Good day, everyone and welcome to the Nucor Corporation Third Quarter of 2022 Earnings Call. As a reminder, today’s call is being recorded. Certain statements made during this conference call will be forward-looking statements that involve risks and uncertainties. The words we expect, believe, anticipate and variations of such words and similar expressions are intended to identify those forward-looking statements, which are based on management’s current expectations and information that is currently available. Although Nucor believes they are based on reasonable assumptions, there can be no assurance that future events will not affect their accuracy. More information about the risks and uncertainties relating to these forward-looking statements may be found in Nucor’s latest 10-K and subsequently filed 10-Qs, which are available on the SEC’s and Nucor’s websites. The forward-looking statements made in this conference call speak only as of this date and Nucor does not assume any obligation to update them, either as a result of new information, future events or otherwise. For opening remarks and introductions, I would like to turn the call over to Mr. Leon Topalian, President and Chief Executive Officer of Nucor Corporation. Please go ahead, sir.

Good afternoon and thank you for joining us for our third quarter earnings call. Joining the call today are other members of Nucor’s executive team, including Dave Sumoski, Chief Operating Officer; Steve Laxton, Chief Financial Officer; Al Behr, responsible for Plate and Structural Products; John Hollatz, responsible for Bar, Engineered Bar and Rebar Fab; Greg Murphy, responsible for Business Services and our General Counsel; Dan Needham, responsible for our commercial strategy; Rex Query, responsible for Sheet and Tubular Products; and Chad Utermark, responsible for New Markets and Innovation. As our teammates continue to serve our customers in what we anticipate will be a record year for Nucor financially, we have not lost focus on our most important goal of becoming the world’s safest steel company. After two record-setting safety years in 2020 and 2021, we are on pace for the safest year in Nucor’s history in 2022. I want to acknowledge the progress demonstrated by all of our teammates as they continue to take care of our most important value. I’d also like to thank and give a shout out to our sheet and engineered bar teams for achieving world-class safety performance so far this year, and I want to encourage all of our team members to maintain their focus on safety so we can again achieve our most important goal that we have set for our company. Regarding our financial results in the third quarter, we posted earnings of $6.50 per share. And through the first 9 months of this year, we have earned $23.85 per diluted share, setting an all-time record for Nucor Corporation. Our earnings in the third quarter were down compared to the record high levels we achieved in the first two quarters of the year. And as we indicated in our guidance, earnings from our steel mill segments were lower in the third quarter due to metal margin contraction and reduced shipping volumes, particularly at our sheet and plate mills. Prices have decreased more rapidly than our raw material costs, and we have also had planned outages at several of our mills. The ongoing war in Ukraine, dynamic changes in energy cost, and shifting monetary policy have amplified economic uncertainty. Even with this uncertainty, we continue to see good demand here in the United States, particularly in our Steel Products segments, which had strong earnings again in the third quarter. Their performance was largely the result of continued robust demand from the non-res construction market. U.S. Census Bureau data reflects that the total domestic non-res construction spending hit a record in August at $79.4 billion. Steve Laxton is going to provide more details on the financial performance of our three business segments and the outlook for the final quarter of the year. Although increased economic uncertainty and lower pricing for many steel grades mean it’s unlikely we will see more record highs for the rest of the year, we believe that the medium and long-term outlook for our business is quite positive. We continue to execute on our various capital investment projects so that we are well positioned to seize market opportunities as they evolve. Consistent reinvestment in our businesses has been the critical factor enabling value creation by our team over the years. The construction and startup of our Nucor Steel Brandenburg plate mill continues to progress incredibly well with respect to safety, budget, and schedule. The Brandenburg team is delivering one of the safest construction projects in Nucor’s history. The Brandenburg team has already commissioned the electric arc furnace, the ladle metallurgical furnace, and anticipates commissioning the vacuum tank degasser and caster in the next several weeks. Commissioning is also underway in the rolling mill area, positioning the team to produce its first plate products by year’s end. The startup this year will have our state-of-the-art mill ready to enter the market in 2023. We also announced that Brandenburg is publicly registered to pursue LEED version 4 for building and design certification. In a continued trend of environmental leadership as a company, Nucor Steel Brandenburg is the first steel mill in the world to pursue certification under LEED version 4, which is more stringent than previously rating systems. The new plate mill will play a key role in supplying sustainable steel to build our clean energy infrastructure. It will be one of very few mills worldwide and the only one in the Western Hemisphere capable of supplying the critical steel components required to build offshore wind farms. I’d like to congratulate our entire Nucor Brandenburg team. The ramp-up at Nucor Steel Gallatin continues to progress, although we anticipated a full run-rate production by the end of this year, we now expect that this will occur in Q1 of 2023. The majority of our startup delays have centered around equipment sequencing, and remember that this upgrade was a complete modernization of the entire facility, including new automation software throughout the mill. This investment, combined with the galvanizing line we added in 2019, the addition of the recently purchased pickle line and the two mills currently under construction, dramatically expands the breadth of market solutions our Gallatin mill can provide. Collectively, these efforts position Gallatin with a higher, more value-added product suite and will enable our team to generate higher profit margins as we move forward. We are proud of the work our team is doing to safely bring the Gallatin facility to its full production capability for our customers. The third quarter was also the first full quarter of operating CHI overhead doors since closing on the acquisition in June. We continue to work closely with the CHI team to integrate them into Nucor, and we are already realizing supply chain efficiencies because of the acquisition. We are also working to capitalize on incremental sales opportunities now that CHI is part of Nucor. We are very excited about the growth potential of this new portion of our business, and we are on track for a record 2022 and ahead of our acquisition model expectations. We also announced in the third quarter that we will be adding a melt shop at our Kingman, Arizona facility. The new $100 million melt shop will have the capacity to produce 600,000 tons annually and create approximately 140 new full-time jobs. Kingman is currently a rolling mill, and we are leveraging that existing footprint and adding melt shop capacity there to efficiently meet the growing demand for rebar in the Western U.S. Lastly, at the end of the third quarter, we announced that the Nucor Board of Directors approved the construction of the galvanizing line at our Nucor Steel Berkeley sheet mill that is expected to begin operations in mid-2025. The Board also approved an additional galvanizing line to be constructed in the Western United States, with details to be announced at a future date. The new Berkeley line will be our eighth wholly-owned galvanizing line. These investments further advance our strategy of shifting our mix to higher margin value-added products and capitalizing on sustainability trends that are driving more growth opportunities for Nucor. Turning to Washington for a moment. During the third quarter, Congress passed the CHIPS Act and the Inflation Reduction Act, two pieces of legislation that will strengthen domestic manufacturing and create opportunities in the future for the American steel industry. The CHIPS Act promotes semiconductor manufacturing here at home, which is strengthening our supply chains and helping us unleash a manufacturing renaissance across the United States. The Inflation Reduction Act invests in the domestic manufacturing of clean technologies to reduce emissions. It also contains provisions that encourage the procurement of American-made steel products in clean energy infrastructure. Incentives to build our clean energy future with low emission steel produced by the U.S. industry give us a competitive advantage. And finally, as we have mentioned in previous calls, we expect to start seeing the impacts of new federal infrastructure spending in 2023 as states continue to move forward with their projects. With our expanded capabilities and sustainable steel products, we are well positioned to supply the broad array of solutions that are essential to these efforts. And we are confident that as we do so, our efficient and flexible business model and diversified product portfolio will enable us to deliver very attractive returns on our shareholders’ valuable capital. Before I turn it over to Steve, I want to thank our Nucor team for your incredible hard work and great performance through the first 9 months of this year. And as we navigate the volatility and uncertainty in the market, we must stay focused on working safely and operating reliably to take great care of our customers. Let’s finish this year having 2022 be the safest and most profitable year in Nucor’s history. Now, Steve Laxton will share with you additional details about our third quarter performance and our outlook through the end of the year.

Thanks, Leon. This quarter’s earnings of $6.50 per diluted share represent the fifth best quarterly results ever posted by Nucor. Year-to-date earnings per share of $23.85 actually beats the record we established last year for a full year EPS of $23.16. And operating cash flow through the first 9 months of the year was approximately $7.5 billion, also setting a new annual record. The entire Nucor team should be very proud of these results. Comparing this quarter’s results to the prior quarter, our steel segment earnings were down about 55%. Shipment volumes were down about 9%, with sheet and plate volumes relatively weaker and long products more stable. Overall, metal margins contracted by approximately 11% as lower realized pricing for sheet, plate, and bars more than offset reduced metallics cost. Conversion costs were higher due to lower utilization and higher energy costs. Energy cost per ton produced increased by 17% during the quarter and now constitute about $57 per ton. Some of these costs were offset by natural gas hedges we had in place as well as increased earnings from our producing gas wells in the Piceance Basin of Colorado. We continue to see very strong performance from our Steel Products segment. That segment’s earnings were up about 6% on last quarter’s record performance. Joist and deck results improved from the second quarter, while tubular products profits declined. Joist and deck volumes both increased slightly and pricing on orders shipped during the quarter also rose, while substrate costs declined. Pipe and tube shipments were down almost 16%, and realized prices were off about 11%. Leon has already referenced the excellent results posted by CHI overhead doors. CHI is one of several moves the company has made recently to leverage our capabilities, products, and channels in new businesses that have good margins, strong free cash flows, and good growth attributes. We call these efforts to expand beyond. Other platforms in our expand beyond efforts include insulated metal panels and warehouse systems. During the quarter, these businesses produced $29 million and $28 million in EBITDA, respectively. While it’s early in the Nucor life of these three expand businesses, all three met or exceeded the targets for the third quarter in our acquisition model assumptions. I want to thank our teammates for the excellent work they are doing running and integrating these businesses. Raw materials segment earnings were up slightly from the second quarter, with higher profits from our DRI operations more than offsetting lower results from DJJ. Cash provided by operating activities during the quarter was $2.8 billion, while capital expenditures totaled approximately $460 million. Year-to-date capital expenditures totaled $1.43 billion. For the full year, we now expect capital expenditures to be approximately $2 billion. During the quarter, we repurchased 5.3 million shares and paid $132 million in dividends for a total capital return to shareholders of $784 million or 46% of net earnings. Total capital returns to shareholders through the first three quarters of the year via dividends and repurchases were approximately $2.75 billion or 44% of net earnings. During August, we also retired $600 million of senior notes that were set to mature in September. We had pre-funded this maturity and some other outstanding debt back in March of this year with opportunistic issuance of $1.1 billion in new senior notes split evenly between 10 and 30-year maturities. The coupon on the maturing notes was 4 1/8%. The blended coupon on the March issuance was 3.5%. And Nucor continues to enjoy excellent access to capital due to our position as a leading manufacturer across a broad array of steel products, our efficient and highly variable cost structure and our consistent commitment to maintaining a strong balance sheet with good financial liquidity. Speaking of the balance sheet, we finished the quarter with a debt-to-capital ratio of 26% and ample liquidity with $3.5 billion of cash, short-term holdings and restricted cash holdings, and our $1.75 billion revolving credit facility was undrawn. Turning to the outlook for the fourth quarter. We expect our steel mills segment earnings to decline meaningfully relative to the third quarter. Fourth quarter shipments are projected to be lower compared to the third quarter, primarily due to seasonality, customers delaying orders due to economic uncertainty as well as some of the planned outages in our own fleet. We expect lower realized prices in the quarter for most of our mills due to some of the same factors. The most pronounced effects will be felt in our sheet business. Lower raw materials cost will partially offset some of these impacts. We expect lower but still very strong earnings from our Steel Products segment in the fourth quarter, primarily due to seasonality and softer demand. Raw material earnings will also decline sequentially, primarily on lower pricing and shipping volumes from DRI. Several factors are combining to create a more dollar economic outlook. The ongoing war in Europe, other geopolitical tensions and rapid monetary policy actions attempting to tame inflation likely mean tempered near-term demand and stronger U.S. dollar, both challenging elements for Nucor’s customer base. Service centers, in particular, are cautious at this time. While there are still headwinds in the economy, we also have tailwinds supporting our overall demand. Just a few of those factors include non-residential construction, particularly in warehousing and reshoring of manufacturing as well as energy and projects funded by the Infrastructure Investments and Jobs Act, some of which should see commencement next year. Thank you for your interest in Nucor.

Our first question is from Carlos De Alba with Morgan Stanley. Please proceed.

Good afternoon, everyone. Thank you very much. Just getting back on the volumes growth that you have experienced in the third quarter. It seems that on a year-on-year basis, most of the declines were in structured and plate lines on total shipments. But I’m talking anything that the long products and the non-recession construction market are the ones that are holding up a little bit better. So can you help us reconcile this similarly contradictory trends? And how should we think about it in the coming months or quarters? Thank you.

Yes. Carlos, I want to make sure I understand your question. Is it why the long products businesses are seeming to do a little bit more stable in the market than our flat products businesses?

Right. So that is what I understand in the commentary around the end markets. But in the shipments, in the total shipments that were reported, at least on a year-on-year basis, there was a significant decline in structural and plate volumes, total volumes, total shipments, and sheet only came down around 4%. So I wanted to understand these trends.

Yes, absolutely. I’ll make a couple of comments. Maybe ask Al Behr, who’s in charge of our Plan Structural Group, to make a few comments. But overall, long over many decades now have been our most consistent performers in the marketplace. Historically, again, pre sort of ‘21, ‘22 levels, for example, we were in the structural businesses in the low 70% utilization rates and made very, very good returns based on that level. Again, market leadership position helped that, but also the breadth of products that Nucor runs and produces to take care of that customer base also helps. We did see some meaningful declines in plate. And again, Al, maybe just touch on that, and then we will come back to structural.

Yes. Thanks, Leon. Happy to do that. Thanks, Carlos, for the question. I’ll handle the structural question first. That’s more stable than some of the other markets like Leon has talked about. We see some decline. But – and first, any of the comps over last year are tough comps because last year, when we were at or near our record shipments in many product categories, including plate structure. So depending on whether you’re looking over quarters or looking over years, there is that perspective, I think you’ve got to maintain. But on – so on the structural side, we see some softness from service centers. You heard that in the opening commentary. We see resilient demand, though, from fabricators, especially large fabricators that do complex work like chip plants, EV plants, battery plants. We’ve had more of a decline in plate. I think maybe that’s where you see more of the volume drop. Certainly, the same dynamic with service centers where they have been destocking through the year, and they continue to be very cautious buyers despite resilient demand from OEMs and fabricators. We’ve seen an increase in imports into that market as well, particularly in coil form and particularly from Canada and Mexico. So that’s a factor. And when we look at it, our strategy is to drive value and focus on the profitability of these markets and not just chase cheap tons. And so we’ve been very strategic about how we handle the business and how we go about loading our order book. As we look into Q4, I think we will see an improvement in shipments, particularly in plate due to project work. That’s buckets of tons that become available prior to transactional tons. So these are non-res contracts, their bridge work infrastructure. We’ve seen an uptick there and continue to see that into ‘23. And I’m happy to provide some comments about ‘23, but I hope I’m addressing your question about the decline, at least year-over-year.

Yes. That was great, Al. And yes, if you could comment on what you’re seeing for 2022, that will be also great. Thank you.

Yes. So all this to say, we recognize we’re headed into some economic uncertainty, but there are a lot of positive reasons for optimism that we see, particularly in – this is just plate structural. One is infrastructure spending. We’ve always said that infrastructure is going to be a 2023 and beyond play, and we continue to see that and hold that queue. Another is energy. Energy, and particularly renewables, have been very strong through the year. We continue to see that manifesting, as well as a pickup in oil and gas we see in the 2023. And then key markets within non-res. So although there may be softness overall, the areas where we play in non-res, we’re very competitively advantaged. So these are the warehouses and the data centers, the chip plans, the manufacturing, reshoring, those areas where we are positioned best are the areas that show strength in non-res construction. I can’t talk about 2023 without mentioning Brandenburg, and really what we’re most excited about is the opening of our Brandenburg plant. So we’re going to bring that online at the end of this year. We’re ready for an on-time startup. And we’re going to bring up the most broadly capable plate mill in the western hemisphere. And so that story, that strategy has always been about capability and not capacity, and we will be very strategic about how we bring those tons online, but we’re ideally suited to serve customers that we couldn’t serve before. We will have a product portfolio in plate that’s unmatched, and we’re anxious to put in place the strategies to drive value as we bring those assets online. That team has done a tremendous job of executing the project. Leon talked about that in the opening comments. There are a bunch of rock stars, if I can put it very plainly, and what they have come through from 2019 to today to bring a construction project online on budget and on schedule is a Herculean effort and couldn’t be more proud of those folks.

Thanks, Al.

Yes. Thank you, Al and Leon.

The next question is from Timna Tanners with Wolfe Research. Please go ahead.

Hi, good afternoon, everyone.

Good afternoon, Timna.

I wanted to explore the contract side of your business, if we could, for a little bit. Just also following up with the Q4 sequential move, especially given how much contracted tons you have for sheet. Can you remind us of your percentage there? And how we balance the growth in Gallatin with the guidance for sheet? And then secondly, on the contract side, as we head into 2023, the commentary we’re hearing is that this will be a different year for negotiations, suffice to say after last year’s strong negotiating position with lower prices. Maybe seeing something on the CRU discount that’s a little steeper – just wondering if you could comment on how that might look year-over-year. Any thoughts on early negotiations? Thanks.

Yes. Timna, I’ll start us off. And Rex, if there is anything I miss, please jump in. It’s too early to talk about our overall percentage of mix. We’re in the middle of our contract season. And historically, Nucor has been in that 70%, 75% range. Again, I’m not sure we see meaningfully different. But again, we’re not through that yet and can comment a little more clearly, as we enter the Q4 earnings call in January of next year. But one of the things that – and Al touched on it, it’s really a dichotomy of the markets that we sit today. We’re facing 40-year high inflation, supply chain constraints, and new cranes that continue to provide some disruption, monetary policy that’s going to raise interest rates until we roughly double our current unemployment rate. So you’ve got all these negative sentiments in the marketplace. And at the same time, we’ve got some positive. We’ve got automotive, as you’re well aware, that is forecasting an additional 1 million tons or 1 million units of new light vehicles coming into the United States in ‘23. Energy, as Al just mentioned, particularly in renewables, infrastructure spending that’s going to begin to take off. And then the other side of that non-res construction that Nucor is heavily positioned to take care of in our customer base and advanced manufacturing like chips, battery plants, and cold storage. And so what I would share with you and give you a little more than ambiguous or generalized statements, as we look at the contracts, particularly with OEMs that have been placed so far this year for 2023 and beyond, the long-term play as we see it today in the contracts that have been established are forecasting up in volumes, about 15% for next year. So again, we see some encouraging signs as our order book and our customers’ customers are forecasting out beyond that. So again, some positive news, and again, against the backdrop that remains a little fuzzy as we walk into the new year.

Okay. Sorry. My question was more about contract pricing, but that’s helpful information for sure. I guess I’m just wondering if last year, the CRU discounts were 1%, 2%. This year, could we see something closer to 5%, 6%, 7%, 8%, 9%. Is there – anything you can tell us about how those discussions are going or if contracts will be a little more flexible this year after being really strict in 2022?

Timna, this is Rex Query, I’ll comment some of it may overlap what Leon just stated. The comment he made about the success we’re having with partnering with our OEMs, what that’s resulting, what we’re seeing at this point is a willingness to sign up for multiyear contracts, and we’re seeing improved margins. So when you talk about what the discounting is, we look at our business from a margin business. It’s not a fixation on volume. We want to make sure that we offer the value that our customers are willing to pay for. And so what we’re seeing is improved margins in particular with the OEMs and multiyear contract sign-up at this point. I would also comment that we’re seeing the recognition of our varied product mix. Our iconic brand of products with the zero-carbon offerings, our sustainability, all that’s being recognized in particular at this point in the contract season with our OEMs.

Okay. If I could sneak one more in, I just wanted to ask about the business on your raw material side. We have some reports saying that you were taking the DRI modules offline in the fourth quarter. When you guided lower, can you just tell us if it might be comparable to the year-ago levels or if we’re talking about something in between that and just the recent results? That would be really helpful. Thanks again.

Thanks, Timna. I’ll ask Dave Sumoski to maybe provide a couple of comments on raw material sector in our outage plans.

Sure, action, and thanks, Tim, for the question. We moved two of our outages from Q2 to Q4 based on the Russian invasion of Ukraine, and it’s going to result in about a 30% reduction in shipments this in the trough of transfer pricing based on the lower pig iron pricing. That’s what’s really driving the lower results from the raw materials group. There is some margin compression on the recycling side, but most of it is going to come through the DRI facilities based on that 30% reduction in shipments and in production.

Okay, I will leave it there. Thanks again.

Thanks.

The next question is from Tristan Gresser with BNP Paribas. Please go ahead.

Yes. Hi. Thanks a lot for taking my questions. The first one, if I may, your commentary around demand and market conditions that are deteriorating into year-end. For which end market have you seen more weakness over recent weeks? And if you could give us maybe a brief update by end market, that would be greatly appreciated. Thank you.

Yes, Tristan, I will jump in and begin. And if you have some other comments, please touch base. But as we look at some of the strengths, we pointed out some of the auto sector in ‘23. Again, it’s forecasting up about 1 million units for next year, the solar and wind, particularly offshore wind, as Al mentioned, the positioning and timeliness of Brandenburg couldn’t be more ideally suited. There are very few mills in the world that can provide that offshore wind sizing and platform in a range of grades, and so again, incredibly well positioned, excited about that opportunity. And again, you are seeing that match with the current administration’s continued efforts to ensure that the incentives are there for those build-outs to continue to occur. Within the non-res, again, there is some pressure, but there are also some pockets of excellence that we see continuing. Again, the CHIPS Act that was passed recently in Congress is going to have a wonderful re-shoring impact to the United States and bringing chips supply right here domestically. The continuation and build-out of gigafactories and battery plants for the electric vehicles will continue. And again, we see great strength in that. Cold storage, pharma, all are a couple of other areas in distribution and data centers, we see really, really strong growth. As we look at maybe some other sectors in heavy industry and heavy equipment and agriculture, that’s probably fair, but I am not sure it’s going to meaningfully increase for ‘23. And yes, really, that’s probably the best sectors. As we look at the markets that we track and supply into most for ‘23, they are showing stable or improving, and so not a whole lot of decline overall in the markets.

Alright. Thank you. That’s really good color. My second question, if I may. I just wanted to know if you could provide us maybe an update on Econiq sales and the partnerships on low carbon steel and how this has evolved over recent months. And if you can share if you have any target for 2023 and if you have seen any appetite for those low carbon steel sales outside the U.S.? Thank you.

Yes, absolutely. I would tell you, I couldn’t be more excited about what our team has done from an environmental and in the commercial position to bring us to the point where we can offer Econiq steels. And so I would tell you the demand continues to increase. We obviously were very public as we went into 2022, the first coil shipped in January of this year to General Motors. However, after that, we have seen great interest from the auto OEMs, but also broader, we are seeing heavy manufacturing, seeing HVAC. We have had some very public announcements as well in the HVAC with Train about that partnership and their pledges to meet their sustainability goals and their long-term reduction in their carbon footprint only gets accelerated with a net incoming steel of zero. So, we are seeing great interest in that, and I think that will continue in the years to come. Our move in the U.S. economy to build out a green and digital economy will be built with steel, and the steel that gets built with matters. And again, we are offering the cleanest steels, the safest manufacturing, and the most efficient and diverse product offering anywhere in the Western hemisphere. So, again, to your question, Tristan, that move to cleaner steels and near net zero steel is going to continue that trend in the coming years and beyond.

Any targets you can share at this stage or not yet?

We haven’t released any targets in terms of our volume and what we are going to supply in Econiq. What we have targeted and been very public about is our 35% reduction in greenhouse gases by 2030, excuse me. And so that would take us roughly from that 0.48 tons of CO2 per ton of steel produced somewhere in that 0.42 range and so – excuse me, 0.38 range. And so again, we are making strides and investments every day to continue to stay very close to new technologies, carbon sequestration, hydrogen, reforming and the like, and that will continue meaningfully in the years to go so that, again, we can offer more and more of the net zero steels to our customer base.

Alright. Appreciate the color. Thank you.

Thanks, Tristan.

The next question is from Emily Chieng with Goldman Sachs. Please go ahead.

Good afternoon, Leon and Steve. My first question is just around non-residential construction once more. When you think about the mix shift in non-residential construction that’s giving you confidence on the outlook there, how should we be thinking about this deal intensity of the new projects coming online versus maybe some of the pockets of weaknesses like warehousing, for instance, or is it really the pace and number of new projects being sanctioned right now that’s offsetting that – those weaker pockets that’s underpinning your positive outlook there?

Yes. Emily, look, I appreciate the question. And certainly, again, there’s a lot to unpack, whether it’s in non-res or flats in the sheet business in terms of economic signals and true demand. And so I have shared a couple of times on the call parts of that non-res story that we see strength. So, what I am going to do is maybe Chad Utermark is over our products group, just to provide a little more detail and background on what you’re seeing in terms of that customer-to-customer input and what we are seeing in terms of that strength in demand, Chad?

Yes. Thanks Leon and thanks for the question, Emily. As been mentioned before and I will echo, we continue to remain very bullish and excited about 2023 in the non-res space. And I guess to break down what gives us that optimism is, first of all, our backlogs are at historically high levels. While we are off the peak, those unprecedented levels we saw last year, they are still very, very high. And a lot of these projects, they are already moving. Dirt’s already been moved. Concrete is being poured. So, we have a lot of confidence that we will see those projects come to fruition. Furthermore, with our breadth of products and the connections and relationships we have with our customers, the feedback we are getting from our fabricator base, as Al mentioned, especially the larger fabricators, they are very, very optimistic and their backlogs go well out into next year and in some cases, even further. Also, if you look at the two main indicators that a lot of us track, Dodge and ABI, they continue to point to strong activity. Part of your question was about the steel intensity of these projects. And I would say when you start talking about manufacturing plants, EV-related facilities, data centers, and cold storage, all these big projects, they are very steel-intensive. So, we are right in the sweet spot. We feel like at Nucor to supply and meet those needs. So – and then it was mentioned infrastructure will play a huge part, we believe, in 2023 and 2024 to support new course efforts, not only in downstream but in our plate business, structural business, and in our bar business.

Great. I appreciate the additional color. A follow-up I had was just around what may be sort of lumped into sort of conversion costs. I appreciate the comments earlier on energy, and apologies if I missed something on other components of those cost pressures that you are seeing there. But anything that you would be able to share around cost inflationary pressures and whether or not those are stickier or if you are seeing them come off?

Yes. Hey Emily, this is Steve. Thanks for that question. Energy is the most pronounced cost increase we have seen. That’s about 50% year-over-year, and we gave you some numbers in the script on where we are. Two other parts are also up outside of the metal spread. So, the substrate is obviously the largest cost input that we have, but freight and labor costs are also up year-over-year. That’s consistent with probably what every company in America has seen. But I would remind you, Emily, that about 85% of our cost in our steelmaking is variable. And that’s a decided advantage for Nucor over many of our competitors that have much less flexibility and adaptability to respond to dynamic conditions and costs overall. So, we are not necessarily happy about cost going up. But as Al Behr mentioned earlier, we run a margin business. So, we manage everything to the margin, not necessarily to the absolute cost.

Got it. That’s really helpful. Thank you.

Thanks, Emily.

The next question is from Phil Gibbs with KeyBanc Capital Markets. Please go ahead.

Hi. Good afternoon.

Good afternoon, Phil.

Yes. I just wanted to stick with Emily’s question a bit longer because, I mean my model kind of exploded here in terms of costs because my spreads were better, but my steel profits were not. And the sequential pickup in my model was pretty substantial for conversion costs, so even on a sequential basis. So, I am just trying to think through that? And then maybe just expand the conversation a little bit because there wasn’t just a little bit of a pickup.

Yes. Phil, I think the other – in addition to talking about cost, the volumes were down for us. So, that’s an important part of maybe that you may have missed in your model assumptions heading into the quarter relative to what actually happened.

No volumes were pretty much there. And revenues were actually a little bit better than what I had. And so just to solve for that, it had some math. I don’t know if you loaded a bunch of maintenance into the quarter. And that was substantial. I am not really sure, but I just really stood out.

No, we really did. And I apologize. I can’t see into your Excel spreadsheet from where I am sitting. But our pre-operating start-up costs were in line with the prior quarter, utilizations were down. That’s going to drive your costs somewhat, but the other costs are in line with what you are seeing overall in the marketplace. We are certainly happy to follow-up with you, Phil, and dig into that in more detail and try to help dial into maybe what’s being missed there.

Okay. And then D&A was up substantially quarter-on-quarter. Was that as Brandenburg is coming out of start-up and then the full phasing, was that the biggest pickup?

Yes. The two big drivers on that really have more to do with some of the start-ups, but also the CHI acquisition that was done. Those two things, if you are picking up amortization in your D&A number, then you are grabbing that one.

Okay. And then just lastly on looking probably a little over $2 billion of CapEx next year, I think you had laid that out prior. So, I just want to reiterate that if you could. And then anything that you can comment on in terms of working capital in Q4 and what the size of the magnitude could be of the draw? Thanks.

Yes. Phil, on the CapEx side, we do have about $4.5 billion of projects that we have announced that we will be working on between now and 2025. So, we will have an elevated level of CapEx here for at least for next year. And so we will be likely north of $2 billion. We will refine that further as we go into the end of the year here and finalize our budgets. On the working capital, as you said, we released just under $600 million in the quarter on working capital. Depending on where your model is assuming on volumes and prices, you could see a similar number or even slightly higher in the fourth quarter.

Thank you.

Thank you, Phil.

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

Thank you. I would like to thank our team for an incredible nine months in 2022 and ask that each of you stay focused on delivering the safest and most profitable year in our history. Additionally, I want to thank our customers who enable our success. We appreciate the trust you place in Nucor with every order, and we will continue to work hard to earn your business. And finally, thank you to our shareholders. With the trust that you place in Nucor, we take that responsibility seriously, and we will work daily to continue to be great stewards of the valuable shareholder capital you entrust us with. Thank you for your interest in Nucor. Have a great day.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.