John J. Ferriola - Chairman, Chief Executive Officer and President James D. Frias - Chief Financial Officer, Executive Vice President and Treasurer Keith B. Grass - Executive Vice President, Chief Executive Officer of DJJ and President of DJJ R. Joseph Stratman - Executive Vice President of Beam & Plate Products Raymond S. Napolitan - Executive Vice President of Fabricated Construction Products James R. Darsey - Executive Vice President Ladd R. Hall - Executive Vice President

Michelle Applebaum - Michelle Applebaum Research Inc. David Gagliano - Barclays Capital, Research Division Curtis Rogers Woodworth - Nomura Securities Co. Ltd., Research Division Sohail Tharani - Goldman Sachs Group Inc., Research Division Nathan Littlewood - Crédit Suisse AG, Research Division Timna Tanners - BofA Merrill Lynch, Research Division Philip Gibbs - KeyBanc Capital Markets Inc., Research Division Brian Yu - Citigroup Inc, Research Division Martin Englert - Jefferies LLC, Research Division Aldo J. Mazzaferro - Macquarie Research Matthew Murphy - UBS Investment Bank, Research Division Evan L. Kurtz - Morgan Stanley, Research Division Michael F. Gambardella - JP Morgan Chase & Co, Research Division Andrew Lane - Morningstar Inc., Research Division

Good day, everyone, and welcome to the Nucor Corporation First Quarter of 2014 Earnings Call. As a reminder, today's call is being recorded. [Operator Instructions] Certain statements made during this conference call will be forward-looking statements that involve risks and uncertainties. The words we expect, believe, anticipate and variations of other such words and similar expressions are intended to identify those forward-looking statements, which are based on management's current expectations and information that is currently available. Although Nucor believes that they are based on reasonable assumptions, there can be no assurance that future events will not affect this -- their accuracy. More information about the risks and uncertainties relating to these forward-looking statements may be found in Nucor's latest 10-K and subsequently filed 10-Qs, which are available on the SEC's and Nucor's website. The forward-looking statements made in this conference call speak only as of this date, and Nucor does not assume any obligations to update them, either as a result of new information, future events or otherwise. For opening remarks and introductions, I would like to turn the call over to Mr. John Ferriola, Chairman and Chief Executive Officer and President of Nucor Corporation. please go ahead, sir.

Thank you. Good afternoon. This is John Ferriola, Nucor's Chairman, Chief Executive Officer and President. Thank you for joining us for our conference call. As always, we appreciate your interest in Nucor. With me for today's call are the other members of Nucor's executive senior management team: Chief Financial Officer, Jim Frias; and our other Executive Vice Presidents, Jim Darsey, Keith Grass, Ladd Hall, Ray Napolitan and Joe Stratman. First and most importantly, we want to thank everyone on our Nucor, Harris Steel, David J. Joseph, Duferdofin, NuMit, Steel Technologies and Skyline Steel teams for your excellent work taking care of all of our customers during a challenging first quarter with harsh winter weather in most of the areas where we operate. The more than 22,000 men and women of the Nucor team got the job done, as they always do, by working safely, working smart and working together. Nucor's teammates, the right people, are our company's greatest asset and our greatest competitive advantage. In addition to the operational excellence they demonstrate each and every day, our teams have been working hard to grow long-term earnings power. We have invested significant capital in recent years that we expect to convert into higher highs and profits over the next up cycle. The 2 key drivers to the anticipated profit growth will be reducing our raw material cost and expanding our product mix to include more value-added, higher-margined offerings. I will now ask our CFO, Jim Frias, to review Nucor's first quarter performance and financial position. Following Jim's comments, I will update you on our progress implementing our strategy for profitable growth. Jim?

Thanks, John, and good afternoon. First quarter 2014 earnings of $0.35 per diluted share included unfavorable tax adjustments totaling $0.04 per diluted share. This charge was not factored into our guidance earnings range of $0.30 to $0.35 per diluted share. First quarter results also included a charge of $0.02 per diluted share related to the disposal of assets within the steel mills segment. This charge was factored into our guidance. A comment about our tax rates as it can be confusing due to the impact of profits from noncontrolling interests. After adjusting out profits belonging to our business partners and the onetime tax adjustments, the effective tax rate was 34.4% for the first quarter of 2014. Over the balance of this year, we expect our effective tax rate, after adjusting out profits belonging to our business partners, to be in the range of 34% to 35%. As John noted, our performance was achieved despite the impact of the most severe winter weather conditions in a decade experienced in many parts of the country. The resulting challenges were numerous. Deliveries of raw materials to our facilities and our shipments to customers were hindered by railcar and truck availability. Costs were increased, especially for energy, and customer demand was disrupted as more than half our end-use demand is directly tied to construction activity. Most importantly, our teammates in all of Nucor's businesses applied their can-do attitude and energy to taking care of our customers. We view our industry-leading operational flexibility and reliability as critical pieces of the value package we deliver to our customers every day. First quarter 2014 total energy costs at our steel mills increased by about $7 per ton from the prior quarter. As a partial hedge to these higher costs, the profitable output of our natural gas working…

Thanks, Jim. I am encouraged by our performance in the first quarter of 2014. We delivered solid earnings given the significant challenges outside of our control. The 2 big challenges this quarter were the weather and ongoing pressure from imports. Our team also made excellent progress during the quarter, implementing our strategy of investing for long-term profitable growth. The biggest reason that I'm encouraged is that I see strong evidence that Nucor is beginning to realize initial payoffs from our hard work through this protracted down cycle to grow our long-term earnings power. We have invested our shareholders' valuable capital in numerous projects that provide us new, higher-margined product offerings, cost reductions and quality improvements. After starting up operations just last December 24, our Nucor Steel Louisiana team produced 455,000 tons of DRI during the first quarter of 2014. During the quarter, the facility attained peak operating rates above 90%. Most importantly, the quality of the initial output has been outstanding. Louisiana has already attained world-class quality, with metallization rates of 96% and carbon content exceeding 4%. I would like to thank everyone on our team in Louisiana for their excellent progress in the first quarter and their unrelenting commitment to continuing the hard work required for completing the job. As Jim mentioned, Louisiana's costs were higher than expected during the first quarter. That's not unusual for the early production at a new facility. We are pleased to report that the performance of the equipment has actually exceeded our expectations. As was the case in starting up our DRI facility in Trinidad 7 years earlier, our work is now focused on process adjustments to improve the initially high product yield loss that is inevitably part of start-ups. Our Louisiana team has identified a number of such modifications to reduce yield…

[Operator Instructions] And we'll take our first question from Michelle Applebaum with Michelle Applebaum Research.

So my first question for you is, you're throwing out some numbers that you -- that sound terrific about what's going on at DRI in Louisiana. But I'd like to ask you, and then I have another question. I'd like to ask you to put into perspective for us what some of these numbers mean? And probably one great perspective would be, how does this start-up compare to the start-up of -- or I should say, the restart of Trinidad when you did that?

Well, as I mentioned in the script, our Louisiana plant start-up, we believe, went very well, and particularly when we compare it to our Trinidad start-up 7 years ago. To begin with, the Louisiana quality targets at start-up were higher than those in Trinidad. At the beginning, when we started our Louisiana plant, our quality targets for metallization were 95.5% and our carbon percentage we were looking for was 4% or better. And that compares to the quality targets at Trinidad at start-up of about 95.5% -- 93.5%, excuse me, 93.5% and about 2.5% carbon. So we started out with higher-quality targets and it's important to note that Louisiana achieved their quality targets in a single week. In 1 week, they reached the quality targets that we had set. And it took Trinidad about -- just to put it in perspective, it took Trinidad about 5 weeks to achieve its quality targets. And in terms of the -- achieving the nameplate daily production, Louisiana reached its daily production nameplate target in 11 weeks versus about 26 weeks for Trinidad to reach its nameplate daily production. And bear in mind that Louisiana's facility's a 2.5 million ton furnace, the largest operating in the world. So this was a first-time event in the production of DRI. Now Trinidad certainly was a big start-up, and we had some challenges there, but it was the restart of an existing facility that had been operating. So it faced a few less challenges. So overall, I would say that -- and I'd also point out that being the largest furnace in the world, during the start-up process, we set daily production records for DRI production out of a single furnace virtually every day during the course of the quarter. So overall, when I look at the start-up of the Louisiana facility, particularly as I compare it to the start-up of the Trinidad facility, our team in Louisiana did a great job, and we're very pleased, very, very pleased with the start-up. Now the team still has more work to do...

Okay, great. My second...

And we need to focus on the process in Louisiana, not unlike what we had to do 7 years ago in Trinidad, and we have to focus on improving the yield loss that's associated with the start-up in the process.

Okay. My second question is on trade. So we just had the preliminary decision in rebar, and some people are saying that it's partial good news because Mexico had tariffs that were meaningful, not great, but Turkey didn't get much of anything. And I'm just wondering here, and you know I've been observing trade for over 30 years now, and it's something that when you do steel, you spend a lot of time talking to lawyers. And I just can't help but wonder if a failed trade case, a 0 tariff, isn't so much a nontariff as much as an endorsement of what the other guy is doing, a.k.a. sort of a license to steal. And if that's the case, do we have a bigger problem coming between Korea and Turkey now, both in situations where they are essentially being given a kind of a free pass?

Well, let me start out by saying, Michelle, that these are preliminary findings and that Commerce is not scheduled to give its final determination on these cases until September. I believe it's September of this year. So between now and then, believe me, we will be working hard to convince them to reevaluate their position on Turkey. It's also important to note, though, that Commerce did find, okay, that the producers in Turkey and Mexico were, in fact, dumping into the U.S. market. And in addition, Commerce found critical circumstances for some, although not all, of the foreign producers. Given the surge of imports that we've seen this year, we believe that Commerce should have found critical circumstances for all of the foreign producers dumping into our market. So we're disappointed. We're pleased with some parts of the ruling; we're disappointed with others. We're going to continue to work with Commerce and the ITC to get a better ruling when they have the final determination in September. I got to tell you, I'll go on the record as saying it, we believe the department should have made decisions based on the evidence given in the record that would have produced higher margins for Turkey. And we will continue to work in Washington to express that opinion, utilizing all the strength of all 22,000 of our teammates.

And we'll take our next question from David Gagliano from Barclays.

Great. My questions are actually into trying to drill down a bit more into the economics on the DRI side from Louisiana. If I look at the average scrap and scrap substitute cost per ton figure of $398 for Q1, what was the cost of the DRI per ton that's embedded in that $398 number?

Well, we're not going to go into those specifics. Clearly, I can tell you our competitors would love to hear those numbers. I will tell you -- I'll make just a couple of general comments, as I made during the -- during my comments in the script, that we will continue to focus on the process. We will continue to improve our -- reduce our yield loss as part of the process. And as we continue to do that, we'll reduce our costs associated with the production of DRI.

Okay, okay, understood. How much -- sorry, how much of the 455,000 tons that was produced during the quarter, how much of that was actually consumed at the steel mills during the first quarter, maybe all of it?

David, just a side note, the costs at Louisiana really weren't a factor in the number you quoted because we sell DRI from the -- directly to the steel mills at a market price. So Trinidad operates and generates a profit based on selling pricing costs. And in fact, low competing raw material prices caused Louisiana to sell the materials at a low competing price with pig iron and busheling. So that was a factor in the performance in the quarter. But that number you're quoting reflects a market number.

Okay, okay. Understood.

To address your second question, I don't have a specific number of how much was shipped out. But what I can tell you is that our mills are receiving it. They are consuming it at a rate of about 30% to 40% of the total charge, and they are extremely pleased with the performance of the DRI in our furnace. And in fact, it's performing slightly better than what we expected in some areas. We've seen significant energy savings as a result of the DRI. Furnace lining life has improved as a result of the coating that the DRI is providing in the process, and the electrode consumption has gone down with the use of DRI. So we're very, very pleased. Our teams are very, very pleased with the way that the DRI is performing in our furnaces today.

Okay. And I apologize for asking the same question a different way here. But I'm just trying to get to the economics, a little bit more color on the economics around how DRI is impacting the profitability. So I guess given that it's sold at a market price, is there a way to give us a sense as to whether, after the cost and the sales transfer price, was that a -- overall, was that a positive or a negative contributor to the result? And if so, can you -- is there a way to frame how much...

Well in my script, I talked about what we've identified as pre-operating and startup costs for Trinidad and it was just under $21 million.

For Louisiana.

For Louisiana, excuse me. For Louisiana in the first quarter. And again, there's 2 factors: one is, the startup costs -- excuse me, the -- optimizing the conversion cost, especially relating to yield, as the mill's ramped up to its full capacity and now we fine-tune them to actual process controls; and the second factor is the commercial market it's operating in. And when we started Trinidad -- excuse me, yes, when we started Trinidad back in 2007, it was competing with materials that had a much higher selling value. So the fact that it had not yet optimized its costs wasn't as obvious and it made money right away because it could ship the materials over at a much higher price.

Now as we continue to go through the year, we will focus on the process, as I've mentioned. We will improve the yield loss that's associated with the process, and we expect the financial performance to be much stronger towards the second half of this year. As I mentioned in the script, we're going to be shutting down for 3 weeks in June to make some modifications, which is not unexpected, again, in the startup of a new facility, particularly one that's the largest in the world, the first time that we're operating one that large. So we're going to be shutting down. So it's about 3 weeks to make some improvements that we believe will have a significant impact upon the yield loss associated with the process. Reducing the yield loss obviously is going to have a major impact on the cost profile of the facility. And as Jim mentioned, okay, even given the current low market price for competing raw materials, we believe in the second half of the year, we'll perform much better financially.

Okay. Do you believe it'll be profitable in the second half of the year?

We do, yes. Again, given the current competitive raw material picture, we believe that raw material is pretty much at a low point. We don't think they would get much lower, but again, if that happens, then you've set a new benchmark. So given the current raw materials remain constant going into the rest of the year, we believe that it will be financially positive, profitable, in the second half of this year.

And we'll take our next question from Curt Woodworth with Nomura.

On the long product side, John, it seems like we've seen kind of mixed trends with respect to bar and beam pricing. It seems like the beam pricing has started to decouple a little bit from the scrap price, but rebar remains relatively depressed. I'm just wondering do you think that's a function of relative demand strength in non-res more benefiting beam or more the import side hampering the rebar pricing?

Well probably a little bit of both, okay? In terms of the rebar, demand was hurt in the first quarter, obviously, because of the weather conditions. And we do see, as we go into the second quarter, a small improvement in demand that's tied to residential construction improving, again, modestly, and from an extremely low level, okay, but improving. But that's offset by this issue of imports that we've talked about in the script. So without a doubt, although we see a small improvement in demand, it's being -- the pricing is being adversely impacted by the imports. On the structural steel side, on the wide-flange beams side, we see demand also improving marginally, but we don't have that same import pressure. And therefore, pricing has been a little bit more stable.

Okay. And last question on the M&A strategy. I saw that Steel Technologies has acquired a small processor, I think, a couple of days ago. Is that kind of the beginning of a broader trend for you guys looking at more downstream or processing capability?

Well we always look for -- it's a case of us finding an opportunity that fit well with our strategy of going downstream. It fit very, very well with our steel tech operations. It was a great bolt-on type operation, did not require a major change in management and a lot of additional cost to it. And it's one of our more profitable downstream products that has been very strong throughout the downturn, frankly, and it's a result of the automotive strength in some other markets that are pretty strong. So we saw an opportunity to get a great company at a good price. It was a good bolt-on operation, and we took the opportunity.

And we'll take our next question from Sohail Tharani with Goldman Sachs.

I wanted to ask you on this downtime or are you going to take in the third week of -- in June for 3 weeks? Do you have any idea what kind of costs should we associate with that in our model?

Yes, you're talking about the 3-week outage that I mentioned for the DRI facility in Louisiana?

Yes.

The cost will not be significant. There's some changes we'll be making into the furnace, but they -- we will not be incurring major costs associated with that. And then there'll be some costs primarily associated with the conveyor systems. You might recall from an earlier call that in Louisiana, we have 4.5 miles of conveyor systems. And just as a point of reference to Michelle's earlier question comparing it to Trinidad, Trinidad has about 1.5 miles of conveyors. So when you have that much material handling, we're seeing some yield loss as a result of the impact of dropping the material from one belt to a transfer house to another. So we're going to be going in and doing some work softening the transferring of the material. It's not expensive work. It's just a bit time-consuming. We'll also be making some adjustments to the internal structure of the furnace, which, again, minor cost, but a bit time-consuming. So we're estimating a 3-week outage. Minimal cost, but we will be down for 3 weeks. And I'll mention before the question is asked that we fully anticipated this, and we've been building our raw material stockpile to take it into account. So we will have sufficient, high-quality iron units on hand to get through, to weather through this 3-week downturn.

Sal, as a side point, pre-operating start-up costs were mainly related to Trinidad and the balance we expect - for Louisiana, I kept saying Trinidad -- for Louisiana. And the amount we expect in the second quarter is going to be more in the $10 million to $15 million range, depending on how quickly Louisiana is able to get the yield improvements that they're working on right now.

$10 million to $15 million in 2Q?

Yes.

Great. Helpful. Jim, did you mention in your prepared remarks in very early sentences that half of your volume is tied to non-res? Is that correct what I heard?

Generally, that's true, yes.

Okay. I want to ask...

[indiscernible]

I'm sorry, go ahead.

I think I said more than half, but go ahead.

More than half, okay. I want to ask you about the gas project. The gas projects have been steadily going up, and I think people are view that it may last for a while. And I'm wondering are you properly hedged or does it make sense to rethink about starting drilling or you think that you are already committed not to drill this year and you can't change that decision?

Well we're comfortable with the level that we're hedged, certainly, through this year, and we'll evaluate what we're going to do as we enter into next year. To give you some perspective on that, what we're getting out of our wells, relative to what we're consuming at our furnaces in Louisiana, on average, we were drilling -- we were receiving about 100,000 MMBTUs per day during Q1, okay? And right now, our usage at that the Louisiana facility running pretty much full out, we're consuming 75 million to 80 million MMBTUs per day. So that just gives you some sense of where we stand today in terms of our coverage of gas needs in Louisiana. Now, obviously, as we go through the year and we start some of the depletion on the existing wells, that will change, we're comfortable with the level that we're hedged through this year. We'll reevaluate what we're going to do in the way of drilling next year based upon how we see pricing going forward and other factors.

Okay. And when you talked about your loss at the Louisiana plant, if you benchmark it against the Trinidad plant, how far are you off? Are you 10%, 15% below or you think more than that?

We think it's about 3%, okay? And I will -- but again, I want to point out that when we started the Trinidad plant, the yield loss was more in line with what we're seeing today at Louisiana. Now having gone through the process improvements in Trinidad, we've been able to reduce it. And frankly, we plan to reduce the yield loss in Trinidad even further by the startup of a [indiscernible] that's currently being installed.

What is the typical lead loss, by the way -- ideal yield loss you would like to see in a DRI plant?

I'd like to see 0.

0.

But what is achievable? Let's put it this way.

I would say that somewhere in the neighborhood of 2% to 3% is probably a good goal. Now, of course, when I talk to our team in Trinidad and Louisiana, I will be saying I made a mistake on the call and I'm really looking to achieve is 1.5% to 1%.

We'll take our next question from Nathan Littlewood with Crédit Suisse. Nathan Littlewood - Crédit Suisse AG, Research Division: Just had a few questions, a couple have already been addressed. But could you talk a little bit about some of the market share opportunities you might be seeing at the moment in relation to the blast furnace outages -- or not outages, but sort of ramp backs?

Well so if I'm understanding the question correctly, you're asking me about are we seeing a demand pickup based on some of the struggles that our competitors are seeing in the marketplace? Nathan Littlewood - Crédit Suisse AG, Research Division: Correct. If you could just talk about what sort of products that might be in, what, sort of end market, that sort of stuff.

It's primarily in sheets, okay, that most of the difficulty has been occurring. And we're seeing it across all of the sheet markets. It's been a little bit of a challenge for them. We've seen incremental pickup in our orders. We've had customers coming to us looking for additional tons, and we've had new customers coming to us looking for tons. Clearly, as they do, we have been servicing them as we can, as we have the ability to do. But of course, we're not looking for a short-term commitment from them. We are looking to build upon this short-term need by -- frankly, by requesting and, frankly, insisting that we get a longer-term commitment from them on the supply of steel. Nathan Littlewood - Crédit Suisse AG, Research Division: Do you think that, that will be successful in terms of sort of what you're trying [indiscernible].

Now we've already seen success, frankly, on it. Over the last several weeks, we've picked up quite a -- we picked up some incremental business and, of course, with that, some additional market share and, again, in areas of automotive and others, pipe and tube, for example -- excuse me, OCTG and others. Now the situation is still playing out, okay? So we don't know exactly what's going to happen, but we suspect that we'll see a challenged supply side market on sheet at least through the second quarter. Nathan Littlewood - Crédit Suisse AG, Research Division: Got it, okay. Second one was just again about DRI. I recall you talking in the past about pig iron being the natural substitute for this DRI material. I'm just wondering based on what you can see at the moment in terms of raw materials pricing, is pig iron still the right material to be substituting at the moment? And the second question, I was just thinking more broadly about the operation of this facility. I'm trying to understand how quickly you guys can kind of move your raw material procurement strategy to take advantage of different price spreads between all those raw materials. So if, for example, 1 week, we saw fair scrap prices drop by $20 or $30 relative to pig iron at DRI, HBI, whatever. How quickly could you kind of change your raw material blend to kind of take advantage of that?

Frankly, at a moment's notice. Our furnaces are extremely flexible, and I've mentioned several times that one of the key benefits we see of our DRI strategy is it gives our team the ability to do substitutions as the raw material costs change. And given the flexibility of our furnaces, now we basically charge our furnace from heat to heat, from batch to batch. So we can make those changes very, very quickly and we have a great team, our David J. Joseph Company, that's continuously out there, getting a great sense of what's happening in the market. They look at what's happening with pig iron pricing. They look at what's happening with prime scrap markets. We know what's going on with DRI. We look at HBI. And frankly, we even look at obsolete scrap. So at the end of the day, if obsolete scrap drops to a very low level, we can put more obsolete scrap into our furnace and achieve the same iron unit quality by putting more DRI into the furnace. So to answer your basic question, we can change mixes into our furnace on a heat-by-heat basis. So almost instantaneously we can change them, and we keep enough inventory at our plants to be able to change that mix on a regular basis. And in terms of looking out into the future to build the inventories, our teams are always -- our team at D.J. Joseph, through their trading arm, have a great deal on what's coming down the pipe in terms of pricing and we can adjust for future demands also. Nathan Littlewood - Crédit Suisse AG, Research Division: Got it, understood. And just, I guess, to round out Dave's questions a little bit further, I know you were talking about a year or so ago about potential savings on this DRI plant of about $100 per ton in terms of DRI, the pig iron substitution. We've obviously seen coking coal come off a lot, pig iron prices come down. If you were to reforecast that $100 today, what do you think the number would be?

Well one of the things that we have on our website that's available is the calculator for just that purpose. It just gives you the ability to plug in different iron ore pricing and coking coal pricing in the price of gas per MMBTU. And when you do that, you can get a good comparison between the final cost of the liquid iron coming out using DRI and/or out of a blast furnace. So I would suggest, I don't have the math in front of me right now, but I would suggest that, that you use that tool to take a look at it. Certainly, coking coal is at an unusually low number. I don't know the current number today. The last time I looked it was, last week, I think it was about $115 a ton, somewhere in that ballpark. Keith, is that about?

$115 to $120.

$115 to $120. And iron ore is also at a very low level, about $125, $126, a little bit lower, somewhere in that range. So these are unusually low numbers and, frankly, it's a result of demand for steel worldwide slowing down, the slowdown in China. Now that's going to change. When we talked about the advantages that we saw in the DRI project a year ago or 1.5 years ago, we were looking at it relative to the competitive raw material cost at the time, and we were looking at it in relation to the other products that you mentioned, coking coal and so forth. So things change, and we've always said consistently that whether the DRI facility in Louisiana is a single or a grand slam, is going to be a result of factors that include -- strongly include the price of competitive raw materials and the pricing of the commodities that go into blast furnaces to produce competitively priced iron units. Nathan Littlewood - Crédit Suisse AG, Research Division: Is there any updates that you'd be able to offer in terms of commitment to the Phase 2 plant?

We get asked that question every time. Let me make sure I understood the question. You're asking were we willing to make a commitment at this time to when we would proceed with a second DRI facility? Nathan Littlewood - Crédit Suisse AG, Research Division: Correct, yes.

Well, as I said in the past, no. Not at this time. We're continuing to look at it. We want to get the first one up and running and stabilized. And then we're going to take a look at the environment with all the factors that I mentioned earlier and make the decision on when it's appropriate to move forward. I will say, as I always add as a caveat, we have the land, we have the infrastructure, we're gaining the knowledge and we'll be ready at the right time. Nathan Littlewood - Crédit Suisse AG, Research Division: Understood. And just a final one, circling back on the trade case stuff that Michelle was asking about earlier. I guess we were pretty surprised at how big the Mexico tariff was, or duty was, and also surprised at how low the Turkish number was. When you think about your sort of involvement in the case over the next few months and, I guess, the dagger and analysis that you'll be sort of contributing to that, is there any sort of data points or analysis that you could kind of refer to or talk about that might give us confidence that maybe those Turkish duties are going to be increased relative to the preliminary decision?

Well all I can tell you is that, again, the final determination will come in September. Between now and then, the appropriate agencies will be taking a hard look at the, what we call, the in-country verifications to make sure that what was testified to in the hearings is, in fact, the accurate information. Now we believe that, that, as we look at the data that was put into the record, that they should have had higher duties applied, and we'll be pushing that issue. Of course, it's -- the ultimate call is Commerce and the ITCs.

We'll take our next question from Timna Tanners with Bank of America Merrill Lynch.

I'm going to be bold here. I'm not asking about DRI or trade cases. But it seems to me that there's -- but there's 2 things that I thought you kind of glossed over, if you don't mind my saying so, on the script. And one is that you said you are aggressively going after the opportunity to pursue high-strength lightweight steels. And, I mean, I'm sure you've heard that the aluminum folks are talking aggressively as well about their opportunities, but what does it mean for Nucor to be going after this aggressively? What does that mean? Are you qualified? Are you sending volumes to the auto industry? Can you help me just understand how to think about that or model that opportunity going forward?

Certainly, well I'll make some comments. As I mentioned, we're continuing to develop and to seek qualification of advanced high-strength steels. We continue to make significant strides in the exposed automotive applications. We're in various stages of qualifications for both cold-rolled and galvanized, exposed parts with imminent supply agreements at hand. Some new, as I mentioned on the last call, Timna, some Nucor sheet is already in use for exposed applications. And we tend to focus on sheet, but there's other areas of automotive that we're going after, too, and that's in the SBQ. And we've developed products that are currently in use in crankshaft steels. We are producing actual steels for the automotive industry in our facility in Norfolk, Nebraska. We're developing gear steels for drivetrain applications in our Memphis facility. And, I guess, maybe to help you understand a little bit about what we're doing, you need to take a look back at some of the CapEx that we've spent in the last couple of years that are specifically focused on attracting more automotive business. The number of degassers that we've installed throughout the company, the wide light project that I mentioned again today in the script, which includes a 7-stand at Berkeley. That's going to give us an opportunity with a 72-inch wide product to get into some products for the automotive that we can't currently produce without it. The Decatur automotive quality galvanizing line that we started up a few years ago, the quality of assurance line that we started up last year in Memphis. So when you look at the focus that we put in terms of our CapEx investments, you should have some level of confidence of how successful we can be moving into the automotive arena. And what also might help you, Timna, just to give you some idea of where we stand today. In 2013 in sheet, SBQ and cold finish, the products that go into automotive, about 11% of those products that we produced went into automotive today, or in 2013. One more point that I would tell you and that is this, the automotive companies like the reliability that Nucor offers them. We're extremely reliable with our 4-sheet mills. And as a result, the auto companies themselves have been actively working with our auto team to help us qualify, develop, qualify and get our steel into their automotive or into their cars.

Okay. I thought 10% or so was your historical percent exposure to auto. So maybe would it be helpful to think about how that compares with where you've been historically or the incremental amount? Or obviously I'm asking for a lot here, but margin per ton or volumes? If at some point, you're able to provide that, I know that would be something that could be really interesting.

Well we'll take that under advisement. I'm not sure where the 10% number came from in the past. I can tell you that we've grown that significantly over the last 2 years. It is about 11% today. We expect it to grow another 4% to 5% next year, above that level. And our long-term goal, again, focusing just on the sheet SBQ and cold finish, our long-term goal would be somewhere around 15% of those products. And I'm just now getting some information from my teammates here about where the 10% number came from and that was -- it was 10% of the total steel that was supplied at that time went into automotive. The 15% is for sheet, cold finish and SBQ shipments.

Got you, okay. The other question I had was if you could give us some color on the comments about your second quarter, obviously, some improvement could mean a lot of things. So could you tell us what your customers are saying, particularly with regard to any pent-up demand after the particularly tough first quarter?

Well I can tell you that our key service center customers are reporting stronger shipments, and our shipments to the end markets that we serve are also improving. Inventories at the service centers, as you know, are at historically low levels. The entire supply chain is extremely lean. And it does seem to be some catch-up going on. I noted in the earnings release this morning, the Reliance Steel release this morning, David Hannah, the Chairman and CEO, stated that both demand and pricing increased sequentially for 3 months in a row during the first quarter, a trend that we have not experienced since 2012. So we see that as a very good sign. So yes, we see some pickup. We think the second quarter will be somewhat better than the first. We tend to be a little conservative, okay? Because we don't know what's going to -- how things are going to play out. Right now, our backlogs are good across all of our product lines, our steel lines and our downstream businesses. We've seen, and particularly of note in the downstream businesses, the order entry rate and backlogs during the first quarter improved significantly. Our structural business, as I mentioned earlier, is doing well. Certainly, the -- our plate business is doing very, very well. And as we come out of the winter and go into the spring, the construction sites are going to ease up, open up. You'll see construction that has been challenged in the first quarter, because of the weather conditions, will start to move again. So we feel pretty good about the second quarter.

We'll take our next question from Phil Gibbs with KeyBanc Capital Markets.

John, I just had a question on the iron ore supply chain into the DRI project. Are you, from a lead time perspective, able to get that in a month or 2? Or in the first quarter where you were costing maybe some iron ore that would have been priced, call it, mid-2013 or, call it, 3Q '13 levels, just trying to understand the supply chain there.

Phil, we have a very regular supply chain that comes in on, basically, on a monthly basis. So it's very short -- costing tends to be very current with the current market pricing. It's a regular supply. We get a couple of sources in Brazil and a source in Canada, and we get it even from one source in Sweden, okay? So yes, as you know, that iron ore pricing is based upon a 3-month contract. That's the way it's done now. So we -- our consumption is current with a current 3-month contract. We don't have a long lead time. And because of the various locations we bring the product in from, we are not subjected to any weather issues. We don't need to buy an icebreaker.

Okay. I appreciate that. And then for Jim, any sort of way you could characterize the first quarter? I think you said $20 million of start-up losses in DRI. And I'm not trying to beat a dead horse here, but how much of that was related to things that were purely, maybe more mechanical versus the cost of the actual unit coming out, if there's any way to separate those 2 things? Or maybe you don't even look at it that way. I'm just trying to understand that.

It wasn't really mechanical cost. There was probably some overhead cost of having some contractors and support people there that helped them during the startup. But I would say the majority was truly related to conversion costs.

Yes, let me build on that for a minute, Jim, and say that in the last call, I used the term hiccups, and I guess I used it too much, okay? But I was very pleased to find out I'm a terrible predictor of what's to come because I got to tell you what. From equipment perspective, from an operating perspective, the startup in Louisiana was absolutely stellar. You think about the fact that there's 4.5 miles of conveyor systems supported by, if I have the number right, I believe it's something like 12,000 supporting rollers. You think about those numbers and we had very, very few shutdowns due to equipment in the first quarter. The team did a great job and the equipment performed extremely well. I just can't say how pleased we are with the equipment in the operating side. Now as Jim mentioned again, listen, we've got to focus on the process. It's a new process. And when I say it's new process, it's a new process for us. It's a larger furnace. The HYL process itself is a proven technology. It is not a new technology. But whenever you go through any startup -- I started up several milk shops in my career -- and whenever you start, going through the startup is inevitably a more significant yield loss during the startup that occurs than when you become more familiar with the process and you get all the variables under control. For example, here in Louisiana, we have several different sources of iron ore that go in. The amount of gas that's used with different types of iron ore is a factor that will affect the yield. So it's not an issue of the process or the equipment. It's an issue of becoming familiar with the different mixes and the products that are being produced and optimizing that process.

Okay. And can you just remind us, and I think you mentioned it already, about how much you're physically hedged on natural gas and if there's any more wells that you have that are, call it, in development or where you expect to be at the end of this year?

Yes. We're currently -- at the end of Q1, we're currently at 277 operating wells and we expect to be at about 316 when we wrap up the drilling program in June. So that gives you some idea of where we are. And again, in terms of production, we average just under 100,000 MMBTUs per day in Q1. And currently at our DRI facility in Louisiana, we're consuming somewhere between 75,000 and 80,000 MMBTUs per day. So that gives you some idea of the relative hedge that's in place. And as I mentioned earlier, that will change with time as we move forward, both with increasing production at Louisiana and as the wells deplete. But we're very comfortable with where we are in our hedge position, certainly for this year. And as we get closer to the end of the year and look at what happens with the curve, the future curve for gas pricing going forward, we'll examine that again at the end of the year, and make a decision on whether to resume drilling in 2015. Again, as I mentioned on our last call, the gas is not going anywhere, so it's going to stay there in the ground. If we can drill it when it's 425, that's good. If we can drill it when it's 775, that's a whole lot better. So it's not going anywhere. It's there available to us. We don't lose anything by waiting, and we have the opportunity to take it out of the ground at a higher price, as we believe gas pricing will, over time, ultimately increase, okay?

We'll take our next question from Brian Yu with Citi.

My first question is just on exports. Could you speak to how much volume you did? And then along those lines, Jim, we do have stronger pricing in the domestic market. Is there an opportunity to try to divert some of those tons back to the domestics, given the better margins here?

Currently, we're exporting about 8% of our total production, to answer your first question. And can you repeat the second question? I wasn't quite sure what you meant by diverting it back.

Yes. Just that it seemed like, for many products, we have better pricing here. So I want to see if there's an opportunity to try to sell those domestically given the price improvements we've seen in the U.S. versus [indiscernible]...

Okay. Actually, good question, and it points out a clarification I should make. When we talk about exporting 8% of our product for total production, we target on exports very high-valued steel for special applications, and so the pricing for it, even on an international basis, is very good. So the differential that you're talking about is more on the commodity grades. We don't export a lot of the commodity grades. We tend to focus on the higher-quality products, going for higher-quality, higher-valued applications overseas. So there really is not that much of a difference in pricing internationally and domestically on those products.

Okay, that's helpful. And just I want to make sure that I've got all the moving pieces squared away on DRI because there's been a lot asked about it. Just first off, on the start-up cost, it's $20 million in the first quarter, and you're expecting $10 million to $15 million in the second quarter, so some improvement there.

That's correct.

And then volumes, just from my "back of the envelope" calculations with the 3-week shutdown, you might be looking at about 470-some-odd-thousand tons versus 455,000 in the first quarter, so maybe slightly better volumes in 2Q? And then just on the yield loss, since you're taking this downtime towards the tail end of the second quarter, any improvements on yield we're unlikely to see until 3Q?

Well, there's -- yes, first of all, just what we're projecting in terms of production out of the DRI facility in the second quarter is probably around 500,000 tons, okay? So even though, with the 3-week outage, because of the improvements that were made in production, we will still produce about 500,000 tons. Secondly, to your question of whether we'll see the yield loss improvements or the yield improvements, only after we make the changes at the end of the month -- at the end of the quarter, excuse me, at the end of the quarter, that's partially true. But there's also another factor that comes into yield loss, and that's with the bricketer. And we're installing a bricketer, which will be up and running, okay, very, very shortly, okay? It'll be -- the bricketer will be up and running in the next 2 to 3 weeks. We expect to see a significant yield loss improvement or significant yield improvement with the start up and running of the bricketer Now we are also installing a bricketer in Trinidad, but that's not going to be ready for probably towards the end of the year. Okay?

And we'll take our next question from Martin Englert with Jefferies.

I had a quick question on the plate improvement in the volumes there. They're up pretty substantially year-on-year. I just wanted to get an idea if this is mainly market share gains or improving end user demand there.

Well, it's a little bit of both. Okay, certainly, demand is up. But I have to tell you that the -- our ability to piggyback business given the heat treat and normalized product that we offer to the market now, we've increased significantly the breadth of product that we offer to the market. And with that, we have increased our market share, and the plate market has been strong. It's been going well. Pricing has been good, and demand has been good.

What's been the primary driver within the demand on the consumption on their improvement?

There's a lot of things that are doing well, shipbuilding, pod [ph] Building, railcars, bridge projects. Wind towers are still strong. I mentioned railcars, but specifically, tank cars with all of the movement of natural gas, there's a big demand for that. So all of those markets are strong. We're kind of hitting on all cylinders right now.

Yes. Martin, this is Joe Stratman. I'd like to add one thing. You'll recall a couple of years ago, we set out to improve the mix we have in the plate business, expand products. So we're more able now to go after a broader range of plate products, and those plate products that are in higher demand and offer higher margins at any given point in the cycle. We have a better ability to participate in those markets than we did 2 or 3 years ago.

And I want to make a correction here. I mentioned -- when I was talking about tank cars, I mentioned natural gas. I meant to say oil. There's been so much discussion about DRI and natural gas that I made a Freudian slip.

That's helpful. And one other one within the rebar fabrication business. I wanted to get an idea of the opportunity there, if you have a ballpark estimate on what kind of utilization or what type of annual capability you have within downstream rebar fab.

You want to take a shot at that, Ray?

Well, as far as rebar -- yes, this is Ray Napolitan. As far as rebar fabrication goes, we certainly have additional utilization capabilities, in combination with our Bar Mill Group partners. And let's suffice to say we're not stretched at this point in time.

One thing I would add though, Ray, is given the placement business that we've just acquired a short time ago and the fact that we can offer a complete solution to the customer, the rebar fabrication and placement has helped us improve our market share and our volumes.

Yes, absolutely, John, is moving up the value chain with fabrication and placing, a single-stop shop for our customers. So yes.

How are the backlogs looking within rebar fab year-on-year?

Backlogs in rebar fab are up year-on-year and so are order entry levels.

And we'll take our next question from Aldo Mazzaferro with Macquarie.

I have 2 questions. First one, kind of a simple one, in terms of your comment about the energy costs having risen about $7 a ton, which quite a significant number, can you say how many quarters you might think it would take to revert to normal? Or is it there already?

You talking about energy costs?

Yes.

The energy costs are our market. How quickly they revert to normal will depend, I think, on weather, frankly, and how quickly natural gas supplies and storage, all those get to the point where those prices get pushed back down. But we saw increases in both natural gas costs and electricity costs at our steel mills. And that the $7 number does not include the benefit of our natural gas produced in our working interest agreement relationship. That shows up separately in our raw materials segment with the DRI business.

Okay. So you -- did you say you it -- you think it's mostly reverting now or not yet?

It has started getting better, but I don't think it's gotten back to levels we saw in the fourth quarter yet.

Great. Okay. And then on a separate topic, your -- you got extremely strong liquidity on your balance sheet right now, including the credit line. And I see your CapEx is closer, maybe a little below depreciation levels. I'm wondering can you talk a little bit about your 3- to 5-year view as to what Nucor wants to be 3 to 5 years out in terms of size or products? Especially, what are your plans for that money?

Nucor wants to be in 3 to 5 years as the most profitable steel and steel products company in the world. That's our -- that's always been our goal, and our intention is to achieve it. In terms of what direction we're going to go in terms of investments, it's really impossible to say. We have such a breath of products across our company that we have the potential to look at many opportunities. And so it's really a question of what opportunities become available, how they're priced, how they fit in with the long-term strategy of the company and whether it's the right move to make at that time. So we like to say we keep our powder dry. We keep a strong balance sheet so that we're ready when the right opportunity comes, and we'll take advantage of it at the right time.

And we'll take our next question from Matt Murphy with UBS.

On -- if I look across your product lines, most product lines seem to be pushing to post-recession highs. Maybe sheet stands out as a little bit of a laggard. Does that basically come down to price discipline? And I mean, you talked a little bit going forward about trying to get to some business back as customers are finding themselves short. Can you just elaborate on that a little bit more?

Well, the sheet market has been more challenged than other markets. Rebar has also been extremely challenged. The drivers in both of those cases, frankly, is imports. Imports have had a devastating effect on rebar pricing. It has had a devastating effect on sheet pricing. In both cases, we see demand picking up a little bit, but not significantly. So -- and then touching upon your other question, going back to the challenges in the sheet market that some of our customers are experiencing and what it's done for us, as I mentioned earlier, we picked up incremental business during these supply disruptions. And conditional to the pushed-in business, we make sure that we will take the business, conditioned upon the fact that it stays on our books and awarded to Nucor throughout the rest of the calendar year. So we're taking advantage of the opportunities as they come up. But certainly, sheet has been a challenged market, along with rebar.

And what mix of clients that you're talking to would have been former clients versus new clients on the sheet?

Well, I don't know that I have that number. Frankly, we take care of our long-term customers. So our long-term customers who have had issues with other suppliers, who are coming to us, we are certainly taking care of them first. We don't have a lot of interest in customers who come to us only in times of needs -- need when their regular supplier has let them down because they're not as reliable as Nucor is as a supplier. So I don't have a specific number. But I would tell you that I think the additional tons that we're able to supply to people in need, most of them are going to our longer-term customers who have been loyal to us, and we're taking care of them now.

Got it. And then on your automotive business, I don't need to know, have margin comparisons between your SBQ or your initiatives in high-strength steels. But could you put in order for me kind of your rank of where you would produce material, if you had the choice, in terms of high-strength sheet, SBQ or just cold finish?

I don't know that I would differentiate them and put them in any order of priority. They're all good businesses. And so we're focused on all 3 and we're working hard to develop new products in all 3 of those areas. So we don't put one above the other. We're focused on all 3 areas.

Okay. And in the SBQ market, are you seeing any impact from new domestic competition?

There's -- Jim?

Yes. Jim Darsey. Several years ago, additional SBQ capacity was announced. Nucor and other companies announced additional SBQ capacity in anticipation of the market for SBQ growing in this country. And the market continues to grow and is -- from our perspective, the SBQ producers have added capacity that has absorbed the growth in the market. It's been pretty well balanced.

And we'll take our next question from Evan Kurtz with Morgan Stanley.

I'll try to keep it brief. I know it's almost 3:20. So just one quick one on DRI. I know every question has possibly been asked, but I have one more. It's carbon levels. We are you today? Where do you hope to be? And are you having to charge carbon at your EAF at the current levels if you're replacing pig iron?

Currently, we're at about 4% carbon level. That's really a good level of carbon. We might be able to push it up another .25%, but I don't see us going much more above that. But 4% carbon on DRI is a really good quality product. To your other question of are we still in [indiscernible] ...

[indiscernible]

Oh.

Yes. This is Ladd Hall. The more carbon you put in within the DRI, the less carbon you inject. We're still injecting some of them. I do want to make one thing clear. There's a certain point where you don't want a certain amount of carbon in that DRI. When you take -- put carbon in, you're taking metallics out. So there is a magic number in there, and we're probably around 4-plus percent of that magic number. That's where we're going to be at. We're not really striving to get a higher carbon number than that.

Okay, thanks Ladd.

Got you. And just one last one. On the auto sheet front, do you have any plans of building a continuous annealing line and get into Gen 3 products?

Well. we're always taking a look at new opportunities, so I'm not going to say no. But at this point, it's not high on our list of things to do. But we are studying it. We've taken a look at the market, and we're going to see whether or not that's something we need to move forward.

And we'll take our next question from Michael Gambardella with JPMorgan. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: John, I have a question on the sheet market. How much capacity do you have freed up that you can take share from some of your competitors right now?

Well, let's see. Probably, we're operating somewhere in the neighborhood of 80% to 85% capacity utilization. So we would have a small amount that we could continue to take. Now of course, that's where we are today. Well, we did have quite an influx of orders over the last couple of weeks. So we're in the process of processing those orders. So I would say that we're getting close to the point where we would not be able to take any more business. But at the right price, you can always work in a few tons. So if there's a customer listening to the call that needs some steel in a hurry, give us a call. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: And where -- how far out are you booked right now on sheet?

We're up to the end of June. Michael F. Gambardella - JP Morgan Chase & Co, Research Division: And what's the pricing for at the end of June right now on hot rolled?

I'm not going to give any specific price, but we're in the neighborhood of about $680 to $700.

And we'll take our next question from Andrew Lane with Morningstar.

Really, just one question for me. Now that your mills are using increasing volumes of DRI produced in-house, how have your scrap purchasing practices changed, if at all? You discussed the batch-to-batch flexibility that DRI application allows for when selecting quantities of various feedstocks. But have you already begun to change your actual usage mix of obsolete scrap relative to higher-quality scrap as you apply incremental DRI to your melts?

Absolutely. As I mentioned earlier, we've been able to achieve mixes of up to 30% to 40% of DRI. And when you get to that level, it allows you to put much more obsolete scrap into the furnace. So we are adjusting our mixes on a regular basis. We're taking a look, as I mentioned earlier, on pricing of all of the various commodities, and we're making adjustments as to optimize the mix cost.

Okay. And was that -- are you...

[indiscernible] right now.

Yes. And was that 30% to 40% kind of a target level that you're -- you have achieved and you're happy with? Or is that going to be pushed higher in the coming quarters?

We'll work to move it a little bit higher. But I have to tell you, we're pretty high -- we're pretty happy with that percentage. You go back just a couple of years when we've had the quality of the DRI nowhere close to where it is today. We had about -- facility in Trinidad, as well as the 1 in Louisiana, we were in the neighborhood of only being able to achieve 8% to 10% of the total raw material input. Today, we're at 30% to 40%. We pushed it on an experimental basis. At 1 of our facilities, we were over 50%. I'll leave it at that.

And we'll take our next question from Sal Tharani.

You have a -- you mentioned a spreadsheet you have on your website, which is very helpful in terms of calculating the cost of DRI. I was wondering how should we think about the iron ore cost? Is it -- do you have a lag? I mean, do you buy a 3-month lag or 4-month lag? Some companies in the U.S. have that kind of formula. I just was wondering, when we use iron ore price, what should we use in the calculation? Because iron ore price changes almost everyday.

Well, mostly iron ore is sold on a quarterly contract price basis, okay? So when you want to look at what you would put into the formula, you would look at the last quarter's contract price, okay? So it's really a 3-month lagging number. If you want to look at it and currently, it would be in the December, January, February, March levels.

Okay, great. That's helpful. And one more thing on the -- you had -- you are one of the companies who had walked away from the CRU-minus contracts, which I would -- I think is a very good strategy. I was just wondering if anything you can share in terms of what you learned or any regrets, anything you missed out or you think that it was -- it worked very well as you had expected?

Well, it's proven to be a good decision, without a doubt, particularly with our ability to take advantage of the spot market improvement over the last couple of weeks. We've been able to manage our sheet order book to a more effective balance between contracts and real spot market pricing. So overall, we're very pleased with -- we believe it was a good decision. We're pleased with the outcome.

It appears there are no further questions at this time. Mr. Ferriola, I would like to turn the conference back over to you for any additional or closing remarks.

Thank you, and let me conclude by saying thank you to our shareholders. We certainly appreciate your confidence and your support. Thank you to our customers. We appreciate your business. I want to say thank you to my Nucor teammates for creating value for our customers, generating attractive returns for our shareholders and building a sustainable future for all of us. And most importantly, like always, thank you for doing it safely. Thanks to you all for your interest in Nucor. Have a great day.

This now concludes the presentation. Thank you for your participation.