Good day, everyone, and welcome to the Nucor Corporation Fourth Quarter of 2021 Earnings Call. As a reminder, today's call is being recorded. Later, we will conduct a question-and-answer session and instructions will come at that time. 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 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. Leon Topalian, President and Chief Executive Officer of Nucor Corporation. Please go ahead, sir.

Good afternoon, and welcome to our 2021 fourth quarter and full year earnings call. Joining me on the call today are several members of Nucor's executive team, including Jim Frias, our Chief Financial Officer; Dave Sumoski, Chief Operating Officer; Al Behr, responsible for Plate and Structural Products; Doug Jellison, responsible for Raw Materials and Logistics; Greg Murphy, responsible for Business Services; and our General Counsel; Dan Needham, responsible for Bar, Rebar Fabrication and Engineered Bar Products; Rex Query, responsible for Sheet and Tubular Products; MaryEmily Slate, responsible for Commercial Strategy; and Chad Utermark, responsible for Fabricated Construction Products. By so many measures, 2021 was an extraordinary year for Nucor. Our team delivered incredible financial and operating results over the course of the year, while working safely and responsibly. Every single day, our nearly 29,000 team members remain focused on our company's mission to grow our core steelmaking capabilities while expanding our presence into related businesses that fit with our culture and leverage our strengths. For our team, the most important value is safety. And so, I'm incredibly pleased to report that 2021 was the safest year in our history. Becoming the world's safest steel company is a lofty goal, and our team has now achieved back-to-back record years in safety. Nucor had 16 divisions that went zero recordable injuries in 2021, and I look forward to the day when our entire company achieves that same goal. I want to thank each of my Nucor team members for your daily commitment to safety, looking out for one another and I look forward to an even safer year in 2022. Turning to our fourth quarter results. Earnings per share were $7.97, exceeding our guidance range of $765 million to $775 million. This represents another new quarterly record for our company. Looking at…

Thanks, Leon. As Leon mentioned, fourth quarter of 2021 earnings of $7.97 per diluted share established a new quarterly record, eclipsing the prior record of $7.28 per share established in last year's third quarter. Fourth quarter earnings also exceeded our guidance range of $7.65 to $7.75 per diluted share. Better-than-expected results for the month of December were achieved across a broad group of businesses. Record full year net income of $6.8 billion was driven by Nucor's diverse portfolio of products and capabilities. Profitability records were set by numerous businesses, including Nucor sheet mills, rebar and merchant bar mills, engineered bar mills, plate mills, structural mills, joist and deck, tubular products, cold finished bars and fasteners. Nucor's product breadth continues to be a powerful driver of value creation through the cycle for both our customers and shareholders. While our 2021 performance unquestionably benefited from an exceptionally strong steel industry up cycle, Nucor's results were also fueled by our team's focus and commitment to safely meeting our customers' needs. Disciplined execution of our growth strategy over the years is a significant factor underlying our success. For example, five major greenfield projects completed commissioning and start-up over the 2019 through 2020 time period. They are the rolling mill modernization at our Ohio rebar mill, the hot band galvanizing line at our Kentucky sheet mill, the specialty cold rolling mill at our Arkansas sheet mill, the rebar micro mill in Missouri and the rebar micro mill in Florida. These projects represent an aggregate capital investment of just over $1 billion. For the full year of 2021, they generated EBITDA totaling $674 million. Our teammates at these facilities have done stellar work, executing across the board on safety, product quality and financial performance. Cumulative EBITDA already exceeds the investment outlays for the Gallatin galvanizing line…

[Operator Instructions] We'll take our first question from Sathish Kasinathan with Deutsche Bank.

Congrats on a strong set of financial results as well as the safety record. My first question is on the steel mill segment. You mentioned that you expect earnings to decline due to the lower flat roll margins, but I was just wondering if you could talk about the order entry rate in January and how you see the volumes for the first quarter. And also, can you talk about the ramp-up profile at Gallatin and the total incremental volumes you expect from the mill for the current quarter as well as the full year?

Okay, Sathish. I'll start this off and maybe Jim or Rex Query, EVP over our sheet group, can touch on the Gallatin expansion. Look, number one, to begin with, as we mentioned in Jim's comments that we do expect primarily because of sheet pricing, our steel mills segment to be a little off in terms of profitability. But it's important to remember as well that's coming off a historic year. And in particular, if we think about our sheet group and their performance, the sheet group set a record in terms of shipments at over 11 million tons, generated over $6 billion in EBITDA performance. And if you think about Nucor's 55% return on equity, a large piece of that was attributable because of the sheet group. And so as we move forward, the short-term inflection that we're seeing both in pricing as well as some of the volumes we think are a short-term factor. They're based on imports and obviously, what we saw in the third quarter in terms of buying patterns where the spread between HRC, domestically and internationally, was at an all-time high. We had -- the industry really catch up in terms of order entry rates and deliveries. So, the supply chain got full, very quickly, and maybe even some overbuying. And then couple that with the supply chain constraints, labor constraints and the Omicron variant raging all created for a little bit of a perfect storm here in the fourth quarter heading into early part of 2022. But again, the outlook and the demand picture across every end market that Nucor serves remains very robust. And again, we think this is going to work through the inventory rebalancing and position us well as we move forward.

Yes. And for Gallatin and Rex, you can add to this if you'd like to. It's just going to have the capacity over the year to give us an incremental 800,000 to 900,000 tons. But the way the market is right now, we're going to start off at a much slower pace in the first quarter, and it's going to depend on market demand. We're not just going to make steel enforcement in the marketplace if we can't sell it at a reasonable price, Rex?

Yes, just some additional detail on Gallatin. As far as the outage we had, we're on target coming up. The expectation, as Jim mentioned, approximately 800,000 tons additional for the year. We'll measure that ramp-up during the first quarter with what we see on demand. There's no need to ramp that up any quicker than we need. Full -- there's additional work to be done, which is part of the plan. So in March, we'll commission the EAF, LMF and the caster. And by the end of March, we'll be capable of full production at that point with a wider strip and a thicker slab. But we're going to keep an eye on the market and really measure that ramp-up as we see what market conditions are doing at Gallatin.

Okay. Thank you for the color. And then my second question is on the steel products segment. So you mentioned that you expect margin expansion in the first quarter. But can you talk about the size and duration of your backlogs currently and provide a bit more color on how you see the margin profile through the remainder of the year? We should see some strong tailwind from lower input costs. So just any color you can provide. Thank you.

Yes. Sathish, I'll kick this off and ask Chad Utermark, our Executive Vice President of Products, to really add some color in there. But if I think back to -- even in the height of the pandemic in 2020, that business segment remain incredibly robust. That has continued, and we see that continuing moving forward. The commentary that we made towards the returns and the strength that we anticipate in 2022 as the input cost level will come down, the margin expansion will certainly continue well into '22. And so Chad, why don't you add some commentary behind some of that on backlogs?

Yes. Thank you, Leon. And as Leon mentioned, as we talked about in the script, we believe non-res construction will remain very strong as we enter 2022 and even beyond. We continue to see solid seasonal adjusted quoting activity. So as we look across our broad portfolio of downstream products, it's really solid quoting activity that's ongoing. And if you combine that with our backlogs that are very robust and in some cases, they are all-time record backlogs. So that's one data set that we look at. The second and very important data set we look at is what our customers are saying. And our customers are overwhelmingly bullish on their 2022 demand. And I would ask that you remember, our growth through the years in downstream steel products allows Nucor to have a very good visibility into the demand of construction products such as rebar fab, steel piling, pre-engineered metal buildings, racking, steel tubing, insulated panel, joist and deck, steel conduit. So as we look and analyze that demand from this broad nonres construction base, we are very excited about what 2022 holds. And as far as the margins in our backlog, they're solid. We believe that pricing is solid. We don't see many of any cancellations. And I would also say that the strong backlog margins is not predicated on falling steel prices that could be coming at us. These are healthy margins due to the supply and the strong demand and balance that's out there.

Our next question comes from Carlos De Alba with Morgan Stanley.

Thanks for taking the question. So first, if you could comment as to how you see capacity utilization in your different key products, particularly in Q1, and maybe how you see the progression into Q2 and the second half of the year, if you have visibility, given your backlog. Second question, if I may, is given the $5.5 billion in CapEx over the next three years, I mean, some of that already clearly is ongoing with projects that you are executing, but how do you see the returns on these investments? Any sense of the incremental EBITDA that you could generate from these projects? That would be great.

Yes. I'll start, Carlos. First, regarding capacity utilizations, we don't break those out typically in detail by business. But if we think about overall volumes in the first quarter, it's probably going to be slightly up because of seasonality in the first quarter. Sheet could be slightly down whereas other products we would think would more than offset them, in general. And we would see that volumes would probably improve from that level in the second quarter because there are winter factors with weather and stuff that affects some of the shipments. And also Omicron is affecting supply chains. And maybe at the end, I'll make some comments about the year that are more global about what we're thinking about regarding the economic impacts from Nucor. But relative to CapEx and benefits, we do -- when we announce each project, we generally give some sort of when it's a major project. We give some sort of EBITDA run rate -- so I'll go back and read our earnings release that we published about each of the major projects and see that data -- and we may, at some point, come out with something more formal, where we recap a number of projects that are coming nearing completion and give what the cumulative EBITDA benefit is. But in my remarks, I talked about what we're seeing real time in 2021 in EBITDA from the projects that were recently completed. Okay. Does that make sense?

Yes, that makes sense.

So first, relative to the year because part of your question gets into what to expect for the year. And I think there's two important areas to think about. One is what our earnings is going to be and what is our free cash flow going to be and that those are the things that I think interests you most. And it starts with end market demand. We've already touched on this, but end market demand remains strong. And it's -- the heart of it is non-res construction, biggest user of steel, but we're still not benefiting yet. Auto is still down. Auto is still down because of chips, and auto will ramp up until later this year. And so we're going to see increased demand from auto. We're not seeing the benefits from the infrastructure building, that's still coming. So over and all, we think about end-use demand for steel will be up in '22 over '21, and there are some important pieces that are not benefiting us in the first quarter this year that are still coming. So that's the starting point. Secondly, you've touched on -- others have touched on this already. We've got the largest downstream products businesses of any of the steel companies. And they were getting margins squeezed for all of last year and pricing has finally started to catch up. There's still businesses that have more room to go in terms of expanding their margins and getting prices cut it because of the size of what their backlogs to be. And so, we expect to see margin expansion in the first quarter and beyond for those businesses. So that's a positive. Again, the next is going to be the incremental benefits from the ramp of three major projects: Hickman, the galvanized line, the…

Our next question comes from Emily Chieng with Goldman Sachs.

Congratulations on a strong update today. My first question is just around the capital allocation. And I think last year, you shared that you've been able to execute both growth and a significant amount of capital return. How could we think about that balance going forward in 2022? And what does the next chapter of your growth strategy look like?

Yes. Emily, I'll start off, and thanks for the question. As we mentioned and have talked previously, our mission is very simple. It's a word. It's to grow the core, expand beyond and live our culture. If we think about the core of our steelmaking capabilities, it's the expansions of regional and capabilities. It's not about adding capacity. So the acquisition of CSI for us and having JFE as a second partnership in California and again, a majority shareholder in that operation is really exciting for us. The announcement of our rebar micro mill will continue our market leadership position in rebar. The new mill in West Virginia, we are incredibly excited about because, again, it provides a long-term differentiated value proposition for our customers that have been asking for in need. And if you think about the move in the time over the last 24 to 36 months and what's going on in ESG, the world the sustainability side of our industry is paramount. And again, Nucor is incredibly well positioned as one of the cleanest steelmakers in the world to offer the steels like we just did to General Motors. So that is going to continue. You're going to see Nucor continue to grow our capability. The second piece of that is the expanding beyond, beyond the traditional bounds of our steelmaking range. And those projects like Hannibal Industries in racking, like CENTRIA and Metl-Span to give us a market leadership position today in the insulated metal panels. That is all about the digital economy. As we think about what's happening in warehousing, data storage, cold storage, that is a booming industry that really is insulated from the traditional cyclicality of steelmaking. And so, you're going to see Nucor continue to move and invest in projects where we can combine our culture, our strong balance sheet and our investment strategy and deploying capital that will greatly exceed our cost of capital goals to return to our shareholders. Jim, anything you'd add?

The only thing I would add, Emily, is that when we think about returning capital to investors, that portion of it, it's going to start with 40% of our earnings. And that's going to be a pretty good number in the first quarter. And -- but we do use an intrinsic value model that we show the Board every quarter. There's a very disciplined process. We published our net debt to capital range that we want to live in to maintain our strong investment-grade credit rating, that's 18% to 22%. We're below that right now. And so we would expect that we need to keep investing and returning capital investors both. And we have the capacity to do both as we go forward. The other thing, Leon, that regarding growth is we are likely to have another announcement next week on a growth initiative that's in the pipeline. That's again to add capabilities around our product mix. Do you want to talk about that at all?

Yes. Thanks again. Stay tuned in the coming days, we will announce as we think about our portfolio and our weighting, particularly around sheet, moving up the value chain and expanding our offering in galvanized and painting. Again, in the coming days, you'll see another announcement we're very excited about that. We'll continue to move us in that direction and again, providing a better rounding out of that value added in our sheet products businesses.

Got it, that's very helpful and look forward to an update. My second question just very quickly is around the integration progress you've made at some of your recently acquired businesses, including Hannibal and IMP. Perhaps give us a sense of how they are trending relative to expectations today. I'll leave it at that.

Yes. Thanks, Emily. I'm going to turn this one to Rex Query, our EVP of our Sheet and Tubular, who's over at the Hannibal Industries, and then maybe Chad touched on our CENTRIA and Metl-Span.

Emily, thanks for the question. Hannibal Industries, our first step into the racking side. And obviously, we look for companies that are successful is our first approach for Nucor. Hannibal has been very successful, but also just a cultural fit in the first place. So integration to us, we look at that leadership and if an existing company and we evaluate that fit as well. And so that's what we found in Hannibal. They have a couple of operations, California, Houston, the leadership we've had there, really just spectacular fitting well with our company. We hired a -- or shifted a General Manager, existing General Manager of Nucor over that business. But we're really pulling that group in to get them to understand Nucor, integrate in, look at our production bonus system and how we incorporate that. But it's very much step in, learn as much about their business as well. I'll also comment on Hannibal and the racking, that leadership team, and that includes the existing there and the ones we've added from Nucor. They're tasked with growing that business. So we're already evaluating acquisition potential, greenfield potential in the racking business. So we stepped into that business for the purposes of growing and growing further geographically and expanding our capabilities there.

Yes. We're very excited just like Rex said, about Hannibal, but especially in the IMP space and Leon mentioned about that space. And I want to actually want to talk a little bit more about it. But we're excited about the Cornerstone IMP acquisition, the team that we now have. The insulated metal panel space has been attractive to Nucor for a long time, and we were excited back in 2019 to purchase a start-up company called TrueCore and we're equally excited to welcome the Cornerstone IMP team into Nucor. We are working diligently through the integration and onboarding process. While we face some short-term challenges with chemical supply and a portion of inadequately priced backlog at the time of acquisition, we're still very excited about our future in IMP. And again, just why IMP? First of all, there is significant growth. I think Leon mentioned it earlier in this controlled environmental facilities, e-commerce, data centers, food, medicine. Furthermore, building codes across the country for commercial and industrial buildings continue to be more stringent and insulated panels are one of the best solutions out there in the construction market to achieve those thermal requirements. More and more companies, as you guys know, developers and owners see the value and are focusing on the E and ESG. And we've also watched the growth of IMP in Europe. And we believe the U.S. market, while currently about $1 billion market for IMP, we believe that could grow in excess of $2 billion. So still onboarding, still integrating. We got a few challenges to work through, but excited about the future.

Thank you, Chad. And I'll just close and saying, hey, we welcome the Hannibal team and insulated metal panel team to the Nucor family. And again, excited about the opportunities of those businesses will bring in the years to come.

We'll take our next question from Seth Rosenfeld with BNP Paribas Exane.

I have two questions. First on plate and then I'll follow up later on green steel, please. On the plate market, obviously, plate prices have been remarkably resilient the last couple of weeks even a sheet has fallen a accelerating rate. Can you just give us a bit of color on what you're seeing specifically supporting the plate market today? What's unique in that supply-demand balance? How sustainable is that? In the past, we've seen a pretty tight relationship in plate in hot rolled. Do you think that can break out right now? Or is there a reason to be more concerns looking into the middle of the year for plate? I'll start there, please.

Yes, great question, Seth. I'm going to kick that to Al Behr, our EVP of our Plate and Structural Group now.

Thanks, Seth. I appreciate the question. I don't know that I'd add a lot more than what we've talked about as a consistent drumbeat around demand. The pricing for our product is always driven by demand. And what we see in the plate market, I'd highlight three key markets for us. One is non-residential construction. We've talked about that quite a bit. Our visibility into that market is extremely good, and the demand picture is very strong. Another key market would be heavy equipment, industrial equipment. That market is very strong right now. If there's any indication of weakness that's around supply chain and not true consumption and demand at the OEMs. The final market I would highlight would be energy, broadly energy, which includes renewables as well as oil and gas. Oil and gas has been a bit weaker in the last couple of years, and that with oil prices today is growing by the day. So that really is what it comes down to Seth. It's just a very solid demand picture. Our crystal ball gets pretty buzzy when we look out very much past the next month or so. We don't know what the rest of the year will bring, but we're optimistic about the plate market. The demand in key markets is very good. And we instituted a published price in August of 2020, and that's a relevant price. We're committed to keeping that as a relevant price that's transactionally based. And as we need to move that according to the supply and demand in the markets, we will do that. But what direction that may go is just tough for us to tell, then the demand is good, and we're encouraged.

A separate question, please, on Econiq for the green steel brand. First, congrats on your first delivery to GM. Can you give us a bit more color on the scale of volume growth you think could be achievable, say, in the next one to two years? And then on the pricing side, obviously, demand is perhaps growing very rapidly right now. Supply is very tight. What's the degree of pricing power you're able to achieve compared to any cost escalation perhaps as you adjust raw materials mix or power supply?

Yes. Thanks, Seth. And we're excited about Econiq. Again, this, again, more recent transformation over the last two, three, four years, and moving into a much more sustainable place, Nucor is, again, I think, been ahead of the curve. We've done things that many in our industry have not. We've got two virtual power purchase agreements today that because of our balance sheet allow us to be able to do those things. We're starting out with a carbon intensity that is 3x or 4x lower than some of our integrated competitors. So we begin from a platform of great strength and again, a commitment to be even stronger and even cleaner. So we've announced a 35% reduction target by 2030. That will bring us to about a 0.37, 0.38 tons of CO2 per ton of steel produced, which, again, in the world, numbers is incredibly low. So it enables Nucor to offer what we did to General Motors a few weeks ago in the first coil of net zero steel to their factory. That being said, what I would tell you, again, in the two -- just over two years I've been CEO, that demand picture is changing markedly, literally day-to-day. So it's not just the major OEMs in automotive now that are asking for it. We're seeing many of our construction, many of our OEM partners outside of automotive that are beginning to ask for this. And so I'm not going to detail out what the value is. I would tell you that, that value increases as we move forward because many of our end customers cannot achieve their end stated goals of their carbon footprint reduction targets without an incoming steel that is significantly lower than most of the world averages. So what I would tell you is there is value there today. Make no mistake. That value will continue to increase. And we'll see how that moves through over the next 8, 10, 12 and 24 months in terms of the amount of steel that Nucor participates in and how fast we escalate that, but we kind of control that. We have the opportunity to continue to enhance that and do what's required to meet that demand picture.

Our next question comes from Timna Tanners with Wolfe Research.

I wanted to ask a bit about your visibility into the first quarter now that lead times are a lot shorter. Can you talk a little bit about how good your visibility is for sheet in particular and what you're looking for in order to ramp up Gallatin, like what conditions? Is it demand? Is it price or both?

Yes. Maybe I'll start, and Rex, maybe if you want to add some color. Look, I think with the Gallatin expansion, as Jim mentioned, and possibly Rex, we're going to be disciplined in that ramp up. At the same time, balancing out we've invested a lot of money. So we want to make sure that equipment is ready and available as we progress out. So, that team is working feverishly to bring its capability to where we need. At the same time, I would tell you over the last 12 or 18 months, particularly as we've moved through the last contract season, Nucor has been very disciplined about our approach into the marketplace and how we want to transact. So as Jim mentioned a few minutes ago, we're not going to flood the market just because we want to produce the steel out of Gallatin, and we're going to have a very measured approach and a very deliberate approach into the marketplace. So I expect that we're going to scale up. As we've mentioned throughout the call, we used to track and share, I think, the numbers of end markets. And we track virtually every end market that you can imagine. Of all the end markets we look at, virtually every one of them is projected to grow. In fact, our estimated growth for full year 2022 is about 6% in terms of overall shipment increase. So, we see that as an opportunity. And again, we expect Gallatin to continue to ramp up and meet its objectives and hit the nameplate investment, which is about 1.4 million tons of additional capacity. But Rex, any other color you'd like to share in terms of that ramp-up?

Yes, Timna, thanks for the question. Regarding the visibility, we have good visibility. I mean we talk with our customers weekly. And with the correction that we're seeing right now on the sheet side with what you see in some of the pricing, what led up to that is we entered 2020 with COVID, and things started to contract and shut down. And 2021 was the recovery, so to speak, from that standpoint. So you saw demand increase considerably pricing runoff. That's an opportunity as that demand is increasing for some import to come in. And that's what we've seen as we come in late in the year and we see some of that correction occurring. But the thing we keep hearing right now is this is short-term temporal correction in the underlying demand, much like Al mentioned in those sectors. Those are key sectors, the automotive sector that Jim Frias mentioned as well. What we hear from our customers is they do expect 2022 overall to be a fairly strong year from demand. So that's what we hear from our customers. We see this temporal correction. And as Leon just stated about Gallatin, it's really an opportunity as we're getting some work done there. That team has been in a construction mode for quite some time now. So we're able to ramp that up as we see fit. And so what will we be looking for? We're going to be looking for that demand. It's not a price standpoint. It's the demand we're going to make sure we take care of and service our customers.

Timna, the one thing I would add to that is keep in mind, we're a bit more hot band centric than some of our competitors, and that's where most of the imports have come in. And as you look at what we've done over the past few years, we've been adding galvanizing lines. We're wrapping one up at Arkansas right now. We started one up at Gallatin the year before that. We've got one in Mexico now that's consuming substrate -- part of the substrate comes out of our Berkeley mill. And we're getting ready to announce another galvanized line soon. So we recognize that, that's a part of our portfolio that would perform better for were quite so weighted to hot band. So, we expect to keep doing things to try and deal with that. But that's one of the reasons why we're being impacted, the way we are is our reliance on the hot band market.

That makes sense. My other question was just on contracts into 2022. I know that there was a lot of chatter about moving to shrink the discounts against CRU. And in the past, you've helped us understand Nucor's breakdown of contract business and how to think about it. So I was wondering if you could update us on how those contract negotiations went now that they're over. And any changes in your exposure to automotive, please?

Yes. Maybe I'll start with the automotive, and then Rex, you can update on the contracts. For a long time, we've been in that 1.5 million to 1.6 million ton a year range in the automotive side. Our expectation and our stated goals are to double that to around 3 million tons. And so what I would tell you, in a year that was way off because of the chip shortages in 2021 somewhere in that 12.5 million, 13 million units. Nucor's share in automotive grew, and that is going to continue to grow. And so I can tell you, there's a lot of excitement about Nucor's capabilities being the first EAF to be able to produce a full generation three steel in Hickman as well as what the opportunity and capability of the West Virginia sheet mill will be able to do in terms of transforming a differentiated clean steel, net zero steels into the OEMs. And so, we're committed to move there. At the same time, our goals are not to get overly weighted. We're not looking to move to 20% or 25% of our overall mix in automotive. But to be in the 10% to 12% range, I think, is probably about the right number today. Rex, do you want to touch on contracts?

Yes. I'll finish up on the Hickman galv line. Really, just pleased with what's occurred there, the start-up of that. It's going to be an automotive capable and focused galv line with the additional or the extra high strength. So, we'll be able to feed into that. So that's a step for sure into that. And the new Midwest mill, as Leon mentioned. Automotive is going to be a significant portion of what we look for in that business for that. So you'll see that growth occurring. On the contract side, we're contract season, I would say was what we expected, we had going into it some strength in the marketplace from a demand standpoint. So, the things from great extra, some of those things, but we're discuss with our customers, but at the same time, you got to look at the total package, if you will, of what they see as value. So it's more than just what those pieces are. It's price, but it's delivery, it's service. So our contract season for us, we finished very typical with what we target for contract percents, both on the service center side as well as overall. So, we're in the 80% range and overall target for us. So fairly typical from a volume standpoint as we finish up contract season for heading into 2022.

And we had very few customers that chose not to renew. Isn't that correct?

Yes. In fact, I would tell you, we had more requests for increased volume. So I've seen some of the information of not running in their contracts, those types of things. We did not experience that as a company. In fact, it was the other way around. We performed in a really tight market for our customers, and we had the interest in renewing contracts. That's what we saw for this season.

And our next question comes from Michael Glick with JPMorgan.

A couple of questions on the market. You mentioned your hot band exposure. And right now, we're looking at historically wide spreads between hot-rolled and value-added products. Do you expect that spread to contract back to where it has been historically? Or do you think there's something going on to keep those spreads wider than we've seen historically?

When you say value-added products, what are you referring to?

Cold-rolled and coated products.

Got it. Yes. Look, Michael, I would tell you, I think the overall trend is, you're going to see that gap shrink. We saw, obviously, a huge spike of imports coming in mainly from Canada and Mexico. Predominantly hot band is what we saw with CRU's numbers out yesterday. Those numbers are correcting. And so, I think you're going to see a a closer level set to norm. But what's norm, right? Coming off a historic year like we had in '21, I think there's three things that Nucor has touched on over really the last year. If you look at our industry over the last 12 or 18 to 24 months, there's been significant shift in consolidation, rationalization and trade. If you think about just five years, six years ago, we had about 55 cases that were won in carbon steel. Today, that's over 110. The trade case is different, but obviously, the door opened up with the massive spread. So while I think there's some correction, I also think the industry has moved as well as Nucor in terms of creating higher highs and higher lows that will continue to move forward. In terms of the overall where that ends up, I'm not going to speculate. I would tell you that the healthy functioning market, it's going to find its equilibrium. And at the end of the day, supply and demand will always be the drivers to how we price our products.

And then my second question will also be just kind of bigger picture. The focus on potential capacity curtailments has been on the blast furnace side, but I presume technology on the [indiscernible] side has improved pretty considerably since the late 1980s. I mean do you see any industry EAF flat-rolled mills nearing the end of their relative useful lives given the dilutive impacts on portfolio returns and are of higher scrap and labor costs and a fleet of new mills coming on?

Look, I can only speak to Nucor. And I would just tell you, Nucor has had a long history like 5.5 decades worth of reinvesting back into our mills so that as those mills generate the returns and the EBITDA and the margins, we make sure we reinvest for the long term in all of those assets. So the modernization that our acquisition of the Marion facility, our investment in Kankakee, our investments across the entire product portfolio has been significant in the billions and billions range. And so from a Nucor perspective, I would tell you not at all. Some of our oldest mills are the highest generating returns that we have in our entire portfolio, and it's because we do a great job of reinvesting our teams do an amazing job of keeping the maintenance enough to keep and staying on the latest trends for the improvements in technology to implement, to ensure not only the safest delivery of that steel, but also the lowest cost output to those steel products for our customers.

And that concludes today's question-and-answer session. At this time, I will turn the conference back to Mr. Leon Topalian for any additional or closing remarks.

Thank you. As we conclude our call today, I just want to thank the entire Nucor family, for delivering the safest year in our history and the most profitable year in our history. Thank you. And I look forward to continuing the exceptional performance across all of our businesses in 2022. To our customers, thank you for the trust and the partnership as we continue to build the capabilities required to differentiate Nucor as the supplier of choice. And finally, to our shareholders, we're proud of the record returns provided in 2021. However, we're not resting on our past performance. The Nucor team is focused on maximizing our profitability and continuing to be great stewards of the valuable shareholder capital you entrust us with. Thank you, and have a great day.

And that does conclude today's conference. We thank you for your participation. You may now disconnect.