STLD - Earnings call transcript Q1 2018

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Operator

Good day and welcome to the Steel Dynamics First Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's remarks, we will conduct a question-and-answer session and instructions will follow at that time. Please be advised this call is being recorded today, April 19, 2018 and your participation implies consent to our recording this call.

If you do not agree to these terms, please disconnect. would Investor turn Relations I to conference time, Meyers, Tricia Manager. this like the to over At Please go ahead.

Tricia Meyers

XXXX Thank you, first year Dynamics welcome to conference Christine. Good morning quarter everyone and and Steel earnings call. full

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

from leaders Recycling our our President, Flat President, have Barry Company's Executive operating President; Vice Metals also Group. We Group; Steel Fabrication Steel Roll Vice our including the Pushis, and Senior Schneider, Graham, President, Operations, Vice Senior and platforms, Glenn Downstream Manufacturing Senior Rinn, Long Vice Russ Operations, Group; Operations, Private our Steel Chris Steel

later Internet of our www.sec.gov general under steel, which words differently. be may believe, relating well Some the of are involve the fabrication Form conditions. actual Reform Act at only applicable of Forward-Looking out forward-looking expect, results similar recycling XXXX preceded Statements business SEC heading to risks should any Securities the statements today's Litigation annually protected of XX-Q. anticipate intended meaning; typically and found statements in this these as Examples the and are and Factors, uncertainties businesses, be by turn metals of as date, and Such or described on filed SEC economic Private XX-K speak as and to our predictive, by Form on Risk and they is

comparable the Dynamics release measures to Mark. non-GAAP reconciled issued find yesterday also over Quarter to call to GAAP Results. Reports the the now, XXXX First to will Steel And You I'm turn directly press most entitled reference in measures pleased financial any

Mark Millett

Thank to XXXX Good everybody. morning call. our you, Welcome quarter earnings first Theresa.

team drove time And to truly steel innovative operational and or year. an production we facility SDI our Structural performance. years, appreciate first record achieving our your levels great start still divisions. exceptional very look and the Rail record event this Bar the sharing is XX The to as are and Columbus, a spirit our new safety entire always, prevails. Engineered morning and Butler, at As forward new

Steel We recognition at Rail, quarter detail Theresa last will Association more first folks. for also received Steel Bar about from divisions, our our this the begin safety all But so Manufacturers to and Structural in performance congratulations year's Techs Roanoke and to Columbus, the comment results. morning,

Theresa Wagler

you safe also Thank your the want first Thank team I quarter thank you, everyone. Good time today. Mark. to for for morning and incredible performance.

XXXX per $X.XX first compares quarter per XXXX $XXX net Our diluted of This to $X.XX share. income per or fourth million diluted share $XXX and million $X.XX the $XXX quarter in sequential net of share diluted or million in was income quarter. first or

the Excluding the refinancing and quarter one-time fourth cost, $X.XX. tax earnings adjusted fourth the were benefit in quarter

performance $X.X achieved increase. fourth million the steel in drove XX% steel million compared $XXX increased platform record first quarter of a Operating to operations. revenues driven level, each We per production high production were results in expectation and truly above exceeding to $X.XX roll than between monthly The March flat Columbus guidance executed at March. team Butler share $X.XX and Our income by quarter, our to solid the due-to-higher shipment. everyone, of the the although exceptionally by records

as of a quarterly quarter result operating our improvement. ton to to per steel increased $XX $XXX record growth increased a price sequential income average $XXX million, For $XXX our with average $XX million first The expanded the was cost meaningfully scrap and consumed per to increased only first ton. metal platform. quarter tons division XX% at each XXXX, X% steel sales Steel spreads sequentially X.X the shipments achieved across

the XX% a resulting in sequentially. For million, quarter mill a X% related our $XX operating higher in in metals shipments increased utilization, of with first recycling improvement to steel income metal improved platform, spread domestic ferrous

We mills group strength own capital XX% scrap are integrated the effectively levering The mills, and the steel and mill reducing steel both of ferrous recycling shipped scrap metals operations. of scrap their benefits our to efficiency quality, model, vertically which our requirement. increasing working the

higher First The quarter average was were lower than $XX slightly our This this March time last at income strong XXXX our as year. for XXXX. order in seasonally in strength coupled decreased than with continued demand operating fabrication backlog improved by belief optimism shipments. million more value to offset is operations selling and customer supports it

are material higher of this margins quarter year. significantly likely in compress to However, field costs raw the second

working the overall inventory we of on operations capital higher quarter grew improvement values. based customer $XXX and cash XXXX, first Operational million. million, XXX market from account resulting generated During in flow

payment Additionally, of quarter. the there company-wide as over sharing in incentive such are million in first of several the cash required profit $XXX compensation annual year annual payments quarter year each which this made and performance-based

were year generation. million. of investments currently demonstrating estimate X% XXXX capital quarter confidence the cash our and in 'XX XX% by increases million. of capital $XX 'XX dividends in the XX% quarter. XX%, our through-cycle We of first and full in 'XX, be to in the follows increased First respectively, strength cash investments $XXX We range This

program, to quarter The cash our strength and continued generation coupled the and capital funding $X board optimism million available We our XXXX. We pursuant our and We of maintain is revolving liquidity our structure future. stock credit credit have under provides through-cycle the continued cash also organic opportunity actions in and profile million transactional initiated we still of profile as short-term strength and growth. repurchased with the and available during and reflect common meaningful in the $X.X first investments capital XX, with authorized of which believe liquidity $XXX our facility. billion strong in of the and structure for March XXXX October million $X.X confidence these $XXX $XX billion

and which flat type, we in of for optimized XXX,XXX galvanized, continuation quarter, we We of that first sustainable includes tons the shipments both of tons. had of value Mark? coated roll P&O hot-rolled creation. for and tons. track cold-rolled by those of painted for you, positioned Galvalume, squarely are shipments XXX,XXX And shipments the We our had products Thank had XXX,XXX and you

Mark Millett

Superb. Thank fabric will be our in company safety always priority. and Well is our the Theresa. you, one of number

everywhere. recordable is During a job further XXXX team the recordable year the quarter, our and XX% to executed record zero extremely I of my moving locations and achieving we've quarterly our reduced zero steel you well, to sincere as focused a XX% injury towards have keep goal total compared of The do The great shipment. rate platform the really doing every achieving appreciation. I But us of injuries injuries. challenge before with remain as all day, ultimate the

attained and shipping divisions several As production records. mentioned, record

We capabilities the also to new the of one value-added product to develop industry. adding most diversified continue portfolios in product and

the quarter, operated growth and offsetting the still in not better both rate the more XX% shipping expected XXXX continue energy of annual to sector strong million capability, remains of any tons possible Domestic again still With first once and turned the The is consumption we at automotive expectations sell the with result, general grow. U.S. than rate than to have automotive for Canada. latent domestic X.X industry million the current strengthen. we markets continue annual demand construction contraction during to the while as of and industrial sectors, utilization over in a some As markedly of Mexico, XX%. XX.X as capacity

advantage our automotive We market cost direct on focus the gain and continue leveraging driven to share sales Flat division, costs Roll Mexico. free Columbus related automotive at into a by to

bar steel the demand mentioned on As also sector broader quality belief the special supports call, January our momentum. which continues, for increased industrial in

In Bar to fact, some leverage we as of demand Products achieved level, Division capacity XXX,XXX and yet our additional quarterly Engineered have shipment record grows.

while the long first markets. tons for quarter markets capacity The the Southern and Columbus production position upgraded diversification location producing in notable XXX,XXX high-quality which facilitates increased long our to our Flat $XX in differentiators over million product lower $XX of at Columbus savings. investment costs of XXXX. team the operating Columbus our line $XXX The up value-add in products operations, coating shifts plant add capacity product improved up to still in XXXX Division's new Dynamics key running in An of The painted and have continued galvanizing capacity. this began line a West the significant products, Roll also catalyst appliance benefits at to the through Steel paint be Relative our investment value-added and Butler division very the I adding future our expect value-added for galvanizing there and new Roll Flat additional XX% margin mills Steel one mid-year of utilization products. started first continue to continue coupled as organic improving steel. quarter. well, highest incremental line construction to of double-wide XXXX of years show achieved the tons continues state-of-the-art logistics investment existing the mixed in U.S. three be is Complementing is market million cost investments bit We and would to industrial last the service to and investment XXXX. through XX% This product XX,XXX facility We ship very, few provides successful XXX,XXX year. coating occurred to September existing is the come. quarter in of into Virginia lines a Mexico our ramping believe that initiatives been profitability. our and some of changes annual for earnings the will transformation HVAC, more steel coming in two paint for million resulted track and capacity gains, the line capability diversification on is is the by cycle our our with and in this and Indiana,

specific Rail through-cycle to at have We Structural utilization our increase the Division. three initiatives organic and

This blooms utilization rolling First, is production of both of Bar its to currently the growing fully send are SBQ Engineered still facilities. our to quality and will utilize to through-cycle improve which blooms needs capability. short division, we

annual quarter, on of XX,XXX over market tons our way XXX,XXX is XXX,XXX to During our the environment. recently which well for tons, first transfer tons the shipped of over an the rate team year, strong anticipated run SBQ in

entering XXX,XXX these diversified just and We equal include length large further plan annually, the we but to year, offerings this product sell unequal markets. Second to we’re eventually tons angles.

existing of The through and Third, utilize exposure which XXX,XXX we will million tons there. the to product cut-to-length our are expansion $XX access spooled, smooth casting of annual diversify custom melting bar, will bar. production and and further reinforcing investing market portfolio capability include

intended customer. chain, providing and working substantially enhance should to yield model benefits business capital current logistic meaningful Our the the supply

will we region. the the Midwest addition, to rebar supplier be In largest independent

annual additional begin tons. allow to But atypically, to three of these equipment expect we It Structural Division. utilize investment, first Mid-West producers We’ve project the there one to in was Division. shipping schedule initiatives rebar and utilization some $XX delayed a added be at to have by casting due aggregate, we the penetration of multi-stand melting in capability the of the on rebar capability months in several provide Rail Similar provide as and also design In equipment the investing largest will through-cycle profitability. to We’re excess will our finishing of operations market independent and issues. region. XXX,XXX material slitting to XXX,XXX annual and over strong mid-Atlantic million Roanoke and Bar our improvement at XXXX. future quarter We’ve tons

begin to commission plans equipment June. now in process products and is However, selling team in the

also to should mill lower pricing adequate Good seasonally higher don’t rates. we metal better weather, marginally supply, spread solid weak automotive than With domestic platform a environment, scrap year the export improve. also improved Higher a fabrication we decreased a The shipments progresses sustain steel steady. expect delivered that supply has believe to recycling flows and there ferrous coupled address also as from performance, the is platform with we shipments. more metals mill been a flows and solid Prime build, utilization stable profitability scrap strong Our change. to with expect supported expansion. scrap steel had domestic obsolete utilization And quarter. although

continuing backlog order The a is summer for strength ongoing this season. strong Our and to into construction customer optimism indicator market business remained grow. the solid that continues non-residential heading is the construction

Based where remain source conditions operations customer steel improving strategy levels when Domestic demand pull-through pricing as fabrication benefit confident will that demand mills ongoing of for significant on balances, steel own in during a steel throughout a of our higher domestic we catalyst to purchase one improved. continue rates. market and we mills pull-through from consumption for consumption to steel our We domestic from utilization have internally the and were strong year. This growth. the and place steel through-cycle power reasonably steel Our fundamentals remain inventory our continue volume own the steel steel focuses optimism, believe steel year. remains

recent believe first result May countries imports months in pushing quarter Xst trade and driven prior by also later We uptick reduced coming material deadline. will despite actions the to exempted temporarily the

Additionally, combination our these tax a with success we will for XXXX. are In at firm in growth believe growth. reform drivers initiatives, stimulus investment believe and we provide for our expansion addition

the and foundation our that work for team supports differentiation growth. Our business model through provides and them is Customer and from and success poised and with our term best-in-class demonstrating long and is for and our always generation, maintain It focus, an of of commitment and hard a enviable strategy platforms has market are our them performance coupled flow for sustainability strength position each ability our differentiating to operating transactional the The financial balance strong priority. and our our team, Company execution organic remind cash our I thank first continues the to provided our us their financial continued low-cost sheet. team competition. diversification safety

continue company, creating to focus us for providing value in superior opportunities our forward our new all for on ahead. for and and like to are shareholders We years customers the look employees

the Christine, thank for again, So time you for please today. questions. your And open call

Operator

Instructions] you. [Operator Thank Thank you.

your Please from questions. line Rassouli Our Novid proceed first the with comes of with Cowen.

Novid Rassouli

XXX I on to imports. touch on first Section wanted

how with this your customers, is book extremely my all new term. of there, exemptions May could that expire tight understanding, on you on this in Can having I the agreement customers Korea respect South to us you're that excluding given sense near market order with impacting guess the conversation give or all XXX -- given to given a So Xst, topic? the that the

Mark Millett

certainly would I and of is comments the no input suggest, I do there book it. strong, think is market sense that that the which and believe rolled side I both Novid, on pipe restraints order panic really you're a tube, right on the will is obviously from tighten some at and there order correct, but surprising restraints also rate the the imported coil one the tightness substantially. flat will second. the be of hot-rolled

Novid Rassouli

up On Engineered to we Bar, nice XX% year-over-year. quarter-over-quarter just then and up. saw uplift, And follow

and remainder you record rates prepared speak a your drivers of in where the mentioned diameters was You remarks, outlook XXXX? maybe it seeing that to the quarter for strength, there. you're move that the for Can of the utilization and your business

Mark Millett

you Energy strong, Glenn, much. of segments, off-road very hopefully is But build in and speed say, agriculture, and general can on there. marketplace details the not manufacturing, the product is surprising so give with ranges consumption, just has all the returned strengthen strong continues is equipment very, I things. would industrial tractor, those there trailer strong. in to sorts perhaps obviously

promise you’ve seen in both great sectors showing generally, are strength continued think, here recently. uptick pricing market I So the all and

consuming it’s right to of and now. bellwether And kind the a healthy for steel very of a it’s one environment, so, us it’s me

Glenn, things? So and sizes on

Glenn Pushis

Mark, that’s I well think put.

mill automotive, years We’re the is driving more his the team that Barry ago. installed into which and new

automotive. mining, We’re But adding for And some correct that driven you’re X construction in which and sizes all seeing is inspection finishing X/X our by heavy to and strong arena right bodes smaller bar those truck the capacity the we’re smaller, well mostly and now. exactly trailer, automotive. they’re

Mark Millett

stock tons obviously annual tons to about diameter of the a to to about years capability. now up put two facility As smaller take in an reminder everyone, expansion of XXX,XXX XXX,XXX ago on that we bar

capitalize sort on So that. marketing allowing us of is now to the fully environment present

rate earlier, Structural the aided that’s XXX,XXX annualize as blooms about said capacity I tons here job at into up status. increase being a tons their there, quality XXX,XXX will Bar available getting and months. that we And of to, of shipping in by As great we and Engineered coming have the mill improving SBQ say

Theresa Wagler

the clarification, total XXX,XXX per is year. tons for the of just facility Yes, capacity

Operator

of from Please Goldman next comes Our Matthew question Korn question. your line Sachs. with the with proceed

Matthew Korn

was all averaged think, over XXXX, I back X%. your it you margin, EBITDA historicals, Looking over XXXX, just

I we And of think I widen The you nicely you also couple months shade the XX%, couple profitability talked reached Last XX%. making. all, to all we’ve investments these think last calculations. XX%. quarters that’s the next here, the harvest capabilities expect of as years, XX price you’re my your under and you’re then over getting new about,

per level the what of you is? And make in think look place, and achieved capability to, would ton what you metric capacity would you’ve Mark, you margin you So of operating achieve potential Is as that barring could at? what would happy type once Where think the what there. the you over happy the that, once expansions time be like income? you you’re complex

Mark Millett

the mid never at But Well, at a a of good a and would just table to probably the team to steel market, upper-XXs, as were margins company would one sitting strong very we step. our there I’m suggest, mills in think I around happy so be back time any were when get level.

Matthew Korn

Alright, given maybe limiting tags from Look been and you that else at hasn't Is then weakness pull? of I upward now all an the on? hot-rolled than the going short history look fair the pricing scrap question has at Russ, shredded, the think of XXX wouldn't ton, factor export moved that in that upside? Why something you and more recent XXX-XXX. around for or than enough, What's strong in Russ. trends? a surprised the higher it are

Russell Rinn

think it you ahead. No, I Yes, from Matt. get

one in on enough this scrap certainly U.S. the higher last of think again it. here. of this spring. and or on but production, the here That's fall without has the support draw, market in it's kind export the waned levels a is is export I the to been There continuing kept fall driver predominantly there starting the cap

Operator

Deutsche from comes your with questions. line question next the Please Our Chris Terry with proceed of Bank.

Chris Terry

how for at interested potential the order the seeing? corrections? prices on have are on based Are moved Are all up. the Or looking dynamics at that they the price buying? this just any customers book in as point reluctant you are at at Just seeing the pricing they accepting waiting you're

Mark Millett

and I moment really there there. a said, And acceptance calmness think at an time. certainly out balance is this there as I No, generally a is of

for Xst that May sell-side the and where longevity pricing think I importantly margin stability resilience the prices sure the matter I And market levels change. more As the the or a in side. think demand that in with on we see the our with pricing the the the we year with through market And the point, months, we'll think just today. you summer and as scrap that material if dramatically the that at not fundamentals that in see there about of just the the to Russ's could I recognized seeing coming growth raw mentioned turn and business. is to expectation a I we would the think there it's we're And marketplace receive and imports side

So, profile rest the the I earnings of be going for to the year. think attractive is

Chris Terry

spoke opportunities. lot the the through quite quarterly at call, months just Can changed? go and last looking potential how world last about the you're that's On from three here? how you M&A And you a

Mark Millett

changed. has anything think don't I

the are the there. opportunities There is is pipeline team opportunities still think diligently working I that on. of

taking balance will organic great growth going transactional We're anyway we've we that impulsive the strong just approach. are have a we we a the in because complement disciplined growth very will already be past, to But the not impatient that said expectation stated. to sheet. or be had As in we

Operator

Please from with Company. with comes the Levy of Brett question your proceed Seelaus questions. & next line Our

Bretty Levy

opportunities kind is has your and up this of feedstock Clearly, coming that kind and in to market share the this Cliffs' in border. Toledo, talk potentially up opportunities between as been Can Dynamics? Indiana coming about for market which improve of new gaining the on level what of the obviously, You're it you plant discussion is right in like see automotive. Steel you terms you plant

Mark Millett

Again, our has Brett, there, changed. position not

capability. the reasonable with of million We’re very, market X place in a distribution raw OmniSource very sort supply needs. reasonable, profile we that mill X have more processing has today. is support than and approximately material tons for And of million to our comfortable collection

I other quarter, The by XX% OmniSource. needs in think coming rest XX%, our last the from met obviously about marketplace. were around of we is parties scrap were

those to opportunity. would So, change an return you mine, is the not need purely think strategically, urgent any our that own that as the And attractive at we see necessary belief the think to then the units alternative. pure, don’t into is cycle to I get we through that way all iron us. the return And If a back differently. we profile look unless were investment for

Brett Levy

got And like go second see right question interest I Is lines? you along there to is grow, want there go post-XXX point, at an running obviously to coverage. an guys plus then the it is it’s downstream? you or to now times At after, something after XX you’re plan a what those assume optimal really to you time, as some optimal timing

Mark Millett

have we areas be acquisitions, of that'd One, of underperforming steel opportunities, greenfield around We itself, main turn that'd production asset. can being whether be whether steel whereby sort or focus. three

processing focus, downstream one So steel is another. is

sorts a Our things. or natural team coating, the on to those side, there of of of in things. sorts sheet Glenn And even earlier sort inspection, ability mentioned have side, turning, painting as the that'd those of bar seemed whether value-add be sort

peaks, because to generation, also downstream just that have manufacturing but steel mills opportunities very troughs. processing pull-through So can of through-cycle and is cash where cognizant important of provide then looking for to we’re intermediate volume thirdly, stronger sort And us. not stronger you profitability type our

Operator

question Seth with of proceed Jefferies. line the your Rosenfeld from Our Please with next comes question.

Seth Rosenfeld

strong on outlook their Can give a on those supply one things, think past the in domestic of Obviously, of long product months what the the side products. us Just see envision impressive general just says rates that of Or ahead? for pick well, your two growth you've you lockstep start environment peer an up which over playing sense the the seen side which please. margin in better was see long is your long saw in quarters. up we what from very of utilization two you on forward? kind of flat with do flats side moving lagged seen in catch you looking Do in long has we're the going steel, in product margins to-date? could you And to

Mark Millett

have strong consistent And over Theresa utilization erosion. I know of detailed products kind consistently suggest momentum. few of that we're spectrum at with also The would think more think book, of long an there. color. little point spread sort I a was increases may seen on last a bit what of we've rates this inflection an high years gradual the pretty erosion forward last three I first I order We've weeks. going across with slightly seen the of the

that think will likely continue. I

Theresa Wagler

also the as you not very markets, flat between then is look products would Seth, I different within versus they're remember thing long side and as that long, only SBQ merchants on at you just long but structural on and well. add, then and The if themselves

agree, just expecting outpace that the but I'm products, changes year scrap. expecting in we we I say be try expansion correlate I are to we flat. those throughout think would any So sure to the long able pricing margin to are not I with in

Seth Rosenfield

Can trends? real perspective? orders? are fabrication and side. seeing reform, of the in the demand us terms order just second And from improvement sense tangible Following tax give may already a the on are that you And of seeing bit in you a you if where I product perhaps a question,

Mark Millett

Chris?

Chris Graham

and Upper has I the those institutional, follow six to positive all it's of in continue mix been on construction indices say to of We the just come healthy change. we continues. Midwest the for what have else that to have continue of a Midwest, non-res. in indicate box worth Western such. our areas expansion a commercial months. we markets maintain where see the not weak, strong been Yes, would life outlook been bigger market that anybody It's big has but last

she So, goes. we as steady

Operator

question BMO. with line next Our with questions. from of David your the Gagliano proceed Please comes

David Gagliano

mentioned saw to wanted that just I remarks. translate I raw material costs you I margin XQ correctly? opening XQ. compression significant Did Theresa, you upfront versus your expect hear to clarify higher in in that

Theresa Wagler

in That an if increasing an lag. It's there as uses is steel probably right, Dave. specifically week as X fabrication just fabrication, steel, to wasn't cost, we have and XX think -- you

you're start going lower they purchased well having higher the of at to quarter. steel they so, see And because to prices fourth prices late from benefit kind

they're to quarter cause will compression only Now, have think we the fabrication that prices likely quarter segment. and hitting margin in second going first but some that

David Gagliano

Completely understood, okay, thanks for clarifying.

books sense bit as effectively, this expansion be expecting I at expansion metal with lags, in the hesitant you the that Now give the a scrap, short-term much like we’ve XQ magnitude to you’re should mean order typically parts margin that I of the But magnitude, just place in the seen. of that. a and to, point? steel books Can a operation we have the moving changes to segment. lot to order mix, given know Obviously back the on you prices things margin provide sort us of in the specific commentary.

Theresa Wagler

there's We’re not We going question. I more it the think been to do contracts expect appreciate meaningful enough operations. because XX% to tightness our to steel available, in we going be but taking the of now available. our give of contractual flat-rolled ops. the of closer specifics, in use the to And the market, I and more importantly, is across customers to have the there see, Dave, are maximum that kind interestingly we of it you’re be But business is is have meant one your side on actually customers we see flat -- well, then total scrap know, roll. get lag own And to have with -- busheling probably is dynamic you quality some roll and to and really you’re primarily of flat-rolled minimum or you because you a take right because maximum know as the a prime the that going a of scrap flat such And XXX, our that in month which expansion as of can mix well. that think I expect to

lagging will going as into as move CRU we the you’re they’re from that going see So to platform. be scrap benefit price to that second get quarter, think moderated well

product there's we drivers So, then as drivers just I the long we that flat positive where spoke and well. see in side roll think to side

comfortable these not we’re Sorry, specifics.

David Gagliano

helpful. it. that's No, appreciate I

on than it flat roll to you last related a to the product be long is mix reasonable sequentially? question, Just expect side basically, more the product bit said little heavier just a

Theresa Wagler

we had to shipments, quarter. expect incremental first would roll already record Well, the in but Butler we’re Columbus going production and that the flat see

So, availability. we as sure product most independent. see we we you more an of uplift long that incremental that capacity all opportunity way have is or products, long is for see that it substantially so not the improvements side But one about I’m think mix, in to additional but as there another, market there volume in you’re the on think going

Operator

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

Timna Tanners

big visibility? think looking Dynamics and those, end? you’ve move what a the decision market give year? of the sense taking the back this need philosophically you to conditions step a very prior on been additions what more about us at conditions, in Just What prices how to you’re talking about and planning in that in just What of Can substantial this year. we’ve order capacity does watching Steel strong been light

Mark Millett

very on has honestly, We We the metrics. cycle Timna, Section of view. look don’t tax whatever. sort long change necessary take strategy through changed. wouldn’t it We and believe or reform XXX alone I at Well, a term our

better and And marketplace, certainly nine position trough put there, it doesn’t in think the incredible optimism our with last years different to that mean -- that I since shape good to made we've any the a whether the even the current us going demonstrated to we’re sort we've seven, model going the also forward. over So immediate, leverage out be a in to in of say shifted we've that has very now set shape company. beginning the eight, business that

she sheet We're and superior even to producer there just the as cycler financial but metrics. cost most fabricator our and to metal goes. not work drive to not the the steady efficient So, balance strategy and put producer I steel And changing think it's materially. kind steel lowest continue anticipation sheet of is right

Timna Tanners

X you that that further of the are of at their Do that temporary there how White you other receive it's In any and countries House, might play out with exemptions. deadline for that seems could like your exemptions negotiations of sense in some mentioned quotas? have also that have them may out? discussions do have because that you Japan, those any you May play Also course, some how on change some thoughts see extent of the the can the the exemptions

Mark Millett

domestic we the you do A trust at, can appreciative a certainly the a a even the we're tighten it's the I practice shores. can we when Administration was goes and reasonable we what Despite and both punitive and a would looking rate be their reasonable though steel a we spike more an helpful of the imports to approach announcement a But marketplace. think sure. and XX% we play exemptions industry of playing weren't for profitability advantage XX% balanced speak industry will But We the came world. of stance think appreciative should believe, have understand for the just really the obviously with little And a healthy quarter elimination normalized better from of will more And that the position the be. options -- normalized in took out for the so that's negotiations there Well, mill looking I even changing return imports, cost Ross those we a in what that new what yet tariff. demand so a is recede whereby presented need of a and and develop would honest profitability prevailing. allow press XX% other bunch of profile I doing and supply coming capital utilization of are we talk allowed that U.S. of on, entire the exceed industry. culprits of industry, the the that Secretary level have so and think which our base. And with imports of that's a that away created our rest have steel environment levy so more and more we and But alarmed perhaps little products customer think provider be material the and compromised the in I a but for crushed pricing, the to across were there. where for back blanket others turn, for reinvest bit Commerce along the we to one is and on tariff straight applaud have XX% spreads, actually onto a months, believe the I as We the and And on step maybe that manufacturing And supported in as fair shortage. push get want. again better demand it's that XX% I base Department in sort reasonable whole first recent but countries prudence a time to to good not to the would field,

Operator

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

Phil Gibbs

out your some visibility you XX% helpful? in mid-year. you’re tons do Mark, would you and paint you this had backlog? business want track mentioned shipped you clarity that first line to on that in to quarter, you do think, Question be just and Columbus think, win can you is, Is you by on or off had go the be the this that XX,XXX going at

Mark Millett

trials go it are the into that, lots there’s currently We paint, not many doing are of parameters or with believe it.

So, coming schedules we’re securing end through quarter. we of of through through through third for business July, the second approvals especially various that ramp pieces see up

the to to time the, us have this allows don’t And with that base. we're products that by new we’re products make a relationships are accepted with customer using we another being or making So that make confidence plan. develop we some line term longer

good. little the And really looks that well. making we're going is the judicious there, what team pipeline quality with more the is but we’re producing So,

trying managed a entrance to have to the we’re So, marketplace.

Phil Gibbs

input have Second raw maybe of give the you just situation now the bit you’re us costs little and staged whether also, from cost course be situation, of then or pig potential is environment. the increases or and an that on expect And there or environment? a is refractory question consumable I you. could the whether being on of imports Mark, you update right cadence materials if the electrode right year? on any in geopolitical to risk not now Thank not Russia seeing through now iron given the

Mark Millett

think calls, on as past consumables, I we Well, in Phil. the reported

we On picked electrode a side, bucks couple the ton. of a up

the in think quarter we through $X four, another maybe or the coming on first I and second sorry. quarter bought $X --

Theresa Wagler

I old it's contracts. versus Yes, between per some well, we about $X expectation okay. we were in sequentially. know, about the quarter it's remember, supply Actually, if up Any new electrodes refractories, the you and had -- ton still first

divisions more into of quarter. run we for the as So in second contracts the new the

the stable year. increase We and very of through the and probably incremental, $X then another then expect to rest that be

Mark Millett

electrode and But you’re that’s refractory. saying

Theresa Wagler

That’s electrode refractory. and

Mark Millett

at taking a them was I time, but yes. one

Phil Gibbs

that think, now? on iron also pig seeing gave geopolitical imports to Do from you other question. then on And any sub-part is Russia risk U.S. we’re right that the any into there environment,

Mark Millett

risk there. there is certainly think some I

hearing is about coming it or actually ramping some backup. producers think of been had I that up the Brazil sitting talking like What looks idly some. we’re

remains So be the in again, But side will a on to pressure. Brazilians, seen. price part of that with slight I and got you’ve Russia. is Ukrainians in fill deal, the But could it think geopolitical the that I think, risk again, there some result that just

Operator

from Chris question. your with with proceed Please Longbow. of comes question the next line Olin Our

Chris Olin

think make I just the It that like the guess, you wanted the those global floor going steel right exemptions. over price the Are for are exempted. expect of curious How months. dynamics pick do summer currently offering a regions I about potentially imports I'm not something that. maybe forward? is sure hot-rolled you supply where now? then I very not second And the to sounds the to Mark, to understand do months, price product and like in countries mills low up But

Mark Millett

The Australia, recently changed principally our or if Coast. month was and State countries take Europe I you nonetheless, We're due sort exemption materials last think trading any than BlueScope's is think the they from disruptions par, the two. its not if message probably I a landed seeing perspective not off, are usual. West impact no Europe. count flowing mills But either Mexico, there not partners, pricing until to NAFTA exempted business you're the balanced the way. of higher price them from real at that's has been the and on a

through imports impacted But believe summer getting for now, strongly receive the I see So, we're months not you'll there dramatically. in coming the short.

Chris Olin

freight availability the can And or for product a segments? then change just as raw constraints trucking or to capacity outlook steel about cost you that, bit second the maybe little perhaps talk materials

Mark Millett

there not is pressure us I think continue this inhibiting business, from the right.

Barry Schneider

more, have it truck and I we work But service us providers. into became better with and the regulations like the better always for are rail effect think strong. be really And we freight requires being service. will areas, real they lanes the to business, the our place the system. are freight the just to adjusted certain get trucks closely do did at we And

it's shutouts right having work, I'm least So going daily, now, doing good, many the we're daily not to say flat not for at we're but miss side. too trucks or Glenn? the

Glenn Pushis

daily challenged. more struggle, customers and with Other transportation but through It's lands some the are very And it's both good mean, long rates in continuing fight, various with the fight a the lane. our little product it. companies. to working we're Mark, trucking On are of can some To line, too. lanes our challenging. points, daily open and we're working availability I get rail,

Chris Olin

of I just much ask now? through the goes how volume Can right rail

Mark Millett

probably be it than Well, more rail. by Company, It's used XX-XX the right? to closer XX% to across

Glenn Pushis

close to If I all now, XX-XX were right it's across steel guess to sectors. probably our

Mark Millett

On the side? operating

Glenn Pushis

the side, On right. operating

Operator

with Our next of the your from with Please Cleveland Rueckert question comes questions. line UBS. proceed

Andreas Bokkenheuser

Bokkenheuser me you Andreas It's Can okay? UBS. actually hear from

Mark Millett

Yes.

Andreas Bokkenheuser

on question a growth. Just

where this inorganic call. the affected of growth gains? us or early in by sense consolidated how give And growth rest a with better year. overall share of obviously of have much earlier mainly potential construction? elsewhere? talking growth the market throughout in construction do end is a volume see maybe volume of think, that share you capturing the Do moment? And were the How much Is this about you do market you market sense growing? mentioned via growth see potential I You the you also is at the

Mark Millett

growth we months next think the to qualified from tons at is share referenced take XX about year. team specific automotive The on market XXX,XXX I to over platforms for next the Columbus. And that gone nothing a to that sufficient That last of XXX,XXX is where up XXX,XXX in we’d tons XXX,XXX be it market from year. perspective maybe automotive. will to about tons on And going that will my from to kind like We’ve that likely forward the, see exposure facility.

to volume -- long is expansion increased the On most very are… as we opposed think the product overall of I specific demand side,

Glenn Pushis

yes. sectors, all Across

Mark Millett

up volume, are market pockets. We general in share picking generally, certain specific it’s increase. volume But

Operator

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

John Tumazos

in steel the any output due to to than reasonable to per trend productivity and output lines rate? year more significantly you that increase of productivity And in rise innovation product about do any that a have expect the specific projects mills, X% productivity? Is the capital might

Mark Millett

Well, Well, it John, we’ve growth year. percentage as per analyzed a sure not so good I’m morning.

I a to seems incremental. as And material At there, team of think our that. to suggest, year-over-year have, amazingly, further we continues XX know, you Columbus, output think continue outperform. do culture. years As is do part as to you But growth innovative I opportunity. be we after our Butler

pushed today. for necessarily development, has arenas, been Our it’s that market those and around hard. product And nameplate we haven’t real, team diversification the facility about real and focus capacity

more. that should but capable specific is should already. a be shipping of add And so, portfolio. tons of rebar the being The XXX,XXX major any we capability growth that truth lot line organic outlined the about incremental existing most it's of the mill, the necessary to projects or our form mill And opportunities

Mark Millett

we versus actually to related from capacity truck some division, from reminder, All Butler they're quick Roanoke Just tons X.X. be as the to X tons closer for Bar, we at XXX,XXX year moved a million beginning beginning million And the initiatives. took And likely million to to this tons. a XXXX, year. and with for X.X a XXX,XXX rail ton incremental X to

capability So likely there is as Right XXXX. our Mark ton projects now, over said, are specific but total that's that. million XX.X come that's be driving XX.X to

Operator

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

Charles Bradford

I about haven't any problems alloys? for also you heard with how and most there recently Are about seeing anything any cost.

Mark Millett

No concern or natural matter. real that for gas to relative energy cost either power

is everything stable. So

we are front, an appreciation alloy the On seeing there.

again, material. believe its I So don't

Glenn Pushis

along the bit a we On with a side, structural as we the an SBQ are side, surcharge seeing it sure.. pass mechanism, little [ADM] But we see so it in that. don't on

Theresa Wagler

alloys sequentially and higher Most throughout increase, haven't of kind second quarter. we seen because alloyed a beginning Chuck. the third Yes, XXXX the in were of

look it's second we cost substantive, really observed already the but in of pretty If year-over-year half of alloy the you kind higher 'XX. at

Operator

with Phil question your question Our next follow-up a Please questions. from is with Gibbs proceed Keybanc.

Phil Gibbs

know And and Roanoke timeline? you color just it can earlier. little had at I investment changed investment initial maybe I more a are just have touched your us question on upon a you that on on But the Mark, rebar remind what relative that bit why?

Mark Millett

Glen?

Glenn Pushis

with working that We've Glenn. with equipment. is sure. This Yes, supplier our

some We engineering the have on issues and some equipment. delivery issues

furnace that. project the rebar higher the capability that gain we there. the furnace anticipate run We're in five reheat which the you here next can then the production will over which make rebar that outlet really in hour a furnace. with month of weeks, tonnage larger successfully year. May, a through reading to been changing starting give we in us to and the to back got get We've But push allow rebar that the will few that now us in per the of to months So commissioned run has four and

to the some facility year. said time rebar of some of and the And able products we've We'll to of other facility. has larger a at at in run that XX,XXX get tons gains past, furnace. of Mark per year be Now up merchant because that same our of XXX,XXX XX,XXX push Tricia on rebar tons heating incremental like the

Mark Millett

And not structural, performance the so same at that expecting we're right?

Glenn Pushis

different And supplier. be mill smoothly right structural it's now very actually No on project that schedule. going is to seems and a

Operator

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

Mark Millett

Well, support. appreciate appreciate time again, your today, I your

of to positioned we think take in advantage all I sectors. growing are marketplace the well

a and I hit all be think it’s and XXXX cylinders about us. to good someone to very said, XXXX for going we’re

customers girls, job. doing on line, And the employees, a certainly guys support. your phenomenal I and our For for you’re the appreciate

Bye-bye. day Just keep Thanks safe, each and to everyone. every

Operator

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

Steel Dynamics (STLD) 23 Apr 182018 Q1 Earnings call transcript