Good morning and welcome to Nucor's Second Quarter 2024 Earnings Call. Today's call is being recorded. I would now like to introduce Jack Sullivan, General Manager of Nucor Investor Relations. You may begin your call.

Thank you, and good morning, everyone. Welcome to Nucor's second quarter 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. Other members of Nucor's executive team are also here to participate during the Q&A portion of today's call. We've posted our second quarter earnings release and investor presentation to the Nucor Investor Relations website, and we encourage you to access these materials as we'll 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 from forward-looking statements and involve risks outlined in our Safe Harbor statement and disclosed in Nucor's SEC filings. The appendix of today's presentation includes supplemental information and disclosures along with a reconciliation of non-GAAP financial measures. So with that, we'll begin the call over to Leon.

Thanks, Jack, and welcome, everyone. I'd like to begin by highlighting two recent changes to our executive team. In June, Doug Jellison retired after 33 years with Nucor. Doug worked across many of our businesses and made tremendous contributions to Nucor over the three decades he was part of our team, most recently as EVP for Strategy. We wish Doug and his entire family the very best in retirement. And in May, Randy Spicer was promoted to Executive Vice President to run our bar and engineered bar businesses. Randy is a talented leader who has most recently served as President of Nucor Tubular Products. He's been with Nucor for more than 20 years, and we are excited to have him as part of our executive team. Turning to our second-quarter performance, I'd like to congratulate our entire team on achieving the safest first half of any year in Nucor's history. With 52 of our 109 divisions accomplishing our ultimate goal of zero recordable injuries, these are fantastic results and I'd like to thank our 32,000 team members for your steady progress toward making Nucor the world's safest steel company. In terms of financial results, we generated earnings of $2.68 per diluted share in the second quarter, bringing our year-to-date earnings to $6.14 per diluted share. Second quarter earnings decreased compared to the first quarter, primarily due to lower average selling prices in both our steel mills and steel product segments. Returning capital to shareholders and maintaining a strong balance sheet are key components of our overall capital allocation philosophy, and we made progress on both fronts during the quarter. Nucor repurchased approximately 2.9 million shares for $500 million, and Moody's changed its outlook on Nucor's senior unsecured credit rating from stable to positive. One thing I'm especially proud of is the progress our team continues to make in advancing our long-term, value-creating strategy. During the quarter, we continued to grow our core steelmaking operations while expanding into new downstream businesses. At our Lexington, North Carolina Greenfield bar mill, we hit key milestones during the quarter and remain on track to commission the mill in the first quarter of 2025. At our West Virginia sheet mill, we've made considerable progress since our groundbreaking last fall and expect construction to wrap up by the end of 2026. As for recently completed projects, we continue to build momentum in production and shipments out of our Gallatin and Brandenburg mills. Gallatin shipped almost 500,000 tons for the quarter, establishing new daily and ship production records, and in late June, we celebrated the grand opening of its new tube mill. At Brandenburg, we shipped nearly 60,000 tons in Q2, but we no longer expect to ship 0.5 million tons for the year due to softer market conditions, elevated plate imports, and our focus on capabilities rather than volume. However, we will continue to focus on achieving full run-rate capabilities and becoming EBITDA-positive by the year's end. We also took additional steps to expand the set of solutions we offer customers, recently announcing two acquisitions as part of our Expand Beyond strategy. As a reminder, this strategy involves targeting steel-adjacent businesses with attractive growth profiles, high margins, and compelling synergy potential. In June, we announced the planned acquisition of Rytec, a leading manufacturer of high-performance overhead doors. In conjunction with this acquisition, we're forming Nucor Door Technologies, our overhead door growth platform, which will include C.H.I. overhead doors as well as Rytec. Rytec has two manufacturing facilities in Wisconsin that produce high-performance doors for warehouses, auto dealerships, advanced manufacturing facilities, and cold storage. The company has a strong reputation for quality products and superior customer service. The combination of Rytec and C.H.I. to form Nucor Door Technologies allows us to offer customers a diverse portfolio of residential and commercial doors. The acquisition is expected to close by the end of July, and we're excited to welcome Rytec's 300 team members to the Nucor family. Earlier in the second quarter, we closed on the acquisition of Southwest Data Products, a manufacturer and installer of data center infrastructure. This acquisition gives us expanded capabilities to serve a rapidly growing market driven by the rise of artificial intelligence and cloud computing. By combining the capabilities of Southwest Data Products, Nucor Warehouse Systems, and Nucor Buildings Group, we can now provide customers with nearly all steel products that go into a data center, from the building to the interior infrastructure. We believe the cross-selling opportunities that Rytec and Southwest Data Products create with existing Nucor business units will create meaningful value for our customers and our shareholders. Now, I'd like to take a minute to revisit our long-term growth plan and how the investments we're making today can create value for our customers and shareholders for years to come. In raw materials, we're investing in new technologies to enhance our scrap segregation and recovery rates while reducing our carbon footprint. In our Steel Mills segment, each investment is aligned with our broader strategy to increase Nucor's product mix towards higher-margin, value-added products to address specific customer needs in key markets. For steel products, we're investing in automation to drive efficiencies and create a safer work environment, and we're innovating new products and production methods that our customers value. And finally, we're investing in new downstream platforms where we identify steel-adjacent businesses underpinned by strong secular growth trends. Nucor embarked on this long-term growth strategy in 2020 when I became CEO. Over the past several years, we've accomplished a lot, but we've still got plenty left to do. The next two years will likely be our most capital-intensive with several active construction projects occurring simultaneously. We plan to fund this with operating cash flow and cash on hand, which was approximately $5.4 billion at the end of Q2. Our largest current project is the West Virginia Sheet Mill, which will begin supplying customers in the Midwest and Northeast with a more sustainable sheet product once construction is completed in late 2026. Between now and then, we're excited about the start-ups of several other projects. In the first quarter of 2025, we'll begin ramping up our new Rebar Micro Mill in Lexington, North Carolina, to supply construction markets in the Southeast and mid-Atlantic regions. In the spring and fall of '25, we'll complete construction of two highly automated utility tower manufacturing plants to serve the high-growth power transmission and telecommunications markets. After that, we'll be bringing on new finishing capabilities, including a new galv line and coating complex at Crawfordsville in late '25 and a second galv line at Nucor Berkley in mid-26. Each of these projects, along with several others throughout the company, serve important roles. It's not about adding capacity; it's about a differentiated capability set for our customers, while doubling the through-cycle earnings potential for Nucor. We have crossed the midpoint of our multi-year CapEx plan, but several recently completed projects have yet to reach their full earnings potential. We know what it takes to accomplish the goals we've laid out for you at our Investor Day nearly two years ago, and our leadership team is laser-focused on the execution required to get us there. Finally, I'd like to address concerns the domestic steel industry has regarding unfair trade practices. Over the last 18 months, we've seen a material uptick in steel imported from Mexico and Canada to levels far above historic levels, contrary to the Section 232 agreements with both countries. It's also clear that China and other countries have been evading the Section 232 tariffs and other duties by transshipping steel through our neighbors to the North and South. Fortunately, a few weeks ago, trade representatives from the U.S. and Mexico announced an agreement designed to stop the flow of illegally imported steel from China and elsewhere. Under this new agreement, the U.S. will impose a 25% tariff on Mexican steel that is melted and poured outside of North America. And Mexico agreed to raise its tariff rates on imports from countries with which it does not have free trade agreements. In our view, this was an important first step to stop the surge of steel imports from Mexico and address the problem of circumvention. However, more stringent efforts are needed and any exceptions to this new requirement, including through the exclusion process, will largely negate the benefits of the agreement. And we still have concerns about trade practices involving rebar, electrical conduit, and the rise in fabricated steel products coming in from Mexico. We urge the U.S. government to continue working with Mexican leaders to address each of these issues. We also urge Congress to pass the Leveling the Playing Field Act 2.0. This legislation includes critical updates to the U.S. trade remedy laws that would enhance domestic industries' ability to defend against unfairly traded imports, with new tools to address Chinese cross-border subsidies and expedite investigations of repeat offenders that simply move production from one country to another. We appreciate the bipartisan support that exists for strong trade enforcement. With that, I'll turn it over to Steve, who will share additional details on our Q2 financial results.

Thank you, Leon. And thank you to everyone for joining us on the call this morning. Leon just highlighted how the Nucor team is continuing to advance its long-term and value-creating strategy. And during the first half of 2024, the team also executed on delivering results, posting strong earnings of just under $1.5 billion and around $2 billion of cash from operations. During the second quarter, Nucor generated net earnings of $645 million or $2.68 per share, approximately 23% lower than earnings from the first quarter of the year. The majority of our overall change in earnings between the prior quarter is attributable to our Steel Mill segment. This segment generated pre-tax earnings of $645 million, a decline of roughly 40% from the prior quarter. Lower realized pricing, especially among our sheet mills, was the biggest single factor contributing to the segment's reduced profitability. The Steel Products segment delivered pre-tax earnings of $441 million for the second quarter, roughly 14% lower than the first quarter. Although segment shipments increased in the second quarter, lower realized pricing and decreased margins more than offset volume gains. Our Steel Products segment is composed of a diverse set of products and market solutions. And I'd like to highlight two of our groups that had a more pronounced impact on the segment results during the quarter. First, our Tubular Products group saw earnings decline by more than 50% during the quarter, as those divisions work through higher-price substrate in a declining price environment. Our Tubular Products group accounts for more than one out of every five tons sold from the Steel Products segment. Another group to highlight in this segment is our Joist and Deck operations. These divisions continue to perform well even as realized pricing for these products moderated from the record levels of prior years. Earnings from Joist and Deck declined roughly 5% from the prior quarter, but still accounted for more than half of the segment earnings for the second quarter. Our Raw Materials segment produced pre-tax earnings of approximately $39 million for the quarter. Overall, volumes and pricing were softer than the prior quarter, but lower operating expenses more than offset these headwinds. During the second quarter, the power of Nucor's business model allowed it to generate $1.5 billion in cash from operations. This strong cash generation is a key factor enabling Nucor to continue its balanced, consistent, and long-term approach to allocating capital and creating value. Our capital allocation framework includes maintaining a strong investment-grade balance sheet, providing direct shareholder returns, and enabling growth and value through investments. That balanced and disciplined approach to capital allocation was on display again in the second quarter. Nucor's balance sheet has long been a foundational source of advantage, and an enabler of our long-term strategy. At the end of the second quarter, our total leverage stood at less than 1.2 times trailing 12-month EBITDA, and our cash on hand was a healthy $5.4 billion. And as Leon mentioned earlier, we're pleased to see Moody's revise our senior unsecured credit outlook in May from stable to positive. The second quarter saw Nucor return just over $630 million back to shareholders through dividends and share repurchases. These returns, when combined with the first quarter, yield direct shareholder returns of more than $1.7 billion year-to-date. While we target returning 40% or more of net earnings to shareholders, we've nearly tripled that rate on a year-to-date basis. And this demonstrates an important aspect of how Nucor thinks about managing shareholders' valuable capital. We either invest it to grow and create value, or we return it to shareholders. In addition to strong shareholder returns, during the quarter, we deployed more than $800 million of capital spending and more than $100 million in acquisitions. These investments and those to come will help fuel the future earnings capacity of this company. Turning to our third quarter outlook, we expect consolidated earnings to be lower than the second quarter, primarily because of lower anticipated earnings from our Steel Mill segment. Earnings in the Steel Mill segment are expected to decline meaningfully as realized pricing has recently continued to decline across most of our major product categories. We also expect sequential earnings to decline in our Steel Products and Raw Materials segments. Taken together, the magnitude of the sequential decline in consolidated EBITDA for the third quarter could resemble that of our second quarter. Taking a step back to reflect on the broader macro picture, while the U.S. economy appears to continue to avert a more pronounced downturn, it's becoming more evident that activity has softened as the year has progressed. We've also seen an increase in imports year-over-year, and a higher for longer interest rate environment may have tempered or delayed some marginal demand. The confluence of these factors is driving margin pressure on several of our products in the near term. It's worth noting that there are several end markets that remain quite healthy, including construction activity related to semiconductors and other advanced manufacturing facilities, data centers, healthcare facilities, and energy and infrastructure projects. As the largest and most diversified steel producer in North America, Nucor is well-positioned to service each of these markets. With that, we'd like to hear from you and answer any questions you might have. Operator, please open the line for questions.

Thank you. Your first question comes from Bill Peterson from JPMorgan. You may now ask your question.

Hi, Leon and Steve. This is Bennett on for Bill. Given it's been about 3.5 months since you first introduced your weekly CSP back in April, I was wondering if you could share any key takeaways you've received from customer feedback thus far? And furthermore, how has the strategy unfolded relative to your initial expectations?

Yes, thanks, Bennett. I'll kick this off, and Noah, if you have any comments you'd like to add regarding the CSP and sheet. Look, first, I would tell you we're excited about what we're seeing in the market. I think in a down-market like we're experiencing or a little softer market like we're in today, I think this is exactly where the long-term impact of CSP can be most meaningful to take out the speculation, the speculative buying in the spot market and create a relevant transparent published price. And so, again, I think it's going to take a little bit of time to work through a full cycle in the steel segment or the steel sheet CSP side of things. But again, we like what we're seeing, we're hearing a lot of positive feedback from our customers, and we believe it's helping us to solidify relationships with those customers whose demand is driven more by end-use market conditions and less by speculation. And so, those are the customer relationships we value the most. And again, early days still, but again, we're liking what we're seeing.

Yes, Bennett, this is Noah. I'd just add that at its core to our culture, we've done what we said we would do with CSP. We believe we've provided relevant and timely pricing. And I think the market conditions over the last few months have afforded us the opportunity just to prove our transparency in pricing. I'll say that the feedback we get from customers is our customers want to deploy their capital in a way that creates value for their customers and not in managing working capital or buying opportunistically. So, we're going to continue to do what we've said we would do with CSP, remain relevant and timely with our pricing. And to your point about how do we measure success in the future, we'll gauge success, and we'll be able to see success when we see order entry better matching underlying demand. So I think it's a longer-term engagement, but we're committed and we're happy with our progress on CSP so far.

Great, thanks. And if I could do one more. I think the color was clear on earnings for each segment and the comment relative to Q2 is helpful. But how should we think directionally about shipments for each segment looking into the third quarter?

I'm sorry, shipments related to what Bennett?

For the Steel Mill segment and the Steel Products segment directionally expectations into the third quarter?

Yes, look, I think there's a lot of talk in the market that's softer and are we heading for a cliff? And I would tell you, we don't feel that way at all. Certainly, we've seen pricing move off historic highs of '21 and even parts of '23, but it's moderated. We think we found some stability, and this market has stabilized in most of our product groups from a demand picture. The back half of the year, we expect it to be relatively flat. Again, if you look at the overall market for the year, the ADC is expected to drop about 1%. So again, from a demand picture, things are really not too bad. And again, many of our products remain incredibly resilient. Specifically on the Steel Products sector, again, it's a very large sector for Nucor. It's not just buildings and Joist and Deck and our Vulcraft facilities. We've got the fabricated rebar, we've got Skyline Steel, and our overhead door businesses in both C.H.I. and in Rytec now, and our data systems are racking. And so, it's an incredibly diverse group that's consuming about 22% of our overall steel products. So it's an incredibly large business segment for us. But specifically in buildings and products, we're seeing some stable order entry rates incoming over the last few quarters, and we've seen that very much stabilize. We think the back half of the year, while we're working through some higher-priced inventory will continue to tick up and again from a demand picture, remain pretty resilient.

All right. Thanks so much and best of luck.

Thank you. Appreciate it, Bennett.

Your next question comes from the line of Martin Englert from Seaport Research Partners. Your line is now open.

Hello, good morning, everyone. Can you provide an update on Nucor's raw material strategy, specifically upgraded low-copper shred products and low-emission iron-making to the extent that it's applicable? Maybe this is longer-term, but if you could touch on the electrolysis process for iron ore in your investment in electric?

Yes, Martin, we'd love to address that. I want to ask Al Behr, who's taken over our raw materials group here in a second to provide you a more detailed update. But I would tell you broadly for the last 25 years, Nucor has taken a very, very deliberate focus on controlling our raw material inputs across the spectrum. Over the last decade and a half, we've been really focused on how we control more of that. How do we give ourselves the flexibility and optionality to be able to do that for the long-term? But Al, if you would, maybe share some of the things that we're working on, some of the projects that are already completed, and where we're headed?

Sure, Leon. And thank you, Martin, for the question. You asked just about our raw material strategy. I'd summarize it this way and say that what we're aiming to do is create a competitive advantage by supplying our mills with the most cost-effective stream of inputs, and to do that while minimizing the embodied carbon in our finished products. And so that's our guiding light. And under that, then we execute that by building flexibility and adaptability into our raw material stream. And we've talked about that for a number of years and have had the opportunity to demonstrate that through changes in the market. Excuse me, in the market that we see. So one of those that gives us flexibility is low-copper shred. And I know you asked about that, and I'll share a few thoughts just on how we're attacking that area and how we think of it. And the first thing I'd share with you, Martin, is that low-copper shred isn't new for us, that we've been making that product for about 12 years at two different locations. And so, we've mastered the discipline of how to make it. We've mastered the discipline of how to use it in the mix. But you have seen recently a renewed investment and some newer investments in low-copper shred as we see the demand for high-quality metallics going up. And we're responding to that by making additional investments in low-copper shred to add to the flexibility that's so key to our strategy. And so in terms of where we sit today, I'd share with you, we can process today about 1.4 million tons of low-copper shred. And we're bringing on another 750,000 tons as we speak. So that will give us, in the very near future, about 2.1 million tons of capacity. And then as we look out another couple of years, I'd expect us to add another 3.5 million to 4 million tons of additional capacity, landing us somewhere in the 5.5 million to 6 million ton range for low-copper shred. But Martin, I'll share with you, if you think about the 4 million tons of DRI that we also make and you add to that 6 million tons of low-copper shred, it puts us at about 10 million tons of metallics that we control, which is about two-thirds of our needs. And so that's a sweet spot for us, because it gives us incredible control, while at the same time allowing us the ability to be very flexible and very opportunistic in the market and how we serve the rest of our needs. I know you asked about electric too, and I just want to talk just for a minute about that. I think what I'd say is we remain really excited about that project. It's got a long ways to go, but it's very interesting technology. We remain an investor and are considering additional investments in that space. Noah and I work on that together and are following that closely, that's got really interesting advantages for us, particularly in the lower carbon range. I wouldn't consider that a cost benefit, but that's primarily a green and sustainability benefit and really exciting technology.

Thank you for all the detail. That's helpful. If I could ask one last question. Sequentially, it seems that steel conversion costs have increased quarter-on-quarter. You indicated that conversion costs would remain flat in the third quarter. Can you explain what caused the increase in unit conversion costs in the second quarter?

Hi, Martin, this is Steve. Thanks for the question. The conversion costs really are a function of a few different things, a few different moving parts. And in the quarter, what you see is utilization rates were down a bit, that always affects our cost. But probably more pronounced, there is a flow of materials through our production processes that creates a little bit of timing differences. And that causes the conversion cost to look higher on a quarter-over-quarter comparison. I think the most important thing probably, for you to take note of is that input costs right now are moderating, consistent with what you see with CPI or other indicators.

Okay. Excellent. Thanks for the additional color there.

Thanks, Martin.

Your next question comes from the line of Tristan Gresser from BNP Paribas. Your line is now open.

Hi, good morning, and thank you for taking my questions. The first one is on the policy front. When you look at the upcoming elections, what risks do you see? I mean, for instance, solar and wind have been a source of growth and potential upside for your business. So how concerned are you about any potential new administration removing some of the funding for those areas?

Yes, Tristan, it's really hard to speculate today on what might come in a change of control in the administration. From a macro standpoint, I would tell you, Nucor has had incredible success with both Democratic as well as Republican candidates in office. As we think about that, again, not trying to completely evade your question, or be so ambiguous, would there be some pressure on IRA and would there be some potential for that? Yes, we've heard the same rumors as well. What is the overall impact to Nucor? Well, it's really hard to predict, what I would tell you is our strategy is to invest in the long-term. We're not overweighted to any single side of the market. So we serve an incredibly diverse range of customers and have an incredible range of capabilities for those customers. So we're not so overweighted to offshore wind or certain elements of that, that if it changed, it would be impacting Nucor. But on the other side of that, if those change, do you see the benefits and some tailwind from tax relief and less regulation for investment moving forward? And so again, it's really a very difficult question to speculate on what might happen tomorrow with a different President. And so, we'll just have to wait and see. But again, I love how we're positioned. I love the breadth and strength of our portfolio and where we're headed that I think is going to continue to serve this marketplace incredibly well.

All right. No, I understand and I appreciate the color. And as a quick follow-up to that, when it comes to trade, a little bit again, what do you believe should be the new administration's number one priority when it comes to steel? I mean, you've been vocal about Vietnam being an issue. Is there a specific trade case against the country and Mexico, the new deal? To your understanding, does Brazil have an exemption? Yes, where do you see where - what would you be pushing for?

Yes. Look, you touched on some of that. And what I would tell you is we've always advocated for is not free trade, it's fair trade. To make sure that our trading partners are actually following the TRQs that are put in place, things like the USMCA. So we're - we think it's the right first step that the administration put into place a few weeks ago with Mexico, it's not enough. We still have concerns with rebar, with electrical conduit, and with some other products that we see are surging that have to get brought back into control. We've looked at the fabricated steel products sector over the last several years has more than doubled its import levels from about 1 million, 1.2 million tons. We believe that's closer to 2.4 million tons today that has got to get curved, that has got to get brought into control. And then again, the other piece of all of that is if we begin to pick apart, the most recent announcements with exclusions, it will all fall flat, it won't have any teeth put into it. So again, you're going to see Nucor continue to advocate vocally and in Washington, regardless of the administration to create a level playing field that protects this industry from illegally dumping subsidized steels, from making it onto the shores of the United States.

All right. That's very clear. And maybe the last one, if I can squeeze that in, on plate, you made a big pricing adjustment last month. So what are you seeing from a demand perspective? Do you think you've hit the bottom in terms of prices? Are you starting to see a bit more stable demand environment, or is there further adjustment to come? And if you can touch on the various end-user markets, that would be appreciated?

Tristan, I'll ask Brad Ford to speak to our current outlook in the plate group and go from there.

Yes. Thanks, Leon. Thanks for the question, Tristan. I think it's important to start with some context. We're coming off of some pretty strong years for plate. Really, '21, '22, and '23 were pretty robust. So as we think about this market being a little bit softer, there's a couple of things to address. One, we are seeing some softness in the more interest-rate-sensitive portions of the market, namely kind of vertical construction and some of the heavy equipment and agriculture side. And two, and most significantly, back to the import conversation, we were challenged in the first half of this year by significantly higher levels of imports, which gained some market share and put pressure on pricing. This pressure on pricing has led our distribution customers to take a pretty cautious approach to purchasing, as they try to right-size their inventories. All that said, we do see some bright spots. And as we think about the second half of the year. Back to imports, we've seen certain countries use up almost two-thirds of their quota really through the first five months of this year. So, we expect a slightly lower import picture in the second half. Bridge and power transmission markets remain strong. And what we're hearing from our customers and developers is onshore wind is really going to pick up kind of late in the second half. And then there's the impact from IIJA funding and project awards really as we think about those ticking up here in late '24 and early '25, which supports not just plate, but our structural businesses and a lot of our steel products.

Okay. That's very clear. Thank you very much.

Thanks, Tristan.

Your next question comes from the line of Chris LaFemina from Jefferies. Your line is now open.

Hi, thanks, operator. Hi, guys, it's Chris LaFemina from Jefferies. Leon, you mentioned automation in the Steel Products segment and you've alluded to it a bit in the past. But I was wondering if you could kind of elaborate on how automation could impact your margins. I mean, what sort of cost benefits might you see? Is this sort of the type of stuff that you just need to remain competitive or do you think that you can become an even lower-cost producer relative to the rest of the industry by some of the automation initiatives that you're putting in place?

Yes, Chris. I appreciate the question, and I would tell you, I like our position where we sit today. I think we are cost-competitive with anyone in the world. And again, we have always advocated we will compete against anyone in the world as long as it's done fairly. Again, back to the import question. But regarding automation, regarding AI, it's something that I would tell you Nucor has embraced and is embracing, and the changes are coming at an incredible rate of speed. And so, we're seeing the potential applications of AI and automation in a whole raft of different areas of our business, technologies that we're using to deploy to create safer outcomes for our team members, to create cost advantages, to create efficiencies. And so I'd like Chad Utermark, who is over our innovation group, and maybe John Hollatz to just touch on maybe a few of those specifics. Chad and John, if you would, give Chris a little more detail and background on what we're doing and how we're embracing that.

Yes. Thanks, Leon. Yes, Chris, not only is it a cost opportunity, but it's a flexibility opportunity, especially in our businesses that face penalty and also a safety opportunity for our teammates. When you think about Expand Beyond, yes, we're going to continue to invest and look for businesses so that we can bring technology that will allow us to be more efficient and take care of our customers. Some specific examples in our Nucor racking group, we've invested and we have robotic weld cells that are operating at several of our facilities right now, and we are excited about what we're seeing there. We've mentioned this before, but our two new tower and structured Greenfield plants have highly automated material handling equipment, as well as robotic plasma and weld cells. We look forward into the spring and fall of next year as we bring those plants online and see the automation take place. As a reminder, many of our downstream businesses in Nucor face these demand fluctuations through the cycle. And what we are seeing is that automation in key manufacturing areas can really help us navigate that demand fluctuation so that we can really take care of our customers.

Yes. Thank you, Chad, and thank you, Chris, for the question. I'll share a couple of other examples from a few of our operations. One is our SBQ mill in Memphis, Tennessee, where here our team has embraced AI to optimize the production scheduling of a very complex steel-making process. We've been able to reduce the man-hours committed to this process by about 80% through the use of AI. In addition to that, we also benefit from yield savings, reducing working capital and operational efficiencies. Switching gears to another project, for the last six years, we have been developing a robotic joist line at Vulcraft in South Carolina. Joist production traditionally has been a very labor-intensive process. This new robotic line, which we have been operating now for about one year, utilizes patented robotics and vision technology to perform the assembly and welding of joists. This is really a game changer for our team, and we're looking to grow this across the rest of our joist operations in the future.

Hi, Chris, this is Steve. I'll just add one other thing to address your question about advantage or not. Nucor has always been about creating production efficiencies; that's how we win. And so, if you think about the scale and reach of what we do, any technology advantage is leveraged across a bigger system for more gains. So I'll call that a scale efficiency if you want to, but Nucor is unparalleled in our industry in the ability to be the best.

Thank you. That's very helpful. I appreciate that.

Your next question comes from the line of Philip Gibbs from KeyBanc Capital Markets. Your line is now open.

Hi, good morning.

Good morning, Phil.

So you called out in the press release $137 million of start-up costs. Is the vast majority of that related to Brandenburg at this point?

Yes. Hi, Phil, this is Steve. It's really two projects, Brandenburg, which is slightly bigger in the quarter impact in West Virginia. As we're accelerating the spending at West Virginia, you're seeing a bit more impact there.

Okay. Are you also including non-cash costs in that number?

No, generally not. It's generally contractor work and site-specific work.

Okay. That leads me into my next question. So West Virginia, I think the plan is to get it started at least in terms of some level of commissioning in 2025, but it sounds like it's probably more so in the back half of the year based on your slide deck. And then also ramping throughout '26 and '27 as you build product capabilities. Is that the way to think about it?

It's a year later. So back half of '26 is when we'll ramp up Brandenburg into '27. I'm sorry, West Virginia, not Brandenburg. Yes, West Virginia.

Okay. And you all said in your deck that conversion cost is expected to be flat quarter-on-quarter. Did you have anything from a maintenance perspective to call out in particular in 2Q? And do you have any maintenance outages in the third quarter, anything beyond normal?

Yes, for steel now, you shouldn't see any pronounced impact heading into the third quarter.

Okay. And then lastly from me, any update in terms of what to think about CapEx for this year, or next to the extent that you didn't mention it? Thank you.

Yes, Phil. The guidance we've given on the year is about $3.5 billion for CapEx spend, we'll keep an eye on that. We'll update as we have in the past years as we get closer to the end of the year if we see any meaningful adjustment to that. And then, Leon mentioned it in his prepared remarks at the outset of the call that for the next couple of years, you'll see an elevated level of capital spending as we move through some of these projects. It's about $6.5 billion of really the larger projects that you'll see us move forward on in the next couple of years.

Thank you.

Thanks, Phil.

Your next question comes from the line of Alex Hacking from Citi. Your line is now open.

Yes, good morning. I wonder if you could maybe comment on how much incremental steel demand, if any, you're really seeing from the IIJA at this point, or is that still something that's on the horizon? Thanks.

What I can share, Alex, is that when we consider the three pieces of legislation, the CHIPS Act stands out as the most immediate, with steel processing underway at a significantly higher pace. Following that, we see developments from the IRA, especially in areas like torque tubes and certain applications in wind and solar. Lastly, we are still in the early stages of the infrastructure bill. It's important to note that from the time a state requests funds until it actually reflects in orders could take up to two years. There’s a long maturation process from when the federal package is approved to when the states receive the money for bridge work or infrastructure projects they aim to undertake. We believe that this will keep growing in the coming years as more states progress further along this process and secure those funds, although we acknowledge it is still early days.

Okay. Thanks. And then just a follow-up on Brandenburg, if I could. Right now, it's operating around a 20% utilization rate, and if the plate market was booming, is there anything stopping Brandenburg from a technical perspective to ramping to a 100% utilization rate over the next six to 12 months, or are you still in that start-up phase proving out the capabilities phase and if the mill is really not ready to run at that rate yet? Thanks.

Yes. Look, really, really good question, Alex. And here's what I would tell you. The short answer is no. We anticipate, and the team at Brandenburg continues to do an amazing job of bringing that mill online. So, we expect that even despite market conditions, that mill will be able to achieve its full run-rate capabilities in 2024. Now we'll decide how long we need that and how long they run at those capabilities. But from a technical perspective, yes, they're still working out some bugs, but there's nothing materially that's going to keep us from achieving that full-rate capacity situation by year's end. And again, we'll be mindful as we think about how we introduce those types to the market. Obviously, we know our plate market, we know the customers, and again, we've been selling in the plate market for over 20 years now. So we’ll be mindful about how we think about that. At the same time, balancing that we've got to be able to achieve that so that when it's required, they know they can hit that last gear and produce all the tons that are required for our market.

Thank you.

Okay. Thank you, Alex.

Your next question comes from the line of Timna Tanners from Wolfe Research. Your line is now open.

Hey, thank you, and good morning, everyone. I have a near-term question and a big quick-picture question. So in the near term, I wanted to ask about the magnitude of EBITDA decline commentary and if it was more about pricing than volume again as you said last quarter? And then same concept, but just wanted to follow-up on the downstream segment. If indeed the squeeze in tubular was about the higher cost substrate and that should be normalizing, joist and deck should be normalizing, should we not see a smaller magnitude of decline in the downstream?

Yeah. Look, Timna that's a fair assumption and assessment. What I would tell you is we think about products, there, the reason we forecasted a decline in Q3 is a few reasons. One, they're still working through some of that higher-priced backlog that's going to, we know is going to flow through in the coming weeks and next couple of months. However, again, one of the bright spots as we think about where inflation is, unemployment is a little bit more elevated, seeing the Fed's appetite or at least intimation for some rate cuts, that certainly could have some considerable impact, particularly to the product segment that you would see more likely in the back half of the year, Q4 and into Q1. But again, there's, we know what our backlogs are. Those backlogs are strong, and again from a demand picture in the Vulcraft and joist and deck, we're out for the rest of the year in terms of that backlog strength, but we also know what that pricing is. And again, we're going to see some squeeze on that as we get into Q3.

Yes, Timna, I'd just add to what Leon said, the first part of your question about the near term. It's much more about pricing and margin pressure than it is volume pressure. So you were correct in that assumption.

Okay. Thanks. And then taking a step back on the big picture, there is an incredible amount of appetite for grain-oriented electrical steel, and also for further options on automotive exposed. And I know we've talked about this in the past, but I've been hearing Gallatin can make thicker grades. I know West Virginia is targeting auto. Can you just remind us, A, when could you make some of these other auto grades and compete more broadly in the auto sector? Is that still the design? And is grain-oriented even on your radar still? I just wanted an update there. Thanks.

I'll start things off and open it up for additional comments. Regarding the auto sector, over the past couple of years, we've been supplying between 1 million and 1.6 million tons annually. We have a well-established customer base and strong relationships with many major OEMs. Their demand for our iconic steels has been remarkable. We've received the Supplier of the Year Award from General Motors for nearly five years, and we hope to continue that trend. Our goal is to double that volume in the coming years. With the West Virginia facility coming online, that will be a significant focus for us. As for how far we will expand into exposed automotive steels, we're taking a cautious approach. We know we can produce those steels and will carefully consider our strategy to maximize profits for ourselves, our customers, and our shareholders. We want to avoid overexposure to the auto sector while being deliberate about moving up the value chain and focusing on higher-value products. Regarding electrical steels, we are keeping an eye on that market. We understand the players involved, the imports coming in, and the potential attractive end uses as we move forward. Nucor will continue to assess that space, and we have valuable partnerships with those already producing electrical steels globally. We will evaluate if it aligns with our goals and, again, I encourage you to stay tuned for updates in the coming months.

Okay, will do. Thanks, Leon and team.

Thank you.

Your next question comes from the line of Martin Englert from Seaport Research Partners. Your line is now open.

Hi, thanks for the follow-up. I wanted to see if you could touch on how you source electricity for your steel mills, and the typical duration for agreements? And how you might be thinking about protecting that cost, if the rates and capability of what you have to pay to get that start to rise in the future?

Yes, Martin, look I'm going to kick it off, and I'm really glad you asked that. Over the last three or four years and really since I took over as CEO, it's been something that we've talked about and not just talked, we've actually taken meaningful steps. So you saw a few years ago our partnership with an investment in NuScale, the small module reactor and the advanced nuclear reactors that are getting built. Obviously, Bill Gates and TerraPower are doing their own SMRs, and as well as two other manufacturers. So from a Nucor perspective, we have a large power consumption that we look at. We're in 40 different states. We've got 30 EAFs around the country that we need to build relationships with. But you've got to understand as well, we've been doing this since 1968. We have incredible relationships with the utilities that we're in because we're the largest power consumer in many of those states. But the macro picture to what you're asking, as you think about the green and digital economies, you think about the data center infrastructure build-out in the cloud computing that's got to be handled, that volume is insatiable. And so, we as a nation have really got to think about how are we going to solve that energy need because almost everywhere they're looking, these data centers now are growing from 100 megawatts to 600, 700, 800, 900 megawatts in demand. It's a huge appetite. So you're going to see Nucor continue to look for opportunities to promote, invest in, or otherwise position ourselves for the long-term so that not only do we get surety of supply at the right cost, and again, many of our contracts are long-term pricing. So they're not - we're not going to the market daily or monthly. We don't have - we will have firm power rates versus variable, but we have a consistent pricing model that we're able to look out years and years into the future that will continue that. So again, it's a really important question for our nation, as we think about manufacturing as well as the U.S. citizens and how they're going to be able to afford energy in the years to come. As we think about the current environment in decommissioning of our existing coal plants, about 70% of them will be idle by 2030. So, we've got to find and I think we have to re-embrace as a nation, nuclear energy as the cleanest, most reliable form of energy that's out there. But Steve, anything you'd want to add on kind of current climate and pricing in utilities?

Yes, Martin. I think just to build on what Leon said, a couple of points of emphasis. We're multi-site locations. So it's not specific to a particular delivery point. It's also the vast majority of our power is purchased under a tariff rate agreement. And so those fluctuations tend to change slowly over time. But Leon highlighted really the more fundamental long-term importance of the company or as a country. And we've, of course, you're familiar that we've put in place some purchase power agreements and we've taken some proactive steps to partner with, ironically, I shouldn't say ironically, with folks out of our sector, some technology companies on procurement and worked with utilities closely on the development of their plans. So I'd say that we're very front-footed on this issue. Energy is about - it's a little less than $40 a ton cost last quarter. Roughly, give or take about 80% of that is electricity based. So it is a meaningful part of our overall cost.

Do you have concerns that higher electricity rates might stymy some of the reshoring activity and potentially disadvantage some of the U.S. manufacturing base given the U.S. has been more so an ideal market, at least from a cost of energy or electricity perspective historically versus some others globally?

Yes, short answer, Martin, yes, I do. I think if you look today, the U.S. is building no nuclear power. Right now in China, they're building 27 facilities. And so I am absolutely - because again, we're talking - we're end-use customers. We're talking to some of the biggest companies in the country and the partnerships that we have with them, and they are looking out five, eight, ten years and they know they can't get the power today. And so there are absolutely cases where we know projects are moving forward because they can't meet the power requirements. So yes, is the short answer to that question of it's an issue that has got to be dealt with, because it's sitting right at our front door. And again, we have an opportunity to embrace that, and to think about how we, again, as a superpower in the world, how we continue to proliferate manufacturing, support manufacturing, and again the overall economy through our energy independence.

Okay. I appreciate all the color and commentary. Thank you.

Thank you.

I would now like to turn the call to Leon Topalian, Chair, President and CEO.

Thank you. And once again, I'd like to thank our Nucor team for an outstanding first half performance and safety. Thank you for your efforts, your dedication to one another in helping us to achieve our goal of becoming the world's safest steel company. I'd also like to thank our customers for giving us the opportunity to serve you each and every day. And finally, thank you to our investors for trusting us with your valuable shareholder capital. Thank you for your interest in Nucor, and have a great day.

This concludes today's conference call. Thank you for your participation. You may now disconnect.