Good day, everyone, and welcome to this Nucor Corporation Fourth Quarter and Year-end of 2016 Earnings Conference 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 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 unavailable (sic) [ available ]. Although Nucor believes they are based on reasonable assumptions, there can be no assurance that future events will not affect 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 obligation 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, Chief Executive Officer and President of Nucor Corporation. Please go ahead, sir.

Good afternoon. Thank you for joining us for our conference call. We appreciate your interest in Nucor. With me for today's call are the other members of Nucor's senior management team: Chief Financial Officer, Jim Frias; Chief Digital Officer, Joe Stratman; and our other Executive Vice Presidents, Jim Darsey, Ladd Hall, Ray Napolitan, Dave Sumoski and Chad Utermark. The leadership team in Charlotte would like to thank all of our teammates throughout Nucor for working together to build a safer, stronger and more profitable Nucor. You are the reason our company's best years are still ahead of us. Thank you. We also want to extend a very warm welcome to the newest members of the Nucor family, our more than 900 Nucor Tubular Products teammates, who joined us with the recent acquisitions of Independence Tube, Southland Tube and Republic Conduit. Nucor is very proud and excited to have you aboard. Our Chief Financial Officer, Jim Frias, will now review Nucor's fourth quarter performance and financial position. Following those comments, I will update you on the execution of our strategy for long-term profitable growth. Jim?

Thanks, John. Nucor reported fourth quarter of 2016 earnings of $0.50 per diluted share and full year earnings of $2.48 per diluted share. These numbers exclude any last in, first out or LIFO expense or income. Included in fourth quarter of 2016 earnings were the effects of a change in estimate related to the cost of certain inventories that resulted in a benefit of $0.16 per diluted share. Additionally, compensation costs in the fourth quarter were $0.09 per share, higher than anticipated as a result of: the effects of the change in accounting principle, the effects of the change in estimate and slightly better-than-forecasted operating performance in December 2016. After allowing for these onetime items, fourth quarter 2016 earnings were slightly above our guidance range of $0.30 to $0.35, which assumed LIFO expense of $0.07 per diluted share. On our October 2016 earnings conference call, we committed to completing a review of our steel mill capacity estimates that have been in place for a number of years. Those estimates preceded the sizable investments we have made in recent years to support a broader shift in our mix to include a greater proportion of value-added steel mill products. Examples of these investments include: the Berkeley sheet mill's wide-and-light project; our Arkansas sheet mill's vacuum tank degasser; Nucor-Yamato's wider, lighter sheet pilings and higher-strength low-alloy beams; and our Hertford County plate mill's vacuum tank degassing, heat treat and normalizing capabilities. Although value-added products may run slower on our mills, we expect the richer product mix to support higher overall profitability through the cycle. Reflecting the capacity impact of moving up the value chain, we estimate Nucor's total steelmaking annual capacity to be approximately 26.7 million tons, a decline of about 7% from our prior estimate of just under 29 million tons. For…

Thanks, Jim. Nucor's disciplined strategy for profitable growth is working. Our successful execution is evident in our strong cash flow generation and our industry-leading returns on capital through the challenging steel markets of recent years. Most importantly, our strategic execution positions Nucor to deliver stronger profitability throughout the economic cycle. Consistent with our company's long history of growing stronger during industry downturns, Nucor has sizable pent-up earnings power that we are eager to realize for our shareholders. We are executing our long-term growth strategy by leveraging Nucor's 5 drivers to profitable growth. The 5 drivers are: one, strengthen our position as a low-cost producer; two, achieve market leadership positions in every product line in our portfolio; three, move up the value chain by expanding our capabilities to produce higher-quality, higher-margin products; four, expand and leverage our downstream channels to market to increase our steel mills' baseload volume for sustainable results; and five, achieve commercial excellence to complement our traditional operational strength. I will now update you on highlights of our team's recent progress implementing our strategy for profitable growth. Over the past 3 months, we have established a new strategic platform for profitable growth, Nucor Tubular Products. In October, we completed the acquisition of Independence Tube Corporation. In January, we completed the acquisitions of Southland Tube and Republic Conduit. Combined 2016 tubular shipments for these 3 businesses were approximately 1 million tons. Our aggregate purchase price for the 3 acquisitions of $900 million is approximately 7x estimated average EBITDA over the 2014 to 2016 period. Independence Tube and Southland Tube produce hollow structural section or HSS steel tubing. 2016 shipments totaled about 840,000 tons from 5 facilities located in Alabama and Illinois. HSS steel tubing is predominantly used in nonresidential construction. With the acquisition of Independence Tube and Southland Tube,…

[Operator Instructions] And we'll take our first caller. We'll go to David Gagliano with BMO Capital Markets.

I actually have 2 questions. One is a short-term outlook-related question, which I know you love answering so much, but I have to ask it anyway. And then the second one is related to the accounting change. So first, on the short-term outlook, you provided a lot of your qualitative commentary regarding the expected improvements in the first quarter, but I'm wondering if you could quantify the magnitude of the expectations for the near term. Specifically, what type of quarter-over-quarter improvement should we be assuming for volumes and metal margins? And also, what's a reasonable assumption for scrap, moving forward, embedded in that metal margin assumption? That's my first question.

Let me start with that. Always good to hear from you. And you're right, we do love getting those short-term questions. Even though we can't answer them, okay, we do like hearing them. But I can answer some parts of it. Let me start with the scrap. Our outlook for scrap, we think that scrap has went up -- it's over $100 over the last couple of months, and frankly, we think it overshot a little bit, particularly on the obsolete grades. So we see that cutting back a little bit, dropping back maybe $20 a ton over the next 2 months or so. On obsolete, that's our short-term view. On prime, we think it's a little bit stronger. It perhaps overshot a little bit less, probably a smaller drop back over the next couple of months, maybe in the neighborhood of $10 to $15. When we look at pig iron, we've seen that gone up quite a bit over the last couple of months. Current pricing is in the neighborhood of $325 a ton, but we think that's pretty solid. We don't see that coming back much at all. So on scrap, we can give you a pretty definitive outlook on the short term. In terms of buying, we can answer the question in general terms with what we see going on in the marketplace, and we -- I'm sure we're going to delve into this more deeply as the call goes on. But you see the reports that we see. We see the Drudge Report going up 6% on construction -- or excuse me, the Dodge Report over -- going up over the next quarter, can be up 6%. And we see that supported with our own downstream businesses when we look at the order entry rate. As I've mentioned in the past, we see that as an indicator of what the market is doing. And we see our order entry rates and our quote rates up significantly over the last 2 months, so we think the Dodge Report is probably accurate on that. On the automotive front, you all see the Ward report. That's going to be pretty consistent. They're calling for the year maybe at 17.2 million, 17.3 million as compared to the 17.5 million number last year. So that will be down a little bit. But I would ask you to remember that even if the overall build is down, our percentage of that market share continues to increase. So as we see our position in automotive over 2017, we see it improving. And then finally, energy. Energy, we see as picking up during the year also. We think it's going to be a substantial pickup during 2017.

All right. Great. That's very helpful. Just on the switch from LIFO to FIFO, which, by the way, I think is going to make our lives easier moving forward. My understanding, sometimes, when companies make that change, they do incur a bit of a cash tax -- it can be actually pretty large cash charge. And just so there's no expectations here, should we be thinking about a potential onetime charge coming from this change?

Not a charge. I think what we're really saying is there's a cash -- a hit on the statement of cash flows because of taxes. In Nucor's case, that's not going to be the case. We expect a negligible impact, if any at all, from changing from LIFO to FIFO.

Does that answer the question, Dave?

Yes. That's helpful.

And we next move to Curt Woodworth with Crédit Suisse.

Two questions, a policy question and a question on your sheet metal business. So I'm not sure, John, what level of contact you've had with the new administration, but from a policy basis, I wanted to see what Nucor thought of potential tools or changes that the Trump administration could potentially look to utilize to support the domestic steel industry and its workforce. That's the first question.

Well, we've had, personally, a small amount of contact with the new administration, but obviously, our trade associations have been very active working with them. As a general statement, we feel very pleased, particularly with the appointment of the cabinet members who will be focused on trade. We believe them to be very knowledgeable about the steel industry and very knowledgeable about trade laws and policy. So we feel very -- we feel good about what we see as the changes coming up in the administration relative to trade and particularly to steel as it pertains to trade. And again, all we're looking for -- as we've said many times in the past, all that we're looking for is a level playing field. We are not looking for any advantage. We're looking for a level playing field. We feel good about the administration's position on China with currency manipulation, and we feel very good about their position on China as a market economy status -- not being granted market economy status. We also are very encouraged by the discussion about a strong infrastructure build -- ah, build and bill. Both President Trump and Senator Brown are both speaking about something significant, in the neighborhood of about $1 trillion over the next 10 years. That has a significant impact on steel consumption. We believe that for every $1 trillion spent, you're looking at about 50 million tons of steel -- excuse me, 50 million over the 10-year period, okay? The $1 trillion would be spent over the 10-year period. So we'd be looking at about 50 million tons over the 10-year period, so that could average out to about 5 million tons a year. So now when you look at that and we say our total consumption in the United States is about 100 million tons, 5 million tons is not insignificant. So the trade policies, their view on infrastructure, all lead to very positive outlooks for us with the administration.

Okay. And then a quick question on your sheet mill performance. I'm calculating, and this may be a spiff [ph] off old capacity data, that your sheet mills ran around 71%, 72% capacity factor in the fourth quarter. I'm wondering, given your ability to leverage, potentially, another 0.5 million tons of hot band substrate into your pipe and tube acquisitions as well as market growth, can you comment on where you see utilization rates trending in your sheet mills, I guess, end of the second quarter?

With the comments that I made relative to the automotive market and to your point about the acquisitions that we've made into pipe and tube and as you heard in the script, we picked up about 1 million additional tons of potential business. Of course, our sheet mills have to earn that business, but we fully expect them to do that. We feel pretty good about our utilization rates in 2017. We did well in 2016. And given what we see happening, as I've mentioned in pipe and tube and automotive and particularly, in energy, we're expecting and we've -- Preston Pipe projections say that the consumption will go up somewhere from about 5 million tons in 2016 up to 7.2 million -- 7.5 million tons in 2017. That's a significant improvement. And a lot of that is -- as you know, a lot of the product that goes into that is hot band. And as you know, we are very strong in hot band. It represents about 60% of our sheet business. So given all of those factors, we don't give out a specific utilization rate, but I would say that we are very excited about the utilization that we'll have in our sheet mills in 2017.

We'll take our next question from Matthew Korn with Barclays.

Let me ask again -- following up a little bit on the policy question. I'm sure you've been asked this, but how do the risks of any potential changes to NAFTA regional trade agreements, does that affect your view on the attractiveness of the Mexican JV with JFE at all? And if not or even if so, when is construction scheduled to begin for that plant?

Well, right now, we're scheduled to start construction sometime around May or June. We have picked up -- we've acquired -- we've purchased some of the land that we will need in Mexico. We have options on the rest. And to your basic question, we are watching the situation in Washington very carefully. We're working with our partners, JFE. They have been -- as you know, it's a great steel company. I have to tell you they've been a great partner to work with. And we're watching what happens and recognizing the fact that we do have some options. The equipment is on order. We fully expect to take the equipment and locate it. Right now, we're still planning it's going to be in Mexico. But if something changes and we have some definitive direction that says that's not the place to put it, we do have options, and we will work -- we'll move forward with one of those options.

Got it. That helps. I think we're all glued to CNN a little bit more than we have been in previous years to see the developments there.

Just if I may make one more comment on the project itself. Regardless of where it ends up -- and as I said, we still expect it to be in Mexico, but we'll watch that. But regardless of where it ends up, the project itself, we are very, very optimistic about. The opportunity to work with a great company like JFE, it's going to improve our ability to make higher-value-added products. We've been working very hard on that. Being recognized as a quality producer by JFE is a big positive for us. Working with JFE and their contacts and the new domestics both in Mexico and the United States, we see that commercially as a plus. So the project is a big plus. We've got some things that we got to work through now that there's been some changes in the administration. And as you know, there's a lot of things going on in Washington. The situation is in flux, and we'll monitor it carefully and make a decision on where to move forward with a very good project.

All right. Very good. Let me, if I could, some of the commentary you've made on the M&A you've just completed in the tubular division. Can you talk at all about your expectations for, let's say, year-over-year improvement, in particular for the HSS tubing market or the conduit market for 2017. Any ideas around how margins, volume should look over the next year? And then I'm also curious. You alluded to this maybe a little bit. But are you gaining -- are you able to gain a better foothold with any of your particular buyers via Southland, Republic that could improve your ability to place other downstream products that you're not currently shipping in?

Let me tackle that one first, and then we'll go back to your earlier question. But what it does do is it gives us a greater breadth of product offering to customers who buy across multiple products. A great example would be service centers. As you know, we sell about 30% to 35% of our product through service centers, and they buy large amounts of pipe and tube, particularly HSS. So this gives us a larger share of our customers' wallet, and it gives us a close relationship with many customers. It does get us into -- more heavily into construction, which we see as a good thing. We believe, as I mentioned earlier, construction will be up 6%. HSS obviously goes -- and conduit, both, are big products going into construction. We see that -- those products aimed right at the heart of the construction market. And that's, frankly, one of the reasons that -- along with many others, but it is one of the reasons why we moved forward in this acquisition. Another very important reason, as I've pointed out in the script, is that the cultural compatibility is excellent. They're a low-cost producer. They're focused on continuous improvement. All are important. But the most important issue and the thing that we really liked about them moving forward with this acquisition was the way that they treat their teammates and the way we treat our teammates. So there's a lot of good reasons for moving forward with it. We see it being -- growing stronger as we see construction growing stronger over the next 12 months.

Next question comes from Jorge Beristain with Deutsche Bank.

Two questions. On scrap pricing, we've seen some weakness out of Turkey in the last week, and I think investors are fearful that there may be a following steel correction in the U.S. Could you just talk about your thoughts as to the steel-to-scrap spread, as to how that could evolve in 2017 in the U.S. market?

At the end of the day, when you look at both steel pricing and you look at scrap pricing, Economics 101 comes into play. Demand will drive pricing. At the end of the day, demand will always drive pricing, both domestically and internationally. So as we go into 2017 and we see the demand improving for the reasons and in the areas that I've mentioned a few times now, we expect demand for scrap to certainly be steady, if not improving over the course of the year. So we don't see this significant drop in scrap. As I said earlier, we think it got a little bit ahead of itself, and we'll see a little bit of a drop back as a result of that on obsolete. But I will tell you that prime scrap remains tight. Again, it might have gotten a little bit ahead of itself, maybe drop back a little bit, $10 to $15. But we don't see a precipitous drop in either obsolete and particularly not in prime scrap. We think it will follow demand. The demand for scrap follows the demand for steel. When we look at the improvements, as I've mentioned in energy, in construction and the steady, fast moving forward in automotive, we think demand for steel is going to be improving in 2017. The demand for scrap will follow, and pricing will be stable.

And if I could have a follow-up. On plates, I think I asked this question last quarter, there had been a big discount of plate to HRC. Plate has really jumped up in terms of pricing and is now back at its normal premium to HRC. Could you just talk about what you're seeing on the demand side of plate? And especially post Trump's win, we've just been hearing anecdotally that a lot of things are starting to move in the heavy -- heavy equipment industry and pipelines. If you could just comment, are you actually seeing a real demand pull in plate?

We're seeing a demand improvement in plate. It's a small improvement. We expect it to actually pick up speed as the year goes on, and we're looking for more improvement in the demand side of plate as we get into the second quarter. That said, what I think you see in the strengthening of the product is the fact that we have had significant victories in our trade laws. Now having said that, we still have trade -- ongoing trade legislation that we're pursuing and cases that we're pursuing. But what we've seen to date in the way of success on plate has improved our market significantly in the first part of the year. Now we could get into the specifics of the trade cases, but we've gone against 12 -- we've issued cases against 12 individual countries. And we've been successful on cases that have been against Brazil, South Africa and Turkey, all with sizable tariffs that have been applied, the neighborhood of 75%, 85%, 42% in the case of Turkey. And we're going -- as I said, we're continuing to go after the other countries and particularly -- frankly, particularly going after China, which has been very heavily dumping into our market. We expect these cases to conclude in the next couple of months. And as always happens with these cases, as the conclusion starts to be on the near horizon, these countries begin to back away from the market, recognizing -- particularly, if they recognize that they have been guilty and they know what the outcome is going to be, they start to pull out of the market. And that's what we've seen. So yes, we've seen a tiny bit of demand improvement in plate. We expect to see more improvement as we get into the second half of the year. But the improvement in the market and the pricing is a result of the supply change as we've been able to get the dumped and subsidized products out of our marketplace and bring fair pricing back to that market.

Next question comes from Evan Kurtz with Morgan Stanley.

So first question is on line pipe. There's obviously been a lot of news on that recently. The new administration is far more accommodative, it would seem, on improving pipeline projects, and it sounds like they want to do it with Buy American clauses in place for some of these. So it seems like it might be an interesting market for a U.S. producer. And I know you guys -- I believe you guys, in the past, have never really done much in as far as hot-rolled sheet that could go into X70 and X80-type product. Is that something that you've looked at maybe getting involved in? And if so, what sort of capital equipment would be required to get into that market?

Well, frankly, we can produce X70 today at 2 of our mills. We can produce X70 up to about 5/8 of an inch. We can do that at our Tuscaloosa plate mill, and we can also do it at our Decatur sheet mill. We've sold that into the market, so we don't need any additional capital equipment. It's all been installed, tested, up and running, and we're selling that product today. So we're comfortable supplying X70 up to, as I said, 5/8. We don't know what kind of demand we'll be looking at for these pipelines. Obviously, the Dakota pipeline is being installed, so there's no additional demand there. And we're hearing various accounts on whether it's -- whether or not there's going to be additional steel needed for the Keystone pipeline, so we'll just have to wait and see. But if they need it, we're here to supply it. And the other point that I would make on the Keystone actually, a lot of the material that was made for the Keystone that is on the ground was not produced domestically. Now when they say about having to use made, melted and rolled in the United States in the Keystone, we don't know if that would then disqualify the pipe that's already on the ground that was not melted and rolled in the United States. If I get a vote on that, you know how I'm going to vote.

Do you know if the Keystone gauge is higher than a 5/8 size?

I don't know the specifics of it, but I believe it's -- believe most of it was spec-ed out to be 0.5-inch. So it would be within the range that we can make.

Great. And then just one follow-up question on trade cases. So rebar is coming up pretty soon, and I know it's a new case. The last case, there are initially some minor duties on Mexico and not much on Turkey, which is a little bit disappointing. And there are some remands and some retrying of that same dataset over and over again, and it never really got anywhere. How do you think this new case is going to be different than the last case?

Well, we -- as you mentioned, we are going back after it again. We were very disappointed. We don't think it was a proper outcome to that case. We're feeling pretty good about presenting this case to the new administration, and the people who will be handling it now, we think, are better educated and know more about what's going on both in the steel world and in trade. So we're expecting a more positive outcome. We certainly hope to get that. That said, if we don't, I'm here to tell you we're going to keep going back and keep going back and keep going back until we get a just outcome. It's being dumped, there's no doubt about it, and it's hurting the American worker. And we're going to keep -- we don't give up. We're going to be going back until we get the proper outcome and ensure a level playing field for our teammates to compete upon.

Next question comes from Alex Hacking with Citi.

Coming back to the acquisitions of the tubular operations. You've mentioned that it would have around 1 million tons of capacity, and you mentioned some of the trailing EBITDA metrics. I guess my first question is, what utilization rate were those operations working at on average last year? We're trying to figure out how much upside there is there to future demand improvement. And then secondly, as you said, that's going to take some of your hot-rolled substrate. You mentioned that you think sheet demand is going to be improving this year. Are you looking at opportunities -- or where would there be opportunities to increase your finished steel production to closer match your mill capacities in sheet?

Well, let's start with the utilization. Frankly, they don't work on a utilization rate. They work on -- we look at it, the number of days that they work and shifts that they work per day. So in all 3 cases, they are working 6 days a week, and they're working 2 shifts a day. And that's -- so if you wanted to do it in terms of utilization, that might be a utilization rate of 75%, somewhere in that neighborhood, 70% to 75%. So there's always room for expansion in that. We can run around the clock. One of the things that I would say is these companies that we bought into the Nucor family, they're very good commercially, they're good operationally, but we do believe that there's some synergies that we can bring both operationally and from a commercial perspective. So we would -- our expectation is that we would improve that -- their utilization and their profitability. Could you repeat -- you had a second question. Would you repeat that?

Yes. I'm curious. So that -- those tubular operations, if they earn it, are going to take up more of your hot-rolled steel and improve your utilization rate. You mentioned that you expect sheet steel demand to be good this year. I guess, what opportunities do you have or are you considering to increase sheet steel production to closer match where you have excess mill capacity?

Well, we're always looking at opportunities. I'm not going to get into specific projects that we have on the books that haven't been announced yet, but I will remind you that we did announce a cold mill project at our Hickman facility. This is a very specialized cold mill to produce advanced, high-strength -- ultra-high-strength steel. It's very light gauge, ultra high strength, what we refer to as third-gen steel that will go into the automotive and other applications, motor laminations being another large application for that. So that's one of the projects that we have that has been announced. I can tell you that we are considering several others. They haven't been announced yet so I can't share them with you at this time. But just in general, I would say, when you look at our balance sheet, and we have a strong balance sheet, we have money to invest. We are not afraid to spend it. We talked a little bit earlier today about the JFE project. That will consume 200,000 tons of our product coming out of Berkeley. So we've got other projects going on. We've got the JFE. We've got the cold mill. And we continue to look at how we can improve the utilization of our existing downstream businesses, our existing galv lines and cold mills. And as I mentioned earlier, remember that Nucor is long on HRC, on hot-rolled coil. And at the end of the day, the pipe and tube is going to help balance that a little bit. Also, with the improvement that we see coming this year in energy, our Gallatin acquisition of a few years ago, we're very heavily into the energy market. And they took a huge hit when energy collapsed. And we expect energy to come back and the utilization at our mill in Gallatin to come back with it.

We next move to Seth Rosenfeld with Jefferies.

A couple of questions on the outlook for the steel mills division. We were somewhat surprised on ASPs that came in slightly weaker than we were at least modeling for the period. Can you talk a little about your current product mix, what you saw on the fourth quarter? I'm just wondering if there is potentially a shift from -- away from the higher-value cold rolled in galv towards hot-rolled coil? Or, alternatively, shift away from quarterly contracts towards spot, which might have weighed on the realized prices in light of that period of market volatility?

We didn't see much of a shift in the products on our sheet side. But of course, the contract pricing, you always have a lagging effect, and so you're going to see an effect in the fourth quarter of the pricing that we saw taking place in the third quarter. When you look at our total product, I think we're about 70%, 75% contract?

65 [ph]

65% contract. And of that 65%, roughly 70% is based on monthly, and another 20% is based on quarterly pricing. And as you remember, you saw pricing kind of bottom out in November. So some of that, that you see happening during the month -- the average price declining during the quarter was a result of our contract pricing that occurred based upon our November pricing. So as we see going forward into the first quarter, we see it picking up. I'm not going to give any specifics, but as it has bottomed out. And it's now -- the CRU and sheet in all 3, galvanized, cold rolled and hot band, is improving. We expect that to carry through on our contracts and see it pick up pretty quickly, given a large portion of our contract business is, in fact, done on a monthly basis. Does that answer your question?

Yes, it does. And just one separate question, looking at your exposure to the auto space. Your growth has clearly been very robust in the last couple of years, taking market share. Can you discuss a bit more what sort of progress you've made, both from an R&D perspective and also commercial perspective, in gaining that share, especially into the advanced high-strength steels? At this stage, are you now able to produce and are you supplying to OEMs all major steel grades? Or are there certain parts, like exterior panels, where you're still not supplying, either due to technical or commercial reasons?

It's safe to say that we can supply virtually all parts and all sections that go into automotive. We find some products and parts more attractive to supply than others, but we also have to prove to the automotive companies that we can, in fact, supply all of the steels that they require. So we've done it. Again, I would ask you to take a look at our joint venture with JFE. They are a world-renowned producer of all the grades, exposed, nonexposed, high-strength, ultralight, third gen. They do it all. And in qualifying us as a partner, they took a look at our process, our materials. And frankly, the qualification to become partners with them took us 2 to 3 years, but ultimately, it came out very successful. So yes, we can supply all the parts that go in -- virtually all the parts. I don't know that every single part with -- on the steel -- on the sheet side. And we're working to advance on the SBQ side. We've added the heat treating at our Memphis facility. That will give us more access into some of the more sophisticated parts. We set up our Detroit office. We've got -- in Memphis, we've installed a new inspection line that allows us to get into more of the higher-value products that go into automotive. So we've got a lot of things going on to continue to improve our position in automotive. I could tell you that in terms of how are we being received by the automotive companies, it's very favorable for several reasons. Our quality is good. Our service is excellent. Our on-time delivery is very, very good. And frankly, we're a very financially stable company. And as you know, the parts that they specify on a platform might not have to be delivered for 2 to 3 years. They want to make sure that, that company that they're buying from and specifying their platform supply from is, in fact, around in 2 to 3 years. And Nucor, with our financial strength, we're going to be around for a long, long, long time.

We next move to Timna Tanners with Bank of America Merrill Lynch.

I wanted to kind of follow up on some of the questions about trade cases. Because we've talked about rebar. We've talked about plate. We know sheets have been done. But there hasn't been much on beams, and that continues to see imports and some challenges. SBQ may be too complicated, maybe something else in pipe, maybe some circumvention there. I mean, is there a possibility for exploring other products and approaches that we haven't heard of yet?

Yes, yes and no. It is not too complicated to facilitate trade case on SBQ. So clearly -- I'm not being flippant. Clearly, beam, we're looking hard at beam. And I don't want to say too much except that we're gathering the data, and at the appropriate time, we'll take the move -- we'll make the move. And beyond beam, we're looking at structural fabricated products, which have made an inroad into the market here in the United States. They are finding every way possible to circumvent the trade laws. And I believe that they're confident we're going to have a successful trade case on beams, and now they're trying to find ways to get around that by bringing in structural sections. And at the end of the day, we're prepared to file a case on structural sections, working with our customer base. On the SBQ side, wire rod is a case that we're taking a hard look at, okay, and we expect to be able to move forward on. So when you look at -- you mentioned beams. We're ready to move forward. We're anticipating being able to move forward on that very quickly. Wire rod, Chinese sheet piling is another one that we're going -- we're taking a hard look at. I mean I can go on and on and on. But you've hit the ones that we haven't gone after yet. We focused on the largest ones. We dealt with the ones that were most impactful onto our market, and we've taken care of them. Now we continue to move down onto other products. And we won't stop until we're across all products, all markets, making sure that we have a level playing field to compete upon. And when we do that, when we get that, we're confident we're going to be very successful.

Okay, cool. And next, a little less sexy topic. I just wanted to ask you a little bit more about the LIFO, FIFO move and also the tax rate. So the reason we've heard in the past that it wasn't desirable to move to FIFO was partly because LIFO allowed you to pay lower taxes in a rising -- in a declining price environment, I think it was. But anyway, and it took off some of -- no, it allowed you to pay less taxes as costs went up and less earnings. So I'm just wondering, is there anything about the potential changes in tax code that sparked the decision? And then separately, there is something in the language in the press release, I wanted to clarify that, that made it sound like because you reported a higher number because of the change in LIFO that you had a higher compensation expense. It didn't sound like a Nucor thing to pay yourself more because of a change in LIFO, FIFO, but I just wanted to touch base with you on that.

Yes. First, Timna, as we looked at LIFO and FIFO, we're certainly cognizant of the tax ramifications. But if you listened to the comments I made in the script today, taxes weren't the main driver, and they were a side thing that we're just cognizant of and we didn't view -- and we don't believe that the tax implication is changing now. We view that as being negligible. And we're certainly cognizant that there's discussions about the possibility of LIFO not being permitted in the future. But again, that wasn't a primary driver for us. So it's really more about doing a better job of matching revenue and expenses and reflecting the way inventories flow through our process. And it was really -- just started with this whole concept of looking at our capacities and then cause -- that causing us to reevaluate over how we valued our cost of goods sold and our inventories. So back to your second question about compensation. We pay 10% of our pretax profits to our employees below the level of vice president. Vice presidents and above do not participate in profit sharing. And every dollar of LIFO reserve came out of Nucor's pretax profit at some point in history. So when we decided to make that change to LIFO, the biggest portion -- and as well as change the standard cost, the biggest portion of the compensation impact in the fourth quarter, that $0.09, $0.07 of that total was profit sharing for employees below the level of vice president.

Next question comes from Phil Gibbs with KeyBanc Capital Markets.

Can you provide a status on the Vietnamese circumvention case and the range of potential outcomes that we could see there? Because I think many of us really haven't seen anything like this before, and I'm wondering what it could look like either in part or in full in terms of an outcome.

Well, I'll certainly answer that question, and I'll start by agreeing we've never seen anything like this before, so overt. And -- but Phil, before we do that, I do want to make sure I give you credit for working with our team to help us understand the correlation between infrastructure spend and steel consumption. So thank you for that information. That was very helpful, and we'll be using it in the future also. So thanks for that. So let's talk about the circumvention, which we see as, clearly, a case of circumvention. You look at the galvanized product coming in -- cold rolled and galvanized coming from Vietnam into the United States, and that's gone up by about 300%, right? And at the same time, there's been no additional hot band produced in Vietnam. So we're kind of wondering, as you might be, how did they do this? Because this might be some new magical steel technology that we're unaware of. But we think it's more of a case of circumvention. With the Chinese recognizing that they've gotten blocked into the U.S. market. They are shipping substrate into Vietnam, and Vietnam is then cold rolling, reducing it, galvanizing it and sending it into the United States. What's the range of potential penalties? We can't really comment on that. But what I can tell you is that we are -- we will be filing a case as quick as we can get it all together, and we will -- we're in the process of doing that now. And we're anxious to get that result. We think that this will be just another example to the ITC and, frankly, to our administration of how blatant circumvention can be and how people are taking advantage of our trade laws. And we need to put an immediate stop to it.

Is there a possibility that there could be an exclusion placed on a part of that Vietnamese imported material and not on the other? Or is your understanding that it will be either all or none?

It will be all or none, we believe. Obviously, we have to see what the rulings are. But our position is that it will be all or none, and that it clearly should be all.

Okay, I appreciate that. And then last question for me is, are you seeing any change in customer behavior because of these, call it, in-place trade cases? Or even some of the ones that are in play right now in terms of more of a willingness to work with you as a main supplier or less willingness to go offshore? Just any highlights...

Frankly, we're seeing that both on the products in which we've already had rulings and on those that -- trade cases that are in process now and, frankly, even those that our customers know the data supports filing a trade case in the future. In all of those cases, we do see a change in behavior, as it should be. And they're recognizing that they can't count on the steel going forward. They're turning to the domestic suppliers, Nucor being one, but, frankly, our competition also, which we expect. We can comment on that by the orders we see -- the order entry rate we see and also by the phone calls and inquiries that we are getting on our products. So the answer to that is a clear yes, and we think it's appropriate.

And then, John, I have a quick one. I think, were you invited to meet with the recent president here? And has he asked for your input in terms of what we need to do as a country to, call it, drive better manufacturing utilization across all of our industries? And that's all I have.

Yes. Along with other CEOs in the manufacturing world, I have been asked to supply to President Trump my thoughts on what were the 5 most impactful items that were hurting American manufacturing. I've done that. I've been to -- I've been invited to participate in his manufacturing forum. And although we haven't had a meeting with that yet, I'm looking forward to the opportunity to share my thoughts on what we need to do to make America great again by bringing manufacturing back into the United States. So we'll see how all of that plays out, but yes, I have been -- I've shared my thoughts, and I plan to participate in that forum.

Ladies and gentlemen, that does conclude today's question-and-answer session. I'd like to turn the conference back over to John Ferriola for closing remarks.

Thank you. Let me conclude by saying to my Nucor family, our customers, our shareholders, thank you. Okay? Thank you for what you do. Thank you for your business. Thank you for your support. Thank you for your hard work every day. Your contributions have led us to a position of strength that we enjoy today and ensure a bright future for our company and for our teammates. But most importantly, thanks for what you do every day. Most importantly, thank you for doing it safely. Thanks for your interest in Nucor. Have a great day.

Ladies and gentlemen, that does conclude today's conference. We do thank you for your participation. You may now disconnect.