Barry Schneider: No, I’d just say that the mix is — it’s a good mix for them on the engineering side of the business to keep up with their lead times. So it — isn’t substantially different than the typical business flow that comes through it’s small changes in the segments that we’re serving through fabrication.
Operator: Your next question for today is coming from Katja Jancic with BMO.
Katja Jancic: Just quickly on the aluminum segment, you started disclosing the operating loss. Can you provide some color how we should think about the cost there over the next few quarters or how it should impact you?
Theresa Wagler: Katja, we did break out. So aluminum, because of the investment size, we will have a separate segment going forward. The — we can’t really give you projections on start-up losses. We expect them during 2024 to not be of significant size, and you will be able to see them. The one thing I’d note that you should recognize though, it’s kind of an odd thing that’s required from an accounting perspective, but those start-up losses actually get reflected in our SG&A amount. So if you see SG&A fluctuating, and maybe being higher than it is normally, it’s because those start-up losses during construction are actually included in that line.
Katja Jancic: But is it a fair — fair to assume that they should come up. I think in the fourth quarter, they were around $11 million? Or is that a fair assumption over the next few quarters?
Theresa Wagler: We do have a good contingent of people on the ground now. But yes, during the year because we’ll be expecting to actually still start up, as Mark said, in mid-2025, you’re going to be seeing headcount increase as well as additional construction activity. So yes, you should expect to see those costs rise during 2024.
Operator: Your next question is coming from Alex Hacking with Citi.
Alexander Hacking : On Sinton, how much of Sinton’s output is currently being sold into Mexico, if I remember correctly, you were targeting something like 30% before that mill started up?
Barry Schneider: Yes, we’ve had a very good ability to move product into Mexico. We have a very established team down there that’s been serviced in our Flat Roll Group for a while, but we added a warehouse capability in Monterrey. And last year, we moved about 600,000 tons into Mexico in various industries altogether. But we’re very pleased with how the business is moving. We are welcoming — being welcomed by the customer base in Mexico. And in many cases, we’ve had relationships and haven’t had the ability to get the tons there. Sinton provides us the opportunity not just through proximity, but through the advanced product features that we have. So we have wider, we have heavier products than we would typically have. And these products are being very well received in the various industries.
I would tell you that the continued near-shoring of manufacturing in the United States is very apparent with the investments we see in Mexico and the customer base there. So it continues to go along with our strategy as being a great place to do business, and we’re excited about it.
Alexander Hacking: Thanks, Barry. And then just a follow-up, if I may, on the ally rolling mill. How comfortable are you with your ability to source 900,000 tons of scrap or how much you need. I’m not as familiar with the ally scrap market, but it doesn’t seem like there’s particularly a lot of excess scrap. And I guess like how much — just for context, how much does OmniSource handle today, how many tons?
Barry Schneider: Great question. Obviously, I think we’re advantaged by having OmniSource recycled platform because today, not only are they the largest or second largest ferrous scrap recycler that they are clearly the largest nonferrous recycler and they’re recycling somewhere around 500 million pounds of aluminum. We also have a secondary aluminum operation here in Fort Wayne that we’re making, I don’t know, 260 million pounds or thereabouts of secondary aluminum. So we’re not — it’s not a new environment for us. I think we’ve got a great team. We’ve actually hired some incredible talent to supplement our already incredible talent. And so sourcing the material is not a — we don’t believe a major issue. If you look at our strategy, there are two principal kind of scrap streams, you might say.
One is for the automotive industrial base. The other is for Comstock and the UBC scrap is — well, it’s highly available in California. They’re a deposit state. So there’s a lot of aluminum UBC scrap generated up and down the West Coast, currently either moving to Asia or to the Midwest. And similarly, in Mexico, a sort of a UBC scrap arena, so that’s why we’re locating two facilities, two satellite facilities in those scrap-rich areas, like the scrap at the source, molded in the freight of then moving big solid slab versus scrap to the Midwest is at around about half the price. And so we’re not only advantaging ourselves on the scrap collection side but economically on getting that aluminum to the mill.
Alexander Hacking: Okay. Just one follow-up, if I may. This is probably a really dumb question, but I assume the facility can handle primary as well, if required.
Mark Millett: We certainly will. And you don’t — because you’ve got 900,000 tons of just to be clear, of cash need because the yield loss through the system, and when I say yield loss, it’s not what we call of loss. This appears is just sort of a circular within the mill, you still only need roughly 650,000 tons of total input, 20% of which is primary.
Operator: Your next question for today is coming from Bill Peterson with JPMorgan.
William Peterson: Just on Sinton, I think you mentioned hitting stride in the second quarter. How should we think about utilization for the full year? If I recall correctly, I think you had expected on 80% for the full year at the last quarterly earnings call. Is that still the target? Or should we assume a bit lower?
Mark Millett: It’s my target, Barry?
