Steel Dynamics, Inc. (STLD) Q3 2026 Earnings Report, Transcript and Summary

Good day, and welcome to the Steel Dynamics Third Quarter 26 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 that this call is being recorded today, 10/20/2026 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 David Lipschitz, Investor Relations. Please go ahead, sir.

Thank you, Sylvie. Good morning, and welcome to Steel Dynamics' third quarter 26 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 D. Millett, chairman 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. 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 2000 should actual results turn out differently. Such statements involve risks and uncertainties related to integrating or starting up new assets, aluminum industry, the use of estimates and assumptions in connection with anticipated project returns, and our steel, metals recycling, fabrication, and aluminum businesses as well as to general business and economic conditions. Examples of these are described in the related press release as well as in our annually filed SEC Form 10 k under the headings Forward Looking Statements and Risk Factors. Found on the Internet at www.sec.gov and, if applicable, in any later SEC form 10 q. You will also find any reference non-GAAP financial reconciled to the most directly comparable GAAP measures in the press release issued yesterday entitled Steel Dynamics reports third quarter 2 thousand 26 results. And now I am pleased to turn the call over to Mark.

Well, good morning, everyone. Thank you for joining us this morning for the third quarter 2026 earnings call. As I begin our report, I would like to take a moment to congratulate Theresa on her appointment to CEO at the end of this year. As most of you know, she's been with the company for 28 plus years. Starting when we had just our first mill in Butler, Indiana. Back then, it was just a handful of people, and now we have 14 thousand strong in our team. In that time, she's built an incredible understanding of our markets, our customers, and our company. Most importantly, she understands our culture and is passionate about our people. She has been acutely involved with the strategic decisions and direction we have taken. These past 15 years. Decisions that have driven tremendous growth and about 3 thousand% in shareholder value. Appreciation. A value that very few very few can claim. That success has also been supported by an incredible team of 14 thousand people as I said and the best senior leadership on the planet. All of whom have been very keen, very key contributors of our growth. I just want to, very unusually, maybe, but I just like to signal on that. Miguel Alvarez, Jim Anderson, Matt Bell, Chad Bickford, Christopher A. Graham, Barry T. Schneider, Tommy Scruggs, Richard A. Poinsatte. These folks have been incredible. And with this team, and with Theresa at the helm, we will undoubtedly drive SDI into even greater heights. So that said, and congratulations, Theresa.

Thank you very much, Mark.

Our teams, I think in the in the third quarter, achieved a very strong quarter over quarter financial and operational performance. That said, we did come in just shy of our earlier guidance range due to late September anticipated moves in foreign currency and aluminum hedging unrealized market to market adjustments of just $30 million. Some quarter highlights included, record quarterly steel shipments of 3.8 million tons, adjusted EBITDA of $1.2 billion and extremely strong cash flow from operations of $846 million. Further milestones relating to the aluminum mill commissioning and ramp were also achieved. I. Seriously, my sincere thanks to an amazing team that consistently brings our vision and strategies to life. As I said always, safety will be our most important cultural pillar and value. With great dedication to each other, our team continues to focus on our tick controller safety philosophy. We have hundreds of volunteers that travel across our company not simply auditing our safety practices at our facilities, but cultivating our culture to ensure each facility has the right attitude and mindset to drive our performance ever upwards. there is an incredible time commitment and so inspiring as they operate as a family, supporting each other while challenging the status quo and striving for continuous improvement every day. But before I continue though, Theresa, will you update us on some specifics relative to Q3?

Absolutely. Thank you, Mark, and thank you for your kind words. Morning, everyone. Appreciate you being with us this morning. The third quarter of 2026, our net income was $756 million or $5.26 per diluted share with adjusted EBITDA of $1.2 billion. Third quarter 26 revenues were $6.5 billion and operating income was just under $1 billion was just over $1 billion, higher than sequential second quarter results driven by higher realized steel pricing and record steel shipments. As Mark mentioned, the steel team delivered an outstanding quarter with record shipments of 3.8 million tons, Our steel operations generated operating income of $1 billion in the third quarter, a 43% sequential increase. As average selling prices per ton increased $102. During the third quarter of 2026, the domestic steel industry operated at an estimated utilization rate of 80%, while our steel mills operated at 92%. We consistently achieve higher utilization due to our value added product diversification, differentiated customer supply chain solutions, and the support of our internal manufacturing businesses. And this is consistent throughout all market cycles. Regarding flat rolled steel, market conditions remained favorable. Customer demand is strong. Inventory levels throughout the supply chain remain very lean, and order lead times are elevated. Value added spreads to hot rolled coil prices have recovered, increasing to over $203.30 per ton. As the largest flat rolled steel coater in North America, we are well positioned to capitalize on these margin opportunities. As a reminder, approximately 80% of our flat-rolled steel portfolio, sometimes more, is linked to contractual pricing that generally lags market changes by 2. Given the significant improvement in flat rolled steel pricing and the continued expansion of value added spreads, we expect these favorable market dynamics to positively impact our fourth quarter results and into 2027. Long product steel markets also remain incredibly strong, supported by healthy activity in nonresidential construction. Customer demand continues to be exceptionally robust with order backlogs extending well into 2027. We remain optimistic about demand for our diversified product portfolio of steel products and believe our end market exposure positions us incredibly well. For modeling purposes, for those on the call, our hot rolled coil shipments in the third quarter were 992 thousand tons. Our cold rolled shipments were 146 thousand tons. And finally, our coated flat rolled shipments were 1 million excuse me, were 1.63 million tons. Third quarter 2 thousand 26 operating income for metals recycling was $33 million lower than sequential sorry. It was $33 million lower than second quarter earnings. Due to lower realized pricing. Our metals recycling team is partnering even more closely with our steel and aluminum teams to expand scrap separation capabilities. This will provide a meaningful advantage in increasing recycled content in our aluminum flat rolled products while expanding our earnings opportunities. Our steel fabrication team achieved third quarter operating income of $91 million an increase from second quarter results of $85 million as increased volume and higher average pricing offset significantly higher steel raw material input costs. I want to give a shout out to the team. They did an incredible job. Our steel joists and deck business is experiencing strong demand. With our order backlog is 50% higher today than a year ago. The Dodge Momentum Index, which generally leads construction spending by 12 to 18 months, remains elevated and is improving. We are also seeing improved pricing within our steel joist and deck business with strong expectations for 2027. Supported by positive customer sentiment and quoting activity, continued manufacturing onshoring, and public funding for infrastructure and other fixed asset investment programs. We are starting to see the uplift from this macro environment and we believe it could be considerable. Third quarter 2026 operating losses from our aluminum operations were $26 million. A 21% improvement over sequential results. Shipments and financial performance were below our original expectations due to a matter within the hot strip mill, which Mark will describe in a moment. The issue has been resolved, and we expect improved performance going forward. We expect volumes, cost structure, and profitability from the aluminum rolling mill to improve in the fourth quarter and throughout 2027. In the third quarter, we generated strong cash flow from operations of $846 million Our cash generation is supported by our differentiated circular bid model and highly variable low cost structure. At the end of the quarter, we had liquidity of $2.4 billion During the third quarter 26, we invested $150 million in capital investments, with fourth quarter estimates also in that same range. During 2026, we have repurchased $591 million of our common stock and continued a positive dividend profile. At September 30, $216 million remained available under our current repurchase program. These actions reflect the strength of our capital foundation and cash flow generation capability and the continued confidence in our future. Our capital allocation strategy prioritizes high return growth opportunities while maintaining a disciplined and balanced approach to shareholder value creation. Shareholder returns are anchored by a sustainable and growing base dividend. Complemented by a flexible share repurchase program that allows us to return additional capital to shareholders when appropriate. At the same time, we remain committed to preserving our investment grade credit profile, ensuring the financial strength and flexibility needed to support strategic growth initiatives, navigate market cycles, and create long term value for our shareholders. Our free cash flow profile has fundamentally changed. Increasing to an average annual $2.4 billion during the most recent 5 years. And if you exclude our recent transformational growth, it averages $3.2 billion per year. An incredible achievement. And there is more to come. Over the past number of years, we have invested more than $5 billion, arguably $6 billion, in 3 primary transformative organic growth initiatives. These investments reflect our disciplined approach to capital allocation and our commitment to growing in markets where we believe we can create sustainable competitive advantages. As these assets continue to mature, we expect them to generate meaningful earnings and related free cash flow. We have established a strong and sustainable capital foundation that enables us to invest in meaningful strategic growth opportunities consistently return capital to shareholders, and maintain the investment grade financial metrics that underpin our long term success. And I would be remiss if I also did not congratulate Mark on his upcoming retirement. Although, my belief is he will be busier then than he is now. And just to point out, under Mark's leadership, we went from a market cap of $3 billion to today $35 billion and continuing to move forward. Had around 3 thousand people. And when he originally started, we had 3. To now almost 15 thousand and that was all under Mark's leadership. So thank you, Mark, for that.

Well, thank you, Theresa, but it takes the team. A village. So thank you, though. Consistently achieving those incredible results. Year over year just does not happen. it is the product of an effective business model that mitigates volatility commitment to state of the art technology, both leveraged by a unique and passionate culture driven to excel. The resulting performance reflects the dedication of our team and the effective strategies we have developed and executed over time. We have invested strategically to gain significant scale, high margin product and market diversification, efficient and unique customer supply chains, synergistic operating platforms to optimize market opportunities throughout economic cycles. These strategies enable us to consistently achieve at the highest levels, allow us to control our own destiny and outperform competitors across all markets. So calls. A foundational focus on market and product diversification particularly in higher margin value added products support stronger through cycle facility utilization and strive superior financial performance. We optimize cash generation, which enables a balanced and consistent capital allocation strategy that supports growth, maintains financial strength, and delivers compelling long term returns to our shareholders. Our disciplined approach to capital investment continues to generate strong through cycle cash flow and supports 1 of the highest return on invested capital profiles not only of steel companies, but in the industrial sector. Our most recent and most significant current investment is in aluminum flat roll products. The mill is transitioning from commissioning to full production ramp, and the excitement continues to be palpable as you tour the facility. The team has outperformed all industry expectations. Constructing and commissioning an incredible facility in industry leading time. Competitors and customers alike that have toured the mill are amazed of the quality and the capability of the plant and the speed of product qualification. But even more important to me, they are broadly complementary of the quality and the esprit de corps of the team. Again, they and our culture will differentiate us from the rest of the industry. The team is navigating a volatile aluminum market driven by the impacts of geopolitical conflict. And domestic supply chain challenges. But despite these near term challenges, they have remained focused on execution, customer service, and operational excellence. Beyond these temporary constraints, we are operating in a unique and a highly favorable long term market environment. The United States faces a significant structural supply deficit of more than 1.4 million tons of aluminum sheet. And that shortfall is forecast to widen as demand continues to grow across key end markets. We believe our aluminum platform is exceptionally well positioned to capitalize on that growing domestic demand. Creating substantial long term value for our shareholders. Investment is in clear alignment with our core competencies, Our construction capabilities have once again been proven. Both Columbus and the Mexican slab cast mill, a state of the art facilities built cost effectively and in record time. We expect the same result for our second recycled slab center currently being built in Mississippi. We are using our deep operational know-how in combination with technical expertise of aluminum industry experts. Our proven incentive-driven performance culture will drive higher efficiency and lower cost operations. Compared to our competitors. Our metals recycling platform will facilitate higher recycled content with the largest North American metals recycler including aluminum. Supply chains are in place in both Columbus and Mexico, to achieve the highest recycled content in the industry. New separation technologies are now successful in amplifying supply chain value while providing broader access to usable aluminum scrap. Production today is confirming our expected cost differentiation. When operating at our nameplate capacity and at our expected product mix, through cycle EBITDA expectation for past normalized market conditions remains at $650 million to $700 million-plus a further $40 million to $50 million for our metals recycling platform. Operating experience today, albeit still in ramp up, still supports our 5 key competitive cost advantages. Labor efficiency, higher recycled content, which was achieved in the first half of 27. High yields, and optimized logistics. All driven by a performance based operating culture utilizing state of the art equipment. The strategic investment is a cost effective and high return growth opportunity providing Steel Dynamics with additional countercyclical diversification while further stabilizing and growing our cash generation capabilities. The customer base remains eager for a new market entrance 1 that is known to be innovative. Customer focused, and responsive. But that said, startup and ramp up brings its share of challenges I would like to sincerely thank our customers for their patience and partnership. As we continue to fine tune our operations and optimize performance. Their trust and support have been invaluable, and we remain focused on delivering the highest quality products reliability, and service they deserve. The hot side is fully operational. With the ability to run at rated capacity and superior yields. All 3 cold mills are now operational and running well. Which will allow us to access the full 650 thousand-metric-ton annual capability. We are in the process of improving yields and anticipate achieving our efficiency goals over the coming months. The first of 2 automotive, continuous anneal and solution heat treat lines is fully operational. We achieve finished product qualification status and multiple automotive manufacturers for 5.18 thousand and 5.75 thousand products. and are in trials for 6 thousand series material. We have plans to ship finished automotive products before the end of this year. And I think it all would agree that is a phenomenal achievement. The second cash line is currently in commissioning and will be operational in the first quarter of 27. We have experienced earlier than anticipated product certifications and it is a testament to the incredible talent we have been able to embed in the team and the technical capabilities of mill of the mill. there is great energy, great momentum, As we move through construction, commissioning, and ramping of the various production lines, We continue to be excited by our progress. With expectations for significant cost optimization benefits to occur in the near term, and product mix benefits throughout 27. We did expect to have higher shipments and profitability in the third quarter, But as we ramped up to the higher rolling speeds for light gauge product, we developed a surface quality issue that resulted in significant yield losses. After a period of troubleshooting, we identified the need to change the coolant in the hot strip mill. The troubleshooting, coolant change, and subsequent reestablishment of rolling conditions, led to several weeks of lower production and lower yield. Impacting volume, and increasing costs in the quarter. But as Theresa suggested, the matter has been fully resolved. And operations have been excellent so far in October. Quality and yields throughout the facility have improved dramatically. The hot strip mill has been operating at 75% thus far in October. Those put us a month behind. We still believe we can achieve 90% by the end of the year. We believe volume and profitability from our aluminum operations will increase sharply in the fourth quarter and continue improving through 2027 as startup costs subside utilization yields improve, and scrap content increases. We remain highly enthusiastic about our current and future growth initiatives which we believe will continue to drive the high return growth momentum we have consistently demonstrated. The through cycle earnings potential of over $1.4 billion from our recent key growth projects is becoming a reality. Capital funding is substantially complete and operational optimization is our focus for both our recent flat rolled steel and aluminum investment. I am encouraged by the growing recognition among our teams customers, and investors of the strength and consistency of our cash generation coupled with our disciplined high return approach to capital allocation. Believe the steel industry has undergone a fundamental paradigm shift in recent years. Supported by an increasingly mercantilist global trade environment should help maintain a more level playing field. Through continued and appropriate trade enforcement mechanisms. We expect continued growth in fixed asset investment, which remains a key driver of demand for metal products. Manufacturing reshoring continues to gain momentum and together with growing investments in industrial infrastructure and computing, is expected to continue to support nonresidential cons. Construction of activity. Excuse me. As decarbonization and initiatives continue, the resulting increase in global cost structures will materially steepen the cost curve. Enhancing Steel Dynamics' competitive position and driving opportunities for market share gains and expanded metal spreads. Our highly diversified value added product capabilities provided distinct competitive advantage allowing us to leverage the evolving metals market environment and amplify our relative earnings bar. In closing, as I have often said, our people are our foundation, and I thank each of them for their passion. Dedication and commitment to a success. And we are committed to them. I remind each teammate listening today, nothing is more important than safety for you your families, and for 1 another. I also thank our loyal customers. Our partnerships are built on trust, delivering on our commitments, and collaborating to create innovative solutions and value. Finally, I thank our suppliers and our service providers Your partnership, trust, and support are essential to our continued success. I would suggest SDI has never been in a better position. Current business is in phenomenal shape, and we are on the cusp of yet another step function increase in through cycle cash generation. We have a phenomenal team in place to continue our leading growth trajectory and I look forward to looking from afar at their success. So with that, we will take questions, please.

If you would like to ask a question, please signal by pressing the * key followed by the digit 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. If you pressed *1 earlier during today's call, please press *1 again to ensure our equipment has captured your signal. Also, we ask that you please limit yourself to 1 question to facilitate time for everyone. Any additional questions can be addressed upon reentering the queue. And your first question will be from Nick Cash at Goldman Sachs. Please go ahead.

Thank you, team, and congrats again, to a recent mark. So you just mentioned, Mark, expect to hit about 90% utilization in terms of hot band production exiting the year. But we just wanted to know, should how should investors think about that? And I mean, you utilization? Is that hot band production, cold mill, or finished sheet shipments? And if it is hot band production, should investors think about how that translates to shipments?

Well, I think, obviously, you gotta start at the beginning. And the hot mill feeds all the material downstream. So not 90% capability, I am suggesting, is hot strip mill. Shipments will not be at the at the 90%. Albert, we have the 3 cold mills fully operational today. it is gonna take a little while for a month or 2 to get the entry through the supply chain.

No. That. that is helpful. I am just 1 more to follow-up on the margin side. You guys gave a pretty extensive list of I guess, margin tailwinds on the aluminum side. But is it possible to provide any color or break down the margin opportunity that comes from the higher scrap utilization versus better yields, fixed cost absorption and richer product mix? And also, what is the remind us of the cadence to getting to, you know, your optimal scrap utilization.

And, Nick, so the magnitude we have not. it is really hard to give a range of what that might look The magnitude of impact really is that the yield will have the most impact. And as Mark mentioned, we are actually. We saw a significant improvement in yields across the facility, including the cold mills in October so far. I know we are just, you know, 3 weeks in. But since we made the coolant chain. Change, we have really been able to dial in to those preferred yields and what we think is a long term goal for us of where we want to be. So we see getting to those yields before the end of this year and then refining them and having them be consistent in throughout 2027. So that is the biggest impact. The second then would be the scrap content. And so we have been using more primary aluminum or p 30 as we have gone through the certification or qualification processes with the different product types. We will. The first half of 27, be increasing amount of scrap content. So, hopefully, by midyear year, we are in more of an optimized product mix on the raw material side. And then finally, the component of labor, we really are already there. Right? So the third impact would be having a lower labor cost And we are operating more with what? 750 people today, around 700 people. Compared to what the competitors would be, which, you know, well over 1 thousand people. So we. We have got that already dialed in to the things that you should focus on would be on our yields, and the scrap content, which we think will have definitely in line by mid year, if not before.

That is all extremely helpful. Thank you so much. I will pass it on.

Next question comes from Alex Hacking at Citi. Please go ahead.

Yes. Morning, Mark. Let me add my congratulations know you are still going to be around at the company, but I guess this might be our last earnings call. Taking a company from 3 people to 14 thousand people is quite some achievement. I guess just following up on the aluminum side, Theresa, you gave some color there on the raw materials mix and the yields. When do you think you get to an optimal kind of end product mix? Is that would that be achievable by the end of next year, or that is something that we should be looking for more in 2028? Thank you.

Yeah. No. Thanks, Alex. And thanks for your comments about Mark on your first report too. We tease him about it being the titan of the industry. That said, as it as it relates to the product mix, the fact that the team has achieved the ability to ship finished automotive product here in the next coming months. that is extraordinary. We have only been operating for just last than a year. We do expect to in. Be increasing the amount of automotive as part of the mix throughout 2027. And we are whether we are completely dialed in at 30% by the end of the next year. Probably will not be only because we need to be able to get onto the automotive platforms. So can sheet industrial, definitely are already there on the can sheet side. Automotive will have a significant more amount in 2027, but I would say you probably get to optimize sometime in that 2028 period just because we need to have the ability to get on the new platforms from an automotive producer perspective. Thank you.

Next question will be from Katja Jancic at BMO Capital Markets. Please go ahead.

Congrats to both 3 Sanmark Maybe on the fabric. On the fabrication side, prices seem to be inflecting How should we think about pricing in that business from here?

So, Katja, you are right. And that was what was super extraordinary is that the fabrication team. Obviously, the volume is all in important. And as a reminder, we had really the industry did not have great volume. It was lower than pre COVID for 2025 and. Or 2024 and 2025. We started to see demand really pick up at the end of 25 into 2026, and we have seen that momentum continue as projects that were put on delay in 2024 and 2025 are now coming to fruition. And that is also impacting the long product steel side of our of our business in a very positive way. So the pricing that is going into the backlog today, so those projects that are being priced and really looking for delivery in early 27, do have higher pricing associated with them. So you should see that be very positive for the fabrication segment. That said, fourth quarter seasonality, you know, you still might see some of that. So I would not expect to see something other than the team I am keeping really strong with volumes. And with consistent pricing in the fourth quarter, but 2027 seems to be a really strong opportunity for an uplift on margins, volumes, and pricing.

Maybe just quickly, would it be possible to quantify how much higher prices are in the backlog?

It would be possible, Katja, but then the commercial team would fire me. So I cannot. Thanks for asking. Barry about that.

Okay. Thank you.

Welcome.

Next question will be from Carlos De Alba at Morgan Stanley. Please go ahead.

Yes. Thank you. And let me join the congratulatory comments for both Mark and Theresa. And my question is on the steel mills. Any color maybe Mark or Theresa on how you see the margins in that business trending in the fourth quarter, maybe early 27. Scrap prices that have been lagging, steel prices are now catching up. So wondering if you see potential for margin expansion in the fourth quarter and early next year.

Well, Carlos, I think the marketplace as you as you likely know is very, very tight right this second. You got the confluence of you know, middle lead times have extended well into 2027 right now. Inventories remain at sort of the low end of historical ranges. You have got Q4 outages probably is gonna take a million, 1.2 million tons out of the marketplace. And you have had up to this point, restrained imports. And so you. You have got this tightness for sure. And I do believe that we will see some continued again, intentional and not rapid, pricing increases or momentum. That momentum, I think, is going to continue. And then on the scrap side, you. You are you are right. It. it is been relatively stable. We saw a bump in October. But if you if you look at the dynamics of the of the marketplace, you know, at this even at this price, it is incredibly attractive to the folks bringing scrap to our to our yards. So the obsolete flow right now is very, very, very strong. The export market is still remains relatively soft. The scrap segregation technologies that we have talked about in the in the past are truly sort of effectively expanding the scrap reservoir and reducing the prime scrap needs. You got strong manufacturing. So prompt scrap flows are also strong. So I do not see any major upward pressure in raw material cost. So it would be our view that the margins or spreads will remain very, very strong to slightly upward. In the in the coming months.

Great. Thank you.

James from Lawson Winder at Bank of America. Please go ahead.

Yes. Thanks very much, operator, and then good morning, Mark and Theresa. it is nice to hear from you. I appreciate today's update. And then I would just say it is really reassuring to see a very well planned, well thought out, and very sensible leadership transition. Well done. Thank you. I would like to follow-up on the comments on the steel fab business. So message heard loud and clear. there is gonna be an uplift on pricing, volume, and margin in 2027. Nevertheless, I mean, it is notable that just so if look at Q3 TTM versus Q2 TTM metrics, volumes are up substantially, but then operating incomes were down. And I just wanted to ask if there is some partly offsetting cost headwinds that we should thinking about heading into 2027 on the fab business as well as those positives that you noted in the prior comments?

Yeah. So, Lawson, I thank you for your kind comments earlier. As it relates to the TTM, the difference is the fact that steel prices just strengthened very, very quickly, and our steel joist and deck uses a lot of flat rolled steel, and so that pricing differential has impacted the margins because the teams needed a minute to be able to increase the pricing associated with that raw material uplift, and that is being placed into the backlog into the future. So it is not real time although they are experiencing the higher steel costs, so that is really why you are seeing the difference in the in the TTM amounts that you are looking at. Going forward, as they have had the momentum now of having much higher demand dynamics, They are able to have pricing power, if you will, or pricing is a better word, I guess. We do not see that as affecting nearly as much the 2027 even in light of what we believe will be an elevated steel price environment.

Okay. that is very helpful. And then there is a. An. Or planned maintenance outages at all 3 of the flat rolled mills this quarter. Any factors that you would potentially call out that might cause these outages to be shorter or longer than any of those of the past? And then when specifically do you expect each of them to happen?

The. All the outages are somewhat normal, you know, like 3, 3.5-day outages. With the exception of Butler. Butler may be I do not know, a little longer. We will we will change in at 1 of the large overhead cranks, but not. Nothing overly substantial as we see it right now.

And those outages are October, November, Austin.

Okay. Fantastic. Thank you both very much.

Next question will be from Albert Rellini at Jefferies. Please go ahead.

Hey, good morning. And also congratulations both Mark and Thank you. So just higher level here, across the major steel players, we have kind of seen a move to diversify earnings, whether downstream offerings, specialty steel products or maybe even some you guys, you have positioned the company increasingly to kind of become a value-added metals producer rather than solely a steel producer? More recently, the earning mix has shifted pretty meaningfully back towards steel. The mills have accounted for better than 90% of earnings, I believe, this quarter, which think is probably the highest level since pre COVID and a bit higher than maybe some of your peers. So just, you know, should we think of that as something as maybe, like, a high watermark for steel share of earnings? And based on how you anticipate aluminum eventually rebounding, And how do you expect that shift to evolve over the next year?

Yeah, I mean, it is, Albert, that is a great observation actually. Yes, there probably is I would say a to use your vernacular a high watermark simply because fabrication is rebounding from a volume perspective, pricing perspective. And we do think it was muted in 2024 and 2025. We do not think that is even through cycle. Them or representative of through cycle. And aluminum is just getting started and so. And aluminum will be consistent. So it will be somewhat of a stabilization in both the earnings and the cash flow as there is less volatility generally in that industry as it relates to the earnings profile. And, certainly, we have built diversification within our rolling mill to have even further, I think, stability as it relates to cash flow and earnings. So as we progress through you will see a shift in the fourth quarter and then certainly throughout all of 2027. As aluminum ramps both from a volume perspective, but also from an earnings capability perspective. Steel's still very important, but you will see aluminum and fabric increasingly more of a contribution to the total mix. Mark, do you agree with that?

Yes.

Great. Thank you. Congratulations again. Thank you.

Question-and-Answer will be from Tristan Gresser at BNP Paribas. Please go ahead.

Yes. Thank you for taking my questions. And congratulations, Mark and Theresa. If I may push you a little bit on Aluminum division, I think previously you had this target to be EBIT positive in H2. Would that still be possible now And maybe for next year, I mean, when we look at consensus, it is already above your normalized kind of EBITDA target. So how do you feel about that? And do you think they are a conditions to get there given the visibility you have on your ramp, but we were able to be positive actually in Q3.

And. EBIT. Barry. I am sorry. EBIT. Yeah. I am sorry. I thought you said EBITDA too. I thought. That was my fault. Barry. No. No. No. that is okay. For the second half of the year, in totality, given the experience that we had in the third quarter, I do not think it is likely. Definitely, if they are in the first quarter and onward for 2027, And regarding the second part of your question, we will not comment on where analyst estimates are for any segment or for the company as a whole. So as far as, you know, coming on whether we are we are comfortable with our. Where estimates are for aluminum next year. We will not comment on that. What we will say is that we have complete confidence in the team commercially it is there. The orders are there. The opportunity is there. From a raw material perspective, we have full confidence in the recycling team to help us supply and increase the amount of recycled content. So. And, operationally, given the changes that just took place in the August, September, September time frame, we feel confident in the ramp as well. So we feel very constructive, very optimistic about next year for aluminum. Alright.

I would just add. I think sometimes 1 has to reflect and calibrate a little And the. Obviously, of the headlines this morning on the reports you know, suggesting a challenge and maybe a stumble. All I can say is that 1 has to recognize this has been a phenomenal achievement by the team. Those that have toured the facility, it is absolutely spectacular. And will likely hold or Theresa will likely hold a visit early. Some point next year and you. You will see it. it is absolutely first class facility. We got a first class team and in combination it is led to these accelerated qualifications in auto. Both automotive and can sheet. Again, that 1 needs, I think, reflect and focus on that. You know, when you when you when you climb a peak or Everest, you are you are gonna stumble a little bit along the way. But when you when you have a champion team like we have, there is absolutely no doubt in my mind that you will be startled in the future as to what that facility is gonna be able to achieve.

Alright. that is that is good to hear. Thank you. And the second question is, well, given you have a very strong free cash flow outlook for next year, Can you give us some update on capital allocation, yeah, for 2027? I mean, what will be the focus? It looks like building another steel mill in The US may not be a great idea. M and A is not worth. So I do not know. It. Do you need to see the aluminum plant to be well ramped up in a good track before you announce anything, and we just need to expect higher buybacks until then? Or how should I think about it?

Sure, Tristan. So we are in the middle of going through our kind of formal process around capital allocation as it relates to CapEx and other items. We have a clear pipeline of organic growth opportunities of differing sizes, and the team right now is in process of prioritizing those over the next kind of 1- to 3-year time frame. We are gonna be talking about those early next year in 2027. Right now, for CapEx next year, it might be in the range of you know, $600-plus million, but that needs to be refined. And we will be talking about that during a Capital Markets Day sometime in the first half of next year as it relates to more specificity about what those projects look like. Mark, do you have anything to add?

Well, I assume that the new steel mill is the ASR project. That was announced or suggested me put it that way, a week or 2 ago and I think it. it is it is an incredulous almost fantasy. I would say, we do not feel that the chances of that coming to fruition in all honesty is gonna is gonna occur.

Alright. that is that is very clear. Thanks a lot.

Next question comes from Timna Tanners at Wells Fargo. Please go ahead.

Good morning. And it is been great working with you, over all these years, so best of wishes in the next chapter. Look forward to continuing to work with Theresa. And to this Capital Markets Day. Wanted to talk about your supply. Flat rolled volume surprised us down year over year on the carbon side. And as you mentioned, markets are super tight for that and for merchants and structurals. Is there anything in your system that you can flex a bit and produce more of into next year? How do we think about your volumes and opportunities to reach this growing demand and opportunity?

Well, I think, obviously, Sinton has room to expand maturity in almost a. it is doing incredibly well. You know, it is running at, let's just say, 10 to 22 210 thousand 220 thousand tons a month right this second. And the expectation is for that to continue to grow to 250 thousand tons a month or perhaps more. But there. there is certainly room to improve there. And as that facility ramps up, that they are also ramping up the products that they make. So they are at X65 right now well on their way to the X70 product And as a reminder, it is it is about the only mill. It is the only mill, I believe. That can produce 84-inch wide 1-inch coiled plate at X70 grade material. So room. Certainly room to expand there. A structure mill has a few little tricks up the sleeve, and that is gonna add do not know whether we have saying how much. Theresa, have you been advertising that?

You need to do a 100 Yeah.

About 80 thousand to 100 thousand tons of extra stuff out of out of that facility. Structures out of that facility. And as we always have been able to do, we tweak here and tweak here and the guys and the girls just do better year over year. So yes, there. there is there is room to grow our capability for sure.

Okay. that is a lot of structural. that is that is great update. 1 I am sending this. Can I just follow-up and ask why it has not been running full out? Is it a mix issue, or is there anything else to explain?

Well, we. Obviously, I think. And hopefully, everyone considers our challenges there to be history, but we have got to that good solid state of 80-85% and it just takes it takes a little bit of time to tweak and get all the little bugs out of it. So there is there is no Achilles heel whatsoever. The team is got a great attitude. Attitude. They. They have got a plan to get there. it is just a matter of a little bit of time.

Okay. Thanks again, and all the best. Thank you.

Next question comes from Samuel McKinney at KeyBanc. Please go ahead.

Hi. Good morning, Mark and Theresa. Good morning. Hey. Coated product mix as a percentage of the flat rolled volumes has increased every quarter for a year now. With Galvalume spreads relative to hot rolled knife improved and looking poised to remain a low above their long term average for a while. Just talk about the internal strategy and the demand drivers to keep increasing that mix if you can.

Yeah. I know. it is a it is a great observation. That was done intentionally. If you will remember, about a year, year and a half ago, we added 4 value-added Galvalume coating lines, 2 at Sinton and 2 at 1 of our Indiana processing facilities. And so those have been ramping up. During this period of time, very much supporting the increase of value added product mix within the portfolio. And you should expect to continue to see that improve over the next probably 6 months as well because there is still room for higher utilization. From those lines. So you should continue to see that increasing as we continue our strategy of more. As much value added as we can to create a supply chain that is a little harder to change.

Alright. Appreciate it. Thanks, Theresa.

You are welcome.

And just to add to that, you know, it. it is it is been our MO for years and it is it is something 1 has to do in this. Doing industry. Because the essentially no secrets, but the team is. Continues to have a pipeline of new coated type products We. We have got digital print, which is an absolutely phenomenal technology. And we also have some pre paint improvements that we are gonna be bringing to market. So it is it is not just the volume thing. We will continue to expand our products on those lines.

Okay. that is good color. Thanks, Mark. Thank you.

Next question comes from Bill Peterson at JPMorgan. Please go ahead.

Yes. Hi. Good morning. Thanks for taking the questions. And also, I echoing the congratulations for the entire team there. First question is on long products. I think you answered partially in relation to Timna's question. But the ship has continued to outperform year to date relative to flat rolled. Described some of the key drivers in the market, and I guess you have the ability to expand capacity. How should we think about those outperformance continuing? And what would be driving that?

I will start, and then Mark can put the icing on the top. There was a change bill at the very beginning of the year that Jim Anderson and the team incredibly well where we actually. At our Steele West Virginia facility, we shuttered an ancient, if you will, melt shop. And so internally, that is allowed us to send billets throughout the system from our other facilities. So that is helped create a much more efficient supply chain internally. And helped improve margins and utilization across the other stream mills, if you will. So that is 1 part of it. The second part of it is just that the markets are incredibly strong, and it really dovetails from what we mentioned around the demand for steel joist and deck on industrial and nonresidential construction. it is really driving. it is specifically within structural beams. An increased demand environment that we see, and it is dovetailing into 2027 as well. Mark? Did you wanna add something?

Yeah and it. I would not the. For sure, long products structural markets are incredibly, incredibly strong. Spreads are at a very, very, very good levels. I would not get too over excited thinking that we are too focused in data centers or whatever. It is pretty broad based across a lot of sectors. To be honest. I think the exposure to the data center push is up only about 15% on the. On. In the structural world.

Yeah.

That was actually gonna lead to my. Thanks for the color. But that was gonna lead to my second question, and obviously, there is I guess, some concerns in the market around data center. 15% that is a great data point. But can you give us a sense for how that compares to the last year in terms of the backlogs or just other sort of reference point? Has it grown as a as a portion of the backlog? Or has it been steady? And recognizing these you have called out manufacturing industrial strength more broadly.

From the mark benches structure, Steel joist and deck in our fabrication business it represents less than 10%, generally around 8%. that is been pretty steady. As it relates to the structural world, it is probably increased in 2026. But it is leveled off. it is not something that is driving a frenzy or driving the demand dynamic itself. it is much more broad. Broadly based than that.

Perfect. Thanks again, and congrats again. Thanks, Bill.

Next question comes from John Tumazos, Very Independent Research. Please go ahead.

Congratulations, and thank everyone for their service to the company. Thank you, John. In terms of the aluminum business, is there room in the scrap market to supply and finished product market for a second say, northerly Columbus complex. Is that something that could be a potential use of funds or compete for capital allocation?

So I am I am just gonna jump in for a second, John. That those would kind of 2 questions. So the scrap environment and the demand environment can support another rolling mill in The US or in North America for sure. Whether that is at Columbus or not is a different question. Mark, I do not can go ahead.

Yeah. No. No. it is. The market is definitely there. Even when Novelis's Bay Minette facility finally comes online. there is there is still at least a. In today's market, that is only gonna grow in the future. there is still a space for a 1 full. Certainly 1 full Columbus based mill for sure. And there is definitely the scrap supply out there, John, to support it.

Your highest cost debt is 5 3/8. So today, do your cash balances yield more than your debt costs?

Theresa? Oh, come on. Do not you wanna go out look a big bang?

No. From a capital foundation perspective, we do have some notes next year that will be coming due, I think, in December of next year. And we are constantly looking at the balance between the capital stack, John. And what our opportunities are. We are pretty opportunistic on the financing side. So it. Well pointed out point.

I modeled debt repayments because I do not know where the money's gonna go. But it seems like your yields might be more, and congratulations. You. Thank you, John.

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

Well, super. Well, for those remaining on the line, thank you for your support. And our employees really, really, you have done a phenomenal job. And I think as was noted, it is it is likely my last conference earnings call anyway. Still gonna be associated at a distance to help out wherever I am asked to help out in the future. But again, thank you for your patience and support over the years. it is been an absolutely incredible journey. And it is only gonna be continued by what I consider phenomenal team and the best leadership team in the world. Thank you everyone. Have a great day. Be safe.

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