Nucor Corporation - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue was $7.83B and GAAP diluted EPS was $0.67; adjusted diluted EPS was $0.77, with EBITDA of $0.70B.
• Results beat S&P Global consensus on adjusted EPS ($0.77 vs $0.659*) and revenue ($7.83B vs $7.26B*), driven primarily by volume strength in bar and sheet; management cited a volume-driven beat vs March guidance.
• Sequential outlook improved: management expects Q2 2025 earnings to increase across all segments, with the largest lift in steel mills on higher sheet and plate pricing.
• Near-term catalysts: backlog strength (mill backlogs up >30%; steel products up ~25%), broader Section 232 enforcement and trade remedies, and ongoing growth investments (rebar micro mill, bar melt shop, coating lines, towers & structures).

What Went Well and What Went Wrong

• What Went Well

  • Volumes accelerated: total outside shipments rose 13% QoQ and 10% YoY; steel mill shipments +14% QoQ and +10% YoY, with bar mill shipments +21% QoQ and +20% YoY.
  • Backlogs strengthened: mill backlogs up >30% QoQ and ~25% YoY; steel products backlogs up ~25% QoQ with joist and deck extending into Q4, supporting visibility and margin resilience.
  • Strategic progress: Brandenburg plate mill achieved ABS certification and first wide X70 API line-pipe trials; “25% of Q1 shipments were products Nucor could not offer before”. Quote: “It’s hard not to be optimistic about Nucor’s future”.

• What Went Wrong

  • Price headwinds: average sales price per ton fell 12% YoY (and 2% QoQ), compressing margins despite volume gains.
  • Start-up costs and one-time charges: pre-op/start-up costs were $170M (~$0.56/share); plus $29M one-time losses/impairments (~$0.10/share) tied to closures/repurposing.
  • Raw materials headwinds: pretax earnings declined QoQ on lower DRI pricing and higher operating expenses in scrap processing; scrap costs rose ~3% QoQ; energy and consumables pressured conversion costs YoY.

Transcript

Operator (participant)

Good morning and welcome to Nucor's first quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise, and today's call is being recorded. After the speaker's prepared remarks, I will provide instructions for callers wishing to ask questions. I would now like to introduce Jack Sullivan, Vice President of Nucor Investor Relations. You may begin your call.

Jack Sullivan (VP of Investor Relations)

Thank you, and good morning, everyone. Welcome to Nucor's first quarter 2025 earnings review and business update. Leading our call today is Leon Topalian, Chair, President, and CEO, along with Steve Laxton, Executive Vice President and CFO. Other members of Nucor's executive team are also here with us today and may participate during the Q&A portion of the call. Yesterday, we posted our first quarter earnings release and investor presentation to Nucor's IR website. We encourage you to access these materials as we will cover portions of them during the call. Today's discussion will include the use of non-GAAP financial measures and forward-looking information within the meaning of securities laws. Actual results may be different than forward-looking statements and involve risks outlined in our Safe Harbor Statement and disclosed in Nucor's SEC filings.

The appendix of today's presentation includes supplemental information and disclosures, along with a reconciliation of non-GAAP financial measures. Let's turn the call over to Leon.

Leon Topalian (Chair, President and CEO)

Thanks, Jack. Before we discuss the quarterly results, I'd like to acknowledge the important contributions of two retiring executive team members. Chad Utermark, our EVP of New Markets and Innovation, will retire in June after more than three decades with Nucor. Chad has exemplified the Nucor culture and has positively impacted thousands of team members during his tenure. His leadership in executing our Expand Beyond strategy and driving key acquisitions has been invaluable. We extend our best wishes to Chad and his family in his retirement. Additionally, Greg Murphy, our EVP of Business Services and General Counsel, will also retire in June.

Since joining Nucor in 2015, Greg has provided exceptional leadership, and his impact and advocacy leading our legal, environmental, government affairs, and communications teams has been instrumental in developing long-term strategies that serve our shareholders, customers, and our team.

On behalf of our more than 32,000 team members, thank you both for all of your leadership, friendship, and dedication to Nucor. You will be greatly missed. With Greg's retirement, Ben Pickett has also been promoted to EVP of Business Services, and Doug Wilner has been promoted to President of Corporate Legal Affairs and General Counsel. Just last week, we announced Tom Batterbee will be promoted to EVP of Human Resources and Talent effective May 11th. Tom is an exceptional leader with more than 35 years of service with Nucor. In his new role, Tom will drive Nucor's strategy for the growth, retention, and development of all Nucor team members.

Please join me in giving a warm welcome to Ben, Doug, and Tom in their new roles. Turning now to our first quarter results, Nucor generated EBITDA of $696 million and earned $0.77 of adjusted EPS.

Despite the lower results compared to prior quarters, Nucor's strong balance sheet and deep liquidity allowed the company to advance its long-term growth plans on a number of fronts. During the quarter, we reinvested nearly $860 million into the company, with approximately two-thirds of that going into projects that will commence operations over the next two years. We've returned nearly $430 million of capital to Nucor shareholders.

We've pre-funded upcoming debt maturities, raising $1 billion in new senior notes with a weighted average coupon of 4.88%, and took steps to wind down or repurpose certain operations at divisions where we believe resources can be allocated more efficiently. Through it all, we've continued to Live Our Culture, taking care of our team, customers, and shareholders. The capital projects we've undertaken are designed to strengthen and diversify our earnings profile for shareholders and better serve the evolving needs of our customers.

Several of these projects will commence operations within the next 12 months, and I'd like to take a moment to provide an update on them. Within the Bar Mill Group, our rebar micromill in Lexington, North Carolina, rolled its first billet in April and is on track to produce its first heat in June. Commercial shipments are expected to occur in the third quarter. At our Kingman, Arizona bar mill, we expect the new mill shop to produce its first heat in June and be operational in the third quarter. We've also made considerable headway with new coating facilities at our existing sheet mills.

The coating complex at our Crawfordsville, Indiana sheet mill is scheduled to be completed by year's end and will add galvanizing and pre-painting capabilities at the location.

Additionally, the new galvanizing line at our Berkeley County sheet mill in South Carolina is on track to completion by mid-2026. Within our Towers and Structures business, the greenfield projects in Alabama and Indiana will commence operations throughout the next nine months. Customers have already started to tour our Alabama location, and we are working through initial phases of the qualification process. The Alabama project is slated to begin operations in the third quarter of this year, and the Indiana project is on track to begin operations in the first quarter of 2026.

While construction on our West Virginia sheet mill will continue through 2026, the team there continues to do a great job of moving the project forward. We are near the midpoint of construction timeline, and equipment installation is well underway.

We remain on schedule to commission the mill by the end of next year and look forward to supplying the markets with some of North America's cleanest and most advanced sheet steels. Over the past several months, we've seen significant changes in federal trade policy, including the welcome reinstatement and broadening of Section 232 steel tariffs. Since its implementation in 2018, the 232 tariffs have been significantly weakened through country exemptions, quotas, and numerous product exclusions. By 2024, fewer than 18% of steel imports were subject to Section 232 tariffs.

Ending the exclusions and quota agreements was necessary to strengthen the U.S. steel industry, which was the original goal of the 232 tariffs. We have always maintained the belief that America's national security depends on a robust and healthy American steel industry.

As America's largest and most diversified steel producer, we applaud recent steps to help level the playing field for American steel producers. In addition, the trade case relating to certain corrosion-resistant steel products continues to progress. Earlier this month, the Department of Commerce announced preliminary anti-dumping duties on coated flat-rolled steel from 10 countries. Many of our country's trading partners have taken advantage of our open markets for far too long, to the detriment of the American manufacturer and their teams.

These trade remedies, as well as the comprehensive Section 232 tariffs, are the sort of enforcement mechanisms required to stop unfairly traded imports. For nearly 30 years, Nucor has worked across administrations to ensure strong trade law enforcement, and we will continue to be outspoken on these issues so long as there are trading partners who do not play by the rules of free and fair trade.

When speaking to investors over the past several weeks, we've heard a lot of questions about the outlook for steel demand in light of macroeconomic uncertainty and volatility. Let me spend a few moments describing what we're seeing and what we're focused on. For starters, in the first quarter, we saw backlogs rise over 30% in our steel mill segments and rise nearly 25% in steel products. We recognize a portion of this may be pulled forward. However, we continue to see very healthy order entry rates and relatively stable pricing.

We're also seeing an administration that seeks less regulation, a lower corporate tax rate, and has demonstrated a willingness to pivot and course-correct as conditions evolve. We're seeing steady to improving demand for steel among customers who are engaged in the reshoring, rebuilding, and repowering of American industry.

Nucor is best positioned to supply these growing markets, as evidenced by our order books, which include projects like the advanced manufacturing facilities, infrastructure projects, new hospitals, schools, airports, power plants, and stadiums. Overall, we continue to see the current improving demand environment in line with our expectations of 2025. When you couple that with Nucor's product breadth and capabilities, paired up with recent policies in support of U.S. manufacturers, it's hard not to be optimistic about Nucor's future. While the economy is grappling with a lot of uncertainty and volatility, rest assured Nucor is built for this.

We have the right capabilities, the right team, and the right financial strength to preserve, regardless of the macroeconomic trends. Our mission to Grow the Core, expand beyond, and live our culture is how we plan to succeed. All this requires execution.

It's through great execution that Nucor turns potential into value creation for our shareholders and our customers. That is why my most important message to the team during this period of transformative growth is to stay focused and accountable as we bring new projects to life across the enterprise. Before handing it over to Steve, I want to mention that we recently posted our 2024 corporate sustainability report to the Nucor website. We're proud to share that our greenhouse gas emission intensity is among the lowest in the global steel industry, and we believe demand for cleaner steels will continue to grow.

The report highlights how we're advancing the development of cleaner energy sources such as nuclear energy, as well as carbon-free iron sources and other low-carbon raw materials. The report also highlights impressive progress our team has made in reducing injuries over the last several years.

I'd encourage you to look through it and learn more about how our team is working to care for one another, the environment, and the communities we call home. With that, I'll turn it over to Steve, who will provide more details about our performance in the first quarter and our outlook for the second. Steve?

Steve Laxton (EVP and CFO)

Thank you, Leon, and thank you all for joining us on the call this morning. During the first quarter, Nucor generated net earnings of $156 million or $0.67 per share. This includes pre-tax charges of $29 million or $0.10 per share of after-tax charges related to the closing or repurposing of facilities in our Steel Products Segment and ceasing production of wire rod at our Connecticut bar mill. Excluding these one-time charges, our annual earnings were approximately $179 million or $0.77 per share. Leon highlighted the progress we've made on several of our larger growth initiatives.

While these growth investments create long-term shareholder value, they also create near-term earnings headwinds. During the first quarter, Nucor incurred $170 million or $0.56 per share in pre-operating and startup cost.

Turning to the segment-level results for the quarter, and adjusting for the one-time charges just mentioned, the Steel Mills segment generated adjusted pre-tax earnings of $241 million, increasing approximately 43% from the prior quarter. While average realized prices were roughly in line with the fourth quarter prices, volume increased 14%. The most pronounced increase came from the bar mill group, where shipments rose 21% compared to the prior quarter and 20% year over year. We also saw improvement in plate shipments, driven by a combination of good customer demand and improved operations at our Brandenburg, Kentucky plate mill.

Brandenburg shipments and production have trended higher for five consecutive quarters, a testament to the progress of that team. While shipments were higher during the first quarter, we were also booking at healthy levels.

As Leon mentioned previously, our steel mill's backlog grew more than 30% throughout the quarter and sits up nearly 25% over this time last year. Nucor's Steel Products segment affords a wider and more diverse set of solutions than others in our industry. That capability breadth is a meaningful differentiator and value creator. The segment continues to deliver pronounced impacts on Nucor's overall earnings profile. The Steel Products segment generated adjusted pre-tax earnings of $307 million for the first quarter. Steel products also saw meaningful backlog growth, up nearly 25% across all downstream products for the quarter.

Our joist and deck backlogs now extend into the fourth quarter. As we've shared in the past, the longer duration backlogs for some products within this segment mean we experience a lag between pricing changes in the market and realized financial results.

We're seeing this effect now and expect lower realized pricing in our financial results for some of these businesses in coming months. It's important to note that we expect margins in this backlog to remain well above pre-pandemic levels. Given where backlog set, broader coverage under Section 232 and our healthy current order book, we have a constructive view on the Steel Products segment for the balance of 2025. Since 2022, we've made several acquisitions to expand our construction products capabilities to leverage our company's core competency as an efficient manufacturer.

These acquisitions and subsequent organic growth investments have established four distinct platforms with higher growth and margin potential for our shareholders. During 2024, our overhead doors, racking, and insulated metal panels platforms generated EBITDA of approximately $400 million when annualizing for mid-year acquisitions.

For 2025, we expect these three platforms will generate approximately $450 million in EBITDA, with further growth expected in 2026 when our new towers and structures facilities enter their first full year of production. Turning to our Raw Materials Segment, we realized pre-tax earnings of approximately $29 million for the quarter, a decrease of approximately $28 million from the fourth quarter. Lower realized pricing for DRI and higher operating expenses in some of our scrap processing operations were the primary factors affecting the quarter-over-quarter change. Moving to the balance sheet, we remain committed to maintaining a strong investment-grade credit quality.

A healthy balance sheet with ample liquidity has been a hallmark of Nucor for decades and continues to put the company in a position of strength, allowing us to execute our strategy throughout various phases of the economic cycle.

In March, Nucor increased its revolving credit facility by $500 million, and we raised a billion dollars of senior notes at a weighted average coupon of just under 4.9%. This billion-dollar offering was split evenly across five and ten-year tenors, with proceeds being used to retire a billion dollars of notes that reach final maturity in late May and early June. The rating agencies continue to affirm our investment-grade credit rating outlooks. Our ratings are the highest of any North American steel producer, with an A-minus rating and stable outlooks from both S&P and Fitch, and a Baa1 rating on positive outlook from Moody's.

Nucor ended the first quarter with a total debt to capital of approximately 27% and just over $4 billion in cash. However, as just mentioned, we intend to use a billion dollars of the cash recently raised from our debt offering to retire debt.

Adjusting for this intended use, Nucor would have debt to capital of just under 25%, more in line with recent periods, and cash of just over $3 billion. In addition to maintaining a strong balance sheet, a cornerstone of Nucor's capital allocation framework is to provide meaningful direct returns to shareholders. During the first quarter, that principle was on display as we returned $429 million to shareholders in the form of dividends and share repurchases. Leon spoke earlier about our outlook, but now I'd like to drill deeper on what we're seeing across some of our businesses. Within sheet, we're seeing continued resilient demand from key end-use markets like construction and energy.

Our sheet backlog grew meaningfully during the first quarter, and we expect our second quarter shipments to increase further.

The effects of the core's trade case, coupled with the recent Section 232 refresh, should temper unfairly dumped and predatorily priced materials, allowing for improved stability in the sheet business. Turning to bar, while there is potential concern that some of the commercial construction planning may be pausing in response to recent market volatility, larger projects in advanced manufacturing, infrastructure, and institutional construction remain largely unaffected and continue to represent steady business force. Consequently, we see improved financial performance in bar in the second quarter.

Imports were meaningfully higher during the first quarter, reflecting front-running of tariffs. Within our plate and structural groups, some of the same demand drivers are having a positive impact. Nucor is a leading supplier to structural fabricators, and we saw higher shipments for projects ranging from data centers and warehouses to bridges and other infrastructure projects. New energy-related projects are also driving demand.

We're supplying piling for solar farms, plate for onshore wind and transmission towers, and getting qualified to supply steel for API-grade line pipe out of Brandenburg. Our backlogs are up significantly in both beam and plate, and we expect strong shipment levels and stable pricing to continue into the second half of this year. In the Steel Products segment, our backlogs are up year over year by 19%. Highlighting a few of our larger businesses within that segment, we expect continued strong performance from joist and deck and strengthening performance from our Tubular and Metal Buildings groups.

Positive construction trends on growing data center demand, stable warehouse activity, and ongoing institutional construction are driving backlog growth. In addition, operational gains in our tubular and metal buildings group, coupled with lower imports for tubular, are setting this up for positive momentum in coming months.

Turning to our second quarter 2025 outlook, we expect Nucor's earnings to be meaningfully higher than in the first quarter of this year. Operating results at the steel mills, steel products, and raw material segments are all expected to be stronger than the first quarter. The steel mill segment is expected to drive the largest portion of this sequential earnings growth due to stable volumes and higher realized pricing. Within this segment, Nucor's sheet and plate business are expected to drive the majority of the increase. In the Steel Products segment, we expect higher volumes and improved cost to more than offset slightly lower realized pricing.

In our raw material segment, we expect volumes to remain flat along with moderating scrap pricing and stable realized DRI pricing. We also expect sequential cost improvements within our scrap processing operations.

As we look further into 2025, our expectations for demand remain generally in line with the optimism we shared on our year-end earnings call. We still expect to see growth in domestic steel demand this year, and we're confident in our ability to capture a healthy share of that demand with the best and most diverse range of solutions in the marketplace. With that, we'd like to hear from you and answer any questions you may have. Operator, please open the line for questions.

Operator (participant)

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the following process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Lawson Winder, Bank of America Securities. You may now speak.

Lawson Winder (Senior Equity Research)

Thank you very much, Operator, and good morning, Leon, and good morning, Steve. Nice to hear from you both. Thank you for the update. Steve, on the last call, you provided some guidance in terms of or some backward-looking guidance in terms of what the startup costs were in 2024 and mentioned that we should consider those startup costs in 2025. Can you provide any color on the magnitude of what those startup costs might look like this year, heading to the balance of this year, particularly with the benefit of now having four solid months behind you?

Steve Laxton (EVP and CFO)

Yeah. Hey, Lawson, that's a great question. What you will see for the balance of the year is probably very similar to what we had last year. For your purposes of modeling out the next couple of quarters, I would pencil in something close to what we've done in the last few quarters. Just for a reminder, we had $160 million and $164 million in the last couple of quarters and $170 million this past quarter. We're in a heavy period of both capital spending and ramping up new projects. We've got, as Leon highlighted in his opening remarks, five projects coming online this year.

We're excited about those. Part of that calculation is the ramp rate on the startups as well. Something similar to last year is what you should expect.

Lawson Winder (Senior Equity Research)

Okay. That's extremely helpful. Also, when you think about Brandenburg, what are you guys penciling in for utilization at year-end 2025?

Leon Topalian (Chair, President and CEO)

Yeah, Lawson, it's Leon's look. I would tell you we couldn't be more proud of what the team has done in Brandenburg and their ramp. I'm going to ask Brad to touch on just a few of the details because I think they're worth highlighting, some of the very specifics that they've been able to achieve in the recent months. Brad, why don't you provide some details there?

Brad Ford (EVP of Plate and Structural Products)

Yeah, thanks, Leon. We mentioned on the last earnings call, we're very confident in getting to EBITDA positive run rates by this summer, and we remain confident we're on track for that. That confidence really stems from what the team has been able to achieve there. We've seen record days, record weeks, record months in production, in quality, in shipments, really culminating in a record shipment month in March.

We expect those volumes to continue to grow as the year goes on. Again, the key of Brandenburg is really around product development, and we've seen a tremendous amount of progress there. In fact, 25% of what we shipped out of Brandenburg in the first quarter were products that Nucor was unable to offer prior to Brandenburg. A couple of specifics there I'd like to touch on. One, the team has been working for six or eight months now and finally achieved our ABS certification, which will allow us to supply customers in the shipbuilding space. A huge step forward.

Secondly, we shipped our first wide X70 trials for that growing API line pipe market that Steve had referenced in his comments. That's a market that's typically around a two-2.5 million ton market and really heavily supplied traditionally by imports.

We're seeing very high levels of quote activity, and our customers are excited for Brandenburg to give them a domestic supply chain option. Overall, we're super proud of the team, what they've accomplished. We're excited about the feedback we're getting from our customers who are ready to grow with Brandenburg and with the Nucor Plate Group.

Lawson Winder (Senior Equity Research)

Yeah, it's a fantastic story. Great update. Thanks for that color. Just maybe one sort of follow-up on Brandenburg. What is, or how do you think about the split between higher margin, higher value-add product versus more commoditized product from that and the mix going forward from here this year and potentially next?

Steve Laxton (EVP and CFO)

Yeah, Lawson, look, I'll just touch on that from a high level. As we think about the product capability set in Brandenburg, it covers about 96% of the overall plate consumption in the United States. As Brad just mentioned, they're going to continue to work on the most advanced grades, offering, again, the highest quality plate products. It is a balance, just as you commented. We're going to look at our overall mix between Brandenburg, our Hertford County plants, and Tuscaloosa.

Between the three, there's a very comprehensive commercial plan and strategy that will do both, bring volume to the mill as well as moving them, ramping up to the higher value-added products and higher grades.

You're going to see us kind of target both ends of that as they've done because some of these qualifications, as Brad just mentioned, like the ABS, they don't come in weeks. Those are months and months of proving and the process control behind that. Anecdotally, I would tell you ABS comes at a perfect time, right? As we've seen the president's executive order on ships, Section 301, and what we believe is likely to pass in the coming weeks in the Ships for America Act. This positions us incredibly well, offering products today that Nucor's never offered, but very, quite frankly, in North America, almost no one else can produce.

Lawson Winder (Senior Equity Research)

Fantastic. Thank you very much.

Leon Topalian (Chair, President and CEO)

Thanks, Lawson.

Operator (participant)

Thank you. Your next question comes from Timna Tanners from Wolfe Research.

Timna Tanners (Managing Director)

Yeah. Hey, good morning. Thanks for the color. I have two questions. The first one I wanted to ask about is if you can provide us more clarity on the second quarter guidance. When you talk about the steel mill segment improving quarter over quarter, it seems like a pretty easy calculation on the flat rolled side to say prices are up, say, $200 quarter over quarter, scrap is maybe flat to down. Seems like it could be a huge order of magnitude. I'm just wondering if you could provide any more framework around year over year. Is it going to be similar or any more ways to think about the cadence first to second quarter? Thanks.

Steve Laxton (EVP and CFO)

Timna, I think that's pretty good math you're doing there. We're going to reframe. We're not going to give any quantitative guidance with detail on the earnings call. What we're going to do is wait till our mid-quarter guidance on that. Your math is dialing in the right direction.

Timna Tanners (Managing Director)

Okay. Fair enough. That'd try. The second question is really about not taking away from the clear benefits from tariffs for the entire sector, of course, and for your downstream business, just getting questions about tariff impact particular to Nucor. For example, the slabs brought into CSI traditionally, equipment for your new mills such as West Virginia, Trinidad, DRI. Can you talk about ways that you're mitigating any of those tariff impacts that might not be so positive? Thanks again.

Steve Laxton (EVP and CFO)

Yeah. Timna, I'll touch on that. Look, it's something obviously is changing every day, right? We're seeing these reports out this morning, as I'm sure you are, on what the president's likely to do regarding automobiles in that sector. We're monitoring incredibly closely what those potential impacts will be. You specifically mentioned West Virginia. Much of that equipment has not only been bought, it's already been delivered. The exposure there is dropping day to day. It's not de minimis, but again, it's not, from an overall perspective, a significant needle mover to Nucor this year or in the coming.

I say that at the same time, telling you, look, many of these tariffs and the final remedies are not executed yet. In the raw materials supply chain, Nucor maintains the most diversified raw materials supply strategy in the industry, period.

Full stop. Look, I'd be remiss if I didn't come up to a higher level as well to say the small impact potential of a higher raw material price is much smaller than the impact of the overall macroeconomic trends of the industry. A healthy, vibrant steel industry and having a critical national defense and the pro-American policies that you're seeing adopted by the administration trumps all of that, pun intended. Again, we'll monitor. We'll try to provide you more realistic data as we learn it. Again, we think the impact to West Virginia from an equipment standpoint is going to be minimal on raw materials. Al, anything you'd add that I didn't touch on?

Al Behr (EVP of Raw Materials)

I think you covered it well. Timna, it's a good question. It's obviously been an active year for us.

I think what's helpful to talk through is just how we're positioned in raw material. There's a few ways we're positioned that are unique and create value. One is the footprint, not only of our recycling assets, but of our mills, that particularly our high-quality metallic-consuming mills, the plate and sheet mills, are all located on water, which gives us access to global markets, seaborne markets. Once that material's here, we can move it around the country really effectively on the river system. The second is the intelligence-gathering capabilities we have through the David J. Joseph Company. We operate the largest scrap brokerage in North America.

We're buying and selling ferrous, non-ferrous, ferroalloys raw materials around the globe every day. Third are those global relationships.

These are long-standing relationships we have that give us access to the different levers we can pull to impact and mitigate the very risks that you're talking about. That's really the unique positioning. Leon hit it. It's very fluid. We don't spend a lot of time predicting. We spend a lot of time preparing for the changes that we know will come. We've got the levers we can pull, and we've got the pieces in place to allow us to do that and create value.

Timna Tanners (Managing Director)

Okay. Appreciate it. Thanks, Al.

Operator (participant)

Thanks. Thank you. Your next call will be Alex Hacking, Citi.

Alex Hacking (Equity Research Analyst)

Yeah. Morning. Thanks for the question. I just wanted to ask about the extension of Section 232 to downstream products. Have you tried to quantify how many tons that could impact and what the benefits could be for Nucor? Thanks.

Brad Ford (EVP of Plate and Structural Products)

Yeah, Alex. Look, it is fluid, as Al just mentioned, and it's something that our team, Ben Pickett, his team in Washington, spends a great deal of time. No, we have not quantified, or at least if we have, nothing that I would share publicly. What I would tell you is the overall impact and how we're seeing these move through is consequential. It is impacting. We're seeing, again, a drop below 20% imports for the first time in many years. It's having that positive impact. The other piece of this that we did not see in Trump 1.0 during his first term was the derivative products being included in these pieces of legislation.

Again, we think that's a step in the right direction, and we'll continue to work with the current administration to make sure that all of the products, whether it's raw materials or downstream, are being looked at and considered for, again, not just Nucor, but the health and the vibrancy of the steel industry and the macro.

Alex Hacking (Equity Research Analyst)

Okay. Thanks. Just following up on the guidance for steel products, Steve, I think you said that prices would probably decline for the next couple of quarters just based on lags and so on. I also think you implied that margins would be relatively stable because substrate costs would also kind of be coming down. Is that the message? I just wanted to double-check that. Thanks.

John Hollatz (EVP of Fabricated Construction Products)

Yeah, Alex, this is John Hollatz. We were successful in implementing price increases across all of our downstream businesses over the course of Q1. In some of those businesses, you will see a lag when we realize those price increases later in the year. We're still on joist and deck, buildings, rebar fabrication. There will be some margin compression, which is normal as we work through these cycles in Q2. The business that will see the benefit immediately is the tubular products, where those are very closely related to the price of hot band. We are realizing well above the increases in hot band on our tubular sales.

We have been through this every time we go through this cycle. It is very much what we would expect to happen.

Alex Hacking (Equity Research Analyst)

Okay. That makes sense. Thanks a lot.

John Hollatz (EVP of Fabricated Construction Products)

Thanks, Alex.

Operator (participant)

Thank you. Your next call is from Bill Peterson from JPMorgan.

Bill Peterson (Equity Research)

Yeah. Hi, good morning, team. Thanks for taking the questions. I wanted to come back to the mills and the first quarter results, the second quarter guidance, and what's driving the stable outlook. I wanted to ask, did you benefit from five extra shipping days? You mentioned April 5th quarter end. I'm wondering if there were more shipping days in the first quarter, less shipping in the second quarter. Also, if you can try to help us understand if there's any pull forward in demand in Q1 and how that, I guess, informs the stable outlook for the second quarter.

I guess within the mills, is there any parts of the formats, plate, bar, or sheet that may outperform or ship, let's say, increased shipments versus weaker?

Ben Pickett (EVP of Business Services)

Yeah, Bill, I'll start us off, and then maybe Steve can add some color to, I think, the first question you had around volumes and the additional shipping days. Look, let's begin with the part of your question about pull-through. We've gotten that a lot over the last six to eight weeks since these tariffs were announced. What I would tell you, look, we did see some pull-through. We did see some emergency coming right as those were announced. The important part of that, and looking through that pull-through, is what happened on the back end of that in the last month or two. What we've seen is no drop-off at all in terms of order entry rates and inquiries.

In fact, I would tell you it's been as strong as we continue into the quarter. We've seen no drop-off whatsoever.

As we think about the backlogs that Steve and I both touched in our opening comments, I'll share one data point with you. Again, while they're up about 30% Q over Q, about 25% year over year, one data point that we look at that I think is a good bellwether for kind of the macroeconomic trend is our structural backlog. If we look today at what our structural backlog is, it is sitting at the highest levels in our history ever. The backlogs at Nucor Yamato and Nucor Berkeley beams are sitting at levels we've never seen before. What I would tell you in that backlog, it's not distribution. It is orders by our fabricators.

That is locked in business on projects that have been led and awarded. That backlog is massive, hundreds and hundreds of thousands of tons.

That bodes very well as we move throughout the rest of this year in terms of, as you asked about the upside. Are there upside potentials? Yeah, there are absolutely upside potentials. We've used the words cautiously optimistic, but look, we are optimistic in what we're seeing. We're optimistic in our backlogs, order entry rates, our pricing stability throughout the entire enterprise, as well as the demand drivers like the segments that we serve in data centers, energy, warehousing, the advanced manufacturing, towers, and structures, and those two plants that will be coming up online in the coming weeks.

Nucor is well positioned to, again, meet these end markets today as well as tomorrow as these projects come online. As Brad mentioned, our excitement about Brandenburg and realizing its full offering and, again, paying back our shareholders for the $1.7 billion is exciting.

Look, we couldn't be more excited by Lexington, North Carolina's micromill, the Kingman, Arizona melt shop that we'll be starting up in the coming months, our galvanizing lines at CSI, Crawfordsville, Nucor, Steel Berkeley, and ultimately culminating with a West Virginia startup at the end of next year, which will offer the most state-of-the-art, cleanest, advanced-strength and automotive exposed steels that Nucor has ever entertained before. Yeah, I couldn't be more optimistic about the year, but quite frankly, the next several years as Nucor's full potential is realized.

Bill Peterson (Equity Research)

Yeah. Thanks, Ben. I don't know if Steve can comment on the five shipping days or not, but maybe the second question is the inter-segment eliminations came in a bit later than we'd expected, and the guidance implies a higher level in the second quarter. Is this primarily related to expectations of a steady downstream activity into the third quarter and back half of the year? Is there anything related to higher price DRI coming out of Trinidad, or are there other factors at play?

Steve Laxton (EVP and CFO)

Yeah. Hey, Bill. Back to the calendar question. It is a proclivity of Nucor's financial calendar that crops up. You'll see it every five, six years where we'll have a 95-day quarter. Last year, we had like 90 days or 91 days. I don't remember which it is. There's a little bit of that, and that has to do with how we, for roughly 50 years, have run our fiscal calendar versus the Gregorian calendar that's out there. You'll have to just kind of adjust that if you want to. The other thing, the other part of your question was about the corporate elims, and that probably isn't surprising that that's rising given the pricing environment that we have across the board.

The strength of our backlog, which is very, very broad-based. Leon highlighted that. It's not one or two areas.

It's essentially across our whole portfolio. We see strength. You will see either flat to increasing volumes in some spots, but as margin and profitability goes up, that ELM number goes up as well.

Bill Peterson (Equity Research)

Thanks, Steve. Thanks, Leon.

Steve Laxton (EVP and CFO)

Thanks, Bill.

Operator (participant)

Thank you. Your next question comes from Mike Harris from Goldman Sachs.

Mike Harris (Backup Administrator)

Yes. Good morning. Thanks. Just considering the adjusted EPS of $0.77 compared to the guided range of $0.50-$0.60, can you speak to what happened or did not happen between March 20th and quarter end that resulted in what appears to be roughly, I do not know, $40 million-$60 million after-tax windfall?

Steve Laxton (EVP and CFO)

Yeah. Hey, Mike. There were really kind of two parts to your question there. One is, why did we have a beat? The other, what's in the adjusted number? Really, the beat was driven by volume beats in our steel segment. That's where the vast, vast majority of that came from. It was bar and sheet primarily. Those are our largest volume businesses, so maybe that's not overly surprising to you. With regards to the adjustments, those were non-recurring adjustments that were related to either the closure of facilities or the repurposing of facilities.

About one-third of those were related to our steelmaking business, and about two-thirds were related to downstream product locations.

Mike Harris (Backup Administrator)

Okay. Thanks for that additional color. Just one quick follow-up here. It looks as if you lost about maybe 120 basis points of gross margin sequentially. I guess besides the 10 planned outages, what else contributed to the squeeze? Maybe speak to any structural cost increases versus what may be transient.

Steve Laxton (EVP and CFO)

Yeah. Mike, there's really a couple of places where the margin squeezes were seen. One is, if you look at year-over-year numbers, if you look at that in our steel mill business, conversion costs were up about 2-3%. That was largely driven by energy costs being a little bit higher, and some of our consumables were up just a little bit. Overall, most of the costs were sideways year-over-year, and a few were down. You are seeing some of that in primarily energy. The second aspect is scrap cost quarter over quarter were up about 3%.

The combination of those and that lag effect that we have in our pricing of our steel means that you had some margin squeeze, even though we were in a period when market prices were going up.

Mike Harris (Backup Administrator)

Got it. Thanks a lot for that.

Steve Laxton (EVP and CFO)

Yep.

Operator (participant)

Thank you. Your next question is from Katja Jancic from BMO Capital Markets.

Katja Jancic (Analyst)

Hi. Thank you for taking my questions. Maybe circling back to the earlier tariff questions, and just to confirm, the $3 billion CAPEX that they're spending this year, that does not include any speculation for tariffs. Is that correct?

Steve Laxton (EVP and CFO)

That's correct.

Katja Jancic (Analyst)

If there is any equipment that still needs to be imported into the U.S., which countries would that equipment be coming from?

Steve Laxton (EVP and CFO)

Italy. Mostly Italy, some Germany. Europe. Gotcha.

Katja Jancic (Analyst)

Okay. There's no other, it's mainly just Europe exposure then, correct?

Steve Laxton (EVP and CFO)

That's correct. Yes.

Katja Jancic (Analyst)

Last one, and I might have missed this, but Brandenburg mill, how much did it produce this quarter?

Steve Laxton (EVP and CFO)

We didn't share the number earlier, but we're on that 150,000-160,000 ton pace, but that's ramping up. We anticipate that increasing throughout the rest of this year as we bring it to its full run rate potential.

Katja Jancic (Analyst)

Okay. Thank you.

Steve Laxton (EVP and CFO)

Thank you.

Operator (participant)

Thank you. Your next question is from Chris LaFemina from Jefferies.

Chris LaFemina (Equity Research Analyst)

Hi. Thanks for taking my question. I just wanted to ask about demand. You had mentioned that commercial construction may be pausing in some cases. Obviously, order book's very strong, but we're seeing in other metal markets maybe even unprecedented inventory building in the U.S. ahead of tariffs. Obviously, that's a factor in steel. You mentioned that. How do you differentiate between demand being pulled forward ahead of tariffs and actual underlying demand?

What gives you the confidence that the outlook beyond the first quarter is good when there's clearly been some stockpiling happening in the steel markets in the U.S., especially when you're seeing some end markets begin to soften?

Leon Topalian (Chair, President and CEO)

Yeah. Chris, look, I think it's a great question, but the reality is we've been in this business for six decades. We've operated the model for 35 years. We know our fabricator community incredibly well. To your point, we're not aloof to the recognition of tariffs and the impact. We look at a number of factors. Number one, our fabricator community does not pre-order. They don't build up inventory and put tons on the books in speculation. They just don't do that. We look at months on hand in the area that you do worry about, which is distribution. Did we see an increase from 2.1 months on hand to 3 or 3.5, which tells you you're going to see a 2-3 month gap between orders?

What did we see in sheet? We've seen no drop-off whatsoever.

We see the days on hand in the distribution side remaining very flat. We are not seeing the initial pull-through of a couple of months ago actually having any material impact to decreasing the relative order book and strength that we are seeing. The third piece of that arm is, look, our teams get out. Our commercial teams are interacting with our customers and talking to them each and every day. Their confidence that our customers are describing that their customers have is significant. Again, added to that are other areas that we are going to continue to see in growth.

One of the areas we did not mention in Brandenburg that is incredibly promising is I cannot tell you the number of RFQs that have hit that mill on OCTG.

The volume of the potential impact of that energy sector coming through to Nucor's order book is not going to be insignificant. The border wall potential to come through in our tubular products, again, bodes very well for the potential, as well as what we're seeing in the structural orders in bridge contracts, IIJA, and the infrastructure bill, which is still in the early days, the CHIPS Act. All of these, again, have meaningful impacts to our order book. What we are not seeing is what you described as this massive buildup and a drop-off and a holding pattern of projects not being let.

We are seeing the opposite, and we're seeing these things come to fruition because they're taking the deliveries.

Chris LaFemina (Equity Research Analyst)

That's very good to hear. Thank you for that.

Leon Topalian (Chair, President and CEO)

Thanks.

Operator (participant)

Thank you. Your next question is from Tristan Gresser from BNP Paribas.

Tristan Gresser (Equity Research Analyst)

Yes. Hi. Thank you for taking my questions. Maybe a first one on the follow-up on the trade policy outlook. Are you in discussion with the U.S. administration to remove those tariffs on pig iron and DRI shipments? Do you think that's a possibility? Do you think there is another area of focus that the administration should have? Do you think quotas could actually come back? That's my first question.

Leon Topalian (Chair, President and CEO)

Yeah. Tristan, look, here's what I would tell you is, again, we mentioned in my opening comments from when Dan DiMicco was running this company, we've taken a very active and public role to be advocates in our industry as North America's largest steel and steel producer that continues to this day. Whether it was President Biden or currently President Trump, are we working to make sure that their administration has the right information, the right understanding of the impacts related to this industry? Absolutely. We're doing that every day. Are we looking to provide the right context for the decisions made unequivocally?

However, look, that's an input to the administration. It's not the only source that obviously they're taking. Weighting that relevancy and how that gets made into decision-making, man, we'll both wait and see.

Obviously, the raw material sector, the tariffs, the derivative products, those things that impact Nucor, yeah, we are working incredibly closely in making sure that they have the right information.

Tristan Gresser (Equity Research Analyst)

All right. That's helpful. My second question is on CAPEX. Can you discuss a little bit the increase of the West Virginia budget also for the project? How much have you spent already in 2023, 2024? If there was a hike to the budget, does that mean that if we look at 2026, CAPEX could actually be quite close to the current 2025 guidance?

Noah Hanners (EVP of Sheet Products)

Tristan, this is Noah. Let me give you some just broad color on West Virginia without specifically answering some of your questions. Yes, we are tracking what we told you, the pathway we told you would be on CapEx. We're still on time for a late 2026 into 2027 startup. I tell you, the team there is at about a 40-50% completion of the mill. It looks like a steel mill now, and we're starting to place equipment. I would tell you, we are now focusing our effort around our commissioning plan and getting that mill up and into this auto market as effectively as possible. The team is, you can see the future of EAF auto supply starting to happen at West Virginia as the team executes this plan.

They're doing outstanding work.

We're still on track for the timeline we've provided you before.

Leon Topalian (Chair, President and CEO)

Yeah. Tristan, additionally, look, here's what I would tell you. Over the last several years, that facility and that project are not immune to the impacts of what we've seen in inflation and price increases in terms of contractor rates, fuels, materials, and labor. That is why you've seen the increase to West Virginia. It's not adding scope or things that were missed. It's the inflationary impacts of, again, a pretty healthy economy and, again, the demand pull in construction right now that you saw the increase.

Tristan Gresser (Equity Research Analyst)

All right. How much have you spent already on West Virginia?

Noah Hanners (EVP of Sheet Products)

Yeah. Tristan, we've spent—we're not going to give you a precise number on that, but we're slightly over halfway through the spend on that project. You are going to see us continue to spend a good amount of money over the next few years. Just as a reminder, in the total capital plan that we've got for this coming year of about $3 billion, roughly two-thirds of that is growth-oriented. West Virginia is the largest of those projects. You will see that take up roughly half of our overall capital spend for the year.

Tristan Gresser (Equity Research Analyst)

All right. That's helpful. Thank you.

Operator (participant)

Your next question is from Carlos De Alba from Morgan Stanley.

Carlos De Alba (Research Analyst)

Yeah. Thank you. Good morning, everyone. Could you comment maybe on capacity utilization? What is the expectation in the coming quarter? We saw a very nice jump quarter on quarter. Year on year was more stable. Based on the comments that you provided, your outlook for demand, should we expect capacity utilization to keep going higher?

Leon Topalian (Chair, President and CEO)

Yeah. Carlos, I don't want to predict what the utilization rates are going to be next quarter, but I would tell you, based on our commentary, as you noted from Q4 of about 74-75% to 80% in this quarter, look, the demand drivers are certainly encouraging. The overall picture, though, in terms of our volumes that we're looking at in this year, and it's going to be up a couple of percentage points, that will flow through in different sectors of our business. Overall, I think you could see them slightly improving as we move throughout the year.

Carlos De Alba (Research Analyst)

All right. Great. I might have missed this, but any color on the inventories at Nucor's operating segments, across Nucor's operating segments or specific product lines? How do they compare to the historical average for this time of the year?

Leon Topalian (Chair, President and CEO)

Are you talking backlogs, Carlos?

Carlos De Alba (Research Analyst)

More inventory, product inventory.

Leon Topalian (Chair, President and CEO)

Oh, okay. Sorry. Yeah. Inventories, Carlos, are roughly in line with seasonal adjustment and backlog levels they've got compared to history.

Carlos De Alba (Research Analyst)

All right. Is that the case across most product lines, the main product lines?

Leon Topalian (Chair, President and CEO)

Yeah. Yeah. You may see us, we are perhaps building a bit more in some areas than others as the backlog isn't universal. But when you aggregate all of it relative to our backlog, we're in a good spot.

Carlos De Alba (Research Analyst)

All right. Thank you very much.

Operator (participant)

Thank you. There are no further questions at this time. I will now hand the call back to Leon Topalian for the closing comments. Please go ahead.

Leon Topalian (Chair, President and CEO)

Thank you for joining us for today's call and for your questions. Nucor's strong balance sheet and prudent capital allocation strategy positions us well for long-term success. To our team members, let's continue to make 2025 the safest year in our history. We thank you to our shareholders and our customers for the trust you place in us each and every day and with every order. Have a great day.

Operator (participant)

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.