Q4 2024 Earnings Summary
- Strong demand and operational improvements at the Brandenburg plate mill: Nucor is optimistic about plate demand in 2025 due to expected increases in military and infrastructure spending, which will positively impact their plate products, especially with the new capabilities of the Brandenburg mill. In Q4, the Brandenburg team achieved a production increase of over 100%, conversion cost per ton decreased by 30%, and they produced nearly 150,000 tons with record backlogs. The company has great confidence it will achieve consistent EBITDA positive results by the middle of 2025.
- Resilience and strong performance in downstream businesses: Despite some moderation from record highs, Nucor's downstream businesses, particularly joist and deck, are still performing well above pre-pandemic levels. Backlogs are stable and extend well into the second quarter. The company expects to continue creating value for customers, supporting future earnings growth. They saw improvement quarter-over-quarter in their rebar fab business and doors business.
- Strategic investments and growth initiatives to drive future earnings: Nucor is making significant investments in new mills and finishing capabilities, including a new galvanizing line and coating complex at Crawfordsville, a second galvanizing line at their Berkeley County mill, and additional projects in the bar mill group. These investments are expected to come online between 2025 and 2027 and will allow Nucor to better serve infrastructure and construction markets, advancing towards their objective of doubling through-cycle earnings.
- Margins in Nucor's downstream products, particularly joist and deck, have moderated from record highs, with the warehouse market expected to be flat over the course of the rest of the year, heavily impacted by interest rates.
- Management indicates that shareholder returns through dividends and share repurchases may decrease in 2025, as they plan to balance capital needs with liquidity, and the exceptional return of 135% of net income in 2024 may not be repeated.
- Rising raw material costs, such as scrap prices potentially increasing in Q1 2025, may pressure margins in the steel mills segment, as demand growth drives up input costs.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | -8% YoY (from $7,705M to $7,076M) | Total revenue declined as lower average selling prices and modest volume pressures continued from previous quarters. Similar to Q3 2024 conditions where pricing declines and subdued demand affected revenue, Q4 2024 reflects these underlying market pressures. |
Steel Mills Revenue | -10% YoY (from $4,456M to $3,994M) | The Steel Mills segment saw a revenue drop driven by reduced average selling prices and slightly lower shipment volumes. This mirrors earlier quarters where declining metal margins due to pricing pressure impacted performance. |
Steel Products Revenue | -54% YoY (from $2,804M to $1,302M) | Steel Products revenue plummeted primarily due to a sharp decline in both shipping volumes and average sales prices. The previous period’s challenges in the joist and deck businesses and broad pricing pressures have intensified in Q4 2024, leading to an extraordinary decrease. |
Raw Materials Revenue | +83% YoY (from $444M to $813M) | Raw Materials revenue surged as a result of increased sales, notably from DJJ’s scrap brokerage operations where outside sales rose, building on earlier period improvements. The favorable mix shift towards scrap brokerage continued to drive higher revenues in this segment. |
Operating Income | -64% YoY (from $1,078M to $390M) | Operating income fell significantly due to prominently lower metal margins across both Steel Mills and Steel Products, compounded by declining volumes and additional cost pressures such as asset impairments impacting profitability – trends that had started to emerge in previous periods. |
Net Income | -63% YoY (from $785M to $287M) | Net income contracted sharply as lower earnings in core segments (particularly in steel-related areas affected by weak pricing and reduced shipments) and notable asset impairments reduced profitability. This decline is consistent with earlier periods of margin compression and higher cost headwinds. |
Depreciation & Amortization | +12% YoY (from $311M to $348M) | Depreciation & Amortization increased reflecting ongoing investments in capital projects and acquisitions that expand the asset base. The rise in D&A, seen in prior quarters as new assets and intangible acquisitions were recorded, continued into Q4 2024. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
CapEx | FY 2025 | $3B or slightly above | $3B | no change |
Operating results (steel mills & products) | Q1 2025 | no prior guidance | Generally in line with Q4 2024 | no prior guidance |
Overhead doors/racking/IMP EBITDA | FY 2025 | no prior guidance |
| no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Consolidated Net Earnings | Q4 2024 | Expected to be lower in Q4 2024 compared to Q3 2024 | Q3 2024 Net Income: 249.91M→ Q4 2024 Net Income: 287M(actually higher) | Missed |
Consolidated EBITDA | Q4 2024 | Anticipated to be meaningfully lower in Q4 2024 vs Q3 2024 | Approx. Q3 2024: EBIT 388,273+ D&A 350,461≈ 738,734 → Q4 2024: EBIT 390,000+ D&A 348,000≈ 738,000 (not meaningfully lower) | Missed |
Capital Expenditures | FY 2024 | Expected to be approximately $3.2B | $3,173M | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Infrastructure and government spending (IIJA, IRA, CHIPS Act) | Q3 2024: CHIPS Act commitments ($370B, 60 facilities), waiting for IIJA/IRA flow-through. Q2 2024: CHIPS Act most immediate driver, IRA and IIJA in earlier phases. Q1 2024: 83 new semiconductor projects, $350B capex, IIJA slowest to ramp. | Infrastructure activity remains strong, but no detailed updates on IIJA/IRA/CHIPS. | Recurring; still a future demand driver. |
Operational improvements at Brandenburg plate mill | Q3 2024: Record production/cost metrics in September, near EBITDA breakeven. Q2 2024: 60K tons shipped, 20% utilization. Q1 2024: Ramp-up on plan (50K tons), expected to double each quarter. | Production up over 100% vs. Q3, 150K tons in Q4, conversion costs down 30%, record backlog, targeting EBITDA-positive by mid-2025. | Continues ramp-up; stronger results quarter-over-quarter. |
Downstream performance and expansions (joist, deck, rebar, doors) | Q3 2024: Steel products pretax earnings down 20%, expansions in rebar micro mill, overhead door (Rytec), utility tower facilities. Q2 2024: Joist/deck earnings -5%, rebar micro mill in progress, new door acquisitions. Q1 2024: Capacity expansions in data center/doors, downstream still generating strong margins. | Joist/deck remains above pre-pandemic levels despite warehouse flattening; “Expand Beyond” platforms at $400M EBITDA run-rate. | Strong but moderating in some segments; continued investment in downstream growth. |
Data center market expansion (Southwest Data Products) | Q3 2024: Integration progress for SWDP acquisitions. Q2 2024: Acquisition driven by AI/cloud growth. Q1 2024: SWDP acquired to serve data center racking and infrastructure needs. | Part of “Expand Beyond” platforms; Rytec & SWDP integrated into $400M annualized EBITDA. | Recurring; continues to be a growth avenue. |
New galvanizing lines and coating capacity expansions | Q3 2024: Automotive-focused galvanizing expansions, aiming for 2 million tons of new capacity by 2027. Q2 2024: Similar timelines, part of higher-margin product strategy. Q1 2024: No mention. | Crawfordsville line due late 2025, Berkeley County line by mid-2026. | Ongoing investment to move up the value chain. |
Automotive steel demand growth (West Virginia sheet mill) | Q3 2024: No mention. Q2 2024: Targeting to double auto volumes (currently 1.5–1.6M tons). Q1 2024: No mention. | 40% of construction complete, on track for end-2026 start-up, aims to serve automotive, shifting to EAF-sourced steel. | Recurring topic; significant future volume potential. |
Competition from imports (particularly rebar from Mexico) | Q3 2024: Mexico rebar imports up 1,700%, putting price pressure on domestic mills. Q2 2024: Fabricated steel imports from Mexico doubled, urging stricter enforcement. Q1 2024: General mention of plate imports rising. | Emphasis on fair trade, 40% of total U.S. imports come from Canada/Mexico; concerned about unfairly traded products displacing domestic steel. | Persistent challenge; continuing calls for stricter trade enforcement. |
Rising raw material (scrap) costs | Q3 2024: No mention. Q2 2024: No mention. Q1 2024: Scrap peaked in December, compressed margins early in the year. | Slight scrap price rise could pressure margins; partially offset by lower DRI costs. Raw materials segment may contribute less in Q1 2025. | Intermittent topic; remains a margin watch point. |
Potential moderation in shareholder returns in 2025 | Q3 2024: Strong shareholder returns but no mention of moderation. Q2 2024: No mention. Q1 2024: No mention. | 2024 payout ratio 135%. Management suggests share buybacks could slow in 2025, but committed to at least 40% annual net income return. | Newly mentioned; could affect future capital allocation. |
Start-up costs at new facilities (Brandenburg, West Virginia) | Q3 2024: $168M in start-up costs, mainly Brandenburg/WV. Q2 2024: $137M also largely tied to Brandenburg. Q1 2024: Not specifically mentioned. | $594M in 2024, pressuring near-term earnings; expects improvement as ramps continue. | Recurring notable impact; expected to ease once facilities reach capacity. |
Focus on sustainability and net-zero carbon steel at scale | Q3 2024: No mention. Q2 2024: References advanced nuclear developments, but no direct net-zero update. Q1 2024: Emphasis on net-zero steel, Econiq line, recognized in sustainability rankings. | No direct mention in Q4 2024. | Mentioned in Q1 then not addressed further. |
Fluctuating steel mill volumes in bar and plate | Q3 2024: Bar pressured by Mexican rebar imports, plate supported by Brandenburg gains. Q2 2024: Plate softness with heavy imports. Q1 2024: Both down double digits vs. prior year, slight volume improvement expected in Q2. | Q4 details mostly focused on plate’s strong backlog; bar volumes not specifically discussed. | Persistently discussed; plate showing more optimism recently. |
Warehouse market flattening due to higher interest rates | Q3 2024: Slightly weaker warehouse demand, impacted by rates and imports in structural sectors. Q2 2024: No mention. Q1 2024: No mention. | Warehouse construction has moderated from historic highs but remains healthy; joist and deck remain above pre-pandemic levels. | Emerged in Q3, continuing into Q4 with stable but flatter outlook. |
Shift in plate market sentiment (softness in Q2 → optimism Q4) | Q3 2024: No explicit note of shifting sentiment, though Brandenburg performance improved. Q2 2024: Softness from higher imports, cautious buying. Q1 2024: Not specifically discussed. | Lean inventories, strong bookings, and backlog; optimism for 2025 driven by infrastructure/military demand. | Sentiment improved from mid-year softness to year-end optimism. |
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Capital Allocation and Shareholder Returns
Q: Can you maintain high shareholder returns amid high CapEx?
A: Management emphasized their firm commitment to meaningful returns to shareholders, aiming for at least a 40% payout ratio but often exceeding it when excess liquidity is available [0]. In 2024, they returned 135% of net income to shareholders due to over $7 billion in cash on hand [0]. They intend to balance capital needs with liquidity, ensuring returns remain strong. -
Impact of Tariffs and Trade Policy
Q: How might new tariffs affect Nucor's operations?
A: Nucor anticipates broad, sweeping tariffs that will create a more level playing field for domestic steel producers [1]. While they import some slabs and have operations in Mexico, these volumes are minimal relative to their overall mix [2]. Management is confident in managing any trade impacts, emphasizing their flexibility in sourcing and low exposure to exports. -
M&A and Potential Acquisitions
Q: Are you interested in acquiring US Steel assets?
A: Nucor is open to M&A opportunities that fit culturally and technologically, provided valuations are appropriate [3]. They maintain a disciplined capital allocation strategy and will not overpay for assets. Their focus remains on maximizing shareholder value and responsibly growing the company. -
Plate Market Outlook and Brandenburg Mill
Q: What supports the recent plate price increase and Brandenburg's ramp-up?
A: Management cites lean inventories, strong bookings, and backlogs as drivers for the $60 per ton plate price hike [5]. They are optimistic about plate demand in 2025, expecting increased military and infrastructure spending [5]. Brandenburg Mill's production increased over 100%, with conversion costs down 30% in Q4 [5]. They anticipate consistent EBITDA positive results by mid-2025. -
Rebar Market and Investment Plans
Q: Are you concerned about rebar market oversupply affecting investments?
A: Nucor is not overly concerned about oversupply in the rebar market [12]. They believe sustained demand growth from infrastructure investment, reshoring of manufacturing, and housing needs will absorb new capacity. Their rebar mills are strategically located in large consuming markets, ensuring competitive advantages. -
Growth of Towers Business
Q: How will recent investments impact towers business EBITDA?
A: Nucor expects incremental annual EBITDA from the towers business to be at least $150 million, tripling earlier projections [10]. Recent investments have expanded their national footprint with best-in-class, highly automated plants, leading to significant cost reductions [10]. -
Downstream Business Pricing and Demand
Q: Has pricing for joist and deck orders bottomed?
A: While avoiding predictions on market peaks or troughs, management notes that margins have moderated from record highs but remain well above pre-pandemic levels [4]. The warehouse market, crucial for joist and deck products, is expected to stay healthy and flat through the year [4]. Strong backlogs are in place, carrying into the second quarter [4]. -
Inventory Levels and Restocking Potential
Q: Are inventories right-sized, and is restocking expected?
A: Nucor observes lean inventories in the supply chain and remains optimistic about demand due to pro-economic policies like deregulation, tax relief, and reshoring [7]. They believe these factors will drive demand and support potential restocking throughout the year [7].
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