What caused the Q1 issues and inventory write-off in aluminum, and what are the expected ramp-up volumes for Q2?

Mark Millett clarified the Q1 issue was a "quality issue" related to staining on the product, primarily in January, which has since been resolved. Theresa Wagler added it was a "practice issue," not equipment. Mark guided Q2 aluminum shipments to 60,000-70,000 tons, up from 22,000 tons in Q1. “It wasn't an equipment issue, Carlos. It was a practice issue.”

How are the coated lines progressing, and what are the company's plans for uses of cash given strong free cash flow and falling CapEx?

Theresa Wagler provided flat-rolled shipment breakdown, including 1,530,000 tons of coated steel. Barry Schneider stated the 4 new value-added lines are operating at full capacity. Theresa reiterated the capital allocation strategy: prioritize business growth, then a progressively positive dividend, complemented by share repurchases, noting a temporary pause in Q1 buybacks due to working capital growth. “The 4 new value-added lines are actually operating incredibly well... They're operating at full capacity right now.”

How do you explain the gradual, sustained steel price increases compared to historical volatility? Is this rally sustainable, and what are the risks of increased imports?

Barry Schneider attributed the stability to customer confidence, tariffs, and the importance of local supply chains. He highlighted strong demand, responsive pricing to capacity, and the effectiveness of 232 protections and recent executive orders against unfairly dumped imports. He expressed optimism for long products due to early engagement in large projects. “I think more importantly, a lot of our customers have seen the supply chains are very important. So when we have discussions with our customers, our supply chain position being so local to many of the businesses and having diverse products. It allows us to engage with them on a longer-term frame than just what we see in a quarter or perhaps half a year.”

STLD

Steel Dynamics (STLD) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Materials· Apr 21, 2026

Source: earnings call transcript

Executive summary

Steel Dynamics Q1 FY26 — Record Steel Shipments and Aluminum Ramp-up

Steel Dynamics delivered a strong first quarter, marked by record steel shipments and significant progress in its aluminum operations despite initial start-up challenges. The company continues to benefit from its diversified business model and strategic investments, driving robust cash generation and a balanced capital allocation strategy focused on high-return growth and shareholder returns. Management remains optimistic about market conditions and future growth opportunities.

Highlights

Achieved record quarterly steel shipments of 3.6 million tons.
Reported adjusted EBITDA of $700 million.
Steel operations generated $557 million in operating income, a 73% sequential increase.
Metals recycling operating income increased 155% sequentially to $47 million.
Increased cash dividend by 6% and repurchased $115 million of common stock.

Concerns

Aluminum operations incurred an operating loss of $65 million due to Q1 start-up issues and an inventory write-down.
Cash flow from operations was reduced by $120 million for profit sharing and an additional $150 million for working capital growth related to aluminum.
Steel fabrication margins tightened due to increased steel input prices.

Guidance & targets

Category	Target	Timeline	Confidence
Capital investments	$600 million high materiality	FY26	High
Aluminum operations capacity utilization	90% capacity high materiality	Q4 FY26	High
Aluminum product mix	45% can sheet, 35% automotive and 20% industrial medium materiality	2027 · FY27	Medium
Automotive product qualification (cash line)	receive qualification from several customers medium materiality	Q2 FY26	High
Second cash line commissioning	begin commissioning medium materiality	Q3 FY26	High
Third cold mill production	begin producing medium materiality	Q3 FY26	High
Aluminum shipments	60,000 tons to 70,000 tons high materiality	Q2 FY26	High
Finished automotive products qualification	receive acceptance medium materiality	Q2 FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Steel Operations Operating income increased significantly due to higher realized steel pricing and record steel volumes. Value-added spreads to HRC have improved, benefiting future performance as the largest coater in North America. Long product steel demand and pricing are strong. Operating income sequential increase: 73%Average selling prices per ton increase: $86Average HRC pricing Q4: $850/tonAverage HRC pricing Q1: $975/tonDomestic steel industry utilization rate: 77%SDI steel mills utilization rate: 89%Record quarterly steel shipments: 3.6 million tons	—	—	—	$557 million operating income
Metals Recycling Operating income more than doubled sequentially due to higher pricing for both ferrous and nonferrous scrap. Shipments were modestly lower in Q1 due to weather but are expected to increase seasonally and with support for aluminum operations. Operating income sequential increase: 155%	—	—	—	$47 million operating income
Steel Fabrication Operating income was aligned with Q4 results, with higher shipments offset by increased steel input prices. Order backlog is solid, extending into Q4 2026, driven by positive customer sentiment, manufacturing onshoring, and public funding for infrastructure.	—	—	—	$90 million operating income
Aluminum Operations Incurred an operating loss due to normal start-up issues in January, necessitating a temporary pause and inventory write-down. Operations are now smooth with increasing volumes. The hot side is fully operational, and two of three cold mills are ramping up. Q4 FY25 shipments: ~14,000 tonsQ1 FY26 shipments: ~22,000 tons	—	—	—	operating loss of $65 million

STLD operating KPIs by quarter

STLD operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2025 Q1 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Shipments Steel	3.5M tons Highlights included record steel shipments of 3.5 million tons and adjusted EBITDA of $448 million. Source: earnings call transcript	3.6M tons We had a record steel shipment of 3.6 million tons. Source: earnings call transcript	—	3.6M tons Several highlights for the quarter included record quarterly steel shipments of 3.6 million tons. Source: earnings call transcript	3.7M tons The quarter highlights included record quarterly steel shipments of 3.7 million tons, adjusted EBITDA of $921 million, and we achieved meaningful milestones across our Aluminum and Sinton platforms. Source: earnings call transcript	+2.8%
Shipments Hot band	1.093M tons For modeling purposes for the first quarter of 2025, hot band shipments were 1,093,000 tons, cold-rolled shipments were 116,000 tons and coated shipments were 1,403,000 tons. Source: earnings call transcript	1.097M tons For modeling purposes, this quarter's hot band shipments were 1,097,000 tons, cold-rolled shipments were 120,000 tons; and finally, coated shipments were 1,486,000 tons. Source: earnings call transcript	942K tons For those of you tracking the flat-rolled shipments for your models, fourth quarter hot-rolled shipments were 942,000 tons, cold-rolled 122,000 tons and coated products were 1,395,000 tons. Source: earnings call transcript	1.017M tons I'm sorry, I was -- So I think you're specifically looking for the flat-rolled shipments and the first quarter flat-rolled shipments for hot band was 1,017,000 tons. Source: earnings call transcript	—	+8%
Shipments Cold-rolled	116K tons For modeling purposes for the first quarter of 2025, hot band shipments were 1,093,000 tons, cold-rolled shipments were 116,000 tons and coated shipments were 1,403,000 tons. Source: earnings call transcript	120K tons For modeling purposes, this quarter's hot band shipments were 1,097,000 tons, cold-rolled shipments were 120,000 tons; and finally, coated shipments were 1,486,000 tons. Source: earnings call transcript	122K tons For those of you tracking the flat-rolled shipments for your models, fourth quarter hot-rolled shipments were 942,000 tons, cold-rolled 122,000 tons and coated products were 1,395,000 tons. Source: earnings call transcript	—	—	+1.7%
Shipments Coated	1.403M tons For modeling purposes for the first quarter of 2025, hot band shipments were 1,093,000 tons, cold-rolled shipments were 116,000 tons and coated shipments were 1,403,000 tons. Source: earnings call transcript	1.486M tons For modeling purposes, this quarter's hot band shipments were 1,097,000 tons, cold-rolled shipments were 120,000 tons; and finally, coated shipments were 1,486,000 tons. Source: earnings call transcript	1.395M tons For those of you tracking the flat-rolled shipments for your models, fourth quarter hot-rolled shipments were 942,000 tons, cold-rolled 122,000 tons and coated products were 1,395,000 tons. Source: earnings call transcript	1.53M tons Hot rolls was 151,000 tons, and coated was 1,530,000 tons. Source: earnings call transcript	—	+9.7%
Capacity utilization rate Steel mills	89% During the first quarter, the domestic steel industry operated at a utilization rate of approximately 75%, while our steel mills operated at 89%. Source: earnings call transcript	88% In the third quarter of 2025, the domestic steel industry operated at an estimated production utilization rate of 78%, while our steel mills operated at a notably higher rate of 88%. Source: earnings call transcript	—	89% During the first quarter of 2026, domestic steel industry operated at an estimated production utilization rate of 77%, while our steel mills operated at 89%. Source: earnings call transcript	90% During the second quarter of 2026, the domestic steel industry operated at an estimated production utilization rate of 81%, while our steel mills operated at 90%. Source: earnings call transcript	+1 pt

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Steel joist and deck order backlog solid quarter end

extends into the fourth quarter of 2026

Pipe mills order book booked well into the summer Q1 FY26

Solar order books continuing to remain strong Q1 FY26

Product announcements

Product	Type	Timeline
Industrial and can sheet finished products	milestone	To date
Automotive aluminum hot band	milestone	To date
Finished automotive products (aluminum)	milestone	coming weeks
First automotive continuous annealing solution heat treat line (cash line)	launch	Now operational

Deals & partnerships

BlueScope Acquisition (attempted)

SDI presented a "best and final" joint offer in February, which was summarily rejected by BlueScope, with no constructive engagement since.

Capital programs

Organic growth investments (Texas steel mill, value-added flat-rolled coating lines, aluminum investment) complete $5 billion

Funding: capital funding... basically complete

Benefit:estimated through-cycle annual EBITDA of approximately $1.4 billion

We've invested over $5 billion in 3 primary organic growth investments, including our Texas mill, our value-added flat-rolled coating lines and our aluminum investment. These projects have an estimated through-cycle annual EBITDA of approximately $1.4 billion. The capital funding for Sinton, the 4 value-add lines and aluminum dynamics is basically complete.

Aluminum operations (4 preheat furnaces) underway

The last of 4 preheat furnaces will be in service at the end of the second quarter.

Aluminum operations (Third cold mill) underway

The third cold mill is expected to begin producing in the third quarter.

Aluminum operations (Second automotive continuous annealing solution heat treat line - cash line) underway

The second cash line is expected to begin commissioning in the third quarter.

Risks & headwinds

Aluminum operations start-up issues and inventory write-down Q1 FY26

$65 million operating loss

Mitigation:Things were resolved quickly and are operating smoothly now with increasing volumes already being realized.

Working capital growth Q1 FY26

$120 million related to annual company-wide retirement profit sharing funding and an additional $150 million related to working capital growth, specifically associated with our new aluminum investment.

Mitigation:Paused share repurchases in Q1.

Increased steel input prices Q1 FY26

offset by the increase in steel input prices

Mitigation:Steel fabrication business generally maintains 10-12 weeks of steel inventory, which can tighten margins in a rising price environment.

Rolling aluminum market impacts near-term constraints

traffic impacts of the Iranian war and the domestic supply chain challenges

Mitigation:Accelerating material qualification and product certifications.

Potential prime ferrous scrap challenges over time

null

Mitigation:Expanding scrap separation capabilities through enhanced processes and technology.

Q&A highlights

How will tariffs impact the aluminum business, and given current strong market conditions, is there upside to the previously guided through-cycle EBITDA of $650M-$700M?

Mark Millett noted the current market is "absolutely phenomenal" and "fortuitous" for the start-up. Theresa Wagler added that current market spreads are significantly higher than those used in their profitability assumptions, suggesting a "structural shift" in the aluminum industry, and they will discuss through-cycle expectations in coming months.

“The spreads that we use from a profitability standpoint, just market related for each of the product sets are significantly lower than the spreads that are available today.”

asked by Albert Reline · answered by Mark Millett, Theresa Wagler

2 min read 6 chapters

Detailed narrative

Strong Q1 Performance & Safety Focus

Steel Dynamics reported a very strong first quarter 2026, achieving record quarterly steel shipments of 3.6 million tons and adjusted EBITDA of $700 million. The company emphasized its commitment to safety, with 94% of its 135 locations operating without a lost-time injury in Q1, reflecting a strong safety culture and dedication to a zero-incident environment.

Aluminum Operations Ramp-up

The aluminum operations are making significant progress, transitioning from construction and commissioning to production. Despite an initial operating loss of $65 million in Q1 due to start-up issues and an inventory write-down in January, operations are now smooth with increasing volumes.

The hot side is fully operational, and two of three cold mills are ramping up, with the third expected in Q3. Product certifications are accelerating, with finished automotive products in qualification.

Steel Market Conditions & Diversification

Domestic steel industry utilization was 77% in Q1, while SDI's mills operated at 89% due to value-added product diversification and internal manufacturing support. Flat-rolled steel markets are improving with strong demand and lower imports, leading to elevated lead times. Long product steel markets, including structural steel and railroad rail, remain strong, supported by nonresidential construction, manufacturing onshoring, and public funding.

Capital Allocation & Growth Strategy

SDI maintains a disciplined capital allocation strategy, prioritizing high-return growth, a progressively positive dividend, and a variable share repurchase program, while preserving an investment-grade credit rating. The company has invested over $5 billion in organic growth projects, including the Texas steel mill, value-added coating lines, and aluminum, which are expected to contribute $1.4 billion in annual through-cycle EBITDA.

Strategic Advantages & Market Outlook

Steel Dynamics leverages its circular business model, low-cost structure, and market diversification to optimize cash generation. The company sees a unique and favorable long-term aluminum market environment with a significant domestic supply deficit. In steel, a paradigm shift is noted with pervasive sensing, trade mechanisms, and increased fixed asset investment, driving demand for metal products, especially with reshoring and infrastructure spending.

Raw Material Platform & Sustainability

The company's metals recycling platform, as the largest in North America, provides a strategic competitive advantage by supplying raw materials for both steel and aluminum operations. New separation technologies are being developed to increase access to usable aluminum scrap at lower costs, facilitating high recycled content and mitigating prime ferrous scrap challenges. The biocarbon team also achieved a significant milestone with a "log cutting ceremony."

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.