Good afternoon and welcome to Nucor's Fourth Quarter Earnings Call. All lines have been placed on mute to prevent any background noise, and today's call is being recorded. After the speaker's prepared remarks, I will provide instructions for those wanting to ask questions during the Q&A session. I would now like to introduce Jack Sullivan, General Manager of Nucor Investor Relations. You may now begin your call.

Thank you, and good afternoon, everyone. Welcome to Nucor's fourth quarter and year-end 2022 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 who may provide comments during the Q&A portion of the call. They include Dave Sumoski, Chief Operating Officer; Al Behr, responsible for Plate and Structural products; Noah Hanners, responsible for Raw Materials; John Hollatz, Bar products and Fabrication; Doug Jellison, Corporate Strategy; Greg Murphy, Business Services, Sustainability and General Counsel; Dan Needham, Commercial Strategy; Rex Query, Sheet and Tubular Products; and Chad Utermark, New Products and Innovation. This morning, we posted our earnings release and an updated slide deck 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 may be different than forward-looking statements and involve risks and uncertainties 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.

Thanks, Jack, and welcome, everyone. I would like to begin by highlighting some recent organizational changes. Earlier this month, Noah Hanners joined the executive team as EVP for Raw Materials. Noah is a West Point graduate with his Bachelor's of Science in Mechanical Engineering and his MBA from UNC Chapel Hill. He also served our nation in the United States Army for nine years. Noah began his career with Nucor in 2011 at Nucor Steel Darlington and has worked at several of our divisions, most recently serving as Vice President and General Manager of the David Joseph Company. Doug Jellison, previously EVP of Raw Materials, has accepted the newly created role of EVP for Strategy. Doug has been with Nucor for more than 30 years and has a great understanding of all of our business segments. As we continue to grow Nucor, Doug will help ensure we are further leveraging our competitive advantages across the enterprise. Congratulations to both Noah and Doug. Now turning to our year-end review. I'm proud to announce that 2022 was the safest and most profitable year in Nucor's history, breaking the prior record set in 2021. In the face of uncertain and at times volatile market conditions, we stayed focused on our goal of becoming the world's safest steel company and our mission to grow the core, expand beyond, and live our culture. In terms of safety, we established another record low injury and illness rate for the fourth consecutive year. 20 Nucor divisions went the entire year without a single recordable injury, and we set new records across each of the four primary safety metrics that Nucor tracks. We achieved all of this during a period of rapid growth, welcoming over 2,000 new team members to the Nucor family throughout the year. I'm inspired by the way each member of the Nucor team has embraced our most important value, the health, safety, and well-being of all 31,000 team members who make up our family. Turning to financial performance, we earned $4.89 per share in the fourth quarter of '22, on a way to setting a new earnings record of $28.79 per share for the full-year. This represents a 24% increase over the annual EPS record we previously set in 2021. Our operations continue to generate strong cash flow with a record $11.6 billion of EBITDA. This allowed us to advance our strategy along several fronts while also returning $3.3 billion to shareholders through dividends and share repurchases, consistent with our capital allocation strategy of returning at least 40% of earnings to Nucor shareholders. Our return on invested capital stands at a healthy 35%, and we closed out the year by announcing the 50th consecutive annual increase to our regular dividend following Nucor's original listing on the New York Stock Exchange in 1972. This places Nucor among an elite group of roughly 40 dividend kings, referring to publicly traded companies that have consistently increased annual dividends to shareholders for over half a century. These successes were largely made possible through the hard work and dedication of the Nucor team who executed our strategy to achieve world-class performance. As most of you know, we share our profits with our team, and in just a few weeks, we will reach a milestone never achieved before in Nucor's history, delivering nearly $1 billion back to our teammates. In 2022, we made considerable progress along all of our strategic initiatives, deploying approximately $2 billion in CapEx and completing five acquisitions valued at approximately $3.6 billion, to grow our core and expand beyond. But we didn't just invest in new assets and business lines. We invested in a more sustainable future. We did this through new partnerships and capital commitments to our technologies that can help reduce our carbon footprint even further. In December, we announced an equity investment in Electra, a Boulder-based start-up that has developed a process to produce carbon-free iron used in making steel. In November, Nucor became the first major industrial company in the world to join the United Nations' 24/7 carbon-free energy Global Compact, which aims to accelerate the world's transition to clean, affordable, and reliable electricity. Nucor also cofounded the Global Steel Climate Council, an international Coalition advocating for a single, transparent global emission standard that is focused on steelmaking emissions. Last week, the NRC officially certified new scales designed to build a small modular reactor, the first of its kind approved for use in the United States. Nucor's minority investment in NuScale will continue to support the development of this technology with the goal of producing 100% of carbon-free electricity. Our mission to grow the core, expand beyond, and live our culture is delivering results for our company and our shareholders. In our steelmaking operations, we invested in new capabilities to produce more value-added products and improve operating efficiencies that can earn higher and more sustained margins. In our downstream operations, we continue to expand into new steel-adjacent markets where we can offer differentiated solutions, including overhead doors and utility towers. These represent unique opportunities in faster-growing markets where Nucor can leverage its core competencies, supply chain efficiencies, and market channels to create incremental value for shareholders. And we lived our culture. For over 50 years, Nucor's unique culture has created value for shareholders as it empowers and incentivizes teammates to take ownership of decision-making, drive efficiency, and pursue innovation. Let me provide an update on some of our larger initiatives to grow the core, starting with our Brandenburg Plate Mill. Nearly four years after it was first announced, the Brandenburg team rolled their first steel plate on December 30. They are now focused on the final commissioning of the mill and plan to begin customer shipments by the end of the quarter. Last week, we announced the Brandenburg mill would produce a new product called Elcyon, a sustainable heavy-gauge steel plate designed to meet the growing demands of the offshore wind industry. Congrats to the entire Nucor Brandenburg team for delivering one of the safest mill start-ups in Nucor's history and for completing it on time and on budget. Turning to our sheet operations, we announced plans to build a continuous galvanizing line at California Steel Industries to serve construction markets in the Western United States. Recent closures of galvanizing capacity by other suppliers in the West presented Nucor with a unique opportunity to better serve this region. This new galvanizing line, along with the line we completed at Nucor Gallatin in 2019, and future lines planned for Berkeley and Nucor West Virginia will position the company as a supplier of choice for the cleaner, value-added sheet products our customers are seeking in several key markets. Investments like this help forge even stronger relationships with our key customers, like Trane Technologies, which honored Nucor last week with their 2022 Supplier of the Year award. Now shifting to our Expand Beyond strategy, I would like to provide an update on a few of our recent acquisitions we have completed, beginning with our midyear purchase of C.H.I. overhead doors. When we announced this transaction and held a special investor call last May, we spoke about C.H.I.'s $230 million LTM EBITDA, its 30% EBITDA margins, and average annual revenue growth of 10%. In the last six months following our June closing, C.H.I. generated record EBITDA of nearly $170 million, finishing the full-year with over $320 million of EBITDA and expanding margins. Within the first six months of closing, we have taken our implied trailing EBITDA acquisition multiple down from 13 times to just over nine times. Going beyond the strong financial results, I want to commend the entire C.H.I. team for executing such a quick and seamless integration into Nucor. We are already seeing the benefits of our combined operations, including improvements to C.H.I.'s safety performance. Thank you, team C.H.I. and all of the Nucor team members who have come together to make this an incredibly successful transition. And we are starting to realize supply chain synergies as well with C.H.I., developing plans to source most of its cheap bar and tube from Nucor divisions. Last year, we also acquired Summit Utility Structures, a producer of steel structures for the utility, telecommunications, and transportation sectors. It is an area that we see considerable growth potential in. Then in December, we announced plans to construct two new state-of-the-art tower production plants. These highly automated facilities will help meet the growing need for utility infrastructure as our nation's electric transmission grid is modernized and hardened. Turning to the broader economic backdrop, we recognize there continues to be uncertainty, but we also see tailwinds that should benefit Nucor as well as the American steel industry throughout this decade, including the Infrastructure Act, the CHIPS Act, and IRA that are all starting to work their way into the steel sector. These programs align perfectly with Nucor's unmatched and unrivaled product capabilities to meet the growing demand of our customers today and well into the future. With that, let me turn the call over to Steve Laxton, who will share more about our Q4 performance.

Thank you, Leon. As Leon mentioned, our earnings of $28.79 per share established a new record for the company. These results highlight the earnings power of Nucor's diversified portfolio and industry-leading capabilities. 2022 was also a noteworthy year for cash flows at Nucor. For the year, cash from operations exceeded $10 billion for the first time in our history, and free cash flow topped $8 billion. Over the past five years, Nucor has generated $16.6 billion in free cash flow. During that same time period, we returned $9.7 billion directly to shareholders through dividends and share repurchases while at the same time investing over $12.8 billion in our business through capital expenditures and acquisitions to further strengthen and grow our earnings base. These results demonstrate continued and consistent adherence to our balanced capital allocation framework. Nucor's efficient manufacturing business model is a powerful through-cycle cash flow generator. Turning to our financial results for the fourth quarter, earnings for the Steel Mills segment were down nearly 60% from the prior quarter. Shipment volumes fell 13%, reflecting normal seasonal weaknesses and some purchasing hesitancy as prices were trending lower for much of the quarter. Overall, metal margins contracted as lower realized pricing outpaced lower costs for metallics. Conversion costs were slightly lower compared to the third quarter despite lower utilization rates, in part due to energy costs, which fell approximately 10% on a per ton basis. Alloys and consumable costs also trended slightly lower. Shifting to our Steel Products segment, we continue to see very strong performance with segment earnings of $1.1 billion in the fourth quarter. This is down about 10% from the third quarter's record results but still represents the third-best earnings quarter ever for this segment. Contributions from most product lines were down from their respective third quarter levels, reflecting normal seasonality. An exception was C.H.I. overhead doors, which, as Leon touched on earlier, posted fourth quarter earnings 20% higher than the prior quarter. In Raw Materials, this segment saw negative earnings for the quarter as DRI and scrap processing results were impacted by lower volumes and falling prices for much of the quarter. We also took both DRI facilities offline for planned maintenance and elected to extend those outages for additional service until we saw signs of improving conditions later in the quarter. On the capital deployment front, Nucor's CapEx for the quarter totaled approximately $520 million, bringing total CapEx for the year just under $2 billion. We are forecasting CapEx in 2023 at $3 billion, including some catch-up spending originally slated for 2022, new growth initiatives, and general maintenance. The earnings presentation we posted on our Investor Relations site this morning has additional details on our 2023 capital spending plan, including projected allocations among primary CapEx categories, and a preliminary look at the anticipated pace of spending on a few of our major growth projects over the next couple of years. I would like to take a minute and provide an update on the strong results we are already seeing from recently completed investments. While strong conditions in 2022 certainly aided performance, we believe these were prudent, timely, and well-executed investments that are yielding excellent returns and position the company for continued future success. The roughly $2.2 billion we invested in sheet and bar projects that have been up and running for the past few years generated an estimated $620 million in EBITDA for 2022. In the businesses we acquired over the last two years for around $4.5 billion, establishing four new downstream platforms generated EBITDA of nearly $500 million over the course of the year. We believe this puts us well on our way to reaching our annual run rate EBITDA goal of $700 million for our Expand Beyond businesses. Collectively, these strategic investments and those to come provide significant earnings catalysts and position Nucor for sustained value creation long-term. Turning to our balance sheet, we finished the year in a very strong liquidity position with over $4.9 billion in cash and short-term investments, and our $1.7 billion revolving credit facility remains undrawn. We have been intentional about building liquidity toward the end of the year in light of uncertain economic conditions, coupled with near-term uses of cash, including our 2022 profit-sharing payouts that are earned by our teammates, our capital spending plans, and maintaining our commitment to meaningful direct returns to shareholders. In addition to ample near-term liquidity, Nucor's balance sheet continues to be in a position of strength with total debt to capital of around 25% at the end of the year, and debt to EBITDA well under one turn. Earlier this week, Fitch Ratings published its first credit rating on Nucor with long-term and short-term unsecured ratings of A- and F1, respectively. We were pleased to see Fitch recognize Nucor's credit strength. During the quarter, we repurchased 3.1 million shares valued at $403 million and made dividend payments of $130 million for a total of $533 million returned directly to shareholders, which represents more than 42% of our quarterly net earnings. Over the last five years, we have returned $9.7 billion to shareholders, representing approximately 52% of total net earnings for the period. As we look ahead to the first quarter of 2023, we expect earnings from our Steel Mills segment to increase compared to fourth quarter results on higher shipments, improved metal margins, and expected higher realized prices. In our Steel Products segment, we expect lower earnings in the first quarter compared to the fourth quarter due to seasonally lower volumes and lower pricing in some products. However, it is worth noting that earnings are expected to remain higher than the first quarter of 2022. Our Raw Materials segment earnings are expected to improve on more stable pricing and higher shipment volumes. While operating income from these three segments is expected to be higher compared to the fourth quarter, we expect consolidated earnings for the first quarter to be lower due to higher intercompany eliminations and the absence of one-time state tax benefits that were realized in the fourth quarter. We remain relatively optimistic that 2023 will be another strong year of earnings for Nucor despite entering a period of increased economic uncertainty. Overall, non-residential construction spending continues to be robust, and federal support for infrastructure and energy projects will begin to show impacts on demand in 2023. Other positive drivers of demand include re-shoring of manufacturing, energy infrastructure demand, clean energy and storage projects, EV factories, and semiconductor plants. In closing, we believe the medium and long-term fundamentals of our industry and key demand drivers remain relatively positive. This coupled with our growth initiatives and investments that advance our strategy to grow our core and expand beyond position Nucor for strength well into the future. With that, we would like to hear from you and answer any questions. Operator, please open the line for Q&A.

And our first question here will come from Lawson Winder with Bank of America. Please go ahead.

Good afternoon, Leon, Steve. Congratulations to Noah and Doug on the new roles. And also, I would just say nice work to whoever helped create those slides; they look great. So I wanted to follow up, Steve, on your last comments on market demand. Could you maybe provide a sense of the extent to which demand might be driven also by restocking versus some of these actual real demand drivers that you are highlighting? And then in terms of these real demand drivers, you highlighted non-res, electricity grid, which is moving the needle most for Nucor? Thank you.

Lawson, I will start this off and ask Dan Needham, our EVP of commercial, to jump in and paint some perspective around what we are seeing in terms of the traction from some of the programs we discussed. But I want to begin by saying thank you for recognizing that, and thank you to the 31,000 team members who made a historic year for our company. Thank you to our customers who made all of that possible. I couldn't be more proud that our team executed its fourth consecutive safest year in our history; it is the most important value that we have at Nucor. None of us and our executive team take that for granted, and I look forward to 2023, setting a new safest year in our history. So as we unpack the first question that you began with or started in really understanding the demand trends—real versus restocking. Look, I think we've certainly hit the bottom as we think about distribution, and we are going to see that continue to restock as we move into Q1, but that, to me, is not what is driving demand. If you actually look over the last eight or 10 weeks in the sheet group, for example, our bookings are up 45% to 50% during that time period. Our backlogs over the last—let's say, quarter-over-quarter have climbed about 16%. So that drive is there. That demand is pulling that. The other side is the non-res construction. Obviously, Nucor's channel in that market is over 50%. So we are heavily invested in that. But there are so many incredibly positive signs. And while 2022 was a historic year, and we are slightly off in terms of order activity, we think it is going to be another very strong year; non-res construction will remain robust as we move forward. And there are several things that will drive that, and we will touch on here in just a second. The other piece is our plate strategy and long product strategy that continues to produce and perform incredibly well as we move through the back half of '22 into '23. But as we talk about the Infrastructure Act, the CHIPS Act, Inflation Reduction Act, and automotive improvement for 2023, all others are going to have meaningful and tangible impacts on our business. Dan is going to touch on that in a second regarding the infrastructure bill. But I just want to put some context to the CHIPS Act; it is a $55 billion package that Congress passed. What does that translate to? About 27 different meaningful chip plants that are going to be produced, some of which are pushing $20 billion on their own individual plants. What does that actually translate—what does that look like? That market segment, as we think about advanced manufacturing, is requiring something different for its future. Our customers in that sector are requiring the most sustainable, comprehensive, differentiated value, products, and solutions that are available in the market. Nucor is incredibly well-positioned to meet that growing demand in every category and in every sector. So we feel very good as we enter 2023 that it will be a strong year; maybe not as strong as 2022, but a continued strong year. But Dan, why don't you paint a little context around the Infrastructure Act and what we think we will see in 2023?

Okay. Appreciate the question, Lawson. In particular, what we are seeing forecasts out there from construction indices are predicting infrastructure starts to increase 16% in 2023 and additionally, 10% in 2024. But more specific to that, we are seeing activity today on the infrastructure bill. In January, the Biden Administration announced $2.1 billion in funding for four major bridge projects. The most notable being the bridge over the Ohio River connecting Ohio and Kentucky on I-75 and I-71. You also asked a little bit, and Leon touched on the advanced manufacturing, but the other thing around the advanced manufacturing aspect is the activity is increasing tremendously in that space, not only in chips but also on the EV space and batteries. Those plants are quite large and the requirements from a grade and size standpoint mean that there are only a few suppliers that are capable of serving that, and Nucor is well-positioned to do that. If you think about the breadth of our products and our capabilities in the construction side, we have structural buildings, racking systems, as well as insulated metal panels and garage doors. Our capabilities are unparalleled. One thing you also mentioned was the Inflation Reduction Act around energy. We are seeing activity grow in that space as well. Additionally, our breadth of capabilities fits that space very well. If you think about our leading low greenhouse gas intensity offerings, the requirements in that space, we are well-poised to help the U.S. energy market move towards decarbonization. The last point I would like to make is, in all of these, they are not mutually exclusive. They are all interconnected. We have customers in these spaces in automotive and energy that have requirements on the construction side. A couple of years ago, we created our focus on our solutions teams, and we have teams around construction, automotive, and energy that are best poised to recognize these opportunities early in the design conceptual phase of these projects and work with the owners, developers, and engineers to provide a valued solution for all involved, including Nucor.

Thank you, Dan. Thank you, Leon. Fantastic color. Maybe just one follow-up for me. If you could comment perhaps on the ramp-ups at Gallatin and Brandenburg through 2023, including your thoughts on profitability.

Yes, absolutely. As we touched on in my opening comments on Brandenburg, we are incredibly proud of the team and the work they have done, what they have accomplished. I have been with Nucor a long time now, 26 years, and from a construction standpoint, from a safety standpoint, and from a budget standpoint, this project exemplifies the very best of what our team has done and produced. Al Behr will share a few more highlights of that because we have got some recent milestones that the team has reached here in just a moment. And turning to Gallatin, again, we are about six months behind where we wanted to be on their ramp-up. However, over the last few months, that team has done a phenomenal job of bringing that new cash and equipment online. As I mentioned during the last call, this really wasn't just a brownfield; it was a complete mill modernization with software and automation tying that entire complex together. It was a significant undertaking. The bottom line in Gallatin: in Q2, we expect them to be at full run rate capability. We will see how the market needs and demands go and meet that demand. The other piece I would share is we expect Gallatin to be profitable in the second quarter as well. So, Al, maybe you want to touch on a few other things at Brandenburg.

Yes, I would be happy to, Leon. Thanks, Lawson. We love talking about Brandenburg. Obviously, we are really excited about it. We are sitting here today exactly where we wanted to be. Like Leon said, I just congratulate not only the Brandenburg teammates that have just crushed it in building this project and bringing it in on time and on budget but also our Greater Plate Group teammates at Hertford, Longview, and Tuscaloosa that have created an environment in which this mill is going to thrive. As Leon alluded to, just yesterday, I'm happy to report that we made our first customer shipment out of Brandenburg. So we are on the board, and we are ready to go. In terms of the ramp-up and how we are thinking about 2023, I will share with you that we have got really three focus areas, Lawson, that we are going to think about. Number one is the teammates that we just talked about; they are the difference-makers. They are a competitive advantage. You have seen what they have done on this job site and in the market and what they have created. We are going to continue to focus on them, but also those are the men and women that take care of our customers, which is the second area of focus. So with our customers, we have got existing customers that have helped us get to this point with our plate business. But also, new customers in new markets that are areas for us to go and serve that we couldn't touch before. If you remember back in 2019, the strategy around Brandenburg was to build the most broadly capable mill in the Western Hemisphere and put it in the biggest plate market in the U.S. That is what we have got. We built the capability set, and we intend to use it. So with those two focuses, the third one, which is driving incremental returns for the enterprise. We have had the support from teammates, customers, and our shareholders to put this project on the ground, and now we are just going to be more excited to start driving returns with it. We are excited about what 2023 will bring.

Excellent. Thanks very much.

And our next question will come from Phil Gibbs with KeyBanc Capital Markets. Please go ahead.

How do you guys see the global pig iron trade unfolding this year, given the 25% reduction in 2022? Do you see supply chains having re-oriented at this point? Is there a reduced dependency on it given some of the new projects that have been announced by the blast furnace folks or others? Just what is the reconstruction in that market right now?

Yes. I will kick it off, Phil, and then ask Noah Hanners to comment on that. But I just want to point out because Noah was in the Vice President role over DJJ at the time. Again, as we have mentioned a few times on this call, the day that the Russians invaded Ukraine was the last day we took any material from them. It required Nucor to pivot incredibly quickly. Noah and the entire DJJ team stepped up, and our teams across Nucor stepped up because of the long-tenured relationships that we have around the globe. Because of the relationships that DJJ has built with partners and customers in South America, we were able to pivot, move very, very quickly, and bring new supply into Nucor. At the same time, our teams have also technically figured out how to reduce our use and move from roughly what was about 10% of our pig iron use across the sheet group down to 5% or 6%. The overall tragedy that is still continuing to unfold in Ukraine has created a silver lining for Nucor in how we think about raw materials, our positioning strategy, and our overall use and consumption. Maybe Noah just paint a picture as we think about 2023 and how that is going to shape out.

First of all, thanks for the question, Phil, and really for the opportunity to talk about our team and the performance through 2022 because I think it was really formative for how we think about employing raw materials going forward. The short answer, I think, to your question about the balance of global pig iron supply is that the invasion of Ukraine was really impactful. It was roughly 50% of the supply that went offline when Russia invaded. But more importantly to us is the strength of our raw material models and the flexibility we have. If you think about how we operate, about one-third of our raw materials are self-sourced between the DRI plants and our recycling group assets. You combine this with what is really unmatched coverage of the market through our DJJ brokerage team, and the flexibility of our mills in terms of what they can melt to make our products for our customers, and we can be extremely agile. We are able to, as Leon described, quickly change our melt mixes, maintain our focus on value and use while minimizing our costs and making the products our customers need. If you look back to 2022, it is a testament to this flexibility. We prepared for the invasion to the best of our ability; we had indications that it was coming. We were able to quickly pivot, adjust our melt mixes at the mills, minimize our pig iron, and immediately cease purchasing from Russia. I'm extremely proud of our team for the 2022 performance; they executed, and I'm also confident in our flexibility and the strength that provides us going forward.

Thank you. And then in fabrication, you kind of gave us a range basically somewhere between the fourth quarter of 2022 and the first quarter of 2022, given profit, should we essentially split the difference there, or is it going to be closer to one versus the other? And then within that, how are Deck and Joist prices holding up relative to the second half, because I know that they were historically strong?

Yes, Phil, this is Steve. Thanks for the question, and that has been an outstanding segment that has really driven fantastic results for the year. It has been one of the key catalysts. While we do see some moderation from that group, it is still very strong. I'm not going to guide you leaning one way or the other necessarily from 2021 versus 2022 or something like that. But you are seeing some moderation there, but still outstanding performance from that group well above. You should expect well above historic norms for that group as we head into at least the first half of the year where we have some visibility.

Thanks, gents.

Our next question will come from Curt Woodworth with Credit Suisse. Please go ahead.

Leon and team, I hope you are well. So, I just want to drill down into the margin structure in the mill segment. If I look at 2021, your reported metal spread was about 720. If I look at the back half of 2022, it was about the same at 710. But your EBITDA per ton, at least based on my math, went from 410 to only 185. So that seems to imply a pretty big step up in conversion costs. I know that there could be some Gallatin start-up and other issues, but is that math roughly correct, and can you just talk to how you see conversion costs trending into the start of this year?

Curt, this is David Sumoski. Inflation has certainly been a factor for us in our conversion costs. It probably falls anywhere within $40 to $80, depending on the division. A couple of divisions would be higher than that, Gallatin being one of those, but those are outliers. So inflation has been a big factor. Two other big hitters to remember—well, two other big hitters are, as we bought C.H.I. and ramped it up this year, we run slabs through that facility, and the cost of the slabs goes right directly into our cost of goods sold. So we had some pretty expensive slabs on the ground. That was a pretty big hit year-over-year for our cost of goods sold. Across all of our divisions, we had significant inventory adjustments throughout the year. The cost of those inventory adjustments goes right into our cost of goods sold as well. So those three factors were pretty big—very big—and that is why you see that big increase.

Okay. That is helpful. And then second question is, if I look at Slide 7 on the expand beyond, you are talking, I think, targeted EBITDA across those assets of roughly $700 million. It seems like they are making good progress on C.H.I. to get to the $400 million number. Can you help frame roughly where we are in that progression? And when you look at those business segments, can you talk about growth potential within those? Or how should we think about maybe how much capital you would look to allocate M&A-wise into expanding beyond the core this year, if you have any preliminary views? Thank you, guys.

Yes, Curt, I will begin and let Steve sort of talk about the—as we think about through-cycle EBITDA. But I will touch on your second question first. As we continue to think about the growth of Nucor, we are coming off two historic years. Over the last several years, our strategy has not changed. Our mission and our vision are very clear: to grow our company, period. We are going to do it in two ways: in the core and expanding beyond. You have seen our investments in the core. While we are certainly not done, those will be probably more in line with what you have seen in terms of positioning strategies, moving into more galvanized, more prepaid, and higher value-added products, as opposed to what we are doing in West Virginia in terms of a greenfield facility. But on the Expand Beyond piece, Steve, Alex Hoffman, who heads up our business development team and our executive team, is focused on growing and looking in that expand-beyond area for those adjacent companies that have some steel centricity at some piece that are efficient manufacturers, because that is really where we see the value set in coupling. That is one of the reasons why we were so excited about C.H.I. Again, I couldn't be more proud of Dave Bangert and the entire C.H.I. team for how they have performed through this year. Their EBITDA and where we sit today is far beyond the models that we built out. That focus for us is going to continue. We are going to continue to look to grow Nucor, to position Nucor well into the future and be generating significant revenues as well as our bottom line net earnings through the expand-beyond businesses that we continue to acquire.

Yes, Curt, I will just add a couple of comments there to what Leon said in terms of where we are. With these particular platforms, there is not a significant amount of capital other than what we have announced on the towers business to achieve the $700 million target that we outlined for these businesses. So we are well along that path, very proud of the teams that are in these four platforms. The work they have done so far to integrate into the business has been very solid and I think they just underline what Nucor's business model really is. At our heart, we are a strong, diversified industrial manufacturing model, and we are able to leverage that model in businesses across a broad spectrum of our portfolio to drive value. If you are looking for how much money might be in new expand-beyond platforms, as Leon said, we are a growth company and we are not done yet, but these platforms that are established are well on their way to that $700 million figure.

Okay. Thanks very much.

Our next question will come from Timna Tanners with Wolfe Research. Please go ahead.

Good afternoon, everyone. I wanted to explore a little bit the outlook and then ask a question about volumes, and I think they are a bit tight. But just start with the outlook in the Steel Mills, in particular. You talked about improved profitability on higher volumes and improved margins, specifically in the sheet business. So, the higher volumes, I get, seasonally and off a pretty low base at 70% utilization. On the margin side, I mean, it looks like trending prices at 750 hot rolled compared to Q4's average price of 960 looks like a tough comp. And costs have increased, and there are deeper discounts on your quarterly context and monthly context. I'm just trying to figure out if your guidance is more about the volume side or if I'm missing something on mix or costs?

Yes. I mean, Timna, I'm not going to get into the contract-to-contract comparison. Again, all contracts are not created equal. They are not all on a calendar year; they are not all one-year contracts, and there are different escalators built in accordingly. We feel really good about our strategy. That strategy comes back to the pre-announcement as we were getting ready to announce West Virginia—to build the most diversified capability set, not capacity. If you look at what the sheet group, in particular, has done this year, they have matched demand. They have matched the market in what was required, and that flows through, and you can look very quickly to see our EBITDA per ton and what we have been able to return back to our shareholders and our performance that I'm very proud of. If you think about our positioning as we move forward, we are going to match that. My answer to the Gallatin question: that mill will have the capability to run at full steam by Q2, but we will be very mindful about how we bring those tons into the marketplace. Again, we will be very thoughtful about how we do that. Rex, anything you would like to touch on in terms of that customer and segment as we move into 2023?

Yes, Timna, thanks for the question. The only thing I would really add—if you look at the volatility we had from what we saw in really the second half of 2022, if you look at where CRU stood in the third quarter and then the drop in the fourth quarter and now what we are seeing now, it is a really short window. That is to Leon's point; we have a long-term strategy. In the short term, you may see us do things from quarter to quarter based on what is developing in the market. We chose very specifically not to participate in some of the spot market as heavily as we saw some of the lower pricing. You would see lower volumes, but we are a margin-focused company, long-term; as a group, our goal, our purpose is to generate a return for our shareholders on our investment.

Okay. I was just trying to understand the margin guidance on the sheet side, in particular, if that was pricing or cost-driven, but I don't want to press you on contracts. I understand that is sensitive. So I guess I will switch to the second one. If you have anything else on the cost side, that would be great. But on the utilization at 70% in the fourth quarter, and one of your peers earlier today counting above 85% utilization, should we think about that ramping up given all the positive commentary on demand that you are explaining, Slide 17 and the ramp-up of, of course, Gallatin and Brandenburg. I mean, is it reasonable to expect that there should be a commensurate increase with the new capacity coming on or to more normal utilization levels?

I think you are going to watch that unfold. I'm not going to comment on what our competitor's strategy or positioning is. One of our competitors has a new mill and a lot of assets sitting on the books, and they are going to do whatever they are going to do in bringing that mill up. At the same time, we are going to focus on what Rex said in providing a return to the margin that drives our business. We will meet the demand out there, but we are not going to chase tons or pull forward demand that isn't real. I think what we are seeing in the indicator is that the sheet group is experiencing, over the last two months, very favorable conditions. I think that will continue, and you will see the uptick subsequently in our utilization rates as we head into the back half of Q1 into Q2.

Okay, thanks everyone.

Our next question will come from Carlos De Alba with Morgan Stanley. Please go ahead.

Thank you very much. Good afternoon, Leon and Steve. Leon, I have a couple of questions. One is on startup costs, and the other is on Corporate and Eliminations segment or line in your reports. First, on the startup cost, as you complete some of the projects and ramp up the plate mill, how do you see the start-up costs coming out in 2023, given the big increase that we saw to $250 million in 2022 versus $130 million last year? Any clarity there would be great, understanding that you are always a growing company, but any color would be useful.

Yes. Carlos, and thank you for that comment. I would like to start where you ended. Nucor is very much a growth company, and you do see different treatment of start-up costs from us versus some of our peers. Some of them like to make adjusted earnings; we don't view that as an adjustment. That is just part of what we do. We are a growth company. You will see that going forward from us—continued startup costs, pre-operating startup costs. It was $73 million in the last quarter. We expect it to be down just a little bit in the first quarter. Some of the variability, as you start to model out the year, will have to do with spending and the pace at West Virginia. So you will have to just kind of stay tuned on that. For the next quarter, you will see that come down slightly from the fourth quarter. Did that address your question adequately?

Yes, definitely. And then the other question is on Corporate and Elimination. The report was $77.1 million in the quarter. If I adjust back for the tax credit and the tax, the change in the valuation allowance, I think I calculate—and I'm assuming that this is all on just the same figure pretax and after tax—I calculate that line would have been around $71 million negative—negative $71.4 million, which will be a substantial improvement versus the $441 million reported in the third quarter and $617 million negative in the fourth quarter of 2021. I wonder if you can comment a little bit about that delta, which has definitely helped the quarter. I assume from your guidance that it is not going to be such a positive tailwind in the first quarter of 2023.

Yes, very much so. The components that go into that segment, the corporate and Elims number, you have got several different things: administrative costs, interest costs, and compensation-related costs, the largest of which is profit-sharing, which, as Leon said, we are thrilled that our team earned almost $1 billion in profit-sharing this year, which will get paid out in March. The big swing from last quarter to this quarter was really the inventory valuations that occurred in our intercompany eliminations; that is why it swung to the positive credit that you see. We don't expect to have that going forward. That is going to be the biggest change between Q4 and as we head into Q1. There are really two components to that. If you start to look into your model in a little bit more detail. So, one part of that was the DRI losses we had, which, of course, wiped out any intercompany profits, and the other part is really around volumes. That was more pronounced in our downstream steel product segment than it was anywhere else. We shipped a lot, Carlos, toward the end of the year, even more than we expected. That is partly why you saw a little bit of increased free cash flow from working capital as well from that factor. Just to close the loop here, between what Dave Sumoski commented earlier, it is one of the drivers of why sometimes it is a little complicated to look at our costs when you are looking at a segment, and you are trying to dial into steel mill cost. Part of those elimination numbers are actually falling out of that segment number down into the total corporate eliminations number as well. It does get a little fuzzy when you are trying to look at.

All right, excellent. Well, thank you very much.

Our next question will come from Tristan Gresser with BNP Paribas. Please go ahead.

Yes, hi, thank you for taking my question. The first one on plate, please. Can you explain a little bit about the strategy, and it is kind of a question in three parts. The first one on the volume side: if I look at plate volumes for the year, they are around 1.5 million tons, usually around 2 million tons. So what is the target really with the new facility for 2023? Also, if you can talk a little bit about the mix, the target product mix, and market mix for the new facility. The second part of the question is more on prices. When you look at plate prices to explore, they are still really strong. Do you believe that the demand environment you are seeing is kind of warranting those elevated prices, and now we are back to a more normal kind of price/cost relationship, or do you believe some normalization should still take place there? Finally, with those elevated prices domestically, how do you view the import risk? There has been a new trade case? How hard do you feel about that? Do you think the U.S. market is definitely well protected there?

All right. I'm going to begin, and then I will let Al talk more specifically, but I want to begin with telling you our prices in plate are not elevated. I do look forward to them returning to normal levels closer to $2,000 a ton. I am being a little facetious with you, Tristan, but we don't think they are elevated at all. We think we are in a supply and demand environment, and in a commodity business, demand will always dictate pricing. That is the driver. I would again tell you that they are not elevated. In terms of import risk, and you mentioned the trade case, I testified not too long ago on that case; the ITC has found and upheld the sunset review on those countries. The protections that are in place today—not just on plate but all of our products—are so greatly enhanced from what we saw six or seven years ago. In 2015, for example, there were only about 50 or 55 trade cases that were won against countries found dumping or illegally subsidizing their steels. Today, that is closer to 150. Regardless of administration, we have had great success in advocating for our industry and holding those countries accountable with countervailing duties or antidumping margins for bringing, again, not just plate but sheet, rebar, and other products into this country illegally. But Al, you want to touch on the strategy for Brandenburg and how we expect to ramp that up?

Yes, it is a great question, Tristan. There is a lot to unpack there. I will talk through a few of them and then I may ask Caleb Strother, who is our Director of Commercial for Plate Structural Group, to talk with a few more specifics. But to echo what Leon said: no, certainly not—we think plate prices are at a range where the market is bearing them; they think they are fair, and we don't see them as elevated at all. What we did with our order book or the way we bifurcated our order book through this year is that we separated coil and cut-to-length plate from discrete plate. That was one thing we did to make sure that the highly differentiated product like discrete plate that can only be made at the plate mill collects the premium that is warranted versus some of the other products that can be more influenced by hot band pricing. That has been largely successful. If you follow the pricing of both of those—and I know you do—you can see that we were able to decouple those two. So as we sit now, our order book, our mix on plate is about two-thirds discrete plate and about one-third coil or cut-to-length plate. As Brandenburg comes up, it will be mainly a discrete plate mill. It has a second mill that can run coil plate, but that will be a highly specialized plate, very value-added. We won't run a lot of coil plate out of Brandenburg; it is discrete plate. It will move our mix to about 75% discrete, and we see that as a good thing. You asked about tons. I will give you a rough accounting of the tons during ramp-up year and then ask Caleb to chime in on some of the markets. We are expecting somewhere in the 10,000 to 20,000 ton range of shipments in Q1; so that is primarily a ramp-up quarter. Second quarter probably in the range of 100,000 tons and then somewhere in the 200,000 ton range in the second—excuse me, in the third and fourth quarter. So somewhere in the 500,000 to 600,000 tons, we would expect out of Brandenburg this year. Obviously, the market will dictate part of that, but we expect to be at run rate capability by the end of the year. Caleb, maybe you want to talk just a little bit about some of the market strategies and some of the areas we hope to penetrate with our broader capabilities.

Sure. Thanks, Al, and thanks, Tristan, for the question. Brandenburg brings a whole diversified product mix that we haven't had with our plate group prior. When you are looking at plates up to 14 feet wide, 14 inches thick, and 1,500 inches long, this helps support a lot of the initiatives that are happening in the market. Dan touched on the IRA and the infrastructure package. Brandenburg is well suited in the middle of the country to help supply those customers with solutions that our plate group hasn't been able to offer in the past. Also, with our announcement of Elcyon, you look at further investment in greening of the energy grid that is happening in our country; Brandenburg is well suited to supply the monopile plate that will be required by our U.S. fabricators and as well as globally around the world for other fabricators.

All right. That is very helpful, and just a quick follow-up. In terms of wind and renewable, how much of the percentage of demand or volumes could that be?

The percent of the volume out of—well, I would just tell you energy, roughly around 10% of our overall mix is probably where we see it. That could ebb and flow a little bit depending on demand and timing, but that is roughly where we are at as a company.

All right. That is really helpful. And if I may, just another one, also kind of big picture, but moving from plate to rebar. Can you discuss a little bit what you are seeing on the market more kind of near term, but also more medium-term as you ramp up your new micro mill? And also, what kind of the timeline—is summer 2024 the right kind of timing to think about this facility and the impact on the infrastructure bill? Is it something you are looking at to kind of move meaningfully into Q3, Q4? Is that the right way to think about it?

Good afternoon, Tristan, this is John Hollatz. Thank you for the question. We feel our portfolio in long products is really going to benefit from what we see coming in 2023 related to the infrastructure bill, where the rebar market will grow by 1.5 million to 2 million tons per year. We are planning on ramping up our mill in Kingman, which should ramp up about October of 2024, and Lexington in the middle of 2024. We feel like we are well-positioned to take advantage of that market.

The other thing I would add, John, and Tristan, just in closing that, the positioning of Lexington and the overall micromill strategy is to locate in the growing regions in the Atlantic Coast in that Lexington, North Carolina, sits, which will be very key in growing that sector in that market with proximity to the lowest price scrap, and again, the customers that will be supplying that strategy. As John pointed out, it has been incredibly important for Nucor. That will continue to help shape and provide the returns that we have seen in rebar and quite frankly, of our long products. The other piece is you asked about the Infrastructure Act. We will take meaningful shape, probably second, third, fourth quarter, certainly in the back half of the year. As Dan mentioned earlier, make no mistake, the order activity, the quotes, and the interest in the bar group, our products Vulcraft for decking, it has already begun. We are seeing the pre-bids and activity already starting. That is not just wishing and hoping; we are seeing that activity. We are seeing some of the approvals in the bridge and highway programs actually get funding now, and that will have a meaningful and substantive impact. We estimate, and most of the outside groups estimate, that for every $100 billion in infrastructure, there is going to be about five million tons of steel that will flow through. Again, the product breadth and offering that Nucor has today puts us in an incredibly advantageous position to serve that growing market.

All right. Thank you very much.

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

Thank you. In closing, I just want to thank our team for a historic year in delivering the safest and most profitable year of Nucor's history. Thank you to 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. We take seriously the stewardship of the valuable shareholder capital that you entrust us with. Thank you for your interest in Nucor. Have a great day.

The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.