The operator introduces the Nucor's Second Quarter 2024 Earnings Call and turns it over to Jack Sullivan, the General Manager of Nucor Investor Relations. Leon Topalian, Chair, President and CEO, and Steve Laxton, Executive Vice President and CFO, will lead the call, with other members of Nucor's executive team participating in the Q&A portion. The second quarter earnings release and investor presentation have been posted to the Nucor Investor Relations website. The discussion will include non-GAAP financial measures and forward-looking information. Two recent changes to the executive team are also highlighted, with Doug Jellison retiring after 33 years and Randy Spicer being promoted to Executive Vice President.

The second quarter has been a successful one for Nucor, with the company achieving its safest first half in history and generating strong financial results. They have also made progress in returning capital to shareholders, maintaining a strong balance sheet, and advancing their long-term strategy. Some notable initiatives include the commissioning of a new bar mill in North Carolina and the construction of a sheet mill in West Virginia. Nucor has also seen growth in production and shipments from recently completed projects.

In the second quarter, Nucor's Gallatin facility set new production records and opened a new tube mill. However, due to market conditions and a focus on capabilities rather than volume, they do not expect to ship as much as originally projected for the year. Nucor also made two acquisitions as part of their Expand Beyond strategy, including Rytec, a manufacturer of high-performance overhead doors, and Southwest Data Products, a data center infrastructure provider. These acquisitions will allow Nucor to offer a wider range of solutions to customers and capitalize on growing markets.

Nucor's recent acquisitions have expanded their capabilities to provide steel products for data centers. They are focused on long-term growth through investments in technology, product diversification, and expanding into new markets. These investments will be funded by operating cash flow and cash on hand, with the largest project being the construction of a new sheet mill in West Virginia.

Nucor has several new projects starting in the next few years, including a new Rebar Micro Mill and two utility tower manufacturing plants. These projects will add differentiated capabilities for customers and double the company's earnings potential. Nucor is also addressing concerns about unfair trade practices in the steel industry, particularly with steel being imported from Mexico and Canada at levels above historic levels. A new agreement between the U.S. and Mexico aims to stop the flow of illegally imported steel from China and other countries.

In the paragraph, the speaker discusses the imposition of a 25% tariff on Mexican steel and the need for more stringent efforts to address the issue. They also urge the US government to continue working with Mexican leaders and pass the Leveling the Playing Field Act 2.0 to enhance domestic industries' ability to defend against unfairly traded imports. The speaker then turns to Steve, who shares details on Nucor's Q2 financial results, highlighting the team's execution of their long-term strategy and strong earnings and cash flow. However, the net earnings for the second quarter were 23% lower than the first quarter.

The majority of the change in earnings for the company is due to the decline in profitability of the Steel Mill segment, mainly due to lower realized pricing. The Steel Products segment also saw a decrease in earnings, despite an increase in shipments, due to lower pricing and margins. The Tubular Products group and Joist and Deck operations had a significant impact on the segment's results, with the former experiencing a decline in earnings and the latter performing well. The Raw Materials segment also saw a decline in volumes and pricing, but this was offset by lower operating expenses. Overall, Nucor generated $1.5 billion in cash from operations during the second quarter.

Nucor's strong cash generation allows them to maintain a balanced and consistent approach to allocating capital and creating value. This is demonstrated in their second quarter results, with a strong balance sheet and a return of over $630 million to shareholders. They also made significant investments and acquisitions, which will contribute to future earnings. However, their third quarter earnings are expected to be lower due to lower earnings from their Steel Mill segment.

Nucor's earnings in the Steel Mill segment are expected to decline due to decreasing pricing and a softening economy. This may result in a similar decline in consolidated EBITDA as seen in the previous quarter. However, the company remains well-positioned to serve healthy end markets. The weekly CSP strategy introduced in April has received positive feedback from customers, but it is too early to draw definitive conclusions.

The speaker is excited about the impact of the CSP on the market, especially during a softer market. They believe it will help to eliminate speculation and create a transparent published price. They have received positive feedback from customers and believe it will solidify relationships with those who are driven by end-use market conditions. The speaker also mentions that they have done what they said they would do with CSP and will continue to provide relevant and timely pricing. Success will be measured by better matching order entry with underlying demand.

Bennett Moore asks about the direction of shipments for the Steel Mill and Steel Products segments in the third quarter. Dave Sumoski responds by stating that the market has stabilized and demand for most products is relatively flat. He also mentions that the Steel Products segment is diverse and makes up a large portion of Nucor's overall business. He expects order entry rates to continue to increase in the back half of the year.

Nucor has a strong focus on controlling their raw material inputs, with a goal of creating a competitive advantage and minimizing embodied carbon in their finished products. They have been working on projects to increase flexibility and adaptability in their raw material stream, such as using low-copper shred. Al Behr, who heads their raw materials group, provided an update on their progress and future plans.

The speaker discusses the company's approach to low-copper shred and their recent investments in this area. They currently have a capacity of 1.4 million tons and are adding another 750,000 tons, with plans to add 3.5-4 million more tons in the future. This will give them control over 10 million tons of metallics, two-thirds of their needs. They are also considering additional investments in electric technology.

Tristan Gresser asks about potential risks from upcoming elections, specifically regarding the potential impact on the solar and wind industries, which have been a source of growth and potential upside for the business. He wants to know how concerned the company is about the possibility of a new administration removing funding for these areas.

Leon Topalian discusses the potential impact of a change in administration on Nucor's business. He mentions the company's success under both Democratic and Republican leadership and their strategy to invest in the long-term. Topalian also addresses potential changes in trade policies and their impact on Nucor, specifically mentioning rumors about pressure on IRA and potential benefits from tax relief. He concludes by saying that it is difficult to speculate on what might happen and that Nucor's diverse portfolio and strong position will continue to serve the marketplace well.

The speaker emphasizes the importance of fair trade rather than free trade and advocates for stronger measures to protect the steel industry from illegal dumping and subsidized imports. They also discuss the recent pricing adjustment in the plate market and the current outlook for demand in various end markets.

The plate market has been strong in recent years, but is currently facing some softness due to interest-rate sensitive areas and higher levels of imports. However, there are some positive factors, such as expected lower imports in the second half of the year, strong bridge and power transmission markets, and increased activity in onshore wind and IIJA-funded projects. Leon also mentioned the potential impact of automation on margins in the Steel Products segment.

The speaker discusses the potential cost benefits of implementing automation and AI in their business. They believe that they are currently cost-competitive with anyone in the world and are open to competing with anyone as long as it is done fairly. The company has embraced automation and AI and is seeing changes at a rapid pace. They are using these technologies to create safer outcomes for their team members, increase cost advantages, and improve efficiencies. The speaker then invites two others to discuss specific examples of how they are implementing automation and AI, such as robotic well cells in their Nucor racking group.

The paragraph discusses Nucor's use of automation and advanced technology in their new plants and existing operations. This technology helps them navigate demand fluctuations and better serve their customers. Examples of this include the use of AI in production scheduling and robotic joist lines. Nucor's focus on creating production efficiencies allows them to leverage any technology advantages across their larger system for even more gains.

The Nucor company is known for its unparalleled efficiency in the industry. They reported $137 million in start-up costs, which is mainly related to the Brandenburg project. The West Virginia project is expected to start commissioning in 2025 and ramp up throughout 2026 and 2027. Maintenance costs are expected to be flat quarter-on-quarter, with no significant outages planned for the third quarter.

Leon Topalian and Philip Gibbs discuss the impact of maintenance costs at DRI plants on the company's segment numbers. Topalian mentions that there will not be a pronounced impact on steel in the third quarter. Steve Laxton provides an update on CapEx for this year, stating that the company will spend about $3.5 billion and an elevated level of capital spending over the next couple of years. Alex Hacking asks about incremental steel demand from the IIJA, to which Topalian responds that the CHIPS Act is the most prominent and is seeing steel being processed at a higher rate.

The company is seeing growth in the IRA, particularly in torque tubes and wind and solar applications. However, the infrastructure bill is still in early stages and it takes a long time for states to receive and use the funds. The Brandenburg mill is currently operating at 20% utilization rate, but there are no technical limitations preventing it from reaching its full capacity by 2024.

The speaker discusses the company's plans for introducing new products to the market and their familiarity with the plate market. They also mention the need to balance production capabilities with market demand. In response to a question about EBITDA decline, they mention that it is primarily due to pricing and backlog, but they expect some relief in the coming weeks and months. The speaker also notes that inflation, unemployment, and potential rate cuts could impact the product segment in the latter half of the year.

The company has a strong backlog in Vulcraft and joist and deck, but there is expected to be pricing and margin pressure in the third quarter. They have a good relationship with customers in the auto sector and plan to double their volume in the next few years with the opening of West Virginia. They are considering expanding into exposed automotive, but have not made a decision yet.

Nucor is deliberate about producing steels to make the most money for themselves, customers, and shareholders. They are careful not to become too reliant on the auto industry and are actively looking to move up in the value chain. They are also considering entering the electrical steel market and have partnerships with current producers. In terms of electricity sourcing for their steel mills, Nucor has taken steps to protect against rising rates and costs.

Nucor has partnerships with companies investing in small modular and advanced nuclear reactors to address the growing energy needs of the nation. They have strong relationships with utilities and are looking for long-term solutions to ensure affordable energy for manufacturing and citizens. With the decommissioning of coal plants, there is a need for new energy sources to meet the increasing demand from data centers and cloud computing.

The speaker believes that the nation should embrace nuclear energy as the cleanest and most reliable form of energy. They also discuss the current climate and pricing in utilities, with a focus on long-term contracts and partnerships with technology companies. The average duration of contracts for energy is not specified, but they are typically multi-year agreements.

Leon Topalian expresses his concerns about the potential negative impact of higher electricity rates on reshoring activity and the U.S. manufacturing base. He mentions the lack of nuclear power being built in the U.S. compared to China and how this could affect future power requirements for end-use customers. Topalian emphasizes the need for the U.S. to address this issue in order to support manufacturing and the overall economy. He also thanks the Nucor team for their safety efforts and dedication, as well as their customers for their continued support.

The speaker thanks the investors for entrusting their capital to Nucor and for their interest in the company. The conference call is now over and participants can disconnect.

This summary was generated with AI and may contain some inaccuracies.