Good day and welcome to the Steel Dynamics Fourth Quarter and Full-year 2022 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, January 26, 2023, 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.

Thank you, Jenny. Good morning, and welcome to Steel Dynamics Fourth Quarter and Full-year 2022 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, President, 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 and should actual results turn out differently. Such statements involve risks and uncertainties related to integrating or starting up new assets, the aluminum industry, the use of estimates assumptions in connection with anticipated project returns and our steel, metals recycling and fabrication businesses as well as to general business and economic conditions. Examples of these are described in the related press release as well as in our annual filed SEC Form 10-K under the headings Forward-looking Statements and Risk Factors, found on the Internet at www.sec.gov, and is applicable, in any later SEC Form 10-Q. You will also find any referenced non-GAAP financial measures reconciled to the most directly comparable GAAP measures in the press release issued yesterday entitled Steel Dynamics reports fourth quarter and full-year 2022 results. And now I’m pleased to turn the call over to Mark.

Thank you, David. Good morning, everybody. Thank you for being with us for our fourth quarter and full-year 2022 earnings call. As I think you saw, operationally, our teams had a very solid fourth quarter. Our New Millennium Building Systems platform generated record steel fabrication earnings. Sinton is showing significant operating improvement with a clear path to profitability in the second quarter of 2023. Our new aluminum group is making great progress on our aluminum flat-rolled investments, and I will share more details later in the call. Relative to full-year 2022, the entire Steel Dynamics delivered an exceptional performance with record sales, earnings, and cash flow generation. I think it was a tremendous achievement, and I’m incredibly proud of our team. They are the foundation of our company, and they are the ones that have truly driven our success over the years. It is their culture of excellence and the strategic positioning executed over the last number of years that allows us to maximize opportunities resulting in higher lows and higher highs through all market cycles. However, none of this matters without keeping our teams safe. Often, employees are described as a company’s most important resource. But for Steel Dynamics, they are more than that; they are a family. And now we number over 12,000 strong. We are continually focused and provide the very best for their health, safety, and welfare. We are actively engaged in safety at all times at every level, which is a top priority and an active conversation at all levels in the organization. With that focus, the team’s safety performance improved significantly in 2022. However, there is certainly more to do as we will not rest until we consistently achieve our goal of zero injuries. Before I add any more detail, Theresa, would you like to give us some detailed financial results?

Thank you, Mark. Good morning, everyone. I add my sincere appreciation and congratulations to the entire team. We continue to hit new milestones throughout the company, achieving record annual performance in 2022, with record revenues of $22.3 billion derived from strong product pricing and volumes across all of our operating platforms. Record operating income of $5.1 billion and net income of $3.9 million or $2.92 per diluted share, and record cash flow from operations of $4.5 billion with EBITDA of $5.5 billion. As Mark mentioned, it is truly an exceptional performance. Regarding our fourth quarter 2022 results, net income was $635 million or $3.61 per diluted share which includes additional performance-based special compensation of $24 million or $0.09 per diluted share that was awarded to all nonexecutive eligible team members in recognition of their extraordinary performance and costs of approximately $168 million or $0.67 per diluted share associated with our Sinton Texas flat-rolled steel mill ramp. Our fourth quarter 2022 operating income declined 35% sequentially to $759 million due to lower realized selling values and seasonally lower shipments within our steel operations, which individually generated operating income of $178 million with shipments of 3 million tons in the fourth quarter. Our flat-rolled steel mills were negatively impacted during the quarter with high-cost pig iron that was purchased earlier in 2022 during the early stages of the conflict involving Russia and Ukraine. Based on current pig iron prices of $500 per ton versus our average cost incurred in the fourth quarter, earnings were negatively impacted by about $80 million. We expect to see that continue into the first quarter, and the negative impact is likely to be around $60 million as we work through all the higher-priced pig iron before the end of the first quarter. For the full-year 2022, operating income from our steel operations was $3.1 billion, representing the second strongest year in our history, with record annual shipments of 12.2 million tons. Fourth quarter operating income from our metals recycling operations improved to $14 million based on increased volume and metal spread expansion despite lower average selling values. For the full-year 2022, operating income from our metals recycling operations was $130 million. Due to lower volume and average selling values, our spare scrap prices fell nine out of 12 months during the year and were sequentially lower than the record results in 2021. Our Mexican recycling operations have proven to be a strategic key for both sourcing scrap for our Southern steel mills and driving profitability. I want to convey a sincere thank you to the Zimmer and Roka team. We continue to effectively leverage the strength of our circular manufacturing model, benefiting both our steel and metals recycling operations by providing higher quality scrap to our steel mills, which improves furnace efficiency, lowers cost and reduces company-wide working capital needs. Once again, our steel fabrication operations achieved record quarterly operating income of $682 million as metal spreads continue to expand based on steady product pricing and lower steel input costs, which more than offset the impact of seasonally lower shipments. The steel joists and deck markets remain solid as evidenced by our continued strong order backlog, which extends through the first half of 2023. Our steel fabrication platform also achieved another record year in 2022, with operating income of $2.4 billion, eclipsing last year’s record of $365 million. Congratulations to the entire team; well done! This demonstrates the power of our circular manufacturing model and the natural hedge our steel fabrication business provides against steel price shifts. During the fourth quarter of 2022, we generated strong cash flow from operations of $1.1 billion due to strong results in the release of working capital. For the full-year, we generated a record $4.5 billion; our cash generation is consistently strong based on our differentiated circular business model and highly variable low-cost structure. At the end of the year, we had liquidity of $3.4 billion comprised of cash and short-term investments of $2.2 billion and our fully available unsecured revolver of $1.2 billion. During 2022, we invested $909 million in capital investments of which over half related to the ongoing construction of our four new flat-rolled coating lines and our aluminum flat-rolled mill investments. For 2023, we believe capital investments will be in the range of $1.5 billion, the majority of which relates to our aluminum flat-rolled investments and the completion of our flat-rolled coating lines. Since our last call, we also announced the location for our aluminum rolling mill as Columbus, Mississippi. Mark will share the strategy for the location later in the call. We are incredibly pleased to have received near-term state incentives for the project of $250 million with meaningful additional tax benefits to occur over the next 15 years. During the fourth quarter, we maintained our cash dividend of $0.34 per common share after increasing it by 31% in the first quarter of 2022. We also repurchased $413 million of our common stock in the fourth quarter. For the full-year, we paid cash dividends of $237 million and repurchased $1.8 billion or 12% of our outstanding shares, representing a 53% net income shareholder distribution rate. At the end of the year, $1.3 billion remains available under our current share authorization program. Since 2017, we have increased our cash dividend per share by 119% and we have repurchased $4.2 billion of our common stock, representing 31% of our outstanding shares. These actions reflect the strength of our capital foundation, consistently strong cash flow generation capability, and continued optimism and confidence in our future. Our capital allocation strategy prioritizes high-return strategic growth with shareholder distributions comprised of a base positive dividend profile that is complemented with a variable share repurchase program while we remain dedicated to preserving our investment-grade credit designation. We have strategically positioned ourselves in a position of strength to have a sustainable capital foundation that provides the opportunity for meaningful strategic growth and strong shareholder returns while maintaining investment-grade metrics. Our free cash flow profile has fundamentally changed over the last five years from an annual average of $580 million between 2011 and 2015 to $2.6 billion today between 2018 and 2022. Our recently announced aluminum investment is consistent with our unchanged capital allocation strategy. We will readily fund our flat-rolled aluminum investment with available cash and cash flow from operations. We also plan to continue strong and responsible shareholder distributions as we have clearly demonstrated. We are squarely positioned for the continuation of sustainable, optimized long-term value creation. Sustainability is also a significant part of our long-term value creation strategy, and we are dedicated to our people, our communities, and the environment. We are committed to operating our business with the highest integrity. In that regard, we are excited about our newly formed joint venture with Aymium, a leading producer of renewable biocarbon products. We believe our first joint facility could decrease our steel Scope 1 greenhouse gas emissions by as much as 35%. We have an actionable path toward carbon neutrality that is more manageable and we believe, considerably less expensive than may lay ahead for many of our industry peers. Our sustainability and carbon reduction strategy is an ongoing journey, and we are moving forward with the intention to make a positive difference. We plan to continue to address these matters and to play a leadership role moving forward. As I conclude my remarks, I know there are some of you that follow more detail of our flat-rolled shipments. So for the fourth quarter, our hot-rolled shipments were 959,000 tons, our cold-rolled shipments were 109,000 tons, and our coated shipments were 1.1 million tons.

Thank you, Theresa. Well, as was mentioned, steel fabrication saw phenomenal results in the platform in the year. Again, thank you to the team. I think their effectiveness, efficiency, and output per employee exceeds anyone in the industry. So congratulations to you and thank you for all you do there. It was another record quarterly performance and record annual operating income of $2.4 billion for the year, with record shipments of 856,000 tons. Although the macro industries remain a little mixed, we believe nonresidential construction markets are and will continue to remain strong throughout the year. Despite lower ABI indications, I believe overall architectural firms remain optimistic for 2023. Dodge's Momentum Index improved by about 6% in December and nonresidential starts and build rates are also forecast to remain solid through the year. Our customers certainly tell us that demand remains solid in spite of economic uncertainty, and this is confirmed by current order rates, not only in the joist and deck business but also in our structural products business. Our steel fabrication order backlog extends through the first half of 2023, with strong pricing dynamics and with continued solid order intake rates, we expect to see continued strong volume and performance from those operations throughout 2023. The fabrication platform is not only a significant contributor itself, but it also provides significant pull-through volume for our steel mills, allowing higher through-cycle utilization rates, and it provides a meaningful natural hedge against lower steel pricing. Our metals recycling platform had a solid year, especially in light of the challenging pricing environment. During 2022, ferrous scrap prices declined nine out of 12 months and volumes were marginally lower. The team managed to achieve metal margins that were only $2 per gross ton lower than the record 2021 results. After seven consecutive months of declining price during 2022, ferrous scrap prices improved in December and January, and it is our expectation that pricing will continue a moderate seasonal increase during the first quarter. Our metals recycling geographic footprint provides a strategic competitive advantage for our steel mills and our scrap-generating customers. In particular, our growing Mexican volumes will enhance our Columbus and Sinton positions, and the Zimmer and Roka acquisitions are performing very well, with outstanding integration. Our metals recycling team continues to partner with our steel teams to expand traded scrap separation to provide more high-quality, low-residual scrap to our steel mills. The impact of these efforts, along with others in the industry, has demonstrated that innovation will provide ample scrap supply in the years ahead. Similarly, we are also exploring technologies for more effective aluminum scrap separation in anticipation of sourcing material for our upcoming aluminum flat-rolled operations to maximize recycled content. Our steel operations achieved record shipments in the second-best annual earnings in 2022, again, outstanding performance by an outstanding team. So thank you for each and every one of you there, with record shipments of 12.2 million tons and operating income of $3.1 billion. Our 2022 steel production utilization rate was 92%, excluding Sinton, compared to a domestic industry rate of 78%. Our higher utilization rates are clearly demonstrated throughout all market cycles. Our value-added diversified product offerings and differentiated supply chain solutions provide stickiness and the support of our internal pull-through manufacturing volume, which has clearly demonstrated time and again that we can maintain a higher utilization than our peers in the industry. As a key differentiator, it supports our strong and growing through-cycle cash generation capability and best-in-class financial metrics. Looking forward, customer order entry is good and backlogs are solid. In actuality, December was a historically high order intake month followed by another historic high order intake year-to-date. We see a very solid market developing for the rest of the year. Auto production is expected to increase in 2023 from the lower 2022 rates. Dealer inventories have improved but still remain meaningfully below historic norms. The build rate in 2022 was roughly 14.3 million units, and it is expected to grow a little to about 15.1 million for 2023 and higher thereafter. Nonresidential construction remains solid as evidenced by the fabrication backlog, and as I said, the long product steel volumes. Residential construction has certainly softened. It is impacting HVAC, appliance, and other housing-related products, but fortunately, much of our portfolio is biased toward replacement. Oil and gas activity is driving improved orders for OCTG and line pipe, and solar continues to grow. This market strength is clearly supporting market price appreciation, particularly given the challenges with imports in Mexico. Sinton's downstream coating lines are running well but are running below full capacity as the rest of the mill continues to work through startup items. The hot mill has turned the corner, running more consistently, approaching 65% capability month-to-date. We have been experiencing very long sequence lengths on the case recently, up to 22 hours at a time. We are achieving days in excess of 85% capacity, and we should be around about 150,000 tons for the month of January and improving thereafter. Our current utilization is certainly being impacted by certain supply chain issues related to bearings and rollers. This is specific to the casted rolls in the segments. We expect to have this resolved before the end of the first quarter, which will allow for stronger production for the rest of the year. Additionally, high-priced pig iron inventory is being drawn down through the quarter, and we expect raw material input costs to normalize for Q2 through the rest of the year. While financial performance will likely be flat in the first quarter as we consume that high-priced pig iron, we expect significant improvements in both productivity and earnings in Q2. Mill production dimensional capabilities are improving, and the hot strip mill design has been allowing for thermal mechanical rolling, which allows for production of higher strength grades with lower alloyed content and associated alloy costs. We have already been approved for and shipped some API grades. Our experience to date confirms our technical and process choices, and there is no doubt that this is the next-generation electric arc furnace-based flat-rolled steel technology of choice going forward. We continue to grow our exceptional through-cyclical operating and financial performance, which continues to support our cash generation and growth investment strategies. We have four value-added flat-rolled steel coating lines under construction. These projects are going well and are targeted for startup in the second half of 2023. We have a galvanizing line and paint line going in at Sinton, and we are seeing very good customer interest for that new volume. Currently, we are the largest domestic nonautomotive coater of flat-rolled steel with an annual coating capacity of over six million tons; these four new lines will increase that capacity by an additional 1.1 million tons. We have created unique supply chain solutions for our customers, which allow our downstream lines to remain fully utilized with our highest margin products. Switching to aluminum, the market response from both current and new customers across all markets has been incredible. To recap the project itself, the 650,000 metric ton per year aluminum flat roll facility will be located in Columbus, Mississippi. It is close to the Southeastern markets and well positioned to serve Mexico. It is on the KCS rail line, which connects us to Mexico to bring slab up and material back down and it also connects to Canada to bring primary aluminum down from those sources. We intentionally located it on the TVA power grid to allow for the supply of green energy and we have water access by the Tom Bigby waterway, ensuring good transportation structure for us. We attained an attractive incentive package with our current Columbus steel mill close by. This allows us to draw on that facility for talent and professional services, and there will be a transition or transfer of many of our employees there which will infuse our culture into that aluminum facility. We are excited about that. The mill itself will have on-site melt slab capacity of roughly 600,000 metric tons and will be supported by two satellite recycled aluminum slab casting centers—one will be located in the Southwest U.S. and one in SLP Mexico. Both sites are set for due diligence, and I believe it will serve us very well. The strategic thought was to place the slab centers in areas of surplus scrap, and both the California Western market and Mexico will have an abundance of UBC material. The mill will be equipped with the two cash lines, coating line, downstream processing, and packaging lines. We have actually expanded the product scope there to include additional scrap processing and treatment to maximize recycled content. It is a state-of-the-art facility, and we will be serving the sustainable beverage and packaging markets, both body and tam, as well as the automotive and industrial sectors. Breakdown would be 300,000 tons of can sheet, 200,000 tons for auto and about 150,000 tons for industrial. The principal equipment is on order, allowing for a firm startup of the mill by mid-2025. We believe the Mexican slab center will start up in the second half and the Southwest U.S. slab center in early 2025. The total project cost, including the recycled slab centers, has grown a little from our initial $2.2 billion estimate. The increase is somewhat associated with the finalization of the equipment costs. We have also added scope, as I mentioned, we put in a scrap processing and treatment and segregation at both slab centers, which has increased that number a little, and today, we estimate a firm budget of about $2.5 billion. It will be 100% funded with available cash and cash flow from operations, so there is no additional debt needed to push this forward. We clearly expect to see about $650 million to $700 million of through-cycle annual EBITDA, with an additional $40 million to $50 million arising from our recycled Omni Source efforts. From an investment perspective, we see the aluminum market, not unlike that in the steel industry, when we started SDI some 30 years ago. It is an industry that has older assets, little reinvestment over the years, heavy legacy costs, inefficiency, and high-cost operations. The advantage compared to any other steel market we have entered is there is actually a supply-side deficit. Every other market in steel has always been oversupplied, and we have had to use our culture and low-cost strategies to penetrate those markets. With aluminum, there is a clear supply deficit which will aid the ramp-up and profitability of that project. Business alignment is key, as this is an adjacent industry. This will allow us to leverage our core competencies in designing, constructing, and ramping up very large capital assets. It will enable us to leverage our recycling footprint—Omni Source is the largest North American recycler of nonferrous products, including aluminum. We recycle over GBP 1.2 billion, half of which is aluminum. I believe we will infuse the project with our culture, powering very low-cost, highly efficient operations. We are excited about this and the reception we are receiving from aluminum customers. Looking forward, we are certainly enthusiastic and passionate about our future growth opportunities as they will carry the high-returning growth momentum we have demonstrated consistent over the years. We were recently added to the S&P 500 Index, which I feel is a true testament to our people and to the financial strength and maturity of our company. We are arguably one of the top five steel producers in the world as measured by market cap today and the third largest in North America by capacity, and we certainly have the best financial metrics of any of our peers. All these achievements have been accomplished in a relatively short time frame, which could not be done without the phenomenal commitment of our extraordinary team. Everyone has had an impact and contributes each and every day. We are celebrating our 30th year in business later this year, and there are only better things to come. Our teams and the culture they create form our foundation, and I thank each of them for their passion and dedication. We are committed to their well-being, their health, and their safety. I remind those listening today that safety for yourselves and each other is our highest priority every day. Our success is also driven by the loyal support of our customers who have become partners and friends over the years, and together, we have created many innovative supply chain solutions that create value for all. We look forward to providing similar value and optionality to all our new customers as we expand our product offerings in the steel arena as well as in the new aluminum market. Finally, thank you to all that have invested in us. A growing number recognizes the power of our culture, the resilience of our business model, and the potential outsized returns that our significant yet disciplined growth will deliver. We eagerly anticipate creating new opportunities for all of us today and in the years ahead. With that said, I would love to open the floor up for questions.

Thank you. Your first question is from Emily Chieng of Goldman Sachs. Emily, you are now live.

Good morning, Mark and Theresa and thank you for taking my question. I would like to start with the aluminum rolling mill and what progress you have made there. I'm curious as to how many contract negotiations or discussions you have started to have with different customers. What end markets have you been targeting so far? And as you think about how Steel Dynamics may ultimately disrupt this industry, are there any indications that the pricing structure that we have historically seen in this industry could change?

Thank you, good morning and thanks for your question. I believe that when someone says disrupt an industry, that can be taken both positively and negatively. From our perspective, we look at it positively, creating optionality for the customer base. Many of our existing steel customers also buy and consume aluminum, so it creates further value for them. I do believe that our advantage, as we have seen over the last 30 years in steel, is that the power of our culture allows us to leverage state-of-the-art equipment, driving effective, highly efficient, and low-cost operations. In any commodity market, the low-cost producer will survive and thrive and allow for superior financial metrics through the cycle. The mill itself, coupled with our culture, the high recycled content we will enjoy, and improved yield impact, through the process, and low overhead costs will all combine to provide a low-cost solution and help us penetrate those markets effectively. Will that change the pricing environment? I don’t think so. We will initially be just a partial participant in that marketplace.

From a progress perspective, Emily, I think Mark mentioned earlier that we do have locations that we have in mind and we are negotiating right now for both of the recycled slab facilities plus we now have a location. There is a lot of excitement happening in Columbus, Mississippi. Last year, we spent just over $120 million on the investments going forward; just to recalibrate since we have an increased amount to $2.5 billion. In 2023, we are likely to spend somewhere between $900 million and $950 million in capital, in 2024, $1.2 billion, with the final $200 million to $300 million during the startup year of 2025. The teams are pushing forward very quickly.

Thank you very much, Mark and Theresa. On capacity, I would like to discuss capacity utilization, both for the industry and the company, as well as the expected ramp-up of the four value-added current lines. You have been operating at a higher capacity than the industry. The industry in the U.S. is running at around 70% to 75%. How long can this persist, especially as the prices are increasing? Supply discipline has been there so far, but some folks are doing as well as you by the numbers you have posted. How do you see the situation evolving? Mark, could you also comment on the ramp-up of the expected utilization of the four value-added lines? You mentioned you see 80% in 2023 for Sinton, but any color on the fourth order lines would be great.

Thank you, Carlos. You are quite the machine gun with questions there! From the ramp-up, I will work backward. The coating lines will undoubtedly be very strong; we have many galvanizing lines and prepaint lines throughout the company, and we will leverage all our technical resources there to get those lines up quickly. We certainly have the substrate available to fully load those lines. I think the ramp-up of those lines is expected to start in the second half, perhaps toward the fourth quarter, and they will ramp up quickly through the rest of the year into the following year.

As it relates to the first part of your question, Carlos, surrounding utilization for the industry—if you look back to more challenging times like 2015, for instance, our utilization still remained very high. This is due to the power of our pull-through volume, which we expect to see as well. We are optimistic for 2023 with the additional onshoring of manufacturing businesses, which you are seeing in reality, as well as with infrastructure programs and investment opportunities. We believe steel demand in the U.S. will continue to stay steady to potentially increase. Additionally, flat-rolled prices have improved recently, and we believe that they should, and that it will positively impact both industry utilization rates and ours specifically, which should remain steady to improving in 2023.

Hey, good morning guys. I wanted to ask about the downstream, the fabricate segment please. Just a little clarity, if you could, on the guidance. As I understand, you mentioned some slippage from very high levels but still above historical levels. Historically, EBITDA per ton prior to 2022 was $190 a ton, and in 2022 it was $2,850. I’m wondering if you could provide color on where we should fall between those two extremes. If you could share anything else it would be greatly appreciated.

One must recognize that the industry has gone through consolidation compared to a few years back, which has allowed for strong market pricing. As the year unfolds, we enter with a solid backlog through the middle of the year for sure. The order input rate is indeed down from the frenetic pace of 12 months ago, but it is still very solid. We believe it will be a good year for us. There may be some concern about economic uncertainty out there; however, we don’t see the gloom that others do. Our order input rates across all sectors, with the exception of a slight drop in residential, are solid.

Yes, thanks, good morning Mark and Theresa, how are you? I want to follow up on the fabrication comments. In the past, you mentioned you had backlog priced through the middle part of this year at pricing at $5,000 or higher. Could you confirm that? Since you are sold through the first part of this year, I assume you are now bidding projects; could you comment on price levels there? From what we have seen, delays or project pushouts, while some areas like data centers have shown weakness, others still seem strong like warehouses. What are you seeing in your backlog?

Good morning, Curt. Regarding pricing, we will not divulge specifics; however, you would have seen that pricing held steady in the fourth quarter from an average perspective. We have seen steady pricing in the backlog as well. I would err on the higher side for what is in the backlog, which is a reassuring sign of earnings resiliency in the fabrication business through at least the first half of 2023. The order backlog has broadened from being focused on distribution warehouses to include more infrastructure-type projects such as hospitals, schools, and churches, which we view positively. We expect very strong volumes for fabrication in 2023 from what we are seeing now.

To reiterate what Theresa mentioned, we are only seeing project cancellations with one customer unrelated to our backlog; so that is a limited issue. Reshoring is real, and that is supportive of our business. Considering the magnitude of some of the manufacturing facilities, particularly battery manufacturing facilities, will require a lot of joists and decks. Despite the reduction from the frenzied pace of 12 months ago, fabrication remains a very strong sector for us throughout the year.

Thank you very much. Can you share the shipments for Sinton this quarter and clarify the $430 million in startup costs impacting profitability? Can you also comment on the expected breakeven timeline regarding startup costs and guidance for what the startup impact might look like in the first quarter?

Yes, Sinton had shipments in the third quarter of just under 270,000 tons, which increased to just under 340,000 tons for shipments in the fourth quarter. We expect to see improvement in the first quarter and significant improvement in the second quarter of 2023. We still expect to see losses as we work through high-priced pig iron, which matches against lower steel prices compared to this time last year. The losses will improve over the fourth quarter but still be around the $10 million mark.

Thank you for taking my questions. Just to follow up on Sinton, can you share any EBITDA annual contribution you are anticipating for next year? Also, how does this compare to the normalized EBITDA target you mentioned given the slower startup and ramp-up of the coating lines in Q4?

Mark mentioned the ramp-up for the two additional value-added lines at Sinton is targeted for Q3 of 2023. They should ramp up fairly quickly to benefit our product mix. While we won't provide full-year guidance for Sinton’s EBITDA yet, I can confirm that the losses in 2022 exceeded $400 million, and we anticipate a shift to significant positive returns for 2023. This differential alone will provide a considerable momentum benefit to our earnings, but it’s too early for precise estimates as we are still ramping up production.

The higher demand translates to price support and market dynamics. Our operations are already running at a high utilization rate. Further demand will bolster our capabilities, especially for Sinton. In terms of market sectors, we are seeing strong demand in Texas's energy sector as well as challenges with imports, which will create good demand dynamics moving forward.

Thank you very much. Just one question for me. Switching gears to the long steel segment, what are you observing in potential new orders from the infrastructure bill, the IRA? Are you seeing anything yet there? We have seen rebar prices declining for the last six months but don't feel like the infrastructure build has abated. What are you observing to halt the rebar price decline?

As we've suggested previously, we aren't heavily involved in the rebar markets. However, from our structural long products perspective, the infrastructure bill or spending has not kicked in yet, which typically takes six to nine months to materialize. By summer, I expect we will see some benefits.

Hi, good morning Mark, good morning Theresa. Thank you for today’s call. Could you share your thoughts on dividend outlook? Last year, you raised the dividend substantially. Given symptoms and considering that Sinton was a drag in 2022, what are your thoughts for 2023?

I smile because Mark tends to pass questions my way, and that's usually how it goes. From our perspective, we strive to continually grow the dividend consistently. Since 2017 we have increased the dividend by almost 120%. We like to do this in sync with free cash flow increases like Sinton. As we look forward, we expect a significant increase and typically announce those in the first quarter. We have more projects coming online in 2023 contributing to through-cycle earnings. Given our recent stock performance, we anticipate strong shareholder distributions continuing, including a robust dividend increase.

Thank you. I have a question about the non-scrap cost of goods sold per ton. Taking total corporate revenues and pretax per ton and subtracting scrap profits, it peaked years ago at 673 and was only 4.56% this quarter. Are the larger contributors to that due to the much lower price of purchased steel for galvanizing and painting? Are lower profits and improvement from Sinton as it ramps up significant factors?

Great to have you on the call as always, and thanks for the question. The biggest parameters are indeed substrate costs. We ramped up the substrate for the tech lines at Sinton. We pre-purchased a significant amount to load the downstream coating lines as we prepared for the hot mill startup, so that is definitely influencing our costs.

The point you made was spot on as well. It also has to do with mix. With the increase in our fabrication business, we would have seen some change there. So I think it is both mix and what Mark talked about regarding the steel substrate.

We have tended to not share specific non-scrap costs of goods sold guidance in the past, and I prefer to maintain that approach. However, I would emphasize that our conversion cost is among the best in the industry. Many do not recognize the offsetting efficiency of volume flow. Our process lines over the years have continuously improved productivity, allowing us to maintain costs for those lines.

Thank you.

Thank you very much. There appear to be no further questions in the queue. I will now turn the call back over to Mr. Millett for any closing remarks.

Thank you and thank you to everyone on the call for your time today. Certainly, thanks to our team. I want to remind each of you that you do contribute, you impact our success. Stay safe and look after your compatriots. We could not succeed without our customers. I would like to reiterate my appreciation for those who have invested in us. A growing number are realizing the strength of our culture; we are indeed different, and we drive unique results. Our business model positions us for higher through-cycle cash generation than our peers. I hope that you are starting to see that our disciplined capital allocation strategy, particularly on acquisitions, supports our robust results. Interestingly, if one measures earnings power per employee, we exceed any competitor in our sector. This reflects on our overall efficiency and effectiveness, strategic decisions made over the years, which we expect will increasingly drop to the bottom line. For investors supporting us, thank you again, and with that said, have a great day.

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