Welcome to the SEAL Dynamics Third Quarter 2026 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, October 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, Director, Investor Relations. Please go ahead, sir.

Thank you, Sylvie. Good morning, and welcome to Steel Dynamics' third quarter of 2026 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, 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 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, 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 measures reconciled to the most directly comparable GAAP measures in the press release issued yesterday entitled Steel Dynamics Reports Third Quarter 2026 Results. And now I'm 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. Before 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've got 14,000 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 3,000% in shareholder value appreciation, a value that very few can claim. That success has also been supported by an incredible team of 14,000 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'd just like to signal them out. Miguel Alvarez, Jim Anderson, Matt Bell, Chad Bickford, Chris Graham, Barry Schneider, Tommy Scruggs, Rick Poinsette. These folks have been incredible, and with this team and with Theresa at the helm, we will undoubtedly drive SDI to even greater heights. So, that said, and congratulations, Theresa.

Thank you very much, Mark.

Our teams, I think, 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 under $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. Both the milestones relating to the aluminum mill commissioning and ramp were also achieved. Seriously, my sincere thanks to an amazing team that consistently brings our vision and strategies to life. As I've 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 Take Control of 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. It 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. 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. Good morning, everyone. Appreciate you being with us this morning. For 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 2026 revenues were $6.5 billion and operating income was just over $1 billion. Higher than sequential second quarter results driven by higher relay 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 achieved 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 Platwell Steel, market conditions remain 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-coil prices have recovered, increasing to over $230 per ton. As the largest flat-rolled steel coder 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 two months. Given this significant improvement in flat-rolled steel pricing and the continued expansion of value-added spreads, we expect these favorable market dynamics to positively impact are fourth quarter results and into 2027. Long product steel markets also remain incredibly strong, supported by healthy activity and non-residential 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 992,000 tons. Our cold-rolled shipments were 146,000 tons. And finally, our coated flat-rolled shipments were 1,630,000 tons. Third quarter 2026 operating income from metals recycling 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 plot roll 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 joints and deck business is experiencing strong demands with our order backlog 50% higher today than a year ago. The Dodge Momentum Index, which generally leads to construction funding by 12 to 18 months, remains elevated and is improving. We are also seeing improved pricing within our steel, joists, 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're 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 business model and highly variable low cost structure. At the end of the quarter, we had liquidity of $2.4 billion. During the third quarter of 2026, 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 30th, $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 five years. And if you exclude our recent transformational growth, it averages $3.2 billion per year, an incredible achievement. And there's more to come. Over the past number of years, we've invested more than $5 billion, arguably six, in three 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've 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 didn't congratulate Mark on his upcoming retirement, although my belief is he'll 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. We had around 3,000 people. And when he originally started, we had three to now almost 15,000. And that was all under Mark's leadership. So thank you, Mark, for that.

Well, thank you, Theresa. But it takes a team. It takes a village. So thank you, though. Consistently achieving those incredible results year over year just doesn't happen. It is the product of an effective business model that mitigates volatility A 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 teams 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, and 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 market cycles. Our foundational focus on market and product diversification, particularly in higher margin value-added products, supports stronger through-cycle facility utilization and strives 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 one of the highest return on invested capital profiles, not only of steel companies, but in the industrial sectors. 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 at the quality and the capability of the plant and the speed of product qualification. But of even more import to me, they are broadly complimentary 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've remained focused on execution, customer service, and operational excellence. Beyond these temporary constraints, we're operating in a unique and 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 a 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. The 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 are 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 to date is confirming our expected cost differentiation. When operating at our main plate capacity and expected product mix, through Cycle EBITDA, our expectation for past normalized market conditions remains at $650 to $700 million, plus a further $40 to $50 million for our metals recycling platform. Our printing experience to date, albeit still in ramp-up, still supports our five key competitive cost advantages. Labor efficiency, higher recycled content, which we'll achieve 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. This strategic investment is a cost-effective and high-return growth opportunity, providing Steel Dynamics with additional counter-cyclical diversification while further stabilizing and growing our cash generation capabilities. The customer base remains eager for a new market entrant, one that is known to be innovative, customer-focused and responsive. With that said, every startup and ramp-up brings its share of challenges. I'd 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 three coal mills are now operational and running well, which will allow us to access the full 650,000 metric ton annual capability. We're in the process of improving yields and anticipate achieving our efficiency goals over the coming months. The first of two automotive continuous annealing solution heat treat lines is fully operational. We achieved finished product qualification status at multiple automotive manufacturers for 5182 and 5754 products. and we are currently in trials for 6,000 series material. We have plans to ship finished automotive products before the end of this year and I think 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 the mill. There's 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, 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 quarry. 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. Though it's 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 road steel and aluminum investments. I'm 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. We believe the steel industry has undergone a fundamental paradigm shift in recent years, supported by an increasingly mercantilistic global trade environment that 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 non-residential construction activity. As decarbonization 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 provide a distinct competitive advantage, allowing us to leverage the evolving metals market environment and amplify our relative earnings power. 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 one 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. With that, we will take questions, please.

If you would like to ask a question, please signal by pressing the star 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 star 1 earlier during today's call, please press star 1 again to ensure our equipment has captured your signal. Also, we ask that you please limit yourself to one question to facilitate time for everyone. Any additional questions can be addressed upon re-entering the queue. And your first question will be from Nick Cash at Goldman Sachs. Please go ahead.

Thank you, team, and congrats again, Theresa and Mark. So you just mentioned market, you know, still expect to hit about 90% utilization in terms of hotband production exiting the year. But we just wanted to know, how should investors think about that 90% utilization? Is that, you know, hotband production, cold mill, or finished heat shipments? And if it is hotband production, how should investors think about how that translates to shipments?

Well, I think, obviously, you've got to start at the beginning. and the hot mill feeds all the material downstream. So not 90% capability I'm suggesting is the hot strip mill. Shipments will not be at 90%, albeit we have the three coal mills fully operational today. It's going to take a little while for a month or two to get the entry through the supply chain.

That's helpful. And just one more to follow up on the margin side. You guys give a pretty extensive list of 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 cadence getting to your optimal scrap utilization?

Nick, so the magnitude, we haven't, it's really hard to give a range of what that might look like. The magnitude of impact really is that the yields will have the most impact. And as Mark mentioned, we're actually, we saw a significant improvement in yields across the facility, including the cold mills in October so far. I know we're just, you know, three weeks in. but since we made the coolant chain change, we've really been able to dial into 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's the biggest impact. The second then would be the scrap content. And so we have been using more primary aluminum or P1020 as we've gone through the certification or qualification processes with the different product types. We will, the first half of 2027, the increasing amount of scrap content, so hopefully by mid-year next year, we're in more of an optimized product mix on the raw materials 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're operating with what, 750 people today, around 700 people compared to what the competitors would be with well over a thousand people. So we've got that already dialed in. So the things that you should focus on would be on our yields and the scrap content, which we think we'll have definitely in line by mid next year, if not before.

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

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

Yeah, good morning. Mark, let me add my congratulations. I know you're still going to be around at the company, but I guess this might be our last earnings call. You know, taking a company from three people to 14,000 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? Would that be achievable by the end of next year, or that's 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 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's extraordinary. We've only been operating for just less than a year. We do expect to be increasing the amount of automotive as part of the mix throughout 2027. We're completely dialed in at 30% by the end of the next year. probably won't be only because we need to be able to get onto the automotive platforms. So CanSheet Industrial definitely are already there on the CanSheet side. Automotive will have a significant more amount in 2027, but I'd 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 Janczyk at BMO Capital Markets. Please go ahead.

Hi, thank you for taking my question, and congrats to both Theresa and Mark. Maybe on the fabrication side, prices seem to be inflecting. How should we think about pricing in that business from here?

So Katya, you're right. And that was what was super extraordinary is that the fabrication team, obviously the volume is all important. And as a reminder, we had really, the industry didn't have great volume. It was lower than pre-COVID for 2024 and 2025. We started to see demand really pick up at the end of 2025 into 26. And we've seen that momentum continue as projects that were put on delay. and 24 and 25 are now coming to fruition. And that's also impacting the long product steel side of our business in a very positive way. So the pricing that's going into the backlog today, so those projects that are being priced and really looking for delivery in early 2027 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 still might see some of that. So I wouldn't expect to see something other than the team 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, Katya, but then the commercial team would fire me, so I can't. Thanks for asking. Sorry about that.

Okay, thank you.

You're welcome. Next question will be from Carlos de Alba at Morgan Stanley. Please go ahead.

Yeah, 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 2027? Scrap prices that have been lagging, steel prices are now catching up. So I'm wondering if you see potential for margin expansion in the fourth quarter and early next year.

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

Great, thank you.

Question comes from Lawson Winder at Bank of America.

Please go ahead.

Yeah, thanks very much, Operator. And good morning, Mark and Theresa. Thanks to hear from you. Appreciate today's update. I would just say it's really reassuring to say a very well-planned, well-thought-out, and very sensible leadership transition. Well done. Thank you. I'd like to follow up on the comments on the steel fab business. So message heard loud and clear. There's going to be an uplift on pricing, volume, and margin in 2027. Nevertheless, I mean, it is notable that just if you 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's some partly offsetting cost headwinds that we should be thinking about heading into 2027 on the fat business, as well as those positives that you noted in the prior comments.

Yeah, Lawson, thank you for your kind comments earlier. As it relates to the TTM, the difference is the fact that steel prices just strengthen very, very quickly, and our steel, Joyce & Duck, 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's being placed into the backlog into the future. So it's not real time, although they're experiencing the higher steel costs. So that's really why you're seeing the difference in the TTM amounts that you're looking at going forward. as they've had the momentum now of having much higher demand dynamics. They're able to have pricing power, if you will, or pricing support is a better word, I guess. We don't 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's very helpful. And then there is... are planned maintenance outages at all three 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?

All the outages are somewhat normal, you know, like three, three and a half day outages with the exception of Butler. Butler may be, I don't know, a little longer. We're changing out one of the large overhead cranes, but nothing overly substantial as we see it right now.

And those outages are October, November, Lawson.

Okay, fantastic. Thank you both very much.

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

Hey, good morning, and also congratulations both Mark and Tricia. Thank you. So just, you know, higher level here, across the major steel players, we've kind of seen a brush to diversify earnings, whether it's downstream offerings, specialty steel products, or maybe even some... You guys, you've positioned the company... increasingly 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. You know, the mills have accounted for better than 90% of earnings, I believe, this quarter, which I 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's share of earnings? And, you know, based on how you anticipate aluminum eventually rebounding, Ben, how do you expect that shift to evolve over the next year?

Yeah, I mean, Albert, that's a great observation, actually. Yes, it probably is, I would say, 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 24 and 25. We don't think that's even through cycle for them or representative of through cycle. and aluminum is just getting started and so an aluminum will be consistent so it will be somewhat of a stabilization in both the earnings and the cash flow as there's less volatility generally in that industry as it relates to the earnings profile and certainly we've 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'll 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 is still very important but you'll see aluminum and fabrication become increasingly more of a contribution to the total mix. Mark, do you agree with that?

Yes. Great. Thank you. Congratulations again.

Thank you. Next question will be from Tristan Gresser at BNP Paribas.

Please go ahead.

Yes, hi. 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 is already above, you normalize kind of EBITDA targets. So how do you feel about that? And do you think there are the conditions to get there, given the visibility you have on your ramp?

But we were EBITDA positive actually in Q3. EBIT, sorry. I'm sorry, EBIT.

I'm sorry, I thought you said EBITDA too. That was my fault. Sorry. No, no, no, that's okay. For the second half of the year in totality, given the experience that we had in the third quarter, I don't think it's likely. Definitely there in the first quarter and onward for 2027. Regarding the second part of your question, we won't comment on where analyst estimates are for any segment or for the company as a whole. So as far as, you know, comment on whether we're comfortable with where estimates are for aluminum next year, we won't comment on that. What we will say is that we have complete confidence in the team. Commercially, it's 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 on operationally, given the changes that just took place in the August, September, September timeframe, we feel confident in the ramp as well. So we feel very constructive, very optimistic about next year for aluminum.

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

All right. That's good to hear. Thank you. And the second question is, given you have a very strong free cash outlook for next year, can you give us some update on capital allocation for 2027? What will be the focus? It looks like building another steel mill in the U.S. may not be a great idea. M&A has not worked. I don't know. 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're 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 the process of prioritizing those over the next kind of one to three year timeframe. We're going to be talking about those early next year in 2027. Right now for CapEx next year, it might be in the range of $600 plus million, but that needs to be refined. and we'll 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 ASAR project that was announced or suggested, let me put it that way, a week or two ago and I think It's an incredulous fantasy, I would say. We do not feel that the chances of that coming to fruition, in all honesty, is going to occur.

All right. That's very clear.

Thanks a lot.

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

Good morning, and it's been great working with you, Mark, over all these years, so best of wishes in the next chapter. I look forward to continuing to work with Theresa into this Capital Markets Day. I wanted to talk about your supply. Flat roll 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 structural. 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 Centum is room to expand Materially, in all honesty, it's doing incredibly well. It's running at, let's just say, 210,000 to 220,000 tons a month right this second. And the expectation is for that to continue to grow to 250,000 tons a month or perhaps more. But there's certainly room to improve there. and as that facility ramps up, they're also ramping up the products that they make. So they're at X65 right now, well on their way to X70 product. And as a reminder, it's about the only mill, it is the only mill, I believe, that can produce 84 wide, one inch coiled plate at sort of an X70 grade material. Certainly room to expand there. Our structure mill has a few little tricks up the sleeve and that's going to add, I don't know whether we've been saying how much, Theresa? Have you been advertising that?

80 to 100,000.

Yeah, about 80 to 100,000 tons of extra stuff out of that facility, structures out of that facility. and as we always have been able to do, we tweak here and tweak there and the guys and the girls just do better year over year. So yes, there's room to grow our capability for sure.

Okay, that's a lot of structure. That's great update. Can I just follow up and ask why it hasn't been running full out? Is it a fixed issue or is there anything else to explain?

Well, obviously, I think, and hopefully, everyone considers our challenges there to be history. But we've got to that good solid state of 80%, 85%. And it just takes a little bit of time to tweak and get all the little bugs out of it. So there's no Achilles heel whatsoever. The team has got a great attitude. Attitude, they've got a plan to get there. It's 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 KeyBank. Please go ahead.

Hi, good morning, Mark and Theresa. Good morning. A coded product mix as a percentage of the flat-rolled volumes has increased every quarter for a year now. With Gallup spreads relative to Hot Rule nicely improved and looking poised to remain 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, no, it's a great observation. So that was done intentionally. If you'll remember, about a year, year and a half ago, we added four value-added flat-roll coating lines, two at Sinton and two at one 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 six months as well, because there's still room for higher utilization. from those lines. So you should continue to see that increasing as we continue our strategy of as much value added as we can to create a supply chain that's a little harder to change.

All right, appreciate it. Thanks, Theresa.

And just to add to that, you know, it's been our MO for years, and it's something one has to do in the steel industry. because essentially no secrets, but the team continues to have a pipeline of new coated type products. We've got digital print, which is an absolutely phenomenal technology, and we also have some pre-paint improvements that we're going to be bringing to market. So it's not just the volume thing. We will continue to expand our products on those lines.

Okay. That's good color. Thanks, Mark. Thank you.

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

Hi. Good morning. Thanks for taking the questions and also echoing the congratulations, you know, for the entire team there. First question is on long products. I think you answered partially in relation to Tim's question, but the ship is continuing to outperform year to date relative to flat rolled. Can you describe some of the key drivers in the market? And I guess you have the ability to expand capacity. Should we think about this outperformance continuing and what would be driving that?

I'll 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 executed incredibly well where we actually, at our Steel West Virginia facility, we shuttered an ancient, if you will, melt shop. And so internally that's allowed us to send billets throughout the system from our other facilities. So that's helped. create a much more efficient supply chain internally and helped improve margins and utilization across the others free mills, if you will. So that's one part of it. The second part of it is just that the markets are so incredibly strong and it really dovetails from what we mentioned around the demand for steel joist and deck on industrial and non-residential construction. It's really driving specifically within structural beams and increased demand environment that we see and it is actually dovetailing into 2027 as well. Mark, did you want to add something?

Yeah, I wouldn't. For sure, long products, structural markets are incredibly, incredibly strong. Spreads are at very, very good levels. I wouldn't get too over-excited thinking that we're too focused in data centers or whatever. It is pretty broad-based across a lot of sectors, to be honest. I think our exposure to the data center pushes up only about 15% in the structural world.

Thanks for the color, but that was going to lead to my second question. Obviously, there's We have some concerns in the Mark Brown Data Center. Fifteen percent, that's 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 portion of the backlog or has it been steady and, you know, recognizing the use that you've called out, you know, manufacturing industrial strength more broadly?

From the Mark mentioned structurals, steel, joists, and deck in our fabrication business It represents less than 10%, generally around 8%. That's been pretty steady. As it relates to the structural world, it's probably increased in 2026, but it's leveled off. It's not something that's driving a frenzy or driving the demand dynamic itself. It's much more broadly based than that.

Perfect. Thanks again, and congrats again.

Thanks, Bill. Next question comes from John Tomasso, 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 the 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 allocations?

So I'm just going to jump in for a second, John. Those were kind of two questions. So the scrap environment and the demand environment can support another rolling mill in the U.S. or in North America for sure. Whether that's at Columbus or not is a different question. Mark, you can go ahead.

Yeah, no, no, no. The market is definitely there. Even when Novelis' bay menu at facility finally comes online. There's still at least in today's market that's only going to grow in the future. There's still a space for certainly one full Columbus-based mill for sure. And there is definitely the scraps to play out there, John, to support it.

Your highest cost debt is five and three-eighths. So today, do your cash balances yield more than your debt costs?

Theresa?

Oh, come on. Don't you want to go out with a big bang? No. From a capital standpoint, Foundation Perspective. We do have some notes next year that will be coming due, I think, in December of next year. And we're constantly looking at the balance between the capital stack, John, and what our opportunities are. We're pretty opportunistic on the financing side. So well-pointed out point.

I model debt repayments because I don't know where the money's going to go. but it seems like your yields might be more and congratulations. Super. Thank you, John.

That concludes our question and answer session. I'd 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've done a phenomenal job. and I think, as was noted, it's likely my last conference earnings call anyway. It's still going to be associated at a distance to help out wherever I'm asked to help out in the future. But again, thank you for your patience and support over the years. It's been an absolutely incredible journey. And it's only going to be continued by what I consider a phenomenal team and the best leadership team in the world. So 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.