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Nucor Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day and welcome to the Nucor 2023 Fourth Quarter Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jack Sullivan, General Manager and Investor Relations. Please go ahead.

Jack Sullivan: Thank you and good morning, everyone. Welcome to Nucor’s fourth quarter and year end 2023 earnings review and business update. Leading our call today is Leon Topalian, Chair, President and CEO, along with Steve Laxton, Executive Vice President and CFO. We also have other members of Nucor’s executive team with us, including Dave Sumoski, Chief Operating Officer; Al Behr, responsible for Plate and Structural Products; Brad Ford over Fabricated Construction Products; Noah Hanners, Raw Materials; John Hollatz, Bar and Rebar Fabrication; Doug Jellison, Corporate Strategy; Greg Murphy, Business Services, Sustainability and General Counsel; Dan Needham, Commercial; Rex Query, Sheet and Talent Resources; and Chad Utermark, New Markets and Innovation.

We have posted our fourth quarter earnings release and presentation to the Nucor Investor Relations website. We encourage you to access these materials as we will cover portions of them during the call. Today’s discussion will include the use of non-GAAP financial measures and forward-looking information within the meaning of securities laws. Actual results maybe different than forward-looking statements and involve risks outlined in our Safe Harbor statement and disclosed in Nucor’s SEC filings. The appendix of today’s presentation includes supplemental information and disclosures, along with a reconciliation of non-GAAP financial measures. So with that, let’s turn the call over to Leon.

Leon Topalian: Thanks, Jack and welcome everyone. I’d like to begin by congratulating our 32,000 Nucor teammates for delivering another strong year of financial results. We closed out 2023 with solid performance earning $3.16 per share in the fourth quarter on our way to $18 per share for the full year. This represents the third most profitable year in Nucor’s history behind 2022 and 2021. In fact, Nucor’s combined net earnings over the past 3 years, exceeds the combined net earnings of the last 20 years. This is a testament to the focus and dedication of our team as we execute our strategy to grow the core, expand beyond and live our culture. In keeping with our commitment to shareholders and our balanced approach toward capital allocation, Nucor invested $2.2 billion in CapEx and returned $2.1 billion to shareholders in 2023, representing 46% of our net earnings.

We are coming off the 3 best years in Nucor’s history, but in spite of that, we are even more excited about what lies ahead. The U.S. economy continues to be resilient and steel-intensive megatrends are starting to drive increased demand for the products we make and our focus on expand beyond businesses downstream are generating excellent returns. Turning to our safety performance, 2023 statistically was the safest year in Nucor’s history making 5 straight years of improvement. We also had 29 divisions going the entire year without a recordable injury. We finished the year with a company-wide injury and illness rate of 0.79, which is 17% lower than 2022 and well below the steel industry average. However, with that said, Nucor will not internally acknowledge 2023 as a record year in safety, will not celebrate 2023 as a record year, because on November 3, we lost a Nucor team member to a workplace accident.

Subsequently, on November 9, we had a company-wide safety stand down. It was a chance to honor our fallen team member and his family, reflect on our most important value, safety and reinforce that the health, safety and well-being of every Nucor team member is what matters most. Our team members come to work each and everyday to support themselves, their loved ones and they must go home each and everyday. That is our greatest responsibility to all 32,000 team members who make up our Nucor family. Every leader inside of Nucor is committed to delivering our mission to become the world’s safest steel company and there is no doubt in my mind, we will achieve our goals together. Nucor is the largest and most diversified steel producer in North America.

We pioneered the commercial application of EAF steelmaking over 50 years ago, and today, we own and operate 30 electric arc furnaces with 4 more under construction. EAF steelmaking and our unique entrepreneurial culture have made us the industry leader and our current strategy, we will keep Nucor out in front as we continue to deliver the financial results and capabilities our investors and customers have come to expect. Today, Nucor leads the North American steel industry across financial, operational and environmental criteria. Value creation for shareholders through prudent capital deployment is our primary financial objective. Since the beginning of 2020, we have invested over $12 billion in CapEx and strategic acquisitions to grow our core and expand beyond.

During the same time, our average annual ROE has exceeded 30% and our annualized EPS growth rate has exceeded 40%. In terms of operation, Nucor makes approximately 1 out of every 4 tons of steel produced in the United States. We have a highly efficient business model and our unrivaled breadth of products and capabilities serve the widest range of end markets. Sustainability is a key differentiator for Nucor and a major part of our growth strategy. We are the largest recycler in the Western Hemisphere and among the lowest in greenhouse gas intensity across global steelmaking. And we are taking steps to position us even better for the future. Supplying customers with the sustainable solutions they have come to expect. That’s why we helped create the Global Steel Climate Council and announced a commitment towards net zero steelmaking by 2050 across Scopes 1, 2 and 3.

Our business strategy and investments are driving growth for shareholders. In raw materials, we are leveraging our market intelligence and flexible supply chain to provide more sustainable inputs. We are investing in advanced scrap separation technologies and near zero emission iron-making and we have partnered with ExxonMobil to capture and store up to 800,000 tons of CO2 per year at our Louisiana DRI facility beginning in 2026. In our Steel Mills segment, we are shifting the mix toward higher margin value-added products. We continue to ramp up Brandenburg, the most capable EAF plate mill in the world. We are constructing a state-of-the-art sheet mill in West Virginia. And we are expanding our rebar micro mill footprint, targeting some of the highest growth regions in the U.S. Turning to Steel Products, we have a strategic advantage on the supply side, given the integration between our mills and steel product teams.

We’ll continue to leverage this advantage while pursuing more cross-selling and companion tons through our solutions teams and we are investing in automation and technology to improve efficiency and reduce the risk of injuries. And finally, our Expand Beyond strategy into its steel adjacent platforms is paying off. We are leveraging our core competencies to grow into higher margin businesses aligned with steel-intensive megatrends. We are executing this strategy through a combination of acquisitions and organic growth, including the construction of 2 new utility structure production facilities. For 2023, our Expand Beyond platforms contributed roughly $415 million in EBITDA, led by overhead doors and insulated metal panels. We remain confident in hitting our $700 million EBITDA run-rate goal for Expand Beyond divisions in the coming years.

We believe the American steel industry is still on the front end of megatrends working their way into steel markets. We are starting to see some increased activity in certain markets like bridge and highway, semiconductor chip plants, EV factories and renewable energy. And as we have shared before, Nucor expects the federal programs that support these megatrends to add somewhere between 5 million to 8 million tons of incremental annual demand for steel over the next several years. While the long-term trends look favorable, we have seen some pockets of slower-than-expected activity. For instance, adoption rates for electric vehicles are tracking lower than some have predicted and several offshore wind projects have been canceled or delayed due to supply chain challenges as well as higher costs.

Warehouse starts are expected to decline again in 2024, but we still expect them to stay above pre-pandemic levels. And despite some of these near-term headwinds, Nucor remains optimistic about the longer term prospects for these end markets. Non-res construction is our largest end market and it has proven to be incredibly resilient. Some of the strongest growth is coming from the sharp rise in advanced manufacturing and infrastructure investment, both expected to rise double-digits over the next 2 years according to Dodge construction forecast. This is helping to offset some of the softness we are seeing for more rate sensitive sectors, which should begin to pick up later in the year if interest rate cuts occur as many expect. Before turning it over to Steve, I’d like to share a few thoughts on how Nucor’s business model continues to deliver attractive returns for our shareholders.

From 2020 to 2023, we have generated a combined EBITDA over $30 billion, net earnings of nearly $20 billion, and returned nearly $10 billion to our shareholders. Throughout it all, we have maintained the strongest balance sheet of any North American steel producer, allowing us to grow the company by investing in higher margin, less volatile businesses. As our results demonstrate, Nucor is a growth company. And given our investment plans and the long-term outlook for steel in the U.S., we see more opportunities for growth in the years ahead. With that, I will turn it over to Steve who will share additional details on our financial results and near-term outlook. Steve?

Steve Laxton: Thank you, Leon and thanks to our shareholders for joining us this morning. Nucor ended 2023 on a strong note with fourth quarter consolidated net earnings of $785 million, including $127 million of pre-operating startup cost. We exceeded the midpoint of our guidance due primarily to better-than-expected performance from our Steel Mills segment in the month of December. In addition to solid earnings for the quarter, the power of Nucor’s business model allowed us to generate more than $1.5 billion of operating cash flow during the quarter, with working capital contributing about $250 million of that total. Turning to our operating segment results, our Steel Mills Group generated $588 million of pre-tax earnings in the fourth quarter, a decrease of 33% from the third quarter.

Total steel mill shipments declined 4% from the prior quarter and realized pricing for the segment was lower across all major products. Our mill utilization rate was 74%, down from 77% in the prior quarter, but higher than the 70% in the fourth quarter of 2022. In the back half of the fourth quarter, we saw an uptick in customer confidence as the UAW strikes were resolved and the Federal Reserve signaled the end to interest rate hikes. Shipment volumes increased as the quarter progressed and we began to realize higher pricing for sheet steel consistent with pricing trends in the published indices. We are expecting further improvements in both shipments and realized pricing to favorably impact results in the first quarter of 2024. Our Steel Products segment delivered another strong quarter with pre-tax earnings of $656 million.

This represented just over half the total segment earnings for the fourth quarter and is the sixth consecutive quarter with Steel Products contributed at least 40% of our total segment earnings. For the year, Steel Products generated segment earnings of $3.4 billion, its second best year behind 2022. Realized pricing and margins continued to moderate in the fourth quarter, but on an earnings per ton basis for the full year of 2023, only gave up about 6 percentage points. Our Raw Materials segment posted a pre-tax loss of about $14 million for the quarter. Compared to the prior quarter, pricing was relatively stable, but output was lower and per ton cost rose due to planned outages at our DRI facilities. Now turning to capital allocation, with $2.2 billion in capital spending and $2.1 billion in shareholder returns in 2023, Nucor once again demonstrated a measured and balanced approach to its capital deployment.

With respect to our shareholder returns, it’s worth noting that next week we will pay our 203rd consecutive quarterly cash dividend in the amount of $0.54 per share. This represents a 6% increase over the prior dividend. As Leon highlighted, Nucor is taking meaningful steps to grow its earnings power and cash flow potential. Since 2018, we have been able to increase our dividend by 42% and reduced our shares outstanding by 23%. For the foreseeable future, we remain confident we will continue to be able to return at least 40% of our net earnings to shareholders by way of dividends and share repurchases. A cornerstone of our capital allocation framework is a commitment to a strong investment grade credit rating and liquidity that enables our strategy.

Nucor’s balance sheet remains well positioned to enable continued execution of our balanced capital allocation philosophy, with a debt-to-capital ratio of 25% and a debt-to-EBITDA ratio of less than 1%. We have a long history of putting capital to use and returning capital to shareholders. Given that principle and our ambitious growth plans, we do expect to end 2024 with a lower cash balance than when we started the year. We finished 2023 with a strong cash position for several reasons. First, with more than $7 billion of cash from operations, we generated robust cash flows throughout the year. Second, we experienced some timing delays in our planned capital spending. And finally, we were preserving liquidity for possible acquisition opportunities, which ultimately did not materialize.

Now that we have broken ground in West Virginia, the pace of our capital spending should accelerate. For 2024, we expect total capital expenditures of approximately $3.5 billion, with our 7 largest growth projects represented approximately two-thirds of this total. In addition, we are firmly committed to growing our portfolio of solutions and expand beyond footprint through value-creating acquisitions. To that end, we are actively fostering a pipeline of acquisition candidates. As always, we will be selective, opportunistic and disciplined in our approach. But unlike our organic growth strategy, the timing and size of potential acquisitions is far less predictable. Looking ahead to the first quarter of 2024, we expect consolidated earnings to be higher than the prior quarter, with improved performance from the steel mills and raw materials segments, partially offset by weaker earnings from the Steel Products segment.

For the Steel Mills segment, we expect quarterly earnings to increase due to higher realized pricing and higher volumes, in particular, from our sheet mills. In the Steel Products segment, we expect lower realized pricing compared with the prior quarter. Across most of our steel products groups, current backlogs are consistent with historic norms, while margins have remained higher than historic averages. For the Raw Materials segment, we expect modest profitability on higher shipments and relatively stable pricing. Looking ahead, 2024 appears to have a more stable outlook than may have been expected just a few months ago, with a reasonable probability of seeing the much discussed soft landing. As Leon mentioned in his opening remarks, the U.S. economy appears relatively healthy with inflation and unemployment metrics continuing to trend favorably.

Market expectations for gradual declines in interest rates could result in more demand for consumer durables, light vehicles and increased activity across a broad construction sector. As the most diversified producer of steel and steel products with the widest array of market solutions, these potential expectations bode well for Nucor. Looking beyond 2024, several steel-intensive megatrends are only in the early stages. While economic cycles will continue to impact the markets, we broadly see positive demand drivers that provide a constructive backdrop to Nucor’s midterm growth potential. With that, we’d be happy to take your questions. Operator, if you would, please open the line for Q&A.

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Operator: [Operator Instructions] Our first question comes from Curt Woodworth with UBS. Please go ahead.

Curt Woodworth: Yes. Thank you. Good morning, Leon and team. And I am sorry to hear that you guys lost a team member in November, but overall congratulations on what’s been a pretty strong safety performance the past several years. My first question is more end market related though in your slide deck, you did have a generally constructive outlook to use your words with regards to commercial construction as well as infrastructure. But when we look at the volume performance of the Bar and Beam mills and even plates to some degree, it’s been pretty choppy to down for almost 2 years now. So I guess what gives you confidence that, that market can inflect? What signs are you seeing in terms of either increased bidding activity on the Highway Bridge side? Or how your order book is shaping up?

Leon Topalian: Yes, Curt, I’ll kick it off, and if there is any other comments for our team. I’ll certainly let them jump in and thank you for the condolences regarding our team number. As we’ve mentioned for decades now, the health, safety and well-being of our 32,000 Nucor team member family is the greatest responsibility we all bear each and every day. They are the ones that are delivering every result we’re about to talk about. So again, thank you for acknowledging that. It’s interesting. There is a lot of talk about new capacity, particularly in the sheet. And we get a lot of questions, Curt, as you know, around well, as we think about new market entrants or increased demand won’t that flattening of the cost curve change the profile and earnings.

And what I would point to is what you really asked about is the longs as we look at structural and while we don’t break out the individual structural mill Nucor-Yamato were Berkley being on the financial performance or the individual rebar mills. I would tell you the performance of our long products divisions has been incredible from a financial result. They are generating incredible returns for our company. Nucor-Yamato is operating at a much higher utilization rate. And so over the last 2 or 3 years and they have been 10 prior, I think prior to the pandemic our average utilization rate at NYS, for example, is in the upper 60s to low 70s that shifted much higher to the mid to upper 70s, low 80s. So that flow through and that run rate is generating great returns.

So I would tell you, the outlook and continued demand for our structural products and loan products remains pretty optimistic. Again, we’ve seen incredibly consistent returns in our longest products divisions and groups that we think will continue into 2024.

Dan Needham: Curt, this is Dan. I’ll give a little perspective on what we see in the market, in particular, with funding programs as well. But if you think of the trends, right now, we are seeing activity in some of the reshoring in the advanced manufacturing, so you are seeing in the EV battery plants those types of things. From a standpoint of IRA, CHIPS and the Infrastructure Act, there is more activity going on on the energy side with the IRA and also with the CHIPS. We are active in shipping to multiple CHIPS plants that are under construction today. From an IRA standpoint, we have seen a lot of activity in solar, particularly 2023 was a record shipment year for us on Torque 2 to go into these solar projects. And we see in that growing into 2024.

It is about 22 gigawatts built in ‘23. We say go in to 22 – about 36 gigawatts in ‘24. What I would say is some of the headwinds, we see the peak of those activities in the volume and demand coming in the next few years. And the reason for that, there is a couple of things that are headwinds now. One is we have talked about on past calls is the labor constraints. That’s real out there. A lot of these projects are competing for the same labor pool. So we do see that having an impact. And then the other thing that’s also impacting the pace of these projects is really around regulations. And what I mean by that is getting access to energy for some of these plants is important. That’s a slow process. The other thing is environmental permitting.

So we’re seeing some headwinds with those, but not just delaying the projects. And lastly, around the infrastructure it can take upwards of 18 months to go from when these projects are announced is actually when they start getting shipped. So that’s why we still see some optimism and are very positive in the outlook and we’re well positioned to take advantage of all of these trends going forward.

Curt Woodworth: Great. And then just as a follow-up for Steel Products. You noted incremental pricing weakness in the quarter. Can you just comment – can you give any more specificity around how you see margins trending in this quarter or the margin profile of the backlog? I mean obviously, there is a lot of moving pieces within the Steel Products segment. But do you have a view on where margins should normalize? And then with respect to getting up to that $700 million EBITDA number, can you do that organically or would you need to acquire as well to reach that? Thank you and best of luck.

Leon Topalian: Yes, Curt, that’s a lot to unpack in there. What I would tell you on the macro, and I’ll let Brad Ford share a little bit more of the details, could be more proud of how our products groups and teams and divisions have performed over the last several years. The non-res sector of our economy has remained incredibly resilient. We had 10 straight quarters over $1 billion earned in that business on the downstream side of our portfolio. And while it was a little bit under that for Q4 of ‘23, its continuing performance is strong. We’re seeing order entry rates that are strong. As we move into Q1, we see that moving upwards. I’m not going to get detailed on the margins, but we see that improving. And so Brad, maybe provide a little bit more context to what we’re seeing as we enter 2024.

Brad Ford: Yes. Thanks, Leon, and thanks for the question. Like Leon, I couldn’t be more pleased with the performance of our downstream product teams. Performance of safety, the clear step change in earnings and the solutions and value we’re providing to our customers and our team is executing extremely well. Joist and Deck tends to get a lot of headlines. And while Joist and Deck is coming off its second best year ever, Nucor Downstream Products is far more than just Joist and Deck. For example, our insulated metal panel group is coming off a record year; rebar fabrication, a record year, pre-engineered metal building, second best year ever; our tubular products group, second best year ever; garage door, fasters, towers, structures, warehouse, systems, skyline on down the list.

This amazing product diversity positions Nucor uniquely to take advantage of strength in a variety of the market segments. As Dan mentioned, we see strength in advanced manufacturing and data centers supported by IRA and CHIPS infrastructure supported by the IIJA. We also see strength in healthcare, education and warehousing while down is still forecasted significantly higher than pre-pandemic levels. Our ability to offer this breadth of downstream products is unparalleled in the industry. These are secure, sustainable solutions for our customers and partners that continue to differentiate Nucor as the supplier of choice. We’re coming off a period of in ‘21 and ‘22 of extremely high demand. And while we see demand moderating back towards historical levels, it’s still quite strong.

And while volumes have moderated, our backlog remains very healthy, and pricing has stabilized at levels far higher than historical averages. In fact, Q4, industry-wide bookings in Joist and Deck were the highest in six quarters and 40% higher than Q4 of last year. So we’re optimistic, and we’re entering 24 with more market activity and momentum than we entered in 2023.

Curt Woodworth: Great. Thank you very much.

Leon Topalian: Thanks, Curt.

Operator: Our next question comes from Katja Jancic with BMO Capital Markets. Please go ahead.

Katja Jancic: Hi, thank you for taking my question. At your Investor Day in 2022, you provided an EBITDA bridge that would get you to normalized EBITDA of about $6.7 billion. Can you provide an update on how you’re progressing on reaching that goal?

Leon Topalian: Yes. I’d actually been pleased to. So in November of 2022, we stood in New York and rolled out the most comprehensive detailed analysis that we’ve ever published before to show you as the analysts what we were going to do and the accountability by which we’re going to hold ourselves to that through-cycle EBITDA with the completion of our CapEx investments would yield about a $6.7 billion through-cycle EBITDA performance. I’d tell you at $7.4 million for the third best year in Nucor, we’re doing really well and that’s going to continue to improve because not all those projects have come to fruition yet. We’ve got galv lines being built, we’ve got our new micro mill being built in Lexington, North Carolina, we’ve got the investments in Kingman, Arizona that we’re making, where we’re expanding our resource pool and how we bring these products to market.

So I would tell you we’re doing incredibly well. And again, we will look back at times and look – coming out of the cycle, did we hit the trough? And what I would tell you is I’m really proud of our earnings. I’m proud of the way the team has been able to accomplish those. And then again, the results that we’ve been able to see, as we shared with you on the opening remarks, to generate $30 billion over the last 4 years, $20 billion in net earnings and 10% or $10 billion given back to our shareholders has been an incredible well disciplined growth strategy and that’s going to continue. We’re going to be very disciplined in how we think about capital allocation moving forward. Steve, anything you’d like to add on as we continue to grow and looking at that run rate of 6.7%?

Steve Laxton: Yes. Katja, just to add on to what Leon said, a lot of those projects are still ahead of us. If you look at some of the biggest ones in our company’s history like West Virginia, those are only in the early stages of their product life. So they haven’t even started to contribute. And in terms of our Expand Beyond investments, we told you that we felt confident those investments would hit $700 million in EBITDA. And we still – we would reaffirm that today and tell you we feel very confident we will hit 700 of their run rates at the end there. So there is still more to come on that. And likely unsaid, cycles go where they go, but we’re continuing to execute on our business on all fronts.

Katja Jancic: And maybe just quickly on the Brandenburg plate mill. How much do you expect the mill will produce in ‘24? I think previously you were expecting about 500,000 tons?

Al Behr: Yes, Katja, this is Al Behr. That’s still our number for 2024. I would expect to be there or north of it. I’m just super proud of that team on how they have worked through the ramp-up there. We continue to be focused on the new part of the market that we can’t service out of our existing portfolio, and we remain mindful of the returns we generate through there at Herbert and Tuscaloosa that contributed to the strong results you see in front of you, and we want to add to that out of Brandenburg. So we’re going to continue that thoughtful process, but Q4 was a meaningful productive quarter for that team. We continue to set new standards. We shipped another Nucor first of 120-foot long plates to a bridge fabricator, 30 tons a piece.

We ship them by truck and by rail. So these are the kinds of things that we will be able to do on a Brandenburg that’s never been done before by Nucor or perhaps the rest of the industry, and we’re just excited as we roll into this year. But that remains our number, and we’re confident in that.

Katja Jancic: Thank you.

Leon Topalian: Thank you.

Operator: The next question comes from Timna Tanners with Wolfe Research. Please go ahead.

Timna Tanners: Yes. Hey, good morning, team. I wanted to ask a little bit more about capital allocation. I guess first off, the comment on lower cash balance. What do you think is the right level, because clearly, it’s been running kind of high recently? So just to get a little more color there? And secondly, you made mention of preserving liquidity for potential M&A and acquisition that you thought could and it didn’t. And here at an industry conference, there is a lot of chatter about Nucor’s supposed involvement in the acquisition process for U.S. Steel. Just wondering if you can comment on that or give us some more color perhaps on your M&A pipeline, what that might look like, what types of companies, etcetera?

Leon Topalian: Yes, Timna, I’ll kick it off and then let Steve. So I’ll begin with the second part of your question, which, again, obviously, the proxies have Nucor took a hard look at some of the select assets within the U.S. Steel portfolio. But at the end of the day, we’re not going to overpay for any assets. We’re going to continue to be very discipline and how we thing about growth. Some of the cash generated was just stronger results and stronger shipments and some pricing and flow through that we didn’t fully anticipate. But I would tell you again from my perspective, we continue to remain an incredibly undervalued stock as we think about the growth metrics that have already shared won’t repeat again, but at 7.5x EBITDA, I think we are a great value in terms of the things that we’re doing in producing.

In regards of who ends up owning U.S. fields assets, Nucor today’s market cap is larger than the next three largest combined steel companies in North America. We are the industry leader. And so again, as we look at our strategy and our growth we’re going to be incredibly disciplined in making sure that the investments we make in our core and expand beyond are delivering the results our shareholders expect. And then they expand beyond particularly that it’s providing some insulation to the traditional sickle county of steel that we’re looking for the steel adjacent downstream businesses that, again, operate a little countercyclical to what we’re seeing in steel and we’re seeing those, again, manifest themselves for CHI, the megatrends that we’re seeing in towers and structures and some of the other businesses that we’ve acquired over the last 3 or 4 years.

Steve Laxton: Hey, Timna, this is Steve. I’ll just add to what Leon said that we don’t – we have such a good opportunity in front of us. And you highlight us the areas that we think about growth. So we’re always going to keep enough liquidity to move on the things we need to move on. And we also highlighted that we will spend around $3.5 billion in CapEx in this year. So that’s a higher rate than our historic averages. Despite that, we will and we will – Leon highlighted this one, too. We still feel like our stock is a good buy here. So you’ll see us at a higher pace for share buybacks in Q1 than we did last year.

Timna Tanners: Okay, that’s super helpful. Thank you for the color. I guess one quick one, if I could add. I know there was a question already about Brandenburg run rate, but I was just wondering, is there still more room to see Gallatin on an annualized basis ramp up? Or is it already pretty fully running out those to the expansion? Thanks again.

Leon Topalian: Sorry, was your question on Gallatin’s ramp-up?

Timna Tanners: Yes, the status of that, if you could, please?

Leon Topalian: Okay. Yes, I’ll provide some of – high level. What I would tell you in the last 3 or 4 months of 2023, the team has executed incredibly well. We have seen daily, weekly, monthly production records set at that facility. They are – have realized the full run rate potential of that mill and now are operating at an extremely high level. So, they have turned – more than turned in the quarter and again, are producing at or near run rate capabilities, and we will continue that as we move into 2024.

Timna Tanners: Okay. Thanks again. Appreciate it.

Leon Topalian: Thanks.

Operator: The next question comes from Bill Peterson with JPMorgan. Please go ahead.

Bill Peterson: Yes. Hi. Good morning and thanks for taking my questions. So, I guess first, in the plate market, I guess what are your views on the plate market given the step-up in service center inventories we saw in December and the year-on-year decline in shipments despite Brandenburg’s ramp? And I guess following up on that Brandenburg sort of ramp commentary, when can we expect to see Brandenburg turn profitable this year?

Al Behr: Yes. Thanks Bill. This is Al Behr again, I will comment on the plates stuff. We did have an increase year-over-year in shipments by 11% and part of that is, of course, Brandenburg. But just speaking about the plate market overall, I would say we are reasonably optimistic. I mean there is areas of weakness that get some headlines and higher interest rates, are a compressive force when it comes to vertical construction where plate is used. But there is plenty of bright spots in other areas like power transmission and railcar manufacturing. Heavy equipment is still strong. It’s probably declining, but it’s still strong and a good pull-through for us. So – and then of course, you have got the bridge and highway tons that are mostly yet to come, and that will come for years in the future.

So, our Skyline business that Brad mentioned pulls a lot of plate tons through almost all of their work is infrastructure related, not just bridge and highway, but many other types of projects. So, our view is not that the plate market is going to be wildly robust, but it’s going to remain pretty steady and has plenty of tailwinds to offset some of the other forces working against us.

Bill Peterson: And on the Brandenburg profitability timeline.

Al Behr: I would expect we hit a run rate of breakeven sometime in the middle of the year.

Bill Peterson: Okay. Thanks for that. Second question is a little bit longer dated, longer focused. But in the last earnings presentation, there has been certainly less on the decarbonization efforts. But with the team having many multi-faceted approach across biocarbon and green pig iron, the CCS program you mentioned, power generation, zero emission iron and so forth. I guess are any of these showing up in 2024 within your investments in CapEx, for example, the CCS program that you have planned for ‘26? I guess how should we think about these programs in terms of what’s leading and how they flow through over the next several years?

Leon Topalian: Yes. Look, I will begin and Greg Murphy, our EVP in Business Services and Sustainability can jump in as well. But from a high level, look, it’s a great question. One of the beautiful things about Nucor and our positioning is this, one of the top five recyclers in the world and certainly the largest in the Western Hemisphere. Our EAF steelmaking technology means that we don’t have to take the billions and billions and billions of dollars of profit we are making in pivot in transition from the old style integrated facilities. You are seeing headlines around the world companies in Europe that are – have made the pledge to 100% switch to EAF steelmaking technologies because they have no choice. The question in my mind isn’t about and if.

This nation is going to move to a greener, more sustainable platform as we rebuild, restore and continue to grow the digital economy. The real question in my mind is the pace in which we changed, do we have the infrastructure, do we have the grid hardening, do we have the resources across the United States to be able to effectively help the EV users power their cars at homes and everything else. But it’s a long-winded way to get to the answer of your question is if you think about the PPAs that were part of, you think about some of these investment projects, the Louisiana partnership in Exxon, they didn’t cost us anything because of the strength of our balance sheet, the strength of Nucor’s leadership position, it wasn’t a huge outlay of cash, if you think about some of the other investments that are smaller in size.

So, they are not – there are tens of millions rather than hundreds of billions. It’s positioning ourselves and finding partners out there that are doing different things with carbon and biochar. We are looking at technologies in Europe that are producing pig iron at or near net zero embodied carbon. So, there is a number of things that we are examining that are not at this point, large scale from a CapEx standpoint. Greg, anything you would add to that?

Greg Murphy: Yes. I guess on the timing issue, we see the Louisiana project beginning to pay dividends probably in 2025. But as Leon said, that is not at all a capital-intensive investment for Nucor. We were able to structure that as an over defense solution, working with a partner who really understands the geology and the petrochemical attributes there in ExxonMobil. And with the 45Q tax credit, that has proven to be a financial winner for Nucor really from beginning to end. And a lot of the other strategies that we will deploy as an EAF producer go to things like our source and supply of raw materials and how we can get lower in body carbon raw materials, how we can use obsolete scrap and extract some of the tramp elements from that and use that to replace things like pig iron.

So, from a capital intensity standpoint, Leon nailed it. We are in a well-positioned place. And really, what we are trying to do is to take a world-class level and make it even better. And we are very, very excited. The last thing I would mention is Scope 2 emissions, that’s a big opportunity for Nucor. You have seen us make investments in both nuclear division [ph] and nuclear fusion technology where we believe that’s going to be an essential element in delivering reliable, affordable base load power in the future that’s zero carbon. That’s still going to be a number of years out into the future. But we believe it’s going to be absolutely essential to supplement the solar, wind and other renewable clean sources in the future. But again, we don’t want to build nuclear power plants.

We want to be the off-takers and use that power.

Bill Peterson: Thanks for the conference and answers and good luck with the execution.

Leon Topalian: Thanks Bill.

Operator: The next question comes from Martin Englert with Seaport Research Partners. Please go ahead.

Martin Englert: Good morning everyone.

Leon Topalian: Good morning.

Martin Englert: Question on conversion costs, they were pretty similar year-on-year around $465 per ton. Just wanted to see if what your thoughts were if this was a reasonable range to expect on a go-forward basis considering today’s operating structure, or is this something that has an opportunity to come down as start-up costs start to subside from some of the growth projects?

Dave Sumoski: Yes. This is Dave Sumoski. Certainly, some of the growth projects, especially Gallatin has – that’s increased our cost based on some of the things that we have done up there and some of the – it was a little bit slower but starting than we had expected. So, we can expect the costs to come down a little bit, but not a lot. I think Gelatin is running at a really good rate now, where I will say we were probably here near full run rate, so we are going to be in a good spot this year.

Martin Englert: Okay. And I just wanted to circle back on the discussion of plate and structural and this is from the mill perspective, looking at the plate volumes and the beam volumes. There was just year-on-year divergent trend when you look at the quarterly where you saw price come down in 4Q, but had been growing and then you have the opposite in structural products. Anything else to add there as far as color as to why those would have pivoted so differently through the course of the year?

Al Behr: Sure, Martin. Hey. This is Al Behr again. I will start with plate, so year-over-year growth, but you see same quarter year-over-year, we took a step back. A lot of that is just we are not going to chase cheap tons. And in Q4, we had some of the imports come in, and those spreads just got to be where we are not going to load our books with tons that aren’t profitable and aren’t going to drive returns for us. So, I think that will change as we move forward, and I spoke to our outlook for 2024 in plate. In beams, you saw a really great quarter of beams. Part of that speaks to the resiliency of the market and Brad spoke to that, and we have spoke to that. It just remains a resilient market, and there is plenty of areas of strength where we can go and compete and win and you see that.

But part of that is also the breadth of Nucor’s portfolio. And some of those tons, you see in the beam group are tons to our downstream customers, Skyline being one of them, that won some nice projects and you will see them ship those tons through the first half to say, convert and perform. So, there is just always – Nucor’s success is a multilayered story. There is always a cylinder firing. And the numbers that you see, I think just reflect that, especially on the beams side.

Martin Englert: Okay. I appreciate the color. Thank you and congratulations on the long-term return profile.

Leon Topalian: Thank you, Martin.

Operator: Next question comes from Tristan Gresser with BNP. Please go ahead.

Tristan Gresser: Yes. Hi. Thank you for taking my questions. The first one is on capital allocation, and thank you for touching on the M&A situation. If I could just have a quick follow-up there, when you look at the pipeline of opportunities, is it fair to assume the most – well, all those opportunities are inside the U.S. and you are not looking at opportunities abroad. And in the past, when you look at the balance between organic and inorganic, I wonder if you could comment a little bit where in the priority list, greenfield projects, you par essentially. That’s my first question. Thank you.

Leon Topalian: Tristan, I will kick it off and certainly let Steve Laxton and share any additional comments. But if you – as you look at our M&A pipeline, you think about our strategy. As we think about growing the core, expanding beyond, what we said is roughly we expect over the next 5 years, 6 years, that we would begin to generate about 20% to 25% of our overall revenues through expand beyond businesses. So, we are moving to that. So, it sort of gives you a rough breakdown to where you are going to see us continue to think about growth, where we are going to continue to channel our capital dollars. Regarding the geography, I would tell you, it’s probably a safe bet that Nucor is going to stay in North America though that’s the sector this economy that we know the best, where we have the most advantages to use the strength of Nucor from our culture, our team, our conversion model and understanding.

As the market leader in 12 of the 14 major steel market and categories, we have been in business a long time. We understand the boundaries around this industry, and we also understand our customers and where they are wanting to go. We are making investments not for our benefits. We are making investments not to be the largest by volume. We are being disciplined in those investments to create capability sets that our customers continue to grow their businesses and continue to flourish.

Tristan Gresser: Alright. That’s helpful. Moving on to maybe the rebar market, can you discuss a little bit the demand trends you have been seeing there over the past a couple of weeks? And we have seen the price hikes coming through, putting an end to some metal spread compression. Do you see any reason on the ground to expect further moderation, or you believe the market has now find kind of a new equilibrium there? Thank you.

John Hollatz: Yes. Tristan, this is John Hollatz. We did see some improved margins in rebar in the fourth quarter. And over the course of the year, rebar remained pretty steady as we have talked about these infrastructure projects and other demand and construction continuing to grow. We are bullish on the rebar market for the future.

Tristan Gresser: Okay. That’s clear. Maybe last question then on plate, I know it has been discussed a bit, but in your outlook, the weakness you are seeing in heavy equipment or earthmoving machinery, how new is that? How severe is it? And in terms of outlook, I think you mentioned something, you said it would be steady. Should I understand it as weakness – those incoming part of – portion of weakness being offset by more supported construction infrastructure that’s coming on?

Al Behr: Yes. Tristan, Al again. Is your question primarily just around that heavy equipment piece? I want to make sure I get that right.

Tristan Gresser: Yes, the kind of the red dot you put in the table and that includes heavy equipment, earth moving machinery. So, some weakness you are seeing there, just trying to figure out if that’s new and if it’s severe. And then when you look at the outlook for metal spreads for plate, they have been pretty steady in January. Is that something you expect to continue, or do you think that weakness you just flagged this could potentially imply some further moderation there?

Al Behr: Okay. Let me address the heavy equipment piece. My comments about it declining, I wouldn’t say are new in terms of the decline in that sector. That’s been happening through the second half of the year. I wouldn’t say we see that as a really strong decline going into 2024 because there is obviously the infrastructure, there is going to be some spending in that end-use market that will keep that somewhat buoy, but we do see it continuing to decline a bit as one of several end markets where we serve with plates. So, all of that put together with non-res construction and some of the other highlights that we talked about in those markets, our outlook for plate is relatively optimistic just in terms of small, like low-single digit incremental growth year-over-year, that there is plenty of different parts where we can compete separate from the ramp-up that we will have in Brandenburg, where we will grab some incremental time just to apply that alone.

Is that helpful?

Tristan Gresser: Yes, that’s really helpful. Thank you for the color.

Leon Topalian: Thank you.

Operator: The next question comes from Curt Woodworth with UBS. Please go ahead.

Curt Woodworth: Thank you. I just had a quick follow-up on capital spending outlook. So, of the growth capital you have outlined for this year, how much of that will carry over into next year? And can you just remind us on the timeline of when you think Steel West Virginia will start to ramp? And then you also noted a potential, I think new micro mill bar project in the Pacific Northwest, if you could just comment on that. Thank you.

Steve Laxton: Yes. Curt, this is Steve. The $3.5 billion projection is our expectation for 2024. And I think if you are trying to extrapolate what future years are going to be, some of those projects like West Virginia are going to push our capital spending into ‘25 higher than historic averages. But likely, if you are potentially not something, it’s probably below that $3.5 billion, if you are trying to look for a direction, but north of $3 billion, if I would guess. And in terms of when West Virginia is completed, it will be in 2026. So, that’s a project that will keep going for some time for us.

Leon Topalian: And then, Curt, your last question on the exploration in the Pacific Northwest. What I would tell you is, we are doing just that. Again, it’s a market we have been in for two decades. Our team in Seattle continues to do an incredible job. And again, we are going to continue to evaluate that market, recognizing the customers that we serve in that market. And where does that most make sense and stay tuned.

Curt Woodworth: Thank you.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Leon Topalian for any closing remarks.

Leon Topalian: In closing, I just want to say thank you to our Nucor team members for another great year in 2023 as we begin ‘24, let’s make sure we take care of our most important value the health, safety and well-being of our Nucor family. Thank you to our customers for the trust you place in us with each and every order and thank you to our shareholders for the valuable capital that you entrust us with each and every day. Have a great day.

Operator: The conference has now concluded. Thank you for attending today’s presentation.