Steel Dynamics (STLD) 18 Jul 242024 Q2 Earnings call transcript

Good day, and welcome to the Steel Dynamics Second Quarter 2024 Earnings Conference Call. [Operator Instructions]. Please be advised this call is being recorded today, July 18, 2024, and your participation implies consent to our recording of this call.

If you do not agree to these terms, please disconnect. At this time, I'd like to turn the conference over to David Lipschitz, Director, Investor Relations. Please go ahead.

Matt. you, Thank welcome Conference and Dynamics Quarter Second Good to Earnings Call. XXXX morning, Steel

reminder, being Vice President today. Officer. As be call Dynamics; Barry and today's a is Schneider, of Officer Chief our are Millett, Steel for Financial Chief call and Executive available Wagler, recorded Operating website replay and today's and later Executive Chief Leading Theresa Mark Chairman President on will and Officer;

call individually. other joining the The of us leadership our are team members senior on

our at project described in general and and Litigation business Risk are conditions. Examples Some the which these and assumptions this or actual press of typically to meaning. anticipate statements, integrating to in of as may of turn and and and preceded found as date, under the of uncertainties the intended anticipated words starting Reform expect, and connection Form well on up economic should returns annually the businesses of new XX-K later in Forward-looking today's applicable, be Statements the XX-Q. as risks industry, XXXX estimates as SEC only related speak Act headings in of Private the protected use believe, be if similar assets, our steel, predictive, filed forward-looking well recycling www.sec.gov, with to out Internet are as release fabrication any Form related Securities metals results aluminum and or by Factors, They involve differently. Such SEC statements by

issued measures Quarter the non-GAAP in reconciled Dynamics Reports results. GAAP Second most comparable find yesterday also You Steel any to referenced measures entitled will the press release XXXX directly financial

turn to the to Mark. pleased over I'm Now call

being Good David. Appreciate Thank call. second our you, everyone. quarter 'XX earnings with us you on morning,

teams our second operational and performance. read, quarter likely solid a financial achieved you As

be excellence part But as that And for and X we injuries. every the do, strives level, the diversification. Though at for our and value-added a tons. ramping were the roll to health, keeping culture. goal say, another steel $X.X remain focused adjusted mind Steel out full an conversation are from million. more rest million. I be that an on for that's great of we're each have that each up I actively was their safety lines all were significant and capacity Dynamics Cash top Of and most on week. the the until to in billion engaged and safety. another million the million coating day. their EBITDA flat will an and to in X.X which honor second adding it very tons always some safety pace, pleasure welfare. We're continues to quarter melting deeply looks our focused operations the think is and progress achieve Fuel honest, even better is I new to and this yielding program team at was higher-margin challenges X impact, safety gratifying quarter, make why their quarter X.X They not so tech we one Revenues for Teams of gaining for providing of to experiencing and of the shipments every incredibly access $XXX day. and past active product record continues team be team. family. achieving rapid consistently It's of been flow controller a commissioning Sinton every safety times of there's proud $XXX best team at

add the some you said, Theresa, quarter? would like that So to to color with

for teams for you, another Thanks thanks and us, Thank everyone. performance. joining Mark. morning, solid to Good

EBITDA or of million $XXX was income net with XXXX adjusted quarter $XXX per million. share second Our $X.XX diluted

revenue XXXX steel $X.X pricing. sequential billion of lower to results slightly realized was quarter quarter Second first due below

second operating material driven million costs. by quarter was $XXX as steel than raw results XX% metal more first lower income pricing of declined scrap quarter than Our spread contraction

operations of the $X,XXX due our steel XX% shipments conversion generated $XXX million, Uniquely, costs declining $XX quarter. all generally and while which realized planned average pricing ton, the sequentially quarter, impacted lower maintenance had per operating for for related except Our steady. were outages income to mills, steel utilization total of to in Roanoke second

for in our needed close quarter quarter first to continues changes Additionally, operations realized first quarter million, Texas in steel outages significantly flat-rolled team almost increased pricing to the to Barry to will our Sinton, and gain implement mills which capacity to compared moment. Operating higher describe the XX% recycling operated the efficiencies. income division of due XX% volumes results despite lower sequential $XX operating was a from than as required

continues our our metals As many recycling you consuming we're metals. team largest also and know, processing recycler our flat-rolled and of shortly the to steel the of North lever other model, operations. circular benefiting effectively metals and already and both aluminum nonferrous strength The aluminum, American copper and scrap operations manufacturing ferrous

compensating team in pricing. strong slightly a XX% first higher in X% the with of sequential than supported fabrication realized for income achieved quarter, quarter steel increase operating results. Earnings an second Our in reduction $XXX more shipments were million than

and until as and joist reminder, steel in to later through coming increase in aluminum quarter consumption debt and of expenses onshoring Act, the DOE, deck decarbonization consumption XXXX. Infrastructure and manufacturing and facilities, asset to related this years. A fixed support and turn, required construct extend year the non-capitalizable to are we expected are fourth investment flat SG&A joist product startup. Inflation long flow domestic backlog Our the Reduction and

item this amount was quarter. line mid-XXXX. million So the in increased second in we This $XX costs until start you'll see operations

similar the provides schedule per estimate occur XXXX. of supplemental half We Our of segment. aluminum as a quarter visibility $XX approximately will million through separate first that costs average

and ramp to XXXX products with positive initially sheet qualify investment EBITDA to We automotive as aluminum be type expectations products. industrial half plans the of we in our have second our can for with

expectations. rolling provide to related operating extremely our be is XX% aluminum already approximately the for of our the construction differentiated recycled slab is later want product of of and ramp as center to has its reaffirm to June $X.X as mill and mill well. We which full going Potosi details for at the the aluminum XXXX total the through capability year more investments of going cost mix Luis and rolling on billion, call expect XXXX. $X.X The expectations San full billion thereafter. Mark cost at been invested We well to the project

remaining in another For the remainder million of the investments. in $XXX And $XXX million. we to invest finally, expect aluminum XXXX, XXXX, the

strong on our circular structure. business be to continues highly variable model differentiated and generation based cash Our cost

as second increased flow value-added XXXX, higher product new of $XXX coating of our from the million. Inventories ahead we of During quarter moderately the lines. generated quarter were in flat-rolled cash we operations

the estimated cash cash Additionally, half of and fully XX% tax unsecured the tax of representing and billion were a available for of billion. payments $XXX in $X.X ended $X.X quarter revolver the rate comprised liquidity with first million short-term strong the investments are year. We quarter, of billion $X.X of

range million through-cycle X% our of already continuing we cash share, $X capital our For flow February, billion, as year. to profile investments XXXX, $XXX dividend this we believe will be quarterly increased of In positive dividend funded which per we've cash in $X.XX grows. total common the

We representing outstanding shares. XXXX, common X% of also our repurchased $XXX in million of stock our

high-return a comprised positive variable we prioritizes repurchase growth capital allocation complemented profile designation. with distributions dividend to base program, remain strategic share our investment-grade that's strategy with while credit dedicated of Our a shareholder preserving

investment-grade aluminum million of in last average notes very of years a used million for $XXX of pleased Our due over $X.X changed be from our the We July, investments. In currently issued an $XXX those free XX-year annual X.XXX% will our notes proceeds Sinton who the December tender. successfully XXXX. cash and flow $XXX X profile billion with purposes repaying with transaction. we excluding has general and strategic invested. fundamentally thank anticipation to million large The We're

Lastly, venture We sustainability long-term facility, producer about plan we that excited significant our venture products. part to is with we start renewable a remain joint commissioning biocarbon In emissions a carbon many late in believe towards creation the an we XX%. We Aymium, expensive actionable more and our less manageable have of decrease which our Steel by regard, greenhouse leading first joint value much strategy. peers. industry quarter is could of considerably Scope gas our [indiscernible] for X that path is as uniquely neutrality believe of fourth as our

sustainability is the and positive reduction with an moving Our strategy carbon ongoing and forward a journey intention make we're difference. to

steel cold-rolled tons. products quarter, flat-rolled of Barry? categories of call X,XXX,XXX of of our the hot-rolled second products coated and tons, XXX,XXX we on that shipments, P&O tons of those for and in X,XXX,XXX Finally, you the track shipped

you, Thank Theresa.

that segments we and earnings the that with Our The quarter, aligned each of engineer Steel market in results. job. the strong and participate performed Fabrication joist second mix first operations for well volume in influence quarter steady achieving we deck

solution core segment each ability to team's remains manufacture Our engineer the best for strength. a and

Our steel backlog a healthy remains through level, the of year. fabrication end the extending order not at

have expectations momentum to through later provide asset infrastructure spending fixed programs for and investment continue related IRA XXXX. onshoring and We construction spending high manufacturing, continue the business, for to continued and this should with the additional year

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

more American They stable moves. competitive platform the demand remain generating to Mexican North supported second aluminum for Our our of steel scrap mills seasonal positions. steel through strategic environment. We for aluminum North customers. In strategically Sinton recycling increased ferrous higher should relatively provides our material improved the and year of rest flat-rolled American and also volume, future advantage ferrous footprint support in locations earnings operations. the than of stabilized compensating our geographic particular, metals competitively metals have Columbus prices advantaged raw our for procurement recycling scrap for operations our quarter recycling a price scrap challenging increased and believe The the our as subject scrap producers for

partnering scrap technology to issues also flat-rolled prime even process scrap achieving with million solutions. our This Our solid will in metals will with both more and through had team ferrous a significant products earnings advantage mitigate and and It is team capabilities aluminum potentials. Field a recycling content tons. X.X of steel potential increase to quarter, materially the both shipments future. increase aluminum in provide the recycled us expand our our separation help teams supply closely

product solutions internal capability generation cash of advantage, and differentiated manufacturing utilization our customer businesses. The operated our supporting utilization quarter domestic industry of steel During to at at our XXXX, higher steel rate mills production while XX% the rate second utilization steel key operate We diversification, steel and financial a an estimated and best-in-class mills XX%. support higher due growing of of the competitive is consistently a through-cycle of rates our supply operated at strong our the chain value-added our metrics.

steel realized declined Our as second quarter. weakened portfolios product throughout pricing across prices

the spreads are in of time flat-rolled America. the very value-added our decline to the new capacity. Underlying additional during customers already X lines addition we steel X.X orders these However, remained remain earnings of largest growing North place hesitant pricing due And are throughout scrap we with million remains products to resilient the but steady, tons quarter. as same coating producer of demand frame, with the supporting continuing prices of

put steel on Additionally, imports supply pressure a dynamics. surge the in

for activity in has steel stabilizing bottom in positive to is month, increased moves continues team within operating efficiency weeks, range the Sinton last future. The order the improvements consistency. times. last pricing We over lead believe our However, especially this and make several the the with

circuits profitability see additional our to have versus multi-capacity successfully and the coating value volume during as through as limitations and X-day the to the electrical install resolved were increased mill's our success, outages value-added year. were to operations necessary We in quarter The support now other improvements lines -- will discussed. The the additional previously improving Sinton head operating alliance XX%. Also, and this to, X and with allow at additional will the great improving facility. the things, team among and mix commenced second of XXX% are necessary different efficiency outages we line took transform production we the have for the restore of product Sinton access margins new safety X previous commissioned which capacity, the additional planning us

disruptions. revised recently growth Regarding environment, is some million on This higher demand to continue for strong across continue to with of stable historical in units the continued steel based North results also and automotive constraints XX production stronger forecast dealer chain building XXXX. due Nonresidential despite resilience XXXX market America around supply inventories below production with recent as estimates expected 'XX types cyber was interest remain norms remained rates. dissipate. Automotive to construction the hesitancy slowdowns

provide should meaningful spending support coming and further and the onshoring construction-oriented projects investment to related Additionally, infrastructure fixed years. asset in

energy and to activity market, industry [indiscernible] the grow, the steady. oil get continues gas for and As

pipe imports the domestic OTCG challenging increasing quarter second and a producers. However, for line environment create

demand XXXX. And Looking for forward, pricing turn steel Mark. dynamics to I'll and we are over optimistic regarding with it that,

Theresa. operating support performed and and But our you, Barry. looking strategies. I investment high-return The continued financial X types and through-cycle consistently appreciate thank lines toward product value-added coating strong chain value-added you, continues growth Well, These Thank generation to cash are that. are extremely key are flat-rolled of growth have investments increasing steel to volume strategies. differentiation well. and supply our performance

them. Barry more we as but And forward the confidence we look increased this week. information, from completed the the year, have progress, provide and a some Sinton's key of Regarding will in rest profitability to volume team task

from the metals the incredible. compelling. solution investments. become from and to new with and support our believe, Dynamics is a innovative strategy, be Steel construction on supply new continues growth a Our There markets highly industry of has strong existing to progress today. the producer We're and aluminum commercial achieving well-known Responses chain flat-rolled still fast-paced remain aluminum for customers I especially consider across regarded

the quick a ton Mississippi. Columbus, a facility flat-rolled aluminum As of metric in project is XXX,XXX overview

heavy to On-site an tons So aluminum maximize the investment first Mexico capacity rolling Slab the the optimized to online with in to mill market mills XXX,XXX and the in an perspective, Gap] recycled industry and to located the quarter satellite inefficient that environment content. construction now [Audio of processing Center mix and steel older somewhat are similar start by started recycled in premise of we the technologies domestic right additional for rich and legacy and can with SDI Slab has regions. We melting slab 'XX. From be half the stock aluminum today is state-of-the-art in the plant the scope up segregation X second assets, scrap products. tons plans think I in mid-'XX, centers our years the UBC has metric expanded of It aluminum scrap XX is slab product Start-up when U.S. XXX,XXX industrial casting Center supported and 'XX include ago. in operations. coming of high-cost target casting costs,

of can American the and aluminum Omni investment to capital has Today, segregate North largest steel very the -- time. Different competencies through operational facilities and scrap though earning and turn, can industry will unique and an can has difficulty deficit, is some ago them. supply that our has and new XX It's footprint. As and in low-cost which coming is streams in culture, that hence, core construction or Omni is that business, aligned performance with North recycling drive know-how, the has separation little had of there's absolute efficiency that and over exists in the different America, also market supply environment in which operation. It difficulty years an deficit high our in our cost recycler, our technologies than developed we we and technologies grow. aluminum likely innovative leverage levers to our drive

XX% for will Through we both cost growth products. We on of very very, in can on continue XX% quarter XX automotive, opportunity in to and for of team XX%, Potosi, product San production in commission at half mid-XX, those and a in Mexico, mix growing XX% mix begin and the construction weighted to of 'XX, us. The those for as in to are months, the in will by plan effective to we with plans 'XX high-return In capacity, begin product first automotive the automotive the first production can our XXXX. qualify XXXX. sheet second to more as the I Luis sectors, we can transition believe targeting volumes and followed 'XX days. slabs the heavier a Roanoke said So the schedule industrial sheet be XX% sheet, probably to

up can complete. additional We equipment know $XXX million construction some a are in plus total time we million the we contracts we operating Omni us to $XX in and it. The also of EBITDA project keen budget. add to the million $XXX achieve to $XX the and billion, Virtually through-cycle and the helping are highest as in key in for assumptions. confident team that annual I expect customers possible. recycled is about centers cost, and And are all platform, to an are is have $X.X confident slab our quality And auto including million shorter cost recycling our

mind, to makes differentiate and outlined a areas: anticipate from also the somewhere key people of system. in you would we past differential, which X labor, automated try we've of you up, optimized significant and asked most and have central them of And over the and project rest plant the as The some That plan in XX% logistics. comes these flow. And for in savings savings of We about content, quantify to industry. The more an yield around today. a areas the us our versus have labor, a our we will competitive layout recycled are storage or X,XXX XXX reduced have material workforce. help

We of we sorts sort massive So et truck, handling legacy And the I have we be the again, suggest steel done levels, existing some, doubt things, costs should no today. years. in productivity there over have can as these that of cetera, high would and product that will amount eliminating of our that competitors the incentives. We achieve from number culture to obviously and will touch be have a performance-based material slab drive when huge a there our productivity to of human folks. not through the no

help the that Again, would America North our today. believe can we that to operation do segregation allow Again, also in think facilities We we've technologies satellite will and us largest the nonferrous be of levering recycler platform. rich I to have probably content, differential. can aluminum developed recycled The XX% that's already the through lean a secondary innovative competitors. compared OmniSource will second the close in-house recycled that content on. The areas. differential being also also I to UBC increase actually the

The conservative a about think that And be here, differential. would being but I the yield. little third be XX% we're of would area

shaving just to Firstly, it it the whatever will profile have facility, an a going the the for [indiscernible] help take off It slab. on rely obviously, just brand-new only the sculpting sure. The doesn't half the will technology of we innovative the which measures we're absolutely and of is needed. of state-of-the-art state-of-the-art, quality just measures off slab, is and what slab,

supersized will of be also utilizing through mill sort coils. We the

So cetera the tails, [indiscernible]. less front-end et

flow supply our demonstrated and A chain taking dense is acquisition emulate bales the generations future we're over So platforms. demand I lines, market. More And considerable cycle continued return yield next our freight increase excited, of again, that us I consistently material generation. that or I growth by are X think generally, slab will strategy that. intentional we've differentiated coating then cash in solutions our less and to there as think aluminum North -- growth rich strategy the melt the then the across our excitement that XX% generation. Near slab followed and within to we're ship new younger UBC heavy, solid probably versus growth loss drive impassioned the want cast is excited Sinton momentum are big, improvement comfortable disciplined, and sustainable advantage steel we're the our support substantial company locating high to they with our all slab logistics operating significantly dynamics years. forward. I'm and and a in satellite to providing plans the palpable focused value-added cash believe aluminum looking as will on continue that that. But long-term areas, organic place within ramp-up current revolutionize term, yield. And through centers allowing market of to the is by UBC and American to closely And history

product and and blessed and for public program, North Inflation flat programs the As joist with U.S. monies steel we should Theresa to deck from increased will from benefit public the manufacturing aluminum. Furthermore, the it scrap and demand, infrastructure those is Dynamics demand don't the mentioned, levered I programs. onshoring other from businesses long allocation best-in-class the and Act continued associated of benefit footprint. benefit of recycled Steel America will and steel believe from carbon be higher were demand through understated, and

be carbon will $XXX will materially some integrated per Our hydrogen-based to CapEx peers, cost spread the expense the in ton. Those SDI of including steepen support at additional DRI, down. expand said also their global, will footprint future. bring through are curve are pricing but bottom as operating I've This our both closing, And that spending being the their each and incur of always higher domestic and substantial the and long-term global curve I foundation, will of product cost teams, we, our passion cycle. In them effectively the our thank for metal dedication. their

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

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

of superior new continue and on us ahead. That listen and We shareholders competitively team [indiscernible] questions. alike. said, to our are to years look focus company, value today opportunities We to for and would for customers, our the in to all positioned the creating Matt, members providing being forward love

[Operator Carlos from Stanley. coming De Instructions] is Morgan from question Alba Your first

have the time? project over to how what recycled wanted that evolve to and that you remind in aluminum may can you, the Just ask Mark, you us content is expect

Carlos be time, -- and it obviously. on will Obviously from honest, over -- depends, it well, product improve, to the

because XX% I target degree, to But be about get raw The XX%. some differentiate XX%, of to is -- we've about products. from with to the other of segregation reliant lower a than for think certain -- that. be material. is the the aim around would UBC XX%. series that UBC X,XXX aim think be automotive our I XX%, technologies Our And And developed will achievable for the that XX% sheet would around can is

All right.

to closer XX%? XX%, overall, going something So be to it's probably

but I've that not done might the had right. math, sounds intuitively,

from Your Research Partners. Englert next question is Seaport coming from Martin

copper provide scrap, an network you the and can capacity on year? entering that might low there be think shredded processing and update growth the For within initiatives internal you ongoing where capability any next

question copper I -- shred. we're Yes, continuing think the operations. the shredding expand to low was that to our all

absolute to far the in scrap, addition as the in melt As just residuals of say quite shop segregate the know-how to volume -- technologies bit I the get we that. a to out fare copper the fully scrap, would utilize the requires

we've Sinton. into expanding down also been that our to So Mill Mississippi growth and

a Flat healthy Roll our now, Mill, we requirements have So at -- have Butler the very where mix right we Columbus we need.

better that the investments down get mills. utilization flat-rolled where into other at we South the the even can Omni's further product So making that takes

deploy that how as excited gets the it it progress great as into is to So probably of problem we're it -- half once on mix very to about the usefully mills. And -- we're also well. making your the to get and in opportunity how That's mills. the

facilities co-locating the in you putting mills? are it shredding the the at or Are technology at you

And equipment facilities. value it out it's point, at shredding along the to the streams a series pull of way. the To is this

also better the the other us the for the to Twitch Zorba, the obtain the in scrap So actual and forth. shred stream, scrap it in recoveries not coming to only setting but elements reduce out copper it so allows of the mills, does

where been -- have is facility the efforts the place is And focus now, those. at best put So focused. our to our that's right

your processing current no as today? of capability to that much for And estimates how is Okay.

give able matches can't of number, productivity we actual our you volume our I we're be will sheet confident that mills. create the a but to that

Gresser is Paribas BNP coming Exane. Your from question next Tristan from

first is Sinton. The on one

it issue that you you But was solved. for you that maintenance lasted you mentioned be had that kind longer, capability this last I of seems only issue transformer now week. back think about and in back April, the as full got that mentioned only to --

can And that you you to QX? was given process and Or little be why And if the essentially. much QX? it market do bit longer going So explain of step-up positive in into EBITDA took in a also what significant a happened is a profitability more expect gradual Sinton conditions?

took front place out switchyard. in in the On work we do outage the high-voltage Sinton, to the had

voltage in in We're we bring in So that of XXX,XXX the only Texas actually brings state facility the in Texas. transmission volts.

the put April concrete bus protocol to off. a to it, in equipment it's have the required to it turn arrived, So high we're process as early us necessary equipment, testing safely the the during both it a down, where we equipment of modifications. And on. ready pressurizing outages, made and there's the the voltage support bringing to that And position also shut

that And turned the the -- the So of key there's a kind equipment, the as of we that. with series we identified actually in on now outage and along got of comes the process. equipment fully installed on-site, the steps fully kind

messing of Texas. in with when prudence, So had with hurricane make our the of winds. South we decided hurricane a weren't the to sure we did have system And out situation we delay high-voltage process slight just in we

we're power in the -- are can fully are speed. to that myself, mechanical positioned teams practice-wise, in addressed we're the go utilize we've furnace. as very And I'm cause. We much root now place some better that's confident up But in works a electrical comfortable as to and the We're that So new I the world, we're put now. guy. the that safety into it really in deep gear

a So we in do getting of even key see plant. as step big this more the productivity out

last is an the in little it's And to recognition at and a going below moment X,XXX developing expand next-generation be standpoint bit higher-strength the capability performance there add the down the technology absolutely technology totally achieve, things proven. But perhaps We took And surface an we're qualities mechanical the productivity, to needs of the a that a a as is a little productivity there. the It a But rolling. important world further. to down be the shift wanted the can and over we think going there phenomenal from design tougher with through I if that I qualities night produce could improved we our there. using hour's is Sinton. quality, little report such what produced product forward. And tons

technology do we that increase is All have facility. the absolutely the of So there. to utilization is simply

guess very not be in means QX. clear. And -- significant Sinton step-up That's profitability into the that there so And QX? a I positive in Okay. EBITDA could was

Tristan, you're correct.

we quarter, were for second So the breakeven EBITDA basically perspective. from an

the relates high half expectations the to so as year Sinton. for of second very And there's it

That's more quick margin the we clear. of on that peak if and XX% very on haven't on HRC prices, from for They Sinton. time. volume Okay. period mean I supply down spot as long maybe low a a U.S. basis. bring at a from you And been outlook look they're that, follow-up

instead I some absorb can type at your So been share? market volume environment of from gain you the guess, you have a of much more that peers do why you Sinton? in where think lastly, market more production are it reducing conditions, to higher And probably contemplated that have time. capacity And difficult this able

be to value, region. needs offer to find in are we the respond a a We're the that we bit that also And spoke, heavier, are in Mexico. into products quite confident higher market customer of strength get Sinton, steels region. these to of that more there tons products the able of where technology that and tons we lot selling had to as very Mark base out that We're new

segments So abilities brought with welcomed to across we've table been different the the there. that market the we

to do having we market supplier. a see So receptive the being regional

the in action area It's versus import rest country. the know, that of you the is different. heightened particularly As

have a that's when Mexico, local short the right to high-value regional, supply base. And customer now chain a is I And welcomed products so hours in truck of Monterrey. say ride for we're few the

wasn't So into we And we a being continue have We in products now, galvanized the judicious local we're before. see very both providers offering. down lines, capability, there. response, good And the markets there time. and to good results will value painted penetrate right new future. But very the to with with develop really we our further able know new we're where good

regional absorb remain So bullish on we in really is the high-value tons the a market what to source. from capability

can sell in honest, growth that market a And that think I the in look take to next And growth restricted in place -- produce years. number. Mexico can Sinton, be you take demand shipment will will have at not today, every the also time place we incredible we it's to over few

onshoring, If trans-shoring, be you look and about got the however is Mexico, in experience at growth witness want then you've we to to there and talk reshoring, it, look others at absolutely phenomenal. to -- you

as in, with back grow market the to XXXX, when 'XX think, came anticipated we place. -- up project to we I continue the So the XXXX, going is first in

Your Timna Research. next is coming Tanners from from Wolfe question

protections [indiscernible] to with take in guided a follow-up, the second against into Wanted -- also, issue Or quick not XX% boost been an And Trying I X it's the release one your X.X does Sinton. dynamic for, just on Mexico, half that months? trade and down any at change different opportunity exports to is out? then think, there given still any? why understand to that has is full there almost month,

market activity changing see the been course, the Mexico We effort, dynamics short Mexico and the anticipate are the with that stop in term. of XXX. Mexican to outages currently we're is a move way. in shortage is of We trade surge, in don't there's that other products an There that recent because Mexico. moving the continue will There that the in to into

we of we'll a at we not a where capacity, as look light we on. take it's plant, total -- as So turn switch, the to most sense. And advantage just opportunities makes things, like continue it steel

as those look growing going second we second half, utilization at to rates. we're we look of the towards we the believe achieve as through the half year, So

Jancic Your is Katja from coming next BMO. question from

going rolling Maybe back bit. mill to the aluminum for a

I difference mentioned products, markets initially, mix more think is you tilted there auto little is a industrial margin products. bit industrial and going products? the you a talk that sheet -- be to Can the to between can

of valuable lines tend as margins can of thinner stack the Yes. if certainly, them as be the The our through in if to you because put again, The guess industrial be particularly are products we just to any paint them, sheet, the that going to were to I outputs. the volume were product. -- of

coming question is next Your Keches from Andrew from Barclays.

XXXX or the the question Theresa. for of notes maybe you've some Look, A refinanced even 'XX.

position that a You the upgraded past pretty now balance in been seem favorable the X generally right to you've be sheet agencies by just of in year.

positive, of it the a by the of like. got spending, You from aluminum or through lot cash 'XX you're sounds low, end that and 'XX, benefit another you'll leverage pretty still is get flow probably the

the pricing you what to want how update relatively can direction a knowing conservative leverage might terms is the I you? that's second guess here? opportunities? do taking see of in balance from leverage the what the optionality more back, question at has future an low sheet look on us guess I of Do capacity to a pipeline just for for been step carry give like you Or just preserve points. some hidden you So

the for Thanks question.

balance does capacity extra for leverage. the sheet So yes, have

just like ahead to $X like you large advance those $X.X under Sinton billion, know, in we'd be aluminum a of organic investments now balance As the and with the cash specifically projects, at and conservative sheet projects, that investments little at build that to for in of so more valuations downturn, growth better like still demand can return there we get because make and sure you optionality to would a we optionality, that weaker be environment. and better if tend have have a value, billion, we

periods, that's stay we us and balance why these So to consistent to during the able which is there shareholders very distributions as the well. actually been on to room and is we've the beneficial important And high-growth is grow shareholder think very sheet.

growth. cetera. likely that for they're absolutely but us you they see are teams return, differentiating opportunities at or organic the are not There with are high will are et distributions. of about, scope the our continue So shareholder -- continue beneficial will -- other see you us nearly aluminum Sinton, at well, talking opportunities strong some There or we size

do relates Steel disciplined it for very addition return very as We're In particular. that We're valuation optionality Dynamics. an believe there could is some we transactions. there in be that, appropriate to to acquisitions, and that ensuring

will more those disciplined well. along see you industry. us be in So some that being said, some there opportunities than the lines others think we that as But do being

the would use. balance at of understand So that the same just the to same, yet time, more there say I sheet we is

question next JPMorgan. is from Bill coming Your Peterson from

update color rolling the markets can for Thanks as business. the the when you the on will of markets? latest qualification is, long for as to of do in thoughts automotive, question the kind for in you guess maybe long-term line mill in and those qualify markets? time it I aluminum How on expect well us contracts just take packaging to terms the your those lock across

sheet qualification As earlier, for material the will of we say can and start in 'XX. initial -- auto said the

long 'XX, to you would the that base long, are is those come expect can in 'XX. recognize, I contracts dedicate in contracts, consumer be long, But time. X the which moment to end longer-term markets duration As going at would necessarily years in not the X, of

XXXX have with customers that just a to numerous us, and industrial in a have for would the draw volumes can plan demand automotive for they for both available and sheet. we the of that of indicated very I add to the that, there's that XXXX already number and have would purposely extensive all for -- place

feel dialogue we materials it's very to and that in the ability in the So robust those market very we're having, confident a interim. having commercial

question Alex Citi is next from coming from Hacking Your Investment Research.

XX% utilization on the talk about exit that's the average rate? in the you Just 'XX, a When and in is XX% that mill. or aluminum clarification 'XX

No.

for not For would be That's close the to exit full rate year. full the that's capacity Alex, The in exit XXXX. rate. the XXXX,

Your John Tumazos next from Independent Very question is from Research. coming

me to for think X didn't risk, May, steel It steel would steel last customers Or more was right. too new rise domestic it domestic I have year, Concerning the et with including do electric steel thought and were And you hindsight fall. Do the because imports total million slabs the customer much there's precise, I preference have steel rose foreign beautiful, capacity more would think and imports imports, in get want tons. coming window carry online, April much cetera. market, a all indirect you new pricing another furnace steel aggressive, blast and total XX% isn't amazes shipments just the metal? price and too delivery the high. they furnace in inventory when share.

that John, propensity Well, year-to-date, and that the as spread hot thereabouts, coated thereabouts common still XX% minus the some up I like products. licenses the the imports, $XXX degree. for in advantage have our I to think friends the coated little. XX% generally or we the band, is are were year, friends spread, is a -- dear above The and are of dear up year-to-date. or see taken And obviously, think, They mitigating

question De Alba is Carlos next from Your Morgan Stanley. coming from

just Any into comment fabrication see I correctly, I material? to that want heard color on If for in on the you the extends backlog offer can that if quarter. for the pricing business. the can pricing the the fourth backlog you

stabilization I the and products can't has a would historical products you around tell in basis, that joist decking a from it's be very and as there strong about Carlos, specific the been we well. basis, go-forward on pricing that. and specifically

you, we the apologize. can I all that's give color So

Chris Your LaFemina Jefferies. next from from question is coming

capital but the the working working we about second and into the second up? flow questions year? the through on my that think that of still particular, I function in of is half aluminum build, -- reversal ramping the in have Most of going kind cash of some build quarter just should asked, been what had one on and capital mill the XXXX? a of the XXXX Is that And portion linger of and of to how

just kind Luis in to we're of XXXX. building still Lab Center, ready time scrap Potosi's anticipation mill first the quarter to related really maybe slab constructing getting in because it some they're of the this start at aluminum point the of production of [indiscernible] San reserves in to None

in structural increase build, period in value-added to to putting inventories we of the relates during the there in anticipation a front -- up lines substrate were time. ramping related those it this As was of of them X there as has lines

and some And but mills also so the at is of increase be ramps of Sinton the reduction as there steel long there other product half the second will year areas. availability still inventory of up some structurally, the

rather flow was to be working a part tax be potentially payments or not of So neutral our half really funding in estimated quarter. the source. either year, The a draw second not capital I the moving would of the expect but see cash the in biggest significant

Tanners Your question Wolfe from Research. is from coming Timna next

you any If about keep given second shifts asking as if big buyback cash? half, $X.X the cash also several debt uses trying might want those remaining you have flow. that was to about last your policy over you CapEx the there's capital in Or pay I'm of to steady the we quarters? $XXX the to if allocation million billion just think down, think I about the make

remainder what capability of We're this with flow in the can given at the our comfortable no our we point time, generation cash allocation very expectation of policy for year. see, there's changing capital

Your is Hacking Research. Alex next question from Investment Citi coming from

that to a in curious is of steel your with perspective concerned is do offtake. think export Mexico how that? about you And trade considering? retaliatory rhetoric you to The Or concerned Sinton the for a sprung Mexico, up tariffs, some tariffs. potential targeting is lead just the you're flat for net right? Are the I'm are of about you that steel could and risk or recently that around more U.S. rhetoric -- some Mexico. that's Mexico

going there's growth to back so guess the -- to problem going big material be be don't need going particular, downstream is to a Mexico the more They're short. see considerable. a be said continue they're term, I they're our and and continue little perhaps more within band. demand I going going though. Well, longer forth. as the -- some from and -- They're perhaps products, aggravations short-term still I But a our need earlier, steel certainly to In still my and growth short perspective, in to But going coated picture, products. hot than noise to to

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

I We of couldn't Well, thank teams it's the without do support We incredible without our to close just loyal things. families. everyone. want it think their and our SDI, doing incredible saying, company can't I an do you, again, inspirational and it customers.

know those your today you We of need and you. service our not as with to Be company create for providers for us. opportunities thank will own, that wisely. the are investment you day. We Thank support Have everything you, And you for of value-creating innovative what to continue you things we faith and you do. And our great will with our we you a we both need may continue folks your to again, work even tomorrow. need shareholders, are integral in treat grow safe. that

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