Steel Dynamics, Inc.

Good morning, and welcome to Steel Dynamics' fourth quarter and full year 2025 earnings conference call. As a reminder, today's call is being recorded and will be available on our website for replay later today. Leading today's call are Mark Millett, Chairman and Chief Executive Officer of Steel Dynamics, Teresa Wagler, Executive Vice President and Chief Financial Officer, and Barry Schneider, President and Chief Operating Officer. The other members of our senior leadership team are joining us on the call individually. Some of today's statements, which speak only as of this date, may be forward-looking and typically preceded by believe, expect, anticipate, or words of similar meaning. They are intended to be protected by the Private Securities Litigation Reform Act of 1995 should actual results turn out differently. Such statements involve risk and uncertainties related to integrating or starting up new assets, the aluminum industry, the use of estimates and assumptions in connection with anticipated project returns, and our steel, metal recycling, and fabrication businesses, as well as to general business and economic conditions. Examples of these are described in the related press release, as well as in our annually filed SEC Form 10-K, under the headings Forward-Looking Statements and Risk Factors, found on the Internet at www.sec.gov, and, if applicable, in any later SEC Form 10-Q. You will also find any referenced non-GAAP financial measures reconciled to the most directly comparable GAAP measures in the press release issued this morning, entitled Steel Dynamics, reports fourth quarter and full year 2025 results. And now I'm pleased to turn the call over to Mark. Super.

Thank you, David. And good morning, everyone. I hope you're all a little warmer than we are in the Midwest and Indiana here in Fort Wayne. But nonetheless, we appreciate you taking the time to join us for our fourth quarter and full year 2025 earnings call. As you've seen, our teams achieved a solid 2025 financial and operational performance in what was a challenging market environment through the year. This is a testament to our diversification and the scale and circular manufacturing business model that we have. The highlights were record annual steel shipments of 13.7 million tons, cash from operations of $1.4 billion, and adjusted EBITDA of $2.2 billion. And most importantly, we had another strong year in terms of safety. At Sinton, consistent operational execution has been achieved. The downstream value-add coating and pre-paint product quality has matured. At Aluminum Dynamics, we have produced and shipped finished aluminum flat row products for the industrial and beverage can markets, as well as hot vans for the automotive sector. Although there's still work ahead, the team has strong momentum positioned as well as commissioning continues in operations around. As always, I'm extremely proud of the entire Steel Dynamics team. They are the foundation of our company, and there's no doubt their passion, innovative spirit, and commitment drive our success. and they inspire me each and every day. I'm also very excited actually to welcome our new team members joining us through the final acquisition of new process steel, which occurred this past December. We are certainly excited to grow with you. As I mentioned, the most gratifying achievement was having a strong safety performance. Our world-class safety culture continues to evolve and our team's dedication to take control of safety philosophy is extraordinary. I'm continually inspired by the commitment they have for one another. They consider themselves family and challenge the status quo each and every day. That said, we will never be satisfied, though, until we achieve a zero-incident environment. Before I transition the call to Teresa and Barry, I'd like to provide some perspectives arising from the press release and investor presentation we posted on Monday, January 5th, related to the proposed Blue Scope transactions. During the past five years, we have focused on strategic organic investments in steel and aluminum products. The associated additional free cash flow generation is meaningful and, as you know, very close at hand. We are well positioned with substantial liquidity, low leverage, and significant expected free cash flow generation to support the continuation of our consistent, disciplined, and balanced capital allocation strategy. Our criteria for growth has not changed. We grow to differentiate our product offerings, supply chains, and to create value for all our stakeholders. A long-standing track record of best-in-class return on invested capital and other return metrics is testament to our disciplined approach to both greenfield and acquisition growth. We have a well-deserved reputation for excellent execution, clear long-term strategy, a business model that enables strong cash flow generation through market cycles, and a culture second to none. Our actions are intentional and strategic, not opportunistic. We pay fair value for good businesses that enhance value for all constituents. In December 2025, we submitted an offer to purchase Bluescope together with our Australian partner, SGH. The offer proposed SGH acquire 100% of Bluescope on an all-cash basis with a subsequent on-sale of the U.S. assets to Steel Dynamics providing all BlueScope shareholders with a tax-effective cash realization opportunity. The proposal was the most recent in a series of constructive approaches to provide BlueScope shareholders the opportunity to unlock the trap value of the North American businesses and to find the right home for their businesses in Australia, New Zealand, and Asia. That home is clearly with SGH, given their track record of value creation across the industrial space, which closely mirrors the focus on delivery, capital allocation, and free cash flow generation of SDI. The offer is compelling, reflecting the value of BlueScope's business appropriately, and is significantly higher than the value its shares have ever realized in over 15 years. The deal construct is simple and straightforward. We requested a customary but short 30-day due diligence period, which provides the opportunity for an effective and speedy process. However, our offer was rejected by the Blue Scope board without any engagement. And the commentary within Blue Scope's subsequent public releases regarding the proposal has to be seen as very disappointing. The premise for the board's rejection was principally based on insufficient value. yet they provided shareholders with no reasonable executable alternative strategy that would provide the same certainty of similar shareholder return. Our cash offer is certain, immediate, and tax effective, with no financing contingency. It eliminates the significant execution risk and hopes that financial improvement might come from improved market spreads and currency exchange rates that are far from predictable. We agree that the North American assets and their operating teams are of quality, as we know them well. In fact, for many years, our steel operators have frequently worked closely with the BlueScope teams, exchanging best operating practices and safety initiatives. The BlueScope North American assets, teams, and senior leadership are not the problem. Rather, BlueScope's long-term financial and share price underperformance are the result of conservative, incomplete growth strategies. As a case in point, North Star Blue Scope and the recently acquired coating businesses are at severe structural disadvantages. The steel mill is essentially a stranded asset and does not have the physical structural capability to provide the necessary value-add products required to supply the geographically disparate coil coating operations. There are missing essential equipment, at a minimum, code rolling and galvanizing. Required investment today could be as much as $1.5 to $2 billion Australian dollars, not to mention the years of waiting on equipment and the construction risks. In February 2024, BlueScope publicly discussed an associated plan to invest at that time $1.2 billion, US dollars, about $1.8 billion Australian dollars today, for a greenfield project to achieve a similar outcome. Yet they officially deferred the project a year later in February 2025 due to market uncertainty and a pivot to acquisitions. Recently, BlueScope wrote down the asset value of nearly a half a billion Australian dollars associated with its recent 2022 acquisition of the North American coatings business, noting that the business was not achieving expectations. More recently, rather than investing for long-term growth, the board announced the one-time tax ineffective, non-recurring, unfranked, special dividend at 453 million Australian dollars, providing no recurring long-term benefit to shareholders. We would suggest the North American Blue Scope strategy isn't working. Geodynamics operational interactions with the Blue Scope organization has spanned over 20 years. Discussions with senior leadership have explored various value-creating concepts along the way. We have both enjoyed considerable business interaction through the sale of scrap, coated coils, joists, and construction products to the BlueScope business, and we purchased substantial steel from Northstar BlueScope. Suffice it to say, we have a unique and clearly qualified perspective on BlueScope's North American strategy and business model, along with the associated earnings capability of their assets. and our respective leadership teams have long understood that industrial logic of combining our businesses. Our proposal to purchase BlueScope along with SDI is not an opportunistic foray to acquire assets on the chief. It represents a longstanding desire to maximize shareholder value for all stakeholders. Our investment premise is straightforward. SDI is the logical owner of the North American assets as we can unlock the latent value. Currently, North Star Blue Scope is a stranded, commodity-centric, single-site steel mill. It will be pressured by additional hot-load coil production capacity coming online in the U.S. within the next 24 months. Product diversification is critical for it to sustain earnings power and an imperative for the desired value creation within their acquired cooling business. These challenges are self-evident, from the recent massive asset breakdown that I mentioned earlier. The scale, supply chains, and business model of SDI would provide immediate resolution. Additionally, BlueScope has publicly emphasized the monetization of industrial and rural land located in remote regions of Australia and New Zealand. We believe there are likely significant zoning and environmental challenges, not to mention development timelines spanning what could be decades. BlueScope's plan for earnings uplift will take considerable time to realize with substantial execution and market risk. So for us, steel dynamics, our pipeline for growth investments is robust. Our track record of delivering profitable growth is without comparison. The acquisition of BlueScope North America makes sense for steel dynamics strategically, but we will be led by our focus on value creation and will be guided by rationale and not hope, and we will remain disciplined as always. With all that said, and given the public nature of how this has evolved, we won't be making any further comments or taking questions related to the BlueScope transaction after our commentary. And we thank you for appreciating and respecting that request. So with all that said, I'd love to talk about the exciting things going on within steel dynamics. So, Theresa, you're up.

Thank you, Mark. Happy New Year, everyone. Thanks for being on the call. I am going to be brief with my comments today. In 2025, we achieved operating income of $1.5 billion and net income of $1.2 billion, or $7.99 per dilute share. Cash flow from operations was $1.4 billion, and liquidity remained strong at over $2.2 billion. as we continued strong shareholder returns and near the completion of a significant organic growth phase with the associated cash flow close at hand. For the fourth quarter specifically, our net income was $266 million or $1.82 per diluted share. As some of you noted, our effective tax rate benefited the quarter by approximately $15 million due to state adjustments and other benefits related to certain reserve items. Fourth quarter 2025 revenue were $4.4 billion in operating income with $310 million. Lower than sequential third quarter results driven by lower realized steel pricing and lower volume. For the full year 2025, operating income from our steel operations was $1.4 billion versus prior year income of 1.6. Record steel shipments, as Mark mentioned, of 13.7 million tons were more than offset by compressed flat-rolled steel metal margins. In the fourth quarter, our steel operations generated operating income of $322 million, sequentially lower driven by seasonally lower shipments combined with planned maintenance outages at our three flat-rolled steel mills. Barry will provide more context regarding the outages in a moment. For those of you tracking the flat-rolled shipments for your models, Fourth quarter hot rolled shipments were 942,000 tons, cold rolled 122,000 tons, and coated products were 1,395,000 tons. For the full year 2025 operating income from our metals recycling operations, it was $97 million, almost 30% higher than 2024 results based on improved pricing and volume and gains the team continues to achieve in operating efficiencies. For the fourth quarter, operating income actually declined about $13 million from a sequential basis based on lower pricing and seasonally lower shipments. Our metals recycling platform provides a significant competitive advantage for our steel, aluminum, and copper operations, using innovative new separation technologies and growing supplier relationships to support their customers and our growing internal needs. For the full year 2025 earnings from our steel fabrication platform, they were $407 million, representing a solid year, yet lower than the prior year earnings as average realized pricing and volume declined. However, pricing and metal margins actually moderately expanded in the fourth quarter as our steel fabrication team achieved operating income of $91 million. Our steel joists and deck demand remained solid, with good order activity. December was one of the strongest activity months in 2025, setting up 2026 very well. We're incredibly excited for our aluminum team's operational and commercial progress. Mark will provide specifics later on on this call, but as planned, the team was EBITDA positive in December based on 10,000 metric tons of shipments and improving cost structures, a true achievement as there's still ongoing construction and equipment commissioning in various parts of the operations. For the full year and fourth quarter 2025, we generated cash flow from operations of $1.4 billion and $273 million, respectively. Of note, there was a structural increase in working capital related to our new aluminum investments, which reduced full year cash flow by approximately $450 million and fourth quarter cash flow by approximately $155 million. Our cash generation is consistently strong based on our differentiated circular business model and highly variable low-cost structure. At the end of the year, we have liquidity of over $2.2 billion. On November 21, 2025, we did issue $800 million in investment-grade unsecured notes, comprised of $650 million of 4% notes due 2028. and $150 million of 5.25% notes due in 2035. The net proceeds from the notes were used to redeem our $400 million notes due 2026 and for other general corporate purposes. During 2025, we invested $948 million in capital investments. We currently believe capital investments for 2026 will be in the range of $600 million. some of the aluminum capex did shift from the fourth quarter into the first quarter, just from a timing perspective. We also completed the purchase of the remaining 55% equity interest in new process steel, effective December 1st, as Mark mentioned, and I also want to welcome the teams. In 2025, we purchased $900 million of our common stock, or over 4% of our outstanding shares, and $240 million during the fourth quarter. At December 31st, we still had $801 million remaining authorized for share repurchases. These actions reflect the strength of our capital foundation and consistently strong cash flow generation capability and the continued optimism and confidence in our future. Our capital allocation strategy prioritizes high return growth with shareholder distributions comprised of a base positive dividend profile that's complemented with a variable share repurchase program. while we remain dedicated to maintaining our investment-grade credit designation. Our free cash flow profile has fundamentally changed over the last five years, from an annual average of $540 million per year for the five-year period 2011 to 2015, to $2.2 billion for the most recent five-year period. And if you exclude the recent investments in sentin and aluminum, it actually would be $3.2 billion per year. And there's still more coming. We've invested over $5 billion in three primary organic growth investments. These projects have estimated through-cycle annual EBITDA capability of approximately $1.4 billion. We've placed ourselves in a position of strength to have a sustainable capital foundation that provides the opportunity for meaningful strategic growth and strong shareholder returns while maintaining investment-grade metrics. We are squarely positioned for the continuation of sustainable, optimized, long-term value creation. Thank you. Barry?