Good day and welcome to the Steel Dynamics’ First Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management’s remarks, we will conduct a question-and-answer session and instructions will follow at that time. Please be advised this call is being recorded today April, 21, 2020 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 Tricia Meyers, Investor Relations Manager. Please go ahead.

Thank you, Michelle. Good morning everyone and welcome to Steel Dynamics’ first quarter 2020 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, President and Chief Executive Officer of Steel Dynamics; and Theresa Wagler, Executive Vice President and Chief Financial Officer. The other members of our Senior leadership team are joining us on the call individually as we are following appropriate special distancing guidelines. Some of today’s statements which speak only as of this date may be forward-looking and predictive typically preceded by believe, expect, anticipate, or words of similar meaning, they are intended to be protected by the Private Securities Litigation Reform Act of 1995 should actual results turn out differently. Such statements involve risks and uncertainties related to our steel, metals recycling, and fabrication businesses as well as the 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 yesterday entitled Steel Dynamics Reports First Quarter 2020 Results. And now, I’m pleased to turn the call over to Mark.

Thank you, Tricia. Good morning everybody. Welcome to our first quarter of 2020 earnings call. We certainly appreciate and value your time at these unprecedented circumstances. Steel making is designated a critical infrastructure industry by the U.S. Department of Homeland Security, but deemed essential to the nation’s defense, infrastructure, transportation and overall economy. As such all our operations have been operating. Protecting the health and wellbeing of the teams is on this critical priority. We are closely monitoring the COVID 19 situation and have implemented numerous additional practices throughout the Company to protect each of us. I want to thank our more than 8,400 team members for remaining steadfast and passionate. We continue to operate safely with a spirit of excellence. I’m incredibly proud to work alongside each of them during this unparallel time. We are committed to the health and safety of our people, the families and our communities, all while supporting our suppliers and meeting the needs of our customers. But before I continue, Theresa, will you please provide insights on the team’s recent incredible performance during the first quarter that should not go unstated, despite these present environmental issues along with our strong financial foundation.

Thank you. Good morning everyone. Our first quarter 2020 net income was $187 million or $0.88 per diluted share. Above our guidance of $0.83 to $0.87 due to stronger than anticipated March flat-rolled steel shipments. First quarter 2020 revenues were $2.6 billion somewhat lower than prior year’s first quarter sales, 10% higher than fourth quarter sequential results driven by improved steel pricing and shipment. Our first quarter, 2020 operating income was $274 million, $18 million lower than prior year, first quarter, but notably 50% higher than sequential fourth quarter results due to record steel shipments driven by solid first quarter underlying demand. From a platform perspective our steel operation’s first quarter shipments increased 7% sequentially to a record, 2.8 million tons with increased volumes experienced across the platform. Our average quarterly realized sales price increased $10 per ton $774 in the first quarter and average scrap cost increased $24 per ton, profiting steel metal margin compression. The result with first quarter steel operating income of $293 million, 45% higher than the sequential fourth quarter results. For our metals recycling platform first quarter operating income was $8 million compared to a loss of $5 million sequentially. A result of higher ferrous to non-ferrous selling values and shipment with prime scrap industries writing almost $30 per gross ton during the first quarter. About 65% of our mills recycling ferrous shipment served by all the steel mills, increasing our scrap quality, our melting efficiency and reducing our Companywide working capital requirements. Our vertically connected operating model benefits both the platforms. For our steel fabrication business, first quarter of 2020 operating income remains strong at $29 million compared to near record sequential results of $33 million. Primarily due to seasonally lower first quarter shipments, we experienced record order inquiry and bookings in the first…

Well, thank you Theresa. As I stated, safety is and always will be our number one value on priority. Nothing is more important. During the first quarter of this year, our safety performance improved from the previous quarter than it comes with a meaningful improvement in the severity of incidents. Our safety performance continues to be significantly better than industry averages. As I said many times before, it is not enough. It will never be enough until we reach our goal of zero. We all need to be continuously aware about surroundings and our fellow team members, I challenge all of us to be focused both as we think traditionally of safety, but even more so now as it relates to keeping each other in good health. The steel fabrication platform delivered a strong first quarter performance, construction is also deemed an essential business and as such, almost all the States below construction projects to remain open. We have some jobs delayed or postponed, but at this time it is not being widespread or meaningful. This should be expected as in previous market downturns construction lag the rest of the market by four to six months to pre-funded ongoing projects. We experienced the record number of inquiries and bookings in the first quarter. Our fabrication order backlog remains very strong, but with 15% higher than at this time last year. Our metals recycling team perform well in the quarter returning to profitability. During the first quarter, prime scrap appreciated about $25 or $30 per gross ton probably with lower domestic steel production, April prime scrap prices were tracked at about $30 and shredded $45 per gross ton. Lower industrial prime scrap flow related to the temporary idling of the automotive sector in April was offset by reduced demand due to…

Thank you. [Operator Instructions]. Our first question comes from the line of Chris Terry with Deutsche Bank. Please proceed with your question.

Hi Mark and Theresa and thanks for the comments. Just interested in the outlook side or what you have seen so far in April, obviously the chart you provided, your presentation had utilizations in 80%. Mark, you are above the average that fall into the mid-50s in the last couple of weeks. Just wanted if you could comment on how steel days going so far in April and maybe based on your order book, what you might expect that to be during 2Q, I know it is a difficult question, but just wondering if you can provide some color on the ground.

Well, certainly. I think as you said, it is an incredibly difficult question. Not so sure our crystal ball is clearer than others, but I will say that it is positive looking through the lens of our order book and our order input right. I read this morning in American Metal, individuals saying, well, nobody is buying, I guess perhaps they are not buying from other people, but they are buying from us. I believe that obviously energy is going to be very stagnant for the rest of this year into next year. Automotive is going to come back again, one doesn’t necessarily know exactly when, but the expectation is late this month and through May, but the bright spot is certainly is construction. As I mentioned earlier construction tends to lag market downturn, you know we saw it in 2015, we saw it in 2008, 2009. It tends to lag the downturn in the market by about four to six months, because operations or projects tend to be pre-funded and we are seeing that in our new millennium building fabrication business and our structure mill. As I said, new millennium extremely strong backlog despite some project push backs. But there is nothing real meaningful change yet and we are very, very strong, have a large market share in the distribution warehouse market that obviously given people staying at home and the expansion of Amazons and they alike that remains a growth area in all honesty. Structural rail division, backlog is currently solid certainly through May. Did see a $25 price decrease just recently, but I do believe that people will recognize that we are toughing out of the bottom of the market, the scrap is going to be somewhat stable here in the next month or two. So those…

Okay, thanks. Thanks for call Mark. I will leave it there.

Thank you. Our next question comes from the line of David Gagliano with BMO Capital Markets. Please proceed with your question.

Hi thanks for taking my questions and congrats on a solid start to obviously a challenging year. I just want to follow-up on the prior question. If we look at, Slide 11, 94% utilization rates in the first quarter. What is that number today?

Dave, I think that is what Mark just really tried to address. So we have not - there are a couple of things that I think differentiates us. One is that we continue to operate 24x7. And so with that, we get the orders and we gain market share during environment like this, especially as others, higher cost production is being shut down. Right now, we are still operating at a very good utilization rate across the platform. The most challenged division frankly is our engineered bar division. And that is because they are tied to both the energy market and to just general industrial. Once automotive comes back and more specifically for engineered bar, in Caterpillar, John deere, et cetera, start to operating again and I think that scheduled, the last chart sizing was toward the mid the end of May, you just start to see that crack. But that being said, it is a very difficult environment. It is just we are able to gain market share. And we are very nimble in order entry and working with the customers and that tends to make it lot in very difficult environments, our utilization stays higher. The other point is the internal volume that is not to be overlooked. So fabrication is still incredibly strong with a record backlog. They need steel, they will be buying that steel from our own steel mills. The same thing with regarding to our internal processing divisions, so Heartland, United Steel Supply, et cetera. They need steel, they will be buying that from our internal steel mills. So that helps our utilization profile and not - most of our - if any of our competitors have that same lever to pull. So we can’t give you an exact percentage number today. Frankly, I don’t know what the exact percentage would be overall, but I know that we feel good about where we are and that the teams are doing a great job.

Okay, thanks for the additional color. The commentary was targeting 80% on the flat side, how about - you know is there a target for the remainder of the year in the product mix?

Well, I think structural should remain in that sort of 75% to 80% range. Again, the merchant shapes, probably less than that. Again, merchant shapes around tend not to be a massive part of our earnings profile anyway, but three out of four of our principal mills Butler, Columbus and Structural Rail Division are targeting that 75% to 80% utilization rate. As Theresa said, engineered bar right now looks pretty softer than that.

So Dave just as an example, if you go back to 2015, which I would suggest is last week on steel environment, that we have seen the overall, generally our operations even at that time we are operating at over 70%, on the flat-rolled side they were actually operating closer to 90%. It is always more challenging in the long product side, because there is just extra capacity out in the system as it relates to long products and because they are all electric-arc furnace based. But today we would suggest that we just have more internal levers to pull. And so we wouldn’t think that necessarily overall when you grew both flat and long has as much impact as it might have at one point in time.

Okay, I will leave it at that. Thanks very much.

Our next question comes from the line of Seth Rosenfeld with Exane BNP Paribas. Please proceed with your question.

Good morning Mark and Theresa, thanks for taking my question. With regards to the cost performance that we have seen in the business, as you continued to grow your processing volumes, utilizing some internal and some third-party substrate, can you give us a sense of how that’s impacting your overall fixed cost base for the business? Again, if we think about how you are positioned in 2020 compared to past downturns, should we consider the growth and processing is essentially more verbalizing your cost base versus history or should we think about this in a different way perhaps. And then secondly, just one more follow-up with regards to Sinton, I wonder if you can please give a little bit of color with regards to decision to continue with the same three million ton target, given the weakness in oil and gas yourself, how did that being weak trough 2021, and plan for one million times going into energy. How do we think about that three million ton target in the current market environment versus the dynamics. Thank you.

Okay. Seth, good morning. I think I have all the questions written down. So the first question is about the adding of the manufacturing businesses or the processing businesses, there is two points that you should keep in mind. One is, you are correct, it is encrypting the variability of our cost structures, but again, as a reminder, each of our operating platforms is already over 85% variable cost, but this helps that as well. The other component to recognize is that because they are buying steel and using steel as a substrate that is impacting our cost of goods sold by having steel run through cost of goods sold, which is higher priced. And so just anecdotally, in the first quarter, we had about 15% of our cost of goods sold was associated with those steel purchases from the converting companies. From a Sinton perspective Mark, I will let you handle the, the energy question.

Yes, for sure. I think that the mill is structured or designed for three million tons is not like a conventional since based EAF where you have two casters, this has one caster with a three million ton capability. And as such it is not a matter of doing half the plant or anything like that. Nor do we would be defensive about doing so. Obviously the export would be adjusted somewhat to demand, but again the energy market are pretty tougher at this time. But as one - for those that have been in the industry for a significant amount of time things do cycle, that their market will come back. But the advantage of the Sinton facility is its geographic location, we are not dependent on one single market product. We have got around about 27 million tons of market capability. When you look at the Southwest. You look at the West Coast and you look at Mexico. And we can ship that product between energy and automotive and construction. And we feel that the investment premise remains totally, totally intact.

And as just a quick point on that, from an energy perspective last year, I think there are other shipments, about 7% was related to energy. But that was primarily at our engineered bar division at Columbus. So within that number, we also shipped quite a bit of volume from our steel, West Virginia facility into solar. So our energy number also includes solar and solar is still something that is actually increasing in demand during this time as well.

Great. Thank you very much.

Thank you. Our next question comes from the line of Timna Tanners with Bank of America Merrill Lynch. Please proceed with your question.

Hey, good morning, and hope everyone is healthy and safe.

Likewise, Timna.

Thank you.

Thank you. I wanted to just drill down a little bit into your cash flow philosophy. So I heard you - maybe Theresa, I misheard. Can you clarify you said for the remainder of the year CapEx is 1.2 billion which sounds like your CapEx forecast is intact at 1.4 billion or did I hear that wrong. If and you also went on to say that you could adjust it if needed, but you are not adjusting it. And you also said that you just authorized further buybacks and just completed what is it 170 million buybacks in the quarter. So I kind of get the impression that now Steel Dynamics is operating as if the impact of reduced demand and COVID-19 impact is a shorter term phenomenon and kind of getting back to normal later in the year? That is what I’m piecing together from your comments on the CapEx and then the buybacks. But I just wanted a little bit more thought on how you are thinking philosophically about the rest of the year and CapEx and buyback? Thanks.

Great. So let me clarify, you are right concerning the capital expenditures currently for 2020. We started the year saying, we expect you to spend about 1.4, we spent a little over 200 million in the first quarter. So for the remainder of the year, there is 1.2 billion mark, of that 1.2 billion, over 700 million of that is actually late in the second half of the year and it is related to Sinton. As we progress Timna through the second quarter, we believe we are going to gain a lot of visibility as a state, for lack of a better word reopen on what that means for steel consumption and on our own operations for the remainder of 2020. As we progress to the second quarter, should we think that we want to potentially take some of that capital and push it into 2021. We can make that decision to do that at that time. But right now, from what we are seeing, as Mark mentioned, how the mills are operating and the market share and the activity that we are seeing, we don’t believe that that decision is something that we are making today. As it relates to our share repurchases. We repurchased 107 million in the first quarter. Most of that was purchased within January and February timeframe, but you should expect to see from us in the second quarter, is that we will be watching the markets, watching the impact of the Corona virus and you will see us heavily into the share buyback market at that point in time and then we will reassess for the second half of the year. The reason the Board authorized an additional 500 million in February of this year is simply because we think share repurchases during periods of excess cash flow is an important tool to have and so we wanted to have that tool, because we actually only had I think about $40 million to $50 million left on a previous program. Does that help clarify how we are thinking about things?

Yes, absolutely. Because I was having a difficult time squaring some of those comments with the market environment. Okay. So I guess just as a follow-up if I could, can you just talk a little bit about when you think you will have more visibility on construction? So like you said, construction is late cycle. You wouldn’t see cancellations yet on that, but it sounds like that could start to flow through later in a year. I just wanted to get a little bit more thought on when you would start to see any impact on your backlog or any commentary from what you are seeing on the ground level because we are hearing that private sector activity is kind of drying up. So I’m just wondering if that is in-line with what you are hearing as well. Thanks.

Well, Timna I have seen the same commentary and it seems to be a little disconnected to higher actual order book and what we have seen, and as I have said quite consistently, our real lens for SDI is through that order book and through the inquiry, right. And all that remains quite strong. The analogy, if you look at the 2008, 2009 downturn, which was pretty significant onto itself, we saw the structural rail division offering pretty consistently into the summer of 2009. That was a good four, five, six months of strong sort of continuation from pre-funded projects and we are seeing as I said - a large part of our business is in the distribution warehouse arena and that is, I would say is expanding more than contracting. So I think we see things optimistically. We were also very, very realistic and I just want to go back to what you are saying about is there a dichotomy between the markets and what was saying relative to a strategy. But I’m going to ramble a little bit, I think, but you know, probably some of the members of the SDI team been in the business probably longer than anyone on the call and probably mostly leadership in steel companies. And we have seen the 80, 81, we lived through and managed through 2001, 2002, when 45% of the industry was in insolvency through 2008, 2009. We lived through 2015. So we are very realistic and recognize the impact in the market change and manage to that. And I think we have demonstrated through our 25, 26 year history, that we are very intentional, we are very disciplined, and we are actually conservative. At that same time and in periods like this, leaders and you have got one of the best leadership teams in the world here. They need to lead, they shouldn’t be seeking cover, we need to be seeking opportunity. And that is where we think Sinton is a very, very good investment, a very good opportunity, and we will continue to go down that path. That being said, just to reemphasize what Theresa said, we are continuing to reassess our order books, the market, cash flow generation, and we will adjust as we see fit. But I think it is very, very important to recognize that. Again, a lot of the CapEx for Sinton is through the back end toward the end of the year here. And it is a huge lever that we can pull if necessary.

Okay. And by lever you mean to delay right? I don’t envision you are talking about, like you pulling it per say, right?

No, what we are just talking about delaying it Timna.

Right.

And one other point, and - you really can’t forget the strength of the working capital for us. And the funding sources it can be if necessary.

Okay. Really helpful, guys. Thank you.

Thank you.

Thank you. Our next question comes from our line of Phil Gibbs with KeyBanc Capital Markets. Please proceed with your question.

Hey. Good morning.

Good morning.

Good morning.

Mark, can you talk a little bit about the onsite customers that you are going to have on Sinton, I think it was part of your script on Sinton, but I just wanted to be sure because I think you have said over 800,000 tons of local are onsite processing and obviously that is a big chunk of the three million tons that you are looking to get? So one, I just want to make sure I heard that correctly and two where do you think that can go as this project evolves?

Well, I think we have got one sign and a second very, very, very close to signing. There is a preference on their part not to submit names at this moment in time. But you are right, the two of them would amount to about 800,000 tons of consumption and processing capability. We probably have another - not probably, we do have four other interested customers that have been given full packages, lease packages and those sorts of things. They just slowed a little bit because of the situation we are in. But we are confident that we are going to get those folks to. But it is a very I think important part of the overall strategy at that note.

Collectively, it is likely to be somewhere over a one million tons of onsite capability.

Okay. Well that is helpful. So talking, basically a third kind of built in onsite there. I think that there are tax benefits or deferrals or accelerated depreciation on years where new assets go into service. Let us just say 2021 is intact for Sinton at least as it is today. What should we be thinking about the size of just the accelerated depreciation, you know benefits in terms of tax avoidance in the year, it goes into service, because obviously with two billion of spending it could be pretty meaningful.

You know, so we don’t have exact numbers, but I would estimate that of the $1.9 billion, you are likely to have accelerated depreciation on at least 80% to 85% of that number.

Okay. Would you take that all in year one? I guess all the assets go into service in 2021?

Yes. So that would all be recorded in 2021 year sort of.

Thanks very much.

Thank you. Our next question comes from the line of Andreas Bokkenheuser with UBS. Please proceed with your question.

Well thank you very much and good morning. I hope you guys all well. Just two quick questions from me, first of all on oil, obviously this week’s oil volatility, how do you guys think about that? Just aside from what it could do to investment in the energy sector on tubular steel and so on and so forth. You know when you kind of saw what happened yesterday to price is what kind of went through your mind in terms of are there any opportunities for steel dynamics that we should be thinking about and what are the less obvious challenges as well? So maybe just give a little framework, if you will, around how you are kind of thinking about the oil price move yesterday. And I guess the second question is more on construction. Can you give a little bit more granularity there? When we look at the residential and non-residential construction numbers, there seems to be as much weakness as the restraints and has been for the last year also. You guys seems to be exposed to the strength of it. So could you give a little bit more granularities where are you seeing that strength in any particular areas? Is it res or non-res, you know, geographically more South than North and so on. That would be very helpful. Thank you very much.

Well, certainly well regarding the energy markets. I think yesterday it was quite incredible and I’m not so sure we have had time to digest. But just in general, obviously the immediate impact is on the energy markets, pipe and tube. And that was, that is not just a COVID thing, that obviously is Russia and Saudi Arabia doing that thing. And the low energy prices will expand the downturn there that is 8% to 10%, I guess of the steel market in normal times. But we looked at that as a pretty stagnant market rest of the year going into this year and next year, first half of next year anyway. I guess the positive, well one is scrap tends to move down with oil, not for sure that the physical markets would allow that to occur in May, we are looking - perhaps shouldn’t move down in May, but we think given the physical market, it is probably a sideways market moving forward, but that may change here in the next week or two. What I do think is that the pressure on the energy market is going on in turn put pressure on the integrated mills. And I think that you have seen a pretty dramatic idling of integrated capacity, last one is capacity here over the last four or five, six weeks. And if you look back over a longer period, you know the last couple of years, there has been a much more frequent turn-on, turn-off of some of that capacity as they suffer pretty strong economic pressure. And I think a sustained downturn in the energy markets will make some of those assets - it is going to be a tough decision that ever bring them back. But I think it may as a positive may help rationalize the industry to some small degree. Sorry. And then you had the second question on construction granularity. Again, there certainly has been weakness in the northeast, but that has tended to be more projects or construction locations actually being shut down by the states. We certainly see strength in fact. We certainly, as I said see strength in that distribution warehouse arena.

Thank you. Our next question comes from the line of Gordon Johnson with GLJ Research. Please proceed with your question.

Hey, guys, thanks for taking the questions. This question may have been asked, but I was wondering if I could get a little bit more color on your shipments expected across some of the different lines, know you said your utilization had dropped to 75%, 80%, can we get maybe a little more color on kind of what you see in Q2, and maybe some of the green shoots you see in a second half?

No we are not going to get too specific for two different reasons. One is that we generally don’t give that type of guidance. And the second reason is especially going into the environment that we are in right now, there is not a lot of visibility. And so we want to make sure that we are being appropriate. But I think what Mark was suggesting is that we intend to see utilization, or at least we are planning for utilization, higher flat-rolled operations, somewhere in that 75% to 80% range and traditionally even in 2015, we were actually operated about 90%. So, we generally gain market share in flat-rolled during periods of weakness. And we are seeing that today as well. And we don’t see a driver for that to change throughout the quarter. Along product side is more difficult. So in the structural and rail arena, we expect to maintain higher utilization in that 75% to 80% range because of the order backlog as it sits today, and because construction is continuing for us in that arena, and with the addition of rail, and rebar that product diversification helps our facility. Across the other long product mill, it is more difficult. So you are going to see the most weakness in our mind and the special bar quality or the SBQ arena. And then, that is distributed throughout. So that is probably about as much clarity or granularities we can provide the volumes at this point.

Okay, that is helpful. And then one last one, in the checks we have done, it seems like you guys are doing quite well in the construction space, particularly against the integrated mills. Is there any I guess approach you guys have or color you can provide on I guess incremental attempts to share that space? Is that accurate that you guys are doing quite well in the construction space against your integrated peers and thanks for the question.

Yes. No that is absolutely correct especially - I don’t know if it wasn’t just impurities like this in the first quarter, our structural rail team did a fantastic job on the construction side and pulling in volume. And if you are speaking more specifically about our fabrication business, we have been gaining market share in that arena as well and the team is doing incredibly well. And Mark point out is more specifically in that warehouse arena, but we have been taking market share and we would expect to continue to do that.

Thanks again.

Thank you. Our next question comes from the line of Sean Wondrack with Deutsche Bank. Please proceed with your question.

Hi, Mark and Theresa, and thank you very much for all the information today. Just to look at the auto market, you know I think you had mentioned that some of the auto manufacturers are looking to come back online in the next few weeks. Can you talk about like are you starting to hear from them more like more order inquiry and also sort of for the industry I realize you guys are a great operator and you are going to have the ability to potentially take share this year. What is sort of your baseline, if you have one yet, a baseline forecast for auto production do you assume 10% this year, curious about that. Thank you.

The question relates to automotive and it relates to the perspective of as they start to roll on and we have been taking market share specifically with the European auto makers, et cetera, would we expect to continue to take that market share and what are we thinking about from a volume perspective? So how much will fuel consumption volumes or auto builds from another perspective and how much will that be down if they get to one million to 1.5 million is what I’m seeing. And then the perspective just around what do we feel about continuing to take that market share related to automotive.

Got it okay. Well I would suggest that as I said earlier, my crystal ball is probably no better than anyone else’s on the call and not the whole recovery is subject to when folks get back into the marketplace and at what speed do they ramp up. From present information it appears that automotive will stop rolling back during the end of the mid to end of next week and all the way through May depending on which company, there is a backlog of vehicles, right the second so how quick recovery is difficult to gauge. You look at a past troughs it tends to replenish - they have been in position to replenish inventory and pent up demand. I’m not so sure we will see that this time around. To qualify our gain in market share is relative to time is a tough thing, but all I can say is the facilities are sort of armed and ready to go. And it is our flexibility across all markets. It is not just the auto, but all markets that allows us to take off opportunistic gains. It is going to be a while before the integrated mills just saw turning on all their idled capacity. One would imagine that they need to see some visibility and transparency for a market that is only has got positive momentum, and their pricing also has positive momentum. And that is not going to happen just because the automotive - one or two [indiscernible] brought up. So there is that time period and it is a matter of months and maybe longer at this time around, who knows, but it is a matter of months where the flexibility of electric-arc-furnace operations can take advantage of the marketplace.

Thank you. Our next question comes from the line of John Tumazos with John Tumazos Very Independent Research. Please proceed with your question.

Thank you very much. How much of the Butler and Columbus mill tonnage used to be scalp for welded to for energy exploration and in the plan for Sinton? And should we just assume that those volumes become construction steels given the short-term crude oil outlook?

Well John, I would say Butler, the energy scalp is not a massive part of their portfolio. And so we tend to see hot roll coil dependence fully is not really related to the oil and gas and given the value-add diversification there, we don’t really have a massive amount of hotline to sell to be honest. Columbus, certainly has greater exposure. And if you remember when we purchased the mill in 2014 that was a dominantly an energy pipe supplier, and I think back then it was 30% maybe 40% of its output.

It was over 40% energy.

Since then the team really catalyzed by the downturn in energy in 2015. The team has done a phenomenal job diversifying that asset, adding greater towing capabilities, adding paint line, adding a variety of high strength type of great steel there, getting into automotive, getting into Mexico. So, both the product and the market diversification there has totally transformed the entity. And so it is through sight learning today, there is nothing like that 2015 as much higher. That being said, it is probably 10%, maybe 15% energy related.

So John, just overall, to put a point on it. Last year our shipments we only had 7% that were related across the company that were related to energy. And some of that included solar. So that was a high premium grade in OCTG that sort of thing. So it is not that much of our business, either last year or today at this point. And then as it relates to Sinton, we will also be competing we think very effectively with imports and I think that is something that people should recognize as well.

Thank you. Congratulations on being the old man in the call Mark, I can simply tie wherever you want.

I will be respectful, but you and I both know.

Thank you. Our next question comes from the line of Phil Gibbs with KeyBank Capital Markets. Please proceed with your question.

Hey Theresa, could you provide the mix of sheet products as typical?

I apologize, Phil. I didn’t. I have it here though. So for flat-rolled shipment, I know a lot of you use it for your models, our hot-rolled coil and our pickled in oil shipments were 891,000 tons, our cold rolled shipments where 151,000 tons and our coated shipments were 948,000 tons for a total of 1,990,000 tons. Apologies.

No worries. That is all. Thanks very much.

Thank you. Our next question comes from the line of Charles Bradford with Bradford Research. Please proceed with your question.

Good morning and I have got both of you guys beat on age, but the question goes down to a little bit coming maybe out of your bailiwick, but apparently U.S. deal has dropped out of membership of the AISI that may impact the quality of the industry data that we get. Have you seen any change in the quality? I’m thinking especially of the usually pretty bad operating rate figures.

Chuck, I would say we have not seen any change that nor have we analyzed it to be honest.

Thank you.

Thank you. Our next question comes from the line of Tyler Kenyon with Cowen. Please proceed with your question.

Hey, good morning Mark and Theresa, I hope you are both doing well. Theresa, just a quick one for me, do you anticipate any relief in 2020 from the recently passed Cares Act, payroll tax deferrals, enhanced deductibility of interest expense, et cetera. In any way to bracket what kind of cash when relief they could provide in 2020.

Yes. Given the analysis that we have done, I really can’t put a great bracket around it, but at this point in time, Tyler it is not something that we are viewing as will be significant for us. There is definitely the payroll tax relief would have an impact, but apart from that given our expectations on operating in the different areas they are helping either smaller companies or companies that are not doing as well as we are. I don’t think it is going to be something that is meaningful at this point. If that changes, we will be sure to let you know.

Thank you.

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

Well, thank you Michelle and thank you everyone on the call. I just would like to emphasize, I’m a pretty optimistic guy and if you were surrounded by the team we have at SDI, you would have that same optimism. And it is really based on SDI’s position. And I suggest even in these tough times, and the SDI team shines in moments of challenge and we are in a position of strength. Our business model is built to be resilient in tough markets. We have a high variable cost structure, 85% of our cost structure is variable. We got a broad value-added product portfolio, and we have strong pull through volume, as we have suggested from our internal downstream operations. All that builds a high utilization rate we have demonstrated in every trough higher utilization rates than our competition. And when you have capital intense deal assets, volume is absolutely critical. And that translates into better financial metrics that to cycle. So we are still confident in our cash generation capability. We are still confident in our financial foundation and we are battling each and every day, but our orders continue to flow in. So we do remain positive. That being said, we are incredibly intentional. And we recognize that we need to be assessing markets and our position almost each and every day. We have demonstrated that in the past and we will demonstrate that going forward. So for all of you. Thank you for being on the call. Customers and employees seriously, thank you, you make SDI who we are today, and everyone be healthy, be safe. Bye, bye.

Thank you. Once again, ladies and gentlemen, this concludes today’s call. Thank you for your participation and have a great and safe day.