaining more of a conservative position, I would say. So that on top of what I see as a phenomenal team down in Columbus doing phenomenal things with an absolutely amazing piece of kit. And Barry, I think, has said it in past calls.

But just the nature of the aluminum process and production sort of steps or units, it’s a lot more forgiving from a startup standpoint. We’ve explained it in the past. A thin slab or steel mill such as a Sinton or a Butler or whatever, because the whole mill melts through refining, through casting, through rolling, it’s just one continuous thing. One hiccup in one spot can take you down. And it sort of compounds itself through the system. Whereas in aluminum, we have just at Columbus, we have the 4 melt-cast units. You’ve got the hot mill. You’ve got the—we will have 3 cold rolling units. It’s just a lot more forgiving. So giving all that, we just see. It’s the redundancy in it. Yeah. That’s right. And so we just have a high confidence level. Just a follow-up to that.

Can you give us an idea of where you’re running at right now? I know there’s a lot of trials and things going on, and you may not want to double-count stuff. It’s not purely commercial, but trying to just understand where you are from a capacity utilization standpoint. Thank you. I would prefer not to be that specific. I would say that our shipping rates are not necessarily a reflection of the production rates because of the quality. It just evolves with ramping up. That needs to be refined and optimized. It’s getting optimized almost on a weekly basis. The actual physical capability of the equipment is very sound. Thank you. Good luck. Thank you. Thank you. Our next question is coming from Carlos de Alba with Morgan Stanley. Your line is live. Yes. Thank you very much. Hopefully, you can hear me.

But maybe, Theresa, can you comment a little bit on working capital? How do you expect that to move throughout the year given that you will continue to ramp up the aluminum business? And then CapEx beyond 2026, any comments there? Yeah. Thanks, Carlos. I think I got both questions. From a working capital perspective, a majority of the build that was required for aluminum, given the current pricing dynamics of aluminum, the metal, just the pure metal itself, most of that has been captured already in 2025. There’ll be some slight fluctuations between now and the end of the year. Nothing that I think would be material enough to be noted. First quarter, however, just remember that we actually pay our profit sharing to all of our employees in that first quarter timeframe. So generally, that has some pressure on the working capital and the cash flow.

Otherwise, everything looks like it’s pretty steady for the year. As it relates to capital expenditures beyond 2026, as a reminder, our maintenance, or what we refer to as our sustaining capital, really is fairly low. It’s generally around $250 million, maybe upwards of $300 million now. And beyond that, we haven’t really named any specific material projects at this point in time. Thank you. All the best. Thank you. This concludes our question and answer session. I’d like to turn the call back over to Mr. Millett for any closing remarks. Super. I appreciate that. And for those remaining on the call, again, thank you for your support and for your time today, for sure. Our teams aspire to create that shareholder value creation that we seem to be able to do year in, year out. And 2025 was a reflection of that.

Most importantly, to our employees that might be on the line, you’ve all done an absolutely phenomenal job. You continue to do an absolutely phenomenal job. What you do each and every day, that execution drives our success, and it drives that in the marketplace as well. Thank you. Each and every one of you, be safe for yourselves, for each other, and for your family. Thank you very much. Have a great day, everyone. Bye-bye. Once again, ladies and gentlemen, that concludes today’s call. We thank you for your participation and have a great and safe day.