Again, Seattle has been an incredible producer for Nucor, for our customers, shareholders. And so again, against that backdrop of providing the most capabilities for our customers are really the drivers behind this exploration in our future.
Phil Gibbs: Thanks, Leon. I had one further, and I apologize, but it just popped in my mind here. What’s the current appetite for M&A across the spectrum, whether that’s in mills or fab or recycling. I know you’ve obviously made a lot of internal investments. So you can be more in control of kind of the long-term asset quality and cost base of what you’re investing in. But what’s the appetite to add on that capability with M&A? And how willing are any of the potential targets you’re looking at? Thanks.
Leon Topalian: Yes, Phil, what I would tell you is that we’ve generated an awful lot of free cash flow. We’ve got a lot of cash. We’ve got the best credit rating in the industry. So all those things said, there’s no desperation — there hasn’t been. There wasn’t in ’21 and ’22 and the record years of Nucor. It was an incredibly disciplined approach to think about growth. But make no mistake, we are going to grow. We are going to invest. We’re going to continue to maximize our shareholder returns. We are going to continue to be great stewards of the shareholder capital we are entrusted with. We are going to return our 40%. We are going to maintain an incredibly strong credit rating but we’re going to invest further in the future.
We’re going to look at so I would tell you the appetite is continually strong with again, a very disciplined mindset that is cash isn’t burning a hole in our pocket. We are not going to chase things. We are going to look for the things that create EVA for our shareholders, period, full stop. Again, under the umbrella of the cultural fit that matches Nucor’s longstanding traditions of how we know we can maximize that return is through the team, through the incredible culture that Nucor is been a proud part of for 60 years, that is driving and guiding our decisions and how we think about those companies that we choose to engage and bring on in Nucor. Thanks, Phil.
Operator: The next question is from Timna Tanners of Wolfe Research. Please go ahead.
Timna Tanners: Yes. Hey, good morning, everyone. I wanted to follow-up on Phil’s question and see if I could ask it a little differently. But on a call we were just on and most of us, we heard that there’s a view of one of the other steel mills that there could be further consolidation in the flat rolled sector. So do you agree that there’s further — you’ve been making your investments to grow organically in a lot of ways. But do you think there’s also ability to further consolidate without running into any issues in antitrust?
Leon Topalian: Yes. Look, Timna, I think like you, we are watching that play out as well. And so we’ll see how that shakes out in the coming weeks and months and years. But again, what I cannot speculate on some of that, what I can tell you for sure is our strategy is clear in how we want to think about growing this company and investing for our future. So historically, what we’ve seen is the industry is consolidated. That’s been a healthy thing for the steel industry. It’s been a good outcome. And so whether or not certain companies meet DOJ hurdles, I can’t even begin to speculate on, but again, like you, we are watching how this plays out, and we’ll stay tuned.
Timna Tanners: Okay. So let me switch gears a little bit and kind of ask, on the flat rolled side, you’ve been ramping up Gallatin and Brandenburg for a while, but not — it doesn’t seem like you’re running flat rolled anywhere near full out. If we look at the sheet volumes, they’re down quarter-over-quarter despite Gallatin ramping up. So you’re running your sheet at less than full utilization, but you’re also starting a new sheet mill. Is that going to displace any capacity? Or are you thinking that will be incremental? Because I know on the rebar side, you’ve been pretty disciplined and not adding a lot of extra capacity, but is flat rolled a different market for a reason that I might be missing? It would be great to hear your thoughts on that. Thanks.
Leon Topalian: Yes, I’ll share a couple of perspectives. The first thing though I want to do is decouple Gallatin and Brandenburg. Brandenburg’s not been in the startup for a while. They are on target. They completed that project on schedule, on time and on budget with one of the highest safety outcomes we’ve ever seen in the history of Nucor. So I couldn’t be more proud of how they’ve executed that and how the plate group is going to market. So I would tell you that’s very different from what we’ve seen in Gallatin, where, again, I’m not sure all of our — obviously, you’ve been doing a number of Nucor facilities. When you look in the visits I’ve made to Gallatin and what they had to do, the integration of we call it a brownfield, but they essentially were greenfield and everything from automation in the control systems that are required to bring that new equipment online was Herculean, the team’s worked incredibly well safely, but there were a lot of startup issues that cost us 6 to 8 months of where we thought we were going to be.
Your ultimate question of, are we going to peg the utilization rates to the outcomes? The answer is no. We are going to look at making sure that the tons we bring into the market are balanced. We are not just going to run 1-inch plate at Brandenburg because they can when Hertford or Tuscaloosa can do something already make those tons and serve that customer need. But Rex or Al, any other additional comments you’d like to make.
Rex Query: Tim, this is Rex Query. As I look at our capabilities across our sheet mills, we are positioning ourselves to rationalize product based on — I’m going to say the capability and the efficiency levels of our various plants. So if you look at our pickle galv line, at Gallatin, which we have continued to support through all of these changes at Gallatin and supply into the automotive market, heavy frame applications. You look at our expansions in the coated side, a new Gallatin announced for Berkley with tremendous automotive supply there from that plant. So we are going to expand capability there, our investments in [indiscernible] so we really look to make sure that we are expanding capabilities, value added we are growing in our capabilities with our customers, not just only in volume. We are going to focus on margin and bottom line profitability. Frankly, that’s going to be our focus.
Timna Tanners: Okay. I was just trying to get an answer to the question on the sheet mills. Are they going to be — the additional Westford industry, will that be incremental capacity? Or like you were alluding to on the rebar side, could it replace existing capacity? And if it’s incremental, is there room for another 3 million tons in the market? Thanks.
Leon Topalian: Yes. Look, I think it’s a fair question, and it’s going to be both. This is the short answer. Part of the driver for that as we think about the sustainability model and where our customer segment is asking us to go and has been asking us to go, that’s going to be an incredible need. And don’t forget that that mill is going to sit in the largest sheet consuming range in the United States where Nucor is underserved. We don’t have as much market share that we know we are going to be able to go in and provide for our customers. So there’s no doubt that both pieces of that strategy are going to come into play in the coming years as we ramp that up. And so no, we are not building 3 million tons of capacity that we think we’re going to run in 2.1. We have full expectations that we are going to build it to 3, and it’s going to run at 3.
Timna Tanners: Okay. Thank you.
Steve Laxton: What you just said, the incrementally in new capacity.
Timna Tanners: Got it. Thanks again.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Leon Topalian for closing remarks.
Leon Topalian: In closing, I’d like to thank our Nucor team members for the way you’ve executed our growth strategy and continue to raise the bar on our safety. Let’s carry this performance through and finish the rest of this year and make this the fifth straight year of record performance. I’d like to also thank our customers for the trust you place in us with each and every order. And finally, thank you to our shareholders and the trust you place in us to be great stewards of the capital. Thank you all for your interest in Nucor, and have a great day.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
