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Mark Millett

Well, thank you, David. Good morning, everyone. It's good to be with you on our first-quarter '25 earnings call. I will apologize in advance. I've got a crushing head cold. So if I feel more -- sound a little rugged, please excuse that. But that said, our teams achieved a solid financial and operational performance in the first quarter. It's continued testament, I think, to our business model and performance-driven culture. Highlights included record steel shipments of 3.5 million tons and adjusted EBITDA of $448 million. Most importantly, our teams continue to operate safely.
We've been successfully ramping our four new value-add flat-rolled steel coating lines with the expectation of full earnings benefit later this year. These lines represent an additional 1.1 million tons of higher-margin product diversification, which further adds to our position of being the largest nonautomotive coater in North America. The (inaudible) team gained considerable momentum in the quarter running at around 86% of capacity and many times over 90%. The team also achieved positive EBITDA for the quarter with expectations of a steep acceleration of profitability for the remainder of this year. I'm very excited for the accomplishments that the team has made in the last six months. And there's absolutely no doubt, it is the middle of the future, and Barry will go into some more detail during his opening comments.
Aluminum Dynamics successfully cast its first aluminum ingot in January at our Columbus, Mississippi facility and in March at our Mexican satellite slab facility. We're extremely proud and excited for the [teams], everything is on schedule for the systematic commissioning of the rest of the lines with an expectation to ship commercial quality coils in June.
Again, I'm proud of the entire Steel Dynamics team. They are the foundation of our company, and they continue to amaze me. We are singly focused on providing the very best for their health and safety, and we continue building a world-class safety culture. In particular, our team's dedication to our take controller safe program is extraordinary. We're actively engaged in safety at all times and at every level, keeping it top of mind and an active conversation each and every day.
I'm continually inspired by the commitment our team members have for one another. They consider themselves family and challenge the status quo each day. That said, there always will be more to do as we drive toward a 0-incident environment. So, Theresa, would you like to give us some details on the quarter?

Theresa Wagler

Thank you, Mark. Good morning, everyone, and thank you for joining us. I add my sincere thanks to the teams for another solid performance. Our first quarter 2025 net income was $217 million or $1.44 per diluted share with adjusted EBITDA of $448 million. First-quarter 2025 revenue of $4.4 billion was 13% higher than fourth quarter sequential results, primarily driven by record steel shipments.
First-quarter operating income of $275 million was 16% higher than sequential results, also related to steel volumes. As we discuss our business this morning, we continue to focus and execute on our transformational growth initiatives. Our steel operations generated operating income of $230 million in the first quarter sequentially higher as record shipments more than offset metal spread [contraction] with an average realized external steel price decline of $13 per ton and an average scrap price increase of $16 per ton. I do want to add my congratulations to the (inaudible) team. They've really turned a corner, very excited for them.
From a steel price perspective, as a reminder, approximately 75% to 80% of our flat-rolled steel business is tied to lagging contracts, generally, on average, about two months in arrears. So the more recent increases in flat-rolled steel pricing will positively impact the second quarter. 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. And as a reminder, we'll continue to see that coated volume actually increased from a product mix perspective as the four new lines start to have full utilization. In the first quarter, they were still only utilized on average around 50% to 55%.
For the first quarter, operating income from our metal recycling operations was $26 million improving modestly as volumes in ferrous metal spreads increase. We're the largest nonferrous metals recycler, processing and consuming ferrous scrap, nonferrous aluminum, copper and other metals and we're growing in support of our increased steel capacity and soon-to-be aluminum flat-rolled operations through new and expanded supplier relationships and the use of innovative new separation technologies. And I want to congratulate the OmniSource and Nano all teams as they're increasing those separation technologies, and we're actually adding capacity in the coming months.
Our steel fabrication team achieved first quarter operating income of $117 million, lower than sequential fourth quarter results as realized pricing declined a modest 4% and shipments seasonally decreased. Our steel joist and deck demand remained solid with good order activity. March was our strongest order entry month in 2 years. Our backlog extends into the (inaudible) quarter of 2025 and forward backlog pricing remains solid. Federal programs, manufacturing growth and onshoring are expected to support domestic fixed asset investment and rated flat and long product steel and steel (inaudible) in the coming years.
Pivoting to our aluminum operations. A quick reminder as we finish constructing the aluminum facilities, non-capitalizable expenses are required to flow through SG&A. As a result, our SG&A in the first quarter was higher by approximately $37 million. We continue to have expectations to achieve positive EBITDA in the second half of 2025 for the aluminum platform, and plan to operate the rolling mill at approximately 30% for the full second half of the year with an exit rate of 50% and 75% for the full year of 2026 with an exit rate of 85%. Construction is coming to completion and commissioning progressing extremely well. Approximately $2.4 billion has already been invested through March of 2025 with the remaining $300 million forthcoming.
During the first quarter of 2025, we generated cash flow from operations of $153 million, which was reduced by an annual company-wide profit sharing retirement distribution of $165 million. Excluding this payment, cash flow was $318 million in the quarter with net working capital growing about $105 million as steel prices increased later in the quarter. We ended the quarter with strong liquidity of $2.6 billion. We invested $306 million in CapEx during the quarter.
For the full year of 2025, we still believe capital investments will be in the range of $800 million to $1 billion, with the majority related to the completion of our aluminum and biocarbon strategic growth investments. As a reminder, our sustaining or what some call maintenance capital requirements are conservatively in the range of $200 million to $250 million annually. Regarding shareholder (inaudible), our cash generation is consistently strong based on our differentiated circular business model and highly variable low-cost structure (inaudible) and confidence in our future. Our capital allocation strategy prioritizes high-return growth with shareholder distributions comprised of a base positive dividend profile that's complemented with a variable share repurchase program, while we remain dedicated to preserving our investment-grade credit designation.
Our track record is proven and recognized. In the last 5 years, our average -- excuse me, our after-tax return on invested capital was 23% in this major line frame of transformational growth and strong shareholder returns. We opportunistically access the investment-grade bond markets in March and issued $1 billion of unsecured notes comprised of a [5.25%] $600 million 10-year tranche and a 5.75% $400 million 30-year tranche, using the proceeds to pre-fund a $400 million note that matures in June of 2025 and for other corporate purposes. We really appreciate the receptiveness of the credit investors for our offering, allowing us an excellent outcome, and we sincerely thank you to all involved.
A quick forecasting comment as alumina dynamics and construction, so will the associated interest expense capitalization in the second quarter. So net interest expense in the first quarter was around $12 million. In the second quarter, it will be closer to $3 million and therefore likely $40 million a quarter. Our free cash flow profile has fundamentally changed over the last 5 years from an annual average of $540 million to most recently, $3 billion if we exclude aluminum and Sinton. Even if we include aluminum and sinton, it's still over $2 billion per year.
We've placed 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. We're squarely positioned for the continuation of sustainable optimized long-term value creation. Thank you. Barry.

Barry Schneider

Thank you, Theresa. Our steel fabrication operations had a solid performance in the first quarter. In fact, as Theresa mentioned, March represented the single highest month order entry volume in two years with the momentum continuing in April. Our order backlog extends into the fourth quarter with attractive pricing levels. We continue to have high expectations for the business due to the strong quoting and order activity, continued onshoring of manufacturing recently announced significant privately funded manufacturing projects and public funding for the infrastructure and other fixed asset investment programs.
The long-term uplift from this backdrop could be considerable for all of our platforms. Our steel fabrication platform provides meaningful volume support for our steel mills, critical and softer demand environments, allowing for higher through-cycle steel utilization and also mitigates the impact of lower steel prices. Our metals recycling operations improved earnings in the first quarter as demand for North American steel producers supported higher ferrous scrap volume. The team also continues to grow its access to recycled aluminum in advance of our aluminum flat-rolled operations ramp up. Ferrous scrap prices increased each month of the first quarter of 2025 before moderating approximately $3 per ton in April as weather improved, supporting our scrap flows.
We currently expect prices to remain fairly stable throughout the year. The North American geographic footprint of our Metals Recycling platform provides a strategic competitive advantage for our steel mills and for our scrap generating customers. Our metals recycling team is also partnering even more closely with both our steel and aluminum teams to expand scrap separation capabilities through both process and technology solutions. This helps mitigate potential risk of supply as more grades of ferrous and nonferrous scrap become usable for our steel and aluminum operations.
It also provides us with a significant advantage to materially increase the recycled content for our aluminum flat rolled products and increase our earnings opportunities. The steel (inaudible) managed strong quarter, achieving record shipments of 3.5 million tons. During the first quarter, the domestic steel industry operated at a utilization rate of approximately 75%, while our steel mills operated 89%. We consistently operate at higher utilization rates due to our value-added steel product diversification, our differentiated customer supply chain solutions and the support of our internal manufacturing businesses. This higher through-cycle utilization of our steel mills is a key competitive advantage, supporting our strong and growing cash generation capability and best-in-class financial metrics.
Regarding the flat-rolled steel markets, pricing and order entry have stabilized at levels much higher than we saw in the second half of 2024. However, there has been some hesitation with certain customers awaiting more market certainty. Overall inventories remain historically lean, but increased imports kept incremental buying bay in certain product areas, specifically for coated flat-rolled steel products. We led -- we levied a trade case related to these products in the third quarter of 2024, and we recently received favorable preliminary countervailing and dumping rulings, which has already slowed the imports of a fairly priced coated steel flat-rolled products. This, along with the announced [232] tariffs, should positively impact demand for lower carbon emission, US-produced steel products.
This positions us incredibly well as we are the largest producer of nonautomotive coated flat-rolled steel products in North America. As for the long product steel market, they also improved in the first quarter with demand for most sectors stable or improving.
Prices have increased over the last several months with solid order entry and improving backlogs. For Sinton, Texas flat-rolled mills production and reliability continue to improve in the first quarter, operating at 86% utilization and at times, over 90%. As Mark said, they achieved positive EBITDA for the quarter. We expect to see significant increase in Seton's earnings contributions as they continue in the second quarter and again in the second half of the year. As the team further improves yield, lowers their cost structure and improves the cost of quality, we also continue to work on product (inaudible) to expand our existing flat-rolled product offerings.
Currently, API pipe grades and high-strength steels are in various stages of development in the operations.
Also, the additional two new value-added coating lines are increasing volume, improving Sitton's value-added product mix and through cycle earning capabilities. Regarding the steel markets environment, North American automotive production estimates for 2025 recently revised lower with uncertainty due to the impact of recently discussed auto and auto part tariffs. However, there's ongoing discussions of these being softened as well. Fortunately, our specific automotive customer base has remained stable with us growing automotive market share in both flat roll and SBQ steels. Nonresidential construction remained stable with slowdowns across some industries. However, as I mentioned earlier, we have seen pricing for structural beams, engineered buyers and merchant buyers, increased over the last several months with expanding backlogs.
Additionally, onshoring, large recently announced domestic manufacturing projects and infrastructure spending should provide further support to fixed asset investment and related construction oriented projects. As for the energy market, oil and gas activity remains steady with recent signs of increasing activity for both flat roll steel and SBQ. We also see ongoing demand in the solar markets, which we are very active.
Looking forward, we remain optimistic regarding steel demand and pricing dynamics for the remainder of 2025. And with that, I'll surrender the microphone.

Mark Millett

Okay. Thank you, Theresa. Thank you, Barry. Well, I think the last 6 months, a great example of the resiliency of our business model. Our performance-driven team-based culture in combination with a proven, diversified and value-add business model drives superior through-cycle financial metrics.
Such consistently strong operating and financial performance continues to support our cash generation and growth investment strategies, having a very balanced cash allocation strategy that has delivered the highest shareholder returns in our industry. Our disciplined investment approach continues to support a strong and growing through-cycle cash generation profile while maintaining the highest return on invested capital among our peers.
Again, the (inaudible) flat rolled steel coating lines are increasing volume and performing very well from a quality perspective. These types of high-return investments are key to our value-added product and supply chain differentiation strategies. As we mentioned, (inaudible) continues to perfect its operational reliability and downstream operations. They were EBITDA positive in the first quarter with expectations for a material positive shift in financial contribution this year. And most recently, volume and growth strategy is months away from contributing to our earnings.
I think the aluminum investment premise is especially compelling and parallels our disruptive entry into steel industry some 30 years ago. We see a market environment in aluminum similar to the domestic steel industry back then.
Older assets, high legacy cost burden, inefficient, high-cost operations. They've had a difficulty earning their cost of capital and hence, little additional investment in facilities and technologies taking place. No significant expand in the past 40-plus years. But unlike our entry into the oversupplied steel market back then, there is significant North American supply deficit for aluminum sheet and it's growing. There's clear business alignment between our steel and aluminum operations.
We're leveraging SDI's core competencies in construction and operational know-how and exploiting that with our performance-driven culture driving higher efficiency, lowest cost operations. It also levers Omni's recycling footprint being the largest North American aluminum scrap recycler, along with new separation technologies. This meaningful investment is a cost-effective and high return growth and diversification opportunity for us. And the project is no longer just a vision, but it's a reality. Construction of the expansive mill in Columbus, Mississippi is nearing completion and is in commissioning phase being executed at an extraordinary pace.
The aluminum industry is finally realizing we're here and we will be a force to be reckoned with. The customer base across all sectors is excited to have a new market entrant that is known to be innovative, customer-centric and responsive to their needs. For us, business relationships in long term, founded on trust and the continuous goal of creating mutual value. We strive to be a differentiated supplier each and every day. As our aluminum growth has become a reality, and our reputation permeates the industry, aluminum professionals with vast experience have joined us in this exciting project. And it's exciting to see, they see the vision and are excited by our culture where they see that they themselves can make a major contribution.
They are helping us build a phenomenal team that combines in-depth knowledge aluminum flat-roll operations, commercial markets and process technology, (inaudible) customer service, complementing our SDI professionals that will bring performance-driven culture to bear. As many of you know, the physical assets will be a state-of-the-art 650,000 metric ton aluminum flat rolled facility in Columbus, Mississippi, with about 300,000 tons of (inaudible) sheet, 230,000 ton eventually of auto and 130,000 tons of industrial construction products.
We will, in Columbus have on-site slab capacity of around 600,000 metric tons, supported by 2 satellite recycled aluminum slab casting centers located in UBC scrap regions. Project scope includes additional scrap processing and new segregation technologies to maximize the aluminum recycled content. The team is executing exceptionally well. The team successfully cast the first industrial (inaudible) canned and goods in Columbus, Mississippi in January and have since then been developing practices for the 3,000, 5,000 series alloys. And in San Luis Potosi in March, they cast their first thing (inaudible) also. We plan to continue commissioning throughout the facilities during the coming months and to produce commercially viable products in June 2025.
Production is expected to grow to an exit rate capacity of 50% this year and 75% capacity for the full year 2026. This is relative to cost differentiation. We expect through-cycle annual EBITDA of $650 million to $700 million plus $40 million to $50 million for metals recycling platform, significant savings relative to our competition centered on 4 key areas: labor savings, higher recycled content, significant process yield improvements and logistics. And while walking the plant floor, you can feel the excitement as our teams recognize their ability to revolutionize the North American aluminum industry as we did in steel. We're in passion by our current and future growth plans, as they will continue to drive the high return growth momentum we have consistently demonstrated over the years.
The earnings growth of these new projects is compelling. Capital spending for Sinton, the 4 value add lines and the aluminum dynamics facilities is largely spent with a projected future through-cycle EBITDA contribution of some $1.4 billion or more. Fuel dynamics has grown to a resilient cash-generating business and diversification, driven by the best teams in the world. In the last 5 years, we've invested billions of dollars in organic strategic growth. We earned a return on invested capital of 23% compared to the S&P 500 at only 12% and certainly way better than our industrial peers. We've increased our cash dividend over 100%.
We have repurchased over 30% of our outstanding shares and over 40% since 2017. All the while maintaining best-in-class investment-grade credit metrics and creating outstanding value for our customers and suppliers our teams and our shareholders. I'm excited as investors clearly see now the power and consistency of our through-cycle cash generation, combined with our consistent and high return capital allocation strategy. It is our belief that the steel industry has undergone a paradigm shift in recent years. There's a pervasive sense of mercantilism that will provide a level playing field through continued and appropriate trade mechanisms.
We've seen that in the recent coated flat road steel positive trade determinations. Recent Trump administration steel and aluminum moves, the tariffs, risk mitigation to address numerous supply chain dislocations of accelerated reshoring and manufacturing. AI and cloud computing will support nonresidential construction, data center data centers, chip factories and battery plants, (inaudible) growing fixed asset investment associated with public and private dollars, decarbonation agent will materially steepen the global cost curve, providing steel dynamics with a significant competitive advantage to gain market share and increase metal spreads.
This evolving metals business environment should amplify our earnings capability. So as you see, we are blessed with good fortune, our people being our foundation. I thank each of them for their passion and dedication. We are committed to them. And I remind us listening today that safety for yourselves, your families and each of those is the highest priority.
I'd be remiss not to thank our loyal customers, many of whom have supported us since our inception. As I said earlier, these partnerships are based on trust on doing what we say we will do and creating new solutions to enhance their value proposition. Our new and aluminum partners were experienced the same and also to our suppliers and service providers who we value and trust. Thank you. Our culture and business model continue to differentiate our performance, leading to best-in-class financial metrics.
We're a circular metals business, providing enhanced lower carbon supply chain solutions and in turn, mitigating volatility in cash flow generation through all market cycles, providing an enhanced shareholder returns and value to all participants. We look forward to creating new opportunities for all of us today and in the years ahead. So with that said, Holly, I would love to open the lines for questions.

Question and Answer Session

Operator

(Operator Instructions) Katja Jancic, BMO.

Katja Jancic

Maybe starting on your raw materials or metallics needs. Can you talk about how exposed you are to importing those?

Mark Millett

Sure. perhaps, Katja, just expand that a little bit because I'm sure the whole tariff and trade situation is of interest to everyone. And I think the -- generally, tariff and trade actions to date specific to steel and aluminum are extremely beneficial for us. One has to recognize even before this present term, the Section 201, the 301, anti-circumvention and other past cases are still firmly in place and prevent impact from China. And I think the recent court case and I know I'm deviating from the raw materials, but just giving you a broad picture.
The recent core case, which is the trade action against the coated steels, it's going to be very impactful. In fact, it's already impactful. It covers, I think, Barry 10. You have 10 Asian countries and about 3 million, 4 million tons of dumped coated steel, and that will be very beneficial to us.
And I think the derivative products actions are extremely beneficial. There are, I think, some 2 million to 3 million tons of fabricated structural steel items coming through on to our shores. And that's an appreciable volume. That market is probably somewhere 6 million to 8 million tons and suppressing that will have a major, major impact for our Long Products platform. And then just generally, the tariffs on supply chains already is providing, I think, a positive momentum from a reshoring standpoint.
Relative to raw materials in particular, obviously, scrap is not included today, and all my comments are as of today, one doesn't know necessarily what may happen in the days, weeks and months ahead. But the scrap flowing across the border is not an impact to us. We bring about 700,000 tons of scrap in from Canada and about 400,000 tons up from Mexico, but that remains (inaudible). [P1020], which will be consumed in our aluminum facilities, that -- the tariffs tend to be absorbed through the Midwest premium and passed on to the customer base. So that has little impact. We will have a little impact from tariffs on pig iron, if they remain in place.
Just as we did at the onset of the Ukrainian war, when pig iron pricing went sky rocketing, and availability was challenged, we increased our -- the prime scrap and more importantly, or sort of what we call [Shred1], our low-residual scrap and reduce that pig iron content or appetite so that will be reduced. And then there will be some impact on slab -- aluminum slab coming up from Mexico. That will be incremental this year because of -- obviously, we're ramping up and the volume is not going to be very large.
So I think in general, we are well positioned relative to our peers. And I think it sets the stage for the renegotiation. The USMCA gets renegotiated in 2026. I wouldn't be surprised if that got pulled forward. But I think it will be a very, very positive outcome for the country when that occurs.

Operator

Timna Tanners, Wolfe Research.

Timna Tanners

I hope you're feeling better soon. I wanted to ask, if I could, about what changed that sentence from prior guidance? You've talked about not being positive than it was? And then if I could also, are you still looking to produce exposed automotive eventually there? Any update, please, would be great.

Theresa Wagler

Timna, real quick, can you just reask that first part of your question about what changed? Can you just clarify that a little bit?

Timna Tanners

Yes. So initially, you had talked about Sinton not being profitable, I think, in the mid-quarter update? Or -- and then in the results, you talked about it being profitable. So I just wanted to understand that and maybe what's improved there and can continue to improve going forward?

Theresa Wagler

So from a change perspective, I'm going to let Barry get into the details of (inaudible) because we are really excited. That's why we congratulate the team and hopefully somebody down there is listening. But from the perspective of what changed, we were just really trying to see where end of the quarter fell out. And obviously, they were more exposed to spot pricing than Columbus and Butler are. So some of the price appreciation on the flat rolled side was actually able to be captured in the March time frame where it will be more lagging at Butler and Columbus.
So it was nothing that was significant, but it was very exciting for us to have an EBITDA positive quarter heading to operating and income in the second quarter.

Barry Schneider

And really, the team maturing and bringing the line utilization rates higher has allowed us to capture that market quicker, as Theresa mentioned. With the long-term projection of Automotive exposed, we are very excited about the product we produced down there. I think it's early to be talking about exposed, but we're developing really good practices so that we continue to make our customers happy as we ramp the facility up and we introduce new products. So I wouldn't rule it out, but it's not something we're advertising at this minute.

Operator

Carlos De Alba, Morgan Stanley.

Carlos de Alba

Yes. Sorry, I was on mute. On the fabrication business, I think I heard that March had the strongest order entry in two years. Does this mean that the volume that we saw in Q1 marked probably the bottom and should increase from here? And if not the second quarter, maybe the third quarter, because we did notice that the shipments in the first quarter, and I understand the seasonality, but they were the lowest, I think, since 2015 or 2017 on a quarterly basis?

Theresa Wagler

I'll let Barry add. What I would say is we've been talking about this, we talked about kind of the whole quarter that for fabrication in the first quarter because there was still some hesitancy around what was happening with the administration, what steel costs would be, where interest rates were that there was some hesitancy from a customer perspective of actually having those jobs proceed forward. And so we knew there'd be some open patches, if you will, and those generally get filled with projects that have a little bit lower pricing dynamics. So we definitely are seeing strength in the second half of the year as it relates to fabrication, and that's the momentum you're seeing in March and April, but I'll let Barry further comment.

Barry Schneider

Yes, the activity we're seeing is robust and it's the type of projects that we do very well in with aluminum. So we do see those projects materializing, and we also see some of the projects that have been temporarily on hold status with the uncertainty. Some of those are starting to free up. So we anticipate growing forward through second quarter and into the second half of the year as what we see today comes into realization.

Operator

Tristan Gresser, BNP Paribas.

Tristan Gresser

Just a quick fullstream side. Does that mean that with the visibility you have in backlogs into the end of the year, do you expect volumes to improve on a year-on-year basis starting Q2 or maybe in H2?

Theresa Wagler

Tristan, yes, we do expect to see, based on what we can tell today and the order activity and the current macro environment that we're all watching day to day, we absolutely expect volumes to be higher year-over-year.

Tristan Gresser

All right. And my question then is more on the demand side of the equation. Could you discuss a little bit by end markets what has been the recent developments since the tariffs were announced in early April. You mentioned you had a strong Q1, and now there is some uncertainty. So I'm curious to see the order activity, how it's been in the past 2 weeks.
And also how we should -- I mean you had a very strong shipment figure in Q1, how we should think about shipments into Q2?

Barry Schneider

Yes, Tristan, we continue to see a lot of real consumption out there. In spite of all the uncertainty out there, there are a lot of customers that are actually looking to further the relationship with us. we've seen more growth in our longer-term contracts, people trying to cement their supply chains. And when you look at specific marketplaces like construction goods, our painted products are doing very well. We see resilient demand out there.
We see opportunities for growth with the HVAC industry, we support we saw an uptick in February and March. And some of it, we think, was a little bit buying ahead of uncertainty of tariffs. But now we're seeing some demand fill back in there.
So we continue to be pretty excited about what we see at HVAC. The appliance business we do is pretty steady. And I think that much like automotive, depending on where you're at in those industries, your vision of them might be different. So our appliance vision is pretty strong right now. We're also very strong with automotive, the platforms that we are on, are actually doing very well.
So we saw a Q1 kind of surge, particularly with the North American players that we're associated with. So we remain very excited about that. We're seeing a lot of activity for pipe and tube, whether it's oil and gas or whether it's infrastructure. Those projects are starting to materialize, and there's real demand for some of these activities that has kind of been put off. So we're excited about that. And some of the rail business we do is also very steady.
So last year, it was slow with Class I railroads, but we're starting to see that pick up again in 2025 period. So again, we see a lot of pockets where things are good. So in spite of the perhaps reception of the industry, people are still trying to make things go. And our team is really good. When things get tight like this, our relationships come back and our relationships help support how we go forward.
So in times like this, we're excited about the opportunity to grow and to enrich those relationships, we've worked so hard at building. So all in all, with what we see today, we're excited about where 2025 is going.

Tristan Gresser

All right. That's very helpful. So just to confirm, normal seasonality in Q2 seems a fair base case in terms of volumes.

Theresa Wagler

I'm sorry, Tristan, can you say that again?

Tristan Gresser

Normal seasonality into Q2 for steel shipments seems like a fair assumption?

Theresa Wagler

So we've got a lot of different things happening right now to Barry's point. So we've got Sinton growing. We're gaining market share and the especially the core cases can't be under discussed as far as the positive impact. And since we're the largest quarter of automotive flat-rolled fields in North America, it's specifically impactful to us in a very positive way. So I would not expect to see shipments go backward, if that's what you're asking.

Operator

Chris LaFemina, Jefferies.

Christopher LaFemina

I actually have a kind of more of a strategic question. You've obviously spent a lot of time on your existing organic growth that's sitting in the aluminum mill and the value add lines, all of which are getting close to the finish line now. So you're going to start to generate higher to cycle cash flows. You talked about being excited about your current growth plans as well as your future growth plans. And I'm wondering what happens next?
I mean you'll be -- presumably, you're on a higher cycle cash flow run rate. You've talked in the past about doing more in non-steel recycling, including, I think you talked about in copper, for copper and aluminum. You've obviously been buying back shares as well. I mean do we get into situation where Steel Dynamics becomes an even bigger capital return story? Or is it about the next leg of growth?
And then -- sorry, secondly, on the next leg of growth. If you look at growing in the US steel industry, are you worried about investments from par and steel mills, building new capacity here to sort of circumvent tariffs and ultimately, that leaving little opportunity for you to grow in steel domestically. So really just kind of a question around medium- to longer-term strategy.

Mark Millett

Well, I think, as I mentioned earlier, we were absolutely blessed. We have a great team and the strategic initiatives they've put in place over the last 5, 10, 15 years is why we're here today. And as you rightfully say, we're going to have a very, very strong cash position moving forward as all these recent projects come to fruition is going to allow us a continued sort of balanced cash allocation strategy. I don't think you -- it's going to change and we will use all the tools in our toolbox to improve shareholder value. I think you will see growth in aluminum for sure, as you've seen it in steel, a lot of the things that evolved through our life cycle and steel, downstream value-add processing, coating, painting, can be done in the aluminum world as well. So that will continue.
And steel itself, for sure, there's still still plenty of opportunity there. Our teams are incredibly innovative, and there are market spaces and its that we don't play in today that we intend to penetrate. We don't grow just to be big. We always grow. If you look at both our organic and our inorganic growth. We always differentiate ourselves, and you will continue to see that value-add sort of profile going forward.

Theresa Wagler

I would just add to that right now, and the teams are doing it. We're in a period of execution and optimization of these larger growth projects that we've had. So we don't see billions of dollars of CapEx in the near term, but we do see the cash flow coming. So that will allow opportunities for shareholder returns to continue at a really strong rate. It also allows us though, we don't want to forget about the fact that we are acquisitive.
So we do look at transactions from time to time as well. We're just really disciplined, and that's what differentiates us from our peers. So there's still a lot of opportunity for growth. while distributing strong shareholder returns on a through-cycle basis.

Christopher LaFemina

So I guess I was also wondering in terms of the mechanism for capital returns and buybacks are nice. But having a higher through-cycle dividend that could be funded by the higher through-cycle cash flows might actually be an even more compelling point of differentiation? And how does the Board and the management team think about the allocation of those capital returns and is it possible that you just -- you changed the dividend payout model based on the higher through-cycle cash flow.

Theresa Wagler

No worries. So from a dividend perspective, I mean, we've increased our dividend by over 100% in the last 5 years. So we definitely keep an eye on it, and we definitely know that it's important. But we grow the dividend when our cash flow structure fundamentally grows on a through-cycle basis. So you should expect to see dividend growth as you have seen in the past as we have more significant cash flow opportunities come to fruition through organic or transactional growth such as aluminum, such as Sinton, you will see more significant dividend increases.
So I think we are following that philosophy. We want to keep dividends on an absolute basis, meaningful, yet conservative, and we complement that with the share buybacks. So -- the board looks at it that way as does management because we want to be responsible so that, that dividend is never at risk.

Operator

Bill Peterson, JPMorgan.

Bill Peterson

Nice job on the quarterly execution. I wanted to ask about downstream margins and how to think about it in the second quarter. When we think about the lagged input costs, higher steel prices, can you think this will overshadow the price stabilization or improvements you've spoken to about in the past? Just trying to get a sense for us when we think about margins in the quarter and looking ahead.

Theresa Wagler

We generally, as you know, Bill, don't give a specific guidance as it relates to things like that. I would just point you to some of the drivers to consider. So one of the drivers is that fabrication generally keeps 8 to 10 weeks of inventory or substrate inventory may be 12 weeks on the ground. So as we've had escalating flat-rolled steel prices, you will see higher steel input costs going into fabrication, but that can also be a premise or a driver for increased profitability or increased pricing on the product side. And we have seen stabilization there. So later in the year, we definitely think there's opportunity for growth, whether that comes sooner or later, it's hard to say.
The other thing that I would remind you of is that volume is really, really impactful in our fabrication operations because it really is about people. And so as you have more volume, that margin expands pretty dramatically, pretty quickly because of the cost compression. So I can't give you specific guidance as it relates to the fabrication operations. I would just say, for the year, we're feeling very strong.

Operator

Mike Harris, Goldman Sachs.

Mike Harris

There was a couple of times during the call where my sound cut out. So if you answered this, I apologize in advance. But under the noncash adjustments, can you provide a bit more color on what's behind the $19 million in unrealized gain losses? And maybe speak to how we should think about the potential impact for the balance of 202$.

Theresa Wagler

Yes, absolutely. So Mike, just a clarification to make sure I'm answering your question. You're speaking about adjusted EBITDA, correct?

Mike Harris

That's correct.

Theresa Wagler

Yes. So that relates to -- we have a risk commodities team where we manage risk around the amount of scrap copper finished product copper at our copper rod and wire mill and aluminum. And so that was just an unrealized loss in the first quarter related to the sharp moves in nonferrous pricing generally, that will come back then in the following quarter. So if you look at that quarter-over-quarter, you're going to see over a period of a year, 18 months, 24 months, it doesn't have that much impact, but that's what it was related to specifically in the first quarter. It's just an unrealized hedging loss.

Mike Harris

Okay. So just a timing issue that nets to step out over the course of the year is a good way to look at it?

Theresa Wagler

That's a great way to look at it.

Operator

Andrew Jones, UBS.

Andrew Jones

You hear me okay?

Theresa Wagler

Are you there, Andrew?

Andrew Jones

Yes, can you hear me?

Theresa Wagler

We can now.

Andrew Jones

Okay. Great. Just a follow-up. I mean, you were asked earlier about the metallic exposure and where you heard your point that you can use more prime scrap and reduce that exposure. But can you give us a an actual number for how much pig iron was consumed maybe in 2024 or your kind of expectations for 2025 with the ramp-up of Sinton prior to these coming in, just so we can get an idea for the impact going forward?

Barry Schneider

Andrew, that's a moving target for us. We all the time are looking at the economic balance for what our raw material charges are. So when we speak to the fact that we're working on segregation sorting techniques that allows us to get what would normally be cut great scraps into a cleanless level where we can use them more abundantly. So we are constantly making that decision each month. When it comes to pig iron, we look at that same balance.
And in many cases, it helps the operations besides just quality. It also can be productivity enhancing. So our teams are really good at having different scrap mixes in the mills at every moment of the day and having the right resources to make the best decision at the time. So we can go anywhere from 8% to 25% on a pig iron and we will make those decisions based on what the market pricing are of those different units.
Our Butler, Indiana facility has an iron facility on site, Iron Dynamics, that has been an outstanding asset to have the last five years, specifically because we're able to create iron for the Butler plant out of waste materials. So that technology has allowed us to be a little bit more independent and down South, it's Sinton and Columbus.
Those assets, again, are continually looking at what the product mix requires and what the costs may be. So to this point, we've had great supply from our offshore pig iron suppliers. We've been very -- we continue to be transparent and have discussions. We think those pricing mechanisms will sound themselves for the year. So short term, we haven't done anything out of the ordinary. It's a large volume to just stock up on. And obviously, we don't want to build our working capital. But we feel pretty good that as the situations unfold, we'll continue to find metallics at a competitive price.
Everybody in the ArcFirst community is buying the same materials. It's a matter of how effectively you can use them on a day-to-day basis. And that's again where I think our team excels and being able to make those choices and be informed. A lot of hard work goes into doing that. So the flat roll mills are the only mills that bring offshore metals in the pig iron.
All our long product mills are 100% scrap based. So that's the impact. If you look at what our flat roll is versus long roll.

Andrew Jones

No, that's clear. That's clear. And just to on that working capital point, the mill that we saw in the quarter in (inaudible) is that purely a function of pricing with scrap and other inputs moving up through the quarter? Or was there any other kind of overlays on that?

Theresa Wagler

Remember, the working capital build, if you exclude the profit sharing payment that gets paid every March every year, was really only a build of about $100 million, and that really was associated with pricing moves more on the steel side actually than on metallics. And I guess the takeaway that we would want everyone on the call to have is that as it relates to the -- our current position with raw materials, with demand, the entire kind of set of selling products and getting the raw materials and to sell those products and the current tariffs that are in place, we feel really well positioned, and we don't see a material financial impact to the negative. We actually just see a net upside as it relates to customers' pricing, et cetera.

Operator

John Tumazos, private investor.

John Tumazos

Thank you very much. Concerning your original business plan for the aluminum mill, with the current aluminum tariff economics, the Midwest premium doubled roughly from $0.20 to $0.40 on the plus side. The UBC price had been about a $0.30 discount to LME. Now it's only a $0.05. When you balance out the input output analysis are the current economics better, the same or worse than for your original business plan a couple of years ago.

Mark Millett

Great question. A convoluted algorithm to split out the answer, John. I would say we feel that with the exception of the slab coming up from Mexico, and we'll see how that pans out. The economics remain in place.

John Tumazos

So does that mean it's all awash?

Mark Millett

Again, it's a wash with the exception of where the tariff impact might be on slab coming up from Mexico, but as I said earlier, that for this year, that's incremental because we're just ramping up the volumes are going to be relatively small. And I don't -- well, I don't believe that the current tariff regimen is going to be in place much longer than through this year.

John Tumazos

In terms of the competitive landscape, I recall May 1992 mild firm raised $100 million for the past caster in Davenport, Iowa for Quanex, maybe that's something by Alaris now. What are the aluminum rolling mills of 30-year or younger vintage, the good competitors that you'll be competing with?

Theresa Wagler

So John, if you're asking if there are North American rolling mills that are less of age than 30 years. Is that the question? Because I think --

John Tumazos

I think Alaris built one. I'm just trying to remember what are the ones that are going to be your newer competitors?

Mark Millett

Well, to be honest, I don't think there are going to be any -- there will be no close competitors to us. I mean, if you look at the technology, the scale, the efficiency the increased recycled content that we will be able to have. And just our culture, John, you've followed us for many, many, many years now. The combination of taking state-of-the-art technology and just exploiting it with people that are impassioned that are incented to drive every cent out of the cost structure and maximize metal spread, we are confident in that the investment premise that will be put forth.

John Tumazos

Hats off to everything you're doing. Congratulations.

Mark Millett

Senova like 40 or 45 years since there's been a meaningful high-tech expansion. And like I said earlier, it's reminiscent -- for us gray hairs that have been around for a while, it's reminiscent of us getting into the steel business 30 years ago. Back then, the prior mill was Burns Harbor, 1961. I mean it's the same set of circumstances that we're going to hopefully disrupt.

Operator

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

Mark Millett

Thank you, Holly. And I will be quick, but for our employees that remain on the core, again, absolute heartfelt thanks for what you do each and every day for us. Thank you for your commitment and your passion and my sincere wish that stay safe. Again, thank you to the customers and service providers out there. And for those that are shareholders, again, thank you for your trust and your support.
We too are large shareholders. So we know exactly how you think I believe and we work on your behalf each and every day to improve your value. So thank you. Everyone, be safe. Take care. Bye-bye.

Operator

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