Steel Dynamics (NASDAQ:STLD) reported second-quarter financial results on Tuesday. The transcript from the company's second-quarter earnings call has been provided below.
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Summary
Steel Dynamics Inc reported strong Q2 2026 performance with record quarterly steel shipments of 3.7 million tonnes and an adjusted EBITDA of $921 million.
Net income for Q2 2026 was $534 million on revenues of $6.1 billion, driven by higher steel pricing and shipments.
The company expects improved results in Q3 due to recent steel price increases and strong demand in various segments, including steel fabrication and aluminum operations.
Steel Dynamics Inc's aluminum operations showed progress with increased shipments and reduced operating losses, anticipating higher volumes and profitability in the latter half of 2026 and into 2027.
The company maintains a strong capital allocation strategy, focusing on high-return growth opportunities and shareholder returns, with plans for continued share repurchases and dividend growth.
Management highlighted strong operational execution, strategic market diversification, and a commitment to achieving a zero-incident safety environment.
The company reported liquidity of $2 billion and capital investments of $124 million in Q2, with second-half investments expected between $300 and $350 million.
Strategic growth initiatives, including the Sinton steel mill and aluminum platform, are projected to provide significant future earnings and cash flow contributions.
Steel Dynamics Inc emphasized the importance of maintaining competitive advantages through trade policies and strategic partnerships, particularly within the aluminum and steel markets.
Full Transcript
OPERATOR
Good day and welcome to the Steel Dynamics Inc second quarter 2026 earnings conference call. At this time, all participants are on 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, July 21, 2026, and your participation implies consent to our recording of this call. If you do not agree to these terms, please disconnect.
At this time, I'd like to turn the conference over to David Lipchitz, Director, Investor Relations. Please go ahead.
David Lipchitz, Director, Investor Relations
Thank you, Matthew. Good morning and welcome to Steel Dynamics Inc second quarter 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, Teresa Wagler, Executive Vice President and Chief Financial Officer, and Barry Schneider, President and Chief Operating Officer. The other members of our senior leadership team are joining us on the call individually.
Some of today's statements, which speak only as of this date, may be forward-looking and 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 risks 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 Statement and Risk Factors, found on the internet at www.sec.gov and, if applicable, in any later SEC Form 10-Q. You will also find any referenced non-GAAP financial measures reconciled to the most directly comparable GAAP measures in the press release issued yesterday entitled Steel Dynamics Inc reports second quarter 2026 results.
And now I'm pleased to turn the call over to Mark Millett.
Mark Millett, Chairman and Chief Executive Officer
Thank you, David, and good morning, everyone. Thanks for joining us this morning for our second quarter 2026 earnings call. As reported, our teams achieved a strong second quarter financial and operational performance. The quarter highlights included record quarterly steel shipments of 3.7 million tonnes, adjusted EBITDA of $921 million. We achieved meaningful milestones across our aluminum and Sinton platforms. It's exciting to watch a long-term vision translate into operational success, customer partnerships, and growing value creation.
We have an amazing team of people that achieve best-in-class performances each and every day, and I'm just simply honored to be one of them. But sadly, one of our new team members, Elijah Jones from New Process Steel, was fatally injured in an accident that occurred while work was being performed on equipment this past April. It is gut-wrenching for everyone to experience such an event, and our prayers and thoughts continue to be with Elijah's family, friends, and teammates.
We often say safety is our most important cultural pillar and value. Our world-class safety culture continues to evolve, and our team's unwavering dedication to our Take Control safety philosophy must continue to strengthen even further. I'm continually inspired by the commitment our team members demonstrate towards one another. They operate as a family, supporting each other while challenging the status quo and striving for continuous improvement every day.
We are resolute and committed to achieving a zero-incident environment and will not be satisfied until that becomes a reality. But before I continue, I'd like Teresa and Barry to both add color to the quarter's results. So, Teresa, thank you.
Teresa Wagler, Executive Vice President and Chief Financial Officer
Mark, good morning everyone. Thank you for joining us this morning. For the second quarter of 2026, our net income was $534 million, or $3.69 per diluted share, with adjusted EBITDA of $921 million. Second quarter 2026 revenues were $6.1 billion, and operating income was $700 million, higher than sequential first quarter results, driven by higher realized steel pricing and record steel shipments. Steel operations generated operating income of $721 million in the second quarter, a 30% sequential increase as average selling prices per ton increased $105.
Value-added spreads to hot band have also improved $70 per ton from the lows experienced in the fourth quarter of 2025. As the largest flat rolled steel coater in North America, this will be especially beneficial moving forward. As a reminder, approximately 80% or more of our flat rolled steel business is linked to lagging price contracts in aggregate, generally lagging two months. So the more recent flat rolled steel price increases and further improved value-added product spreads will positively impact our third quarter results.
Additionally, demand and related pricing for our long product steel group is especially strong with demand and pricing continuing an upward trend. Second quarter 2026 operating income from our metals recycling platform was $48 million, in line with sequential earnings as increased shipments offset lower steel metal spread. Scrap flows also remained seasonably strong with ample supply. Our steel fabrication team achieved second quarter operating income of $85 million, aligned with first quarter results of $90 million, as increased volume and steady pricing were offset by higher steel raw material input costs.
Our fabrication business generally maintains between 10 to 12 weeks of steel inventory, which can tighten margins in a rising steel price environment. Our steel joist and deck business is experiencing strong demand and order activity. As a result, our order backlog is 45% higher now when compared to this time last year. We are also seeing increasingly constructive price discussions. This trend reflects improving market fundamentals and healthy demand conditions.
The aluminum team's execution is amazing. Mark will provide the details later on the call. As for the financial impact, second quarter 2026 operating losses associated with the continued startup and commissioning of our aluminum operations were $33 million, a 48% improvement over sequential results. There was also an additional non-cash impairment charge of $16 million related to the relocation of our second planned recycling center. Aluminum flat rolled sheet shipments increased to 53,000 metric tons in the quarter from 22,500 metric tons achieved in the first quarter of this year.
We expect volumes and profitability from the aluminum rolling mill to increase sharply in the second half of 2026 and into 2027 as the third cold mill is brought online in the third quarter, as startup costs subside, utilization and yields improve, and scrap content increases. In the second quarter, we generated cash flow from operations of $428 million. Cash was reduced by $225 million due to working capital growth that was primarily associated with increased customer account values as product pricing improved throughout our businesses and aluminum flat rolled sheet sales continue to climb.
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 billion, comprised of cash and investments of $800 million and our fully available unsecured revolver of $1.2 billion. During the second quarter, we invested $124 million in capital investments and invested $262 million year to date. We believe the second half of 2026 capital investments will be in the range of between $300 and $350 million.
In the first half of 2026, we increased our cash dividend and we repurchased $350 million of our common stock, with $489 million remaining authorized for share repurchases at the end of June. These actions reflect the strength of our capital foundation and cash flow generation capability and the continued confidence we have 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 over the last five years from an annual average of $540 million between 2011 and 2015 to $2.4 billion for the most recent five-year period. And there's more to come. Over the past several years, we have invested more than $5 billion in three transformative organic growth initiatives: our Sinton steel mill value-added coated lines and aluminum flat rolled products platform. 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 ramp and mature, we expect them to generate meaningful earnings and related cash flow. Collectively, these projects are estimated to provide over $1.4 billion of through-cycle annual EBITDA capability, representing a significant opportunity to enhance our future growth, profitability, and shareholder return. 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.
Barry Schneider, President and COO
Thank you, Teresa. Our steel fabrication operations performed well, delivering solid earnings as increased demand and steady realized pricing helped offset higher steel input costs. Order activity has been stronger than we have seen in a number of years. The increased demand has been led by several large markets, reducing the risk that any single sector derails the overall positive trajectory. The Dodge Momentum Index, which generally leads construction spending by a 12 to 18 month window, increased to its highest recent level, up more than 30% year over year.
The increase was driven by commercial planning accelerating institutional activity, led by health care. The long-range project pipeline appears robust, supporting that idea. Contractor project backlogs also stood at over nine months in May, which is near the highest level in several years. Our steel fabrication order backlog was up over 45% compared to this time last year. We are also beginning to see improved pricing. We continue to have high expectations for the business this year due to positive customer sentiment, quoting activity, continued manufacturing onshoring, and public funding for infrastructure and other fixed asset investment programs. The uplift from this macro environment could be considerable. Our steel fabrication platform provides meaningful support for our steel mills, particularly critical in softer demand environments, allowing us to operate at higher through-cycle utilization rates than our peers.
This also helps mitigate the financial risks associated with lower steel prices. Our metals recycling operations performed well during the quarter, benefiting from increased scrap availability and higher shipments as improved weather conditions supported stronger seasonal collection activity. We currently expect scrap pricing to stay relatively steady in the coming months. The North American geographic footprint of our metals recycling platform provides a strategic competitive advantage for both our steel mills and our scrap-generating customers.
In particular, our Mexican operations strengthen the raw material positions of our Columbus and Sinton facilities. They also provide strategic support for aluminum scrap procurement for our flat rolled aluminum investments. Our metals recycling team is partnering even more closely with our steel and aluminum teams to expand scrap separation capabilities through enhanced processes and technology. This will help mitigate potential prime ferrous scrap supply challenges over time and provide a meaningful advantage in increased recycled content in our aluminum flat rolled products while also expanding our earnings opportunities.
The steel team delivered a solid quarter with record shipments of 3.7 million tons during the second quarter 2026. The domestic steel industry operated at an estimated production utilization rate of 81% while our steel mills operated at 90%. We consistently achieve higher utilization due to our value-added product diversification, differentiated customer supply chain solutions, and the support of our internal manufacturing businesses. This higher through-cycle utilization is a key competitive advantage supporting our strong and growing cash generation and best-in-class financial metrics.
Regarding flat rolled steel markets, conditions are strong as solid demand and lean inventory levels support a tight market environment. Lead times are elevated and customers continue to express optimism within flat rolled steel. We are also seeing continued improvement in value-added pricing spreads which have returned to more normalized levels, benefiting from the impact of the core trade cases successfully resolved last year. Long product steel markets are also strong, driven by strength in non-residential construction.
We believe this strength will continue, especially within structural steel and railroad products. Special bar quality markets are also improving across multiple sectors including industrial manufacturing and energy-related markets. Regarding the steel market environment, North American automotive production forecasts for 2026 are to remain in line with prior year. Despite a generally stable production environment, our specific automotive customer base continues to present us opportunities.
We have strengthened our position as a supplier of choice for many U.S.-based European and Asian automotive producers, driven in part by our lower carbon content steel offerings and differentiated value-added product capabilities. I already mentioned the strength of the non-residential construction market related to steel fabrication. This holds true for long product steel as well. Our platforms continue to benefit from ongoing reshoring trends and domestic manufacturing investments which are supporting sustained demand across our end markets.
In the energy sector, oil and gas activity remains strong with pipe manufacturers already looking into 2027 projects. Demand for the solar market also continues to be very robust. Additionally, we are seeing improved demand from the agricultural sector, although residential construction activity remains relatively subdued. We remain optimistic about demand for our diversified portfolio of value-added steel products and believe our end market exposure positions us well.
Regarding trade policy, we believe in preserving a strong, durable trade framework that provides operational viability for U.S. steel producers by disallowing unfairly traded foreign products. The current Administration has based a 50% Section 232 tariff for imported steel on national security matters, fully supporting the industry long term. We are also actively engaged with the USTR regarding the USMCA review to ensure there are no weakening regarding our protections, including melted and poured provisions.
The Administration has launched new Section 301 investigations targeting countries that both flood the market with excess steel and rely on forced labor in its production. We are specifically advocating for these remedies to be additive to the existing 232 steel tariffs. We are advancing legislative and regulatory priorities to create meaningful demand for our steel, particularly through investments in infrastructure, shipbuilding and the power sector.
On the demand side, we're working closely with Congress to strengthen Buy American steel requirements in the Ships for America Act and the Federal Highway Bill, turning large public spending vehicles into volume opportunities for our steel businesses. Now back to you, Mark.
Mark Millett, Chairman and Chief Executive Officer
Thank you, Barry. Thank you, Teresa. All well said. Consistently achieving such positive results year upon year doesn't just happen. It reflects the dedication of our teams and the effective strategies we have developed and executed over time. We have invested strategically to successfully achieve significant scale, high-margin product-to-market diversification, efficient and unique customer supply chains, and synergistic operating platforms to optimize market opportunities throughout economic cycles.
When combined with our performance-driven compensation culture, these strategies enable us to consistently achieve at the highest levels 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 drives 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 in the industrial sector. The most recent and most significant current investment is in aluminum flat rolled products and, as I mentioned in the last call, the excitement and the pride of the aluminum team is absolutely incredible. It is inspiring to watch them transition from construction and commissioning into full-scale production, serving customers with the high-quality products they expect from Steel Dynamics Inc. The teams outperformed all expectations, constructing and commissioning an incredible facility in industry-leading time. Competitors and customers alike that have toured the mill were amazed at the quality and the capability of the plant and the speed of product qualification. The team's 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 though, we are 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 metric tons of aluminum sheet, and that shortfall is forecast to widen as demand continues to grow across key end markets. Combined with appropriate tariffs on imported aluminum products, this supply imbalance is further strengthening the value proposition for domestic producers.
And we believe our aluminum platform is exceptionally well positioned to capitalize on the growing domestic demand, creating substantial long-term value for our shareholders. This investment is in clear alignment with our core competencies. Our construction capabilities have once again been proven. Both Columbus and the cast house at San Luis Potosí are state-of-the-art facilities built cost effectively and in record time. We're using our deep operational know-how in combination with the technical expertise of aluminum industry experts, and our proven incentive-driven performance culture will drive higher efficiency and lower cost operations compared to the competitors. We also believe we have an advantaged commercial position. Two-thirds of our existing carbon flat rolled steel customers also consume and process aluminum flat rolled sheet. Our growth in the automotive sector will complement our existing steel position and provide customer material optionality. The beverage can market will provide countercyclical market diversification, and the more stable earnings profile within the aluminum space will further enhance the consistency of our through-cycle cash generation.
Our metals recycling platform will facilitate higher recycled content. We're the largest North American metals recycler, which includes aluminum. Our knowledgeable teams have developed new separation technologies, amplifying the supply chain value while providing greater access to usable aluminum scrap. So production to date is confirming our expected cost differentiation when operating at our nameplate capacity and expected product mix through-cycle.
EBITDA expectation for normalized market conditions remains at $650 to $700 million, plus another $40 to $50 million for our metals recycling platform. Operating experience today, albeit in ramp-up, is verifying the five key competitive cost, labor efficiency, higher recycled content, higher yields, optimized logistics, all driven by a performance-based operating culture utilizing state-of-the-art equipment. This strategic investment is cost effective and a high-return growth opportunity, providing Steel Dynamics Inc with additional countercyclical diversification while further stabilizing and growing our cash generation capabilities.
The customer base is proving to be eager for a new market entrant, one that is known to be innovative, customer focused, and responsive. We view business relationships as long term, founded on trust, with a continuous goal of creating mutual value, not just simply financial value, but we will provide new supply chain solutions, new products with preferred quality and service. 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 their support have been invaluable and we remain focused on delivering the highest quality products, reliability, and the service they deserve. The hot side is fully operational with the ability to run at rated capacity. Two of the three cold mills continue to increase production while the third and final cold mill started this month.
This will allow us to have the full 650,000 metric ton annual capability. The first of two automotive continuous anneal and 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 6000 series alloys. I think you would agree it's an absolutely phenomenal achievement when you consider the mill has only been running for a little around 12 months. The second casthouse line is expected to start commissioning in the fourth quarter of this year. The team is incredibly excited with the earlier-than-anticipated product certifications. It's 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 and great momentum as we move through construction, commissioning and ramping of the various production units. We're encouraged by our progress with expectations for significant cost and product mix optimization benefits to occur in the near term. We believe volume operations will increase sharply in the second half of 2026 and continue improving through 2027 as startup costs subside, utilization and yields improve, and scrap content increases.
The aluminum flat rolled mill itself produced 84,000 metric tons in the second quarter, which is approximately 50% of capability, with expectations to exit 2026 at a monthly production rate of at least 90% capacity, allowing for full volume capability in 2027. 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 this through-cycle earnings potential of over 1.4 billion from our recent growth projects is becoming a reality.
Capital funding is substantially complete and operational optimization is our focus for both our recent flat rolled steel and aluminum investments. I'm encouraged by the growing recognition among our teams, our 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 mercantilist global trade environment.
This will help maintain a more level playing field through continued and appropriate trade enforcement mechanisms. As Barry described, we expect continued growth in fixed asset investment which remains a key driver of demand for metal products. New and reshoring of manufacturing continues to gain momentum and, together with growing fixed asset investment, will continue to support nonresidential construction activity as decarbonization initiatives accelerate.
The resulting increase in cost structures across the world will materially steepen the global cost curve, enhancing Steel Dynamics Inc 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've said many times before, our people are our foundation.
I thank each of them for their passion, their dedication and commitment to our success. As they are committed to us, we are also committed to them. I remind each teammate listening today, nothing is more important than safety for you, your families and one another. Please keep Elijah's family, friends and teammates in your prayers and resolve to work even smarter and harder to achieve an incident-free workplace. I also thank our loyal customers. As I said previously, our partnerships are built on trust, delivering on our commitments and collaborating to create innovative solutions and value.
And finally, I thank our suppliers and service providers. Your partnership, trust and support are essential to what we do each and every day and to our continued success. So together as a team, we look forward to creating new opportunities and shared success today and in the years ahead. With that said, Matthew would love to answer questions.
OPERATOR
Thank you. If you'd like to ask a question, please signal by pressing the star key followed by the digit 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. If you pressed star one earlier during today's call, please press star one again to ensure our equipment has captured your signal. Also, we ask that you please limit yourself to one question and one follow-up to facilitate time for everyone.
Any additional questions can be addressed upon re-entering the queue. Your first question is coming from Lawson Winder from Bank of America. Your line is live. And once again, Lawson, your line is live.
Satish, Analyst at Bank of America (on behalf of Lawson Winder)
Yeah, hi. Thank you, operator. This is Satish on for Lawson. Good morning, Mark, Teresa and Barry. My first question is on the steel fabrication operations. You mentioned that the ordering activity is strong and that the backlogs are 45% higher year on year and the pricing is beginning to improve. Yet the pricing realized for Q2 was a bit lower than Q1. So how should we think about the pricing or the margin outlook for the second half of 2026?
Teresa Wagler, Executive Vice President and Chief Financial Officer
Satish, thanks for the question. As it relates to the pricing, the pricing that's going into the backlog right now is at improved levels, but that doesn't necessarily mean that that's realized in the second half of this year. Some of those projects are in the fourth quarter and actually being placed into 2027. So you'll continue to see pricing, I think, remain pretty stable as far as from a realized pricing perspective. But the increases you should expect to see probably in the next six to nine months from a pricing perspective.
Barry's nodding. That means I got it right. But yeah, and then, you know, also just take into consideration what we're seeing in the steel side of the equation for steel input costs. But that said, volume is expected to be really strong for the second half of this year and into next year for fabrication. And volume helps offset some of that.
Satish, Analyst at Bank of America (on behalf of Lawson Winder)
Thank you. Of that 45% higher backlogs, is there any way you can share how much of it is volume versus pricing?
Teresa Wagler, Executive Vice President and Chief Financial Officer
Satish, you cut out a little bit. You said for the 45% increase in order activity. What was the question? I'm sorry, you broke up.
Satish, Analyst at Bank of America (on behalf of Lawson Winder)
How much is related to pricing versus volumes?
Teresa Wagler, Executive Vice President and Chief Financial Officer
Although the 45% increase is volume specific, it's not pricing specific.
Satish, Analyst at Bank of America (on behalf of Lawson Winder)
Okay, thank you.
OPERATOR
Thank you. Your next question is coming from Nick Cash from Goldman Sachs. Your line is live.
Nick Cash, Analyst at Goldman Sachs
Hi, team. Good morning and thank you for taking the question. Just a question on aluminum on the shipments of 53,000 tons this quarter. I guess my first question is what was the mix on that? I think in 1Q you mentioned it could potentially shift a little higher on the bevcan side.
Barry Schneider, President and COO
Yeah, it shifted. The predominant increase was can sheet. We're also finishing up automotive hot band shipments and some industrial. You got to remember we're commissioning and ramping up and starting up. So there's no way, even though I wish it would be this way, that we'd be optimal in anything we do. In all honesty, although the team is doing a phenomenal job, where they are at this moment in time we are using probably in the order of about 80% scrap for our can sheet, give or take a little bit.
That will continue to grow. Automotive, I believe we're probably sort of 40/60 P1020 and scrap at this moment.
Nick Cash, Analyst at Goldman Sachs
That's very helpful. Thank you so much. I'll pass it on.
Barry Schneider, President and COO
Thank you.
OPERATOR
Your next question is coming from Carlos de Alba from Morgan Stanley. Your line is live.
Carlos de Alba, Analyst at Morgan Stanley
Yeah, thank you. Good morning, Teresa, Mark and Barry. On the aluminum, remaining on the aluminum business: beyond the impairment, the $16 million impairment, is there any impact on CapEx, operating cost and ramp-up schedule? Or maybe the ramp-up schedule is going to be delayed because of moving the location of your casthouse in the U.S.?
Barry Schneider, President and COO
I would say operationally only incremental — the logistics of bringing — because we'll still be sourcing UBCs from the West Coast, although it'll only be about 60–70% as opposed to the 100% that would have gone in the mill. But that's just incremental cost. OpEx would be the same. Again, we took the $16 million write-down for Benson costs and the CapEx at Columbus is going to rise, I think, in the order of 10 to 20 million dollars. And that's, in all honesty, more to do with just inflation of construction contractors more than anything else.
But the move is not significant. But as you point out, obviously the ramp is delayed for internal supply.
Carlos de Alba, Analyst at Morgan Stanley
Mark, when do you expect maybe this second casthouse to be at 100% utilization, or the ramp-up schedule?
Mark Millett, Chairman and Chief Executive Officer
Certainly first half of next year.
Carlos de Alba, Analyst at Morgan Stanley
All right, great, thank you. And if I may very quickly, Teresa, any comments on working capital? EBITDA came ahead of expectations but obviously working capital was higher because of pricing primarily. How do you see working capital in the third and second half of the year, third quarter and second half of the year?
Teresa Wagler, Executive Vice President and Chief Financial Officer
Yeah, no, it's a fair question. So working capital really did increase in the second quarter more than we anticipated. But that was based on company-wide increases in pricing across all the operations, which is good because the customer accounts remain very strong. So that's eventual cash flow. But we see that working capital should be a funding to certainly neutral, but I would suggest a funding source in the second half of the year.
Carlos de Alba, Analyst at Morgan Stanley
Thank you.
OPERATOR
Thank you. Your next question is coming from Martin Englert from Seaport Research Partners. Your line is live.
Martin Englert, Analyst at Seaport Research Partners
Hello. Good morning everyone.
Teresa Wagler, Executive Vice President and Chief Financial Officer
Good morning.
Martin Englert, Analyst at Seaport Research Partners
Kind of a follow-up question on moving this slab facility but related to the rolling mill in Columbus. If there was some greater upstream slab capability at the Columbus location or elsewhere, what's the maximum capacity of the rolling asset? If there were no slab constraints upstream?
Barry Schneider, President and COO
It's 650. The rolling mill has a maximum capacity of 650,000 metric tons per year.
Martin Englert, Analyst at Seaport Research Partners
Okay, so there's no constraints upstream. If you add additional slab casters or something, you won't get more capacity out of it?
Barry Schneider, President and COO
Correct, yes. But I would stress the 650 is nameplate, and our teams always seem to be able to squeeze a little bit more out of it. But that's not going to be seen for two or three or four years.
Martin Englert, Analyst at Seaport Research Partners
Okay, understood. If I could, one follow-up. If you could just explain the difference for aluminum products between the cash line product that you're working on for automotive applications and a CALP line product. And if there's any asset crossover there, does adding something like a surface treatment line allow you to produce CALP in the future or is it more nuanced than that?
Barry Schneider, President and COO
I can't give you the nuances of the differences in technology, in all honesty, between the — you said cash line and CALP line. Continuous annealing line with pretreatment tends to lean, I think, towards more exposed automotive. We — the cash line, we have the pretreatment and everything is fully capable of exposed automotive. I do believe — in fact, I'm pretty damn sure — because it's already been shipped and qualified by a couple of automotive guys over in the States.
Martin Englert, Analyst at Seaport Research Partners
Okay. Appreciate the detail. Thank you.
Barry Schneider, President and COO
Thank you.
OPERATOR
Your next question is coming from Tim Natanners from Wells Fargo. Your line is live.
Timna Tanners, Analyst at KeyBanc Capital Markets
Hi, good morning. I wanted to ask about the broader aluminum guidance still at 650 to 700 million through-cycle profitability. Just wondering, of course in light of the higher aluminum futures market from when you first announced the project, in light of the pretty sticky lower cost for scrap, what does it take to start thinking about a different forecast there?
Mark Millett, Chairman and Chief Executive Officer
Timna, it's a great question, but we are fully focused on the job at hand and that's just executing, getting things up and running. I would say there's absolutely no doubt, as I said, even though we're in ramp-up, we can see that the plant will clearly demonstrate the 650 to 700 in a normalized environment. So if today's environment remains, then obviously there'll be some upside. But we're not contemplating that or not calculating that.
Teresa Wagler, Executive Vice President and Chief Financial Officer
Well, actually, Timna, you and I have spoken about it and we've spoken about it at the conferences. The full intent is to allow the teams to get the cost structures aligned, get to using more scrap content, et cetera. All the things that Mark mentioned, which we think will take through the third quarter, because remember, we're just getting the third cold mill up and running in July/August timeframe. The last cast line will be fourth quarter. So we want to make sure that we actually have everything dialed in before we start to talk about numbers that are higher than what we've suggested in the past.
But you're not wrong in the fact that the spreads available today are considerably higher than what we would have included in our 650 to 700. And in time, in the shorter term rather than longer term, we will address it.
Timna Tanners, Analyst at KeyBanc Capital Markets
Okay, that's helpful. Thanks. One follow-up, if I could, on aluminum. So of course there's been a lot of attention recently on some incentives to focus on primary aluminum capacity built in the U.S., but in a way you're also adding aluminum capacity through producing slabs from scrap. Right. So is there not any discussion with the administration of also incentivizing or supporting this alternative source of aluminum that is also adding to our national security of aluminum in this country?
Mark Millett, Chairman and Chief Executive Officer
I would say yes, that there are discussions, but going back to your point, Tim, the smelting, the primary aluminum that they're producing is just that — it's primary aluminum. I don't believe they intend to put in any ingot casting initially. So it's not actually affecting the ingot market.
Timna Tanners, Analyst at KeyBanc Capital Markets
Okay, great. Thank you.
Mark Millett, Chairman and Chief Executive Officer
Thank you.
OPERATOR
Your next question is coming from Katja Jancik from BMO Capital Markets. Your line is live.
Katja Jancik, Analyst at BMO Capital Markets
Hi. Thank you for taking my questions. Mark, earlier you mentioned that the aluminum mill was operating at about 50% utilization rate during 2Q. Can you talk a bit about how the utilization rate progressed throughout the quarter?
Mark Millett, Chairman and Chief Executive Officer
It was kind of sequential. It just ramped up month over month.
Katja Jancik, Analyst at BMO Capital Markets
So. And what was the exit rate utilization? Could you provide that?
Mark Millett, Chairman and Chief Executive Officer
It was significantly higher in the June timeframe, so we averaged 50% for the quarter. So it was probably, you know, closer to maybe that 60%. And again, the team feels super good about that, given the fact that we started up about nine months ago and the fact that we're actually now producing automotive quality, can sheet quality, and we're ramping up pretty quickly. But I think what you should expect to see is in the second half of the year that ramp is forecast to accelerate pretty dramatically as we get the third cold mill, because we need that cold mill to reach the optimal capability of the rolling mill itself.
So more to come. But we think it should be a much steeper ramp in the second half of the year.
Katja Jancik, Analyst at BMO Capital Markets
Okay, maybe. And I fully recognize that this is still early, but can you remind us how we should think about Capex next year or what a reasonable range could be?
Teresa Wagler, Executive Vice President and Chief Financial Officer
Absent—so we're doing our longer-term capital planning, Katja, kind of in the next month or so, but absent any significant additional items, I would think that we'd probably be in the range of that 500 to 600 million dollars at maximum. Our sustained capital really is only around 250 to 300 million dollars. So if it was that amount, we would have some growth capital embedded in that as well. But we're really not talking about 2027 yet in much granularity.
Katja Jancik, Analyst at BMO Capital Markets
Okay, thank you.
OPERATOR
Thank you. Your next question is coming from Tristan Gresser from BNP Paribas. Your line is live.
Tristan Gresser, Analyst at BNP Paribas
Yes, hi. Thank you for taking my questions. It's on the steel division. ASP went up quite a lot in Q2. Scrap prices were relatively steady. But EBITDA per ton, I think, is only up $60 per ton, which is already pretty great. But what sort of other cost increases have you seen in the quarter? And how should we think about Q3 from a cost perspective?
Barry Schneider, President and COO
Tristan, I would say as Teresa mentioned, our contracts have a lagging nature to them. So most of those are turning over into the higher pricing that we've seen through Q2. So we look forward to pricing increasing. We do believe scrap will go sideways. As far as other cost structures, we haven't seen significant impacts on any of our cost streams. So we manage all those for the long haul. And right now we're really concentrating on making sure we're on time for our customers and running at high utilization rates.
We did have the teams had some maintenance outages at our three flat roll mills, but those are normal course, but would have increased cost a little bit. Yeah. In Q2, we led with all the mills having an outage, which is somewhat unusual, but it was the right time to take care of the stuff. So some of the costs were embedded in that — what you saw as the COGS in Q2.
Tristan Gresser, Analyst at BNP Paribas
Okay, that's clear. And on the steel division, I think for fabrication, you talk about a pretty strong H2 outlook from a volume perspective. How should we think about your H2 outlook for the steel division?
Barry Schneider, President and COO
The steel plants are all running with excellent backlogs right now. We are enjoying strength in all of the markets we participate in. Now that the spreads between the galvanized and the paint have resumed to somewhat normal, we're very bullish on what our coating facilities can do for us. And our customers are all anxious to keep good business going. So we remain really optimistic of where the steel plants are, and that's across the divisions. Long products, flat, all of our market segments.
Teresa Wagler, Executive Vice President and Chief Financial Officer
Just to—correct me if I'm wrong, Barry, but just to calibrate that spread, I think we began the year it was like 100 bucks.
Barry Schneider, President and COO
A little less than $100 between galvanized and hot rolled coils.
Teresa Wagler, Executive Vice President and Chief Financial Officer
And that was 200.
Barry Schneider, President and COO
A little over 220 or so.
Tristan Gresser, Analyst at BNP Paribas
Okay. All right. No, that's clear. And maybe one quick follow-up on the cost structure for the steel division. I mean, we're starting to see some noise around electricity costs rising for U.S. steelmakers. If you can share maybe your latest dollar per ton energy cost. And how do you expect that to evolve moving forward and remind us maybe of your new contract structure for steel and aluminum as well. That could be interesting. Thank you.
Barry Schneider, President and COO
Electricity—certainly there's a lot of discussion nationwide about electricity and the demand levels. We've seen the relative demand stay steady over the last couple years. There is certainly concern about large users like data centers coming in, and that is a regional thing. We have completely different contracts at each of our steel facilities. That's just the nature of large loads. But we are seeing ample support from all of our utility providers.
We do benefit from running every hour of every week. So there are times at night when it's low demand that pricing reflects that. Our teams are very responsive. They see the real-time pricing in their pulpits. They make good business decisions based on that information. So we see the markets around us move, but we're able to continuously run hard and optimize how we use that electricity, which is just as important. So we don't see any aberrations short term.
But we are concerned about the buildout and generation being added to the grid. We also want to see a more reliable grid — the grid itself. There's areas in the country where reliability is a concern. So we continue to work with our utilities and make sure they know what we do, how we consume power, and we support them. And as far as aluminum, that's more of a natural gas play. And I think where the storage is, we're comfortable. And again, we buy our energy wisely, we look at our needs, and we work with our providers regularly to make sure we're doing what they need us to do to be good customers, and we help them be better suppliers for us.
Tristan Gresser, Analyst at BNP Paribas
All right, perfect. Thank you.
OPERATOR
Thank you. Your next question is coming from Samuel McKinney from KeyBank Capital Markets. Your line is live.
Samuel McKinney, Analyst at KeyBank Capital Markets
Hey, good morning.
Barry Schneider, President and COO
Good morning.
Samuel McKinney, Analyst at KeyBank Capital Markets
Granted, we're coming off a low base, but steel imports have increased month over month over the last couple of months. And July is up noticeably versus June. Any concern on your end that steel pricing levels have finally caused customers to start seeking foreign sources in a more aggressive way?
Barry Schneider, President and COO
Samuel, I would add to that—this is Barry. We are seeing certain countries shipping through the 232s. The offset pricing in the Asian markets has a lot to do with that. So the administration is looking closely at what these rates are. But we've been seeing very high accelerated rates of all steel exports from primarily three countries in Asia. These are disruptive. It is a response to their economies needing to export. The predatory mercantile economies have to find somewhere in the world to put their goods.
We are hoping the administration looks at what quotas were in place in some of these countries prior and they look at what exactly the 232 was meant to do and try to rein it back in. We believe the short-term disruption of these imports will hopefully be abated here in Q3, Q4. But we remain competitive with all our customers and the dialogue of getting steel when they need it and being on time is usually the big factor for what our customers are looking for.
Samuel McKinney, Analyst at KeyBank Capital Markets
Okay, thanks. And then I appreciate there are a lot of moving parts as you start up ADI, but second quarter shipments of 53,000 tons came in a little light of the guidepost you laid out on the last call. Any more detail you can provide on what got in the way of hitting that 60 to 70,000 ton mark you previously outlined and what you're expecting into the third quarter?
Mark Millett, Chairman and Chief Executive Officer
Yeah, it's all part of the learning curve, I would say. As you perfect the different units through the mill, you find challenges or obstructions as you go. We actually left material on the floor that we couldn't ship for a variety of different reasons. No Achilles heel or whatever, but just a couple of little packaging issues — just miscellaneous stuff. So the 53 could have quite easily have been 60 and would have been at the bottom of that range, but no major issues.
It's just a matter of the team just working out all the bugs.
Samuel McKinney, Analyst at KeyBank Capital Markets
Okay. And then kind of guidepost or outlook for the third quarter?
Mark Millett, Chairman and Chief Executive Officer
Significantly improved.
Samuel McKinney, Analyst at KeyBank Capital Markets
Okay, appreciate it. Thanks, guys.
Mark Millett, Chairman and Chief Executive Officer
Thank you, Sam.
OPERATOR
Thank you. Your next question is coming from Richard Garchtarina from Barclays. Your line is live.
Richard Garchtarina, Analyst at Barclays
Great, thank you and thanks for taking my question. Just first off, just wondering, you mentioned that you had constructive discussions on pricing with your customers on contracts. Wondering if you can give us any color on that and how should we think about that cadence of when you'll realize those. Given the lags in contracts, is that going to be more of a 2027 type thing that we should see?
Teresa Wagler, Executive Vice President and Chief Financial Officer
So that was specific, just so there's clarity. It wasn't really contracts per se. It was specific to steel fabrication business and their quoting and what's going into the backlog. And so I think that—and Barry, you can correct me—but I would expect to start to see some improvement in the fourth quarter and certainly into 2027. But those projects are further out than near term. Is that fair, Barry?
Barry Schneider, President and COO
Yep, that's fair for the fabrication side.
UNKNOWN Analyst
Okay, thanks for that clarification. And then just a bigger picture. We mentioned that scrap prices have been relatively stable and we expect them to remain that way for the rest of the year, despite what we're seeing in terms of the move in HRC prices. So just wondering what's driving that in terms of. Historically, we've seen much more correlation in terms of scrap prices with the move in steel sheet prices. So is there anything in the industry that's sort of keeping those scrap prices flattish?
Barry Schneider, President and COO
Well, I think one of the things that was a good victory for the mini mill industry was the Section 301 against Brazil for pig iron imports. The 301 recommendations now exclude pig iron shipments from Brazil into the United States. The pig iron market in the United States is not a merchant market. The only producers of pig iron have very limited ability to sell pig iron directly to the rest of the trade in America. So excluding Brazil allows that material to flow in here.
And although pig iron is a different resource for us, its cleanliness—it's also introducing energy into our mixes—it does help in relation to the pricing of scrap, particularly the prime-quality scraps. So the pig iron trade has been very much disrupted internationally since the Russian invasion of Ukraine, which continues to put pressure on pig iron supply chains around the world. So this is a good victory for the mini mill part of our industry, flat rolled that uses pig iron.
And I think that will have some impact on spreads of hot rolled scrap.
Mark Millett, Chairman and Chief Executive Officer
And perhaps just to add to that, you’ve got an environment today where there's ample supply of scrap in the country. Even with the, you know, the additional capacity that's come online over the last few years, you've got low imports, low exports today, relatively so. So that's holding scrap in country and perhaps not having a massive impact now. But longer term, the good news with the new capacity coming online—you know, Nippon, the Hyundai-Posco plant—they're all adding DRI capacity, which helps the iron unit sort of balance in the country.
So we don't see any major change in scrap, to be honest.
UNKNOWN Analyst
Great, thank you.
OPERATOR
Thank you. Your next question is coming from Bill Peterson from J.P. Morgan. Your line is live.
Bill Peterson, Analyst at J.P. Morgan
Yeah, hi, good morning. Thanks for taking the questions and nice job in a quarterly execution. On the first turning off of steel, so I guess across the product portfolio, have you seen lead times come in at all or start to decline or if not, which products amongst flat rolled or long products are most extended relative to normalized levels? And I guess second parter to that is extended lead times and record pricing in structural, what opportunities do you have there to drive increased output? Whether it's higher utilization, increased investments or something else.
Barry Schneider, President and COO
With long products, our structural rail division is really doing incredible jobs of getting more and more productivity across the board. They are very good at optimizing their mixes so that when an opportunity like this, where the order book is really generous, they run more efficiently. So they're really good at scheduling how they put together runs both in the melt shop casting as well as in the rolling. We've seen casting records, melting records out of Columbia City three of the last four quarters, which—good decision making in tough times—allows them to really run hard.
Right now that energy also translates into the merchants, where we're able to really put together effective campaigns, rolling schedules. On the flat product side, again, I think the utilization that we operate at is usually at this very high level. So it does allow us a little bit of enhanced efficiencies when we know what the orders are. So we could be a little bit more effective in the month instead of looking week to week. But we continue to see our lead times right where we want them.
We don't want to be late. We want to make sure customers get what they want when they need it. And I really have to reach out to Pittsboro. SBQ's been a tough market the last few years, and with the onshoring and reshoring efforts, that team continues to get more and more productive, all the while maintaining a 95% or better on-time delivery. And that's going to customers who need that steel to make products for OEMs and manufacturers. So across the board our steel units are able to operate very efficiently when we see order books like this.
But it doesn't change our strategy for booking, our strategy for relationships. It's all just really a good time to optimize those things in the steel side.
Bill Peterson, Analyst at J.P. Morgan
Thanks for that, Barry. And then I guess pivoting to ADI. A lot of questions on utilization and a lot of other things, but just want to make sure I think you've talked about reaching 90% utilization by end of '26. Want to see if that's still the case or if that's an exit rate. And based on your commentary on mix scrap content as well as the steep ramp in the second half, how should we think about the cadence of the earnings through the balance of the year?
Should we expect third quarter to pivot to profitability?
Teresa Wagler, Executive Vice President and Chief Financial Officer
So from the perspective of exiting the year, at least 90% utilization rate? Absolutely. We feel even more confident about that given the performance of the team in the second quarter and more recently, and especially with the onset of bringing the third cold mill in line here in August. So that will be a key to that. As you think about profitability in the second half of the year, yes, we've been kind of approaching EBITDA-positive to EBITDA-positive, but we would expect to be earnings positive in the second half of the year as well.
Bill Peterson, Analyst at J.P. Morgan
Thanks, Teresa.
Teresa Wagler, Executive Vice President and Chief Financial Officer
Thank you.
OPERATOR
Your next question is coming from John Tomazos from John Tomazos Very Independent Research. Your line is live.
John Tomazos, Analyst at Very Independent Research
Thank you. Looking forward a number of years, where do you think we go next with steel processing, buying 2 1/2–3 million tons more steel than you make? It could be possible to build a sheet mill—another one—to make that steel yourselves. Or is there enough scrap aluminum to build a second 650,000-ton Columbus rolling complex? Or is there something else on the horizon?
Mark Millett, Chairman and Chief Executive Officer
Well, as always, John, phenomenal questions or thoughts. The hot band substrate requirement that has grown over the years and likely will grow a little more obviously is a potential growth avenue. But I would suggest, given the dynamics within the supply-demand balance out there, it wouldn't be a typical mill if we were to do it, but it wouldn't be a mill that we're going to build anytime soon. On the steel side, I think Barry and the team have got a pipeline of some pretty damn neat value-added opportunities.
And as you've always known, we tend—we don't strive to build and grow just to be big. We want to maintain the high-margin, niche product, supply-chain type strategy. So we do have steel projects along those lines. And aluminum obviously also has great potential for growth. It doesn't necessarily—or our past history isn't—to go and build a big mill and then just copy that same thing. We've only been in the industry, obviously, for whatever it is now two years, but we again see smaller value-add, niche opportunities that would have great return on invested capital type profiles.
John Tomazos, Analyst at Very Independent Research
So a big steel mill anytime soon?
Mark Millett, Chairman and Chief Executive Officer
No. Massive, you know, 650,000-ton aluminum mill—probably not here in the very, very near future, but there's plenty of opportunities for us to grow.
John Tomazos, Analyst at Very Independent Research
Thank you.
Mark Millett, Chairman and Chief Executive Officer
Thank you.
OPERATOR
And once again, everyone, if you have any questions or comments, please press star then 1 on your phone. Your next question is coming from Albert Rollini from Jefferies. Your line is live.
Albert Rollini, Analyst at Jefferies
Hey, good morning all. Just on capital allocation, given the earnings trajectory, the continued focus on the execution of the ramp of ADI and some of the working capital and '27 CapEx commentary, I mean, how should we be thinking about the trajectory of repurchases in the coming quarters? Is it reasonable to assume maybe what we saw during the '23 Q4, or is maybe a similar kind of increase from the first to the second quarter more, I guess, reasonable if pricing holds up in the second half?
Thank you.
Teresa Wagler, Executive Vice President and Chief Financial Officer
The expectation would be, as we've mentioned, we want to take the opportunity as we have access to cash flow to lean in on the share repurchases. We think that the current pricing is still incredibly attractive to do that. So, you know, in the second quarter we were at $200 million. We paused in the first quarter, as we mentioned, to allow for the ramp in working capital as aluminum ramps up. I don't know that we have specific plans for what the second half of the year looks like.
I would say it's going to trend more toward like what you saw in the second quarter and perhaps last year. But that will depend on the cash flow as we progress through the second half.
Albert Rollini, Analyst at Jefferies
Thank you.
Teresa Wagler, Executive Vice President and Chief Financial Officer
Thank you.
OPERATOR
That concludes our question and answer session. I'd like to turn the call back to Mr. Millett for any closing remarks.
Mark Millett, Chairman and Chief Executive Officer
Super. Thank you, Matthew. Appreciate everyone's interest and support today and just would like to, as always, thank our customer base. We can't do what we do without you. And particularly on the aluminum side, your patience with us and your support has been extraordinary. Service providers, phenomenal. We can't do without you guys either. Guys and girls, employees, my hat's off to you. I said it at the very beginning. I'm honored to be part of the team.
You do a phenomenal job. I just want to really, really, really stress that we need to continue to work smarter, harder and be committed to getting to that zero-incident safety environment, and to shareholders and investors, we treat your money as it's our own. And we hopefully demonstrated good responsibility there, and we're going to continue to do that in the future. I don't think there's ever been a time where I am more excited for the team, given the step-function increasing cash generation that we're going to see from these new assets, with the growth opportunities that the team has identified going forward, it's—it's nothing but phenomenal what they're going to achieve. So thank you. Thank you. Thank you, everyone.
OPERATOR
Thank you. And once again, ladies and gentlemen, that concludes today's call. Thank you for your participation and have a great and safe day.
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