Leon J Topalian
Chair, President and Chief Executive Officer at Nucor
Thanks, Jack, and welcome, everyone. I'd like to begin by thanking our 31,000 team members for delivering another strong quarter for our shareholders while continuing to deliver on our most important value: the health, safety and well-being of the entire Nucor family. We're coming off our fourth consecutive year setting new safety records, and the team is off to a strong start again in 2023, ahead of last year's record performance through the first quarter.
Turning to our financial results, in the first quarter, Nucor generated EBITDA of approximately $1.9 billion and net earnings of $1.1 billion, or $4.45 per diluted share. This strong performance was due in large part to the ongoing profitability of our steel product segments, along with increased volumes and margins at our steel mills segment compared to Q4. In our steel products segment, net earnings were down 10% from Q4 levels, but remained at 42% ahead of prior year quarter and significantly above historical averages. Shipments out of our steel mills rose 18% taking utilization to approximately 80% during Q1 compared to 70% in the prior quarter. And finally, the performance of our Raw Materials segment improved in the first quarter due to higher volumes.
Nucor has created significant long-term value over many years in cycles by executing on its strategy. And today, we continue to position the company for further value creation. We are advancing several large capital projects to drive continued earnings growth, market share gains, and margin expansion in our core steel-making businesses. And our Sheet Mill Group, Nucor Steel Gallatin continues to ramp up production. We've invested in Gallatin mill to completely modernize its operations and more than double its capacity. And we're pleased with the progress the team has made to date. During the second quarter, we expect Gallatin will continue ramping up to its full run rate of 2.8 million tons and return to profitability. We remain confident Gallatin will be a strong contributor to Nucor's bottom line in the second half of 2023 and for many years to come.
Shifting to West Virginia, progress continues with our new sheet mill. The team has received all preconstruction state permits and is awaiting final federal permits, which we anticipate being finalized in the next few months. We expect to complete construction approximately two years after the receipt of all permits. And as previously announced, Nucor's Board of Directors approved an updated budget for the West Virginia project, which is now estimated at a net cost of $3.1 billion. Once completed, the new mill will have an annual capacity of 3 million tons per year and advanced capabilities that will enhance our ability to provide customers with high-quality, low-embodied carbon steel products, particularly for the demanding automotive and construction applications.
Turning to our Plate operations. The team at Nucor Brandenburg has had a productive quarter, focused on continued commissioning of the mill and beginning shipments to customers. Throughout Q1, the team has made significant headway dialing in the rolling mill and caster as we bring online a mill with the broadest offering of plate products in the Western Hemisphere. Every month, we continue increasing casting rates and the range of production capabilities. Over the balance of 2023, we expect the Brandenburg mill will produce up to 500,000 tons of steel and turn profitable by year's end. This game-changing plate mill gives us a unique capability and will play a pivotal role in building out our nation's infrastructure across multiple growth sectors.
Moving to our expand beyond strategy, we're pleased with the success of our new platforms, especially, the diversification and accelerated growth they bring to Nucor's earning profile. As we've shared before, we look for efficient manufacturers of steel-related products when evaluating candidates to expand beyond our traditional steel-making operations. The most attractive opportunities are those where we can create incremental value through operating synergies, supply chain efficiencies, and revenue enhancements. We also see companies whose values match Nucor's, especially when it comes to taking care of their team. As part of our expand beyond strategy, Nucor established four new platforms, helping to grow the size and diversity of our steel products segment. In the past three quarters, in which we've owned these platforms, they've generated combined EBITDA of roughly $350 million, or annualized EBITDA of approximately $465 million. This puts them on track to reach the $700 million through-cycle annual EBITDA goal we described at our Investor Day in November.
In the first quarter, steel products represented approximately 52% of our segment earnings mix. We plan to keep growing the earnings potential of our steel products segment over time through both organic growth and acquisitions. In fact, just last month, we announced the location of our first of two new production facilities for Nucor Towers & Structures which will help meet the growing demands of our nation's transmission infrastructure. As we execute our expand beyond strategy, we are maintaining a selective and disciplined approach seeking those that enhance our service offerings for customers and generate superior returns for our investors.
Our competitive advantage lies not only in the breadth and quality of the products we produce, but in how we make them. As more customers look to reduce emissions across their supply chains, the low embodied carbon in Nucor Steel is a real differentiator for us. Over the past few years, we've developed numerous supplier partnerships with the likes of General Motors and train. And this week, we're adding to that with the supplier partnership with Johnson Controls. Nucor will recycle nearly all of the scrap from Johnson Control facilities and repurpose it as low-embodied carbon steel to be sold back to Johnson Controls for future use. This closed-loop recycling partnership helps both companies pursue our decarbonization goals. In May, we will publish our updated sustainability report, which speaks to the commitment our teammates have in living our culture and protecting our environment. I encourage you to take the time to review it as it describes what makes Nucor so special. Things like our industry-leading safety record, the pride that our teammates have in working for Nucor. Having being the largest recycler of any product in the Western Hemisphere allows us to make steel with a fraction of the carbon footprint compared to the global average and the various ways we support and invest in our communities. This is what makes Nucor a world-class manufacturer, as recognized by Fortune Magazine, where we were ranked number one amongst steel companies for the second consecutive year as one of the World's Most Admired Companies.
Before turning it over to Steve, let me wrap up by sharing some perspectives on the U.S. economy. Despite the economic uncertainty, we see a constructive long-term outlook for Nucor and the broader U.S. steel industry. And when economic conditions do change, our highly-variable cost structure and flexible operating model allows Nucor to toggle our production and efficiently match demand. Nucor has a track record of operating profitably through downturns and emerging from them even stronger. The long-term investments we make in our conservative capital structures are designed to withstand all economic cycles, and this time is no different. But for now, the fundamentals driving nonresidential construction and infrastructure projects appear to be quite healthy. Three pieces of legislation: the Infrastructure Investment Act, the Inflation Reduction Act, and the CHIPS Act, provide a combined $975 billion of funding or tax incentives, which will have a multiplier effect on the actual amount of capital deployed. Taken together, we believe that these three programs have the potential to generate up to 8 million tons of incremental steel demand per year over the balance of this decade. According to the American Iron and Steel Institute, an estimated 5 million tons of steel is needed for every $100 billion in infrastructure spending. On top of that, we expect IRA will drive significant investment in clean energy, adding approximately 2 million tons to 3 million tons of annual steel demand for wind, solar, and transmission projects. There also have been more than 30 announced semiconductor plants or expansions in response to the CHIPS Act. These are massive steel-intensive factories that take billions of dollars and years to build, and Nucor's unrivaled domestic production capabilities and low-carbon footprint position us favorably to provide the steel for these projects.
As I've said in the past, the green and digital economies are being built with steel, and the steel that they get built with matters. The future looks bright for Nucor and we're excited to continue building on our company's long track record of driving profitable growth and delivering outstanding returns to our shareholders.
With that, let me turn it over to Steve Laxton who will share additional details about our Q1 performance and outlook for Q2. Steve?
