Nucor's Third Quarter of 2026 Earnings Call - NUCOR CORP

Explicit Guidance:

• FY2026 Revenue/Volume: Expects steel mill shipment growth to finish closer to the higher end of the 5–10% range for 2026, supported by durable demand drivers.
• FY2027 Earnings: Expects another strong year for earnings in 2027, positioned to be even stronger than 2026.
• FY2027 Capex: Expects capital expenditures to decline further in 2027, continuing the step down from peak spending in 2024–2025; full 2027 capital allocation details to be shared in January.
• Q4 2026 Earnings (Segment):
  • Steel Mills: Expects stable earnings (higher average pricing offsets seasonally lower volumes and higher costs).
  • Steel Products: Expects stable earnings (higher pricing offsets lower volumes).
  • Raw Materials: Expects slightly lower earnings (primarily due to lower realized DRI pricing).
  • Corporate/Eliminations: Expects lower expenses due to reduced intersegment profit eliminations.
  • Consolidated: Expects earnings to be in line with or modestly higher than Q3 2026 results ($5.80/share).
• Shareholder Returns: Committed to returning at least 40% of net earnings annually; year-to-date returns reached nearly $1.4 billion (42% of earnings) as of Q3 2026.

Business-Segment Outlook:

• Steel Mills (Sheet & Plate):
  • West Virginia Sheet Mill: Commissioning expected by December 2026; production ramp in early 2027 targeting 50% utilization by end of 2027. Expected to add 50% utilization capacity to the network, with base load tons shifted from other mills to support the ramp.
  • Automotive Galvanizing (Berkeley, SC): New automotive-grade line began production early this month; utilization expected to reach 50% in Q2 2027, reaching full run rate by end of 2027. Adds 500,000 tons of annual galvanizing capacity.
• Steel Products (Towers & Structures):
  • Facility Status: Decatur, AL facility on track for EBITDA positive status "this month" (Q4 2026); Crawfordsville, IN facility full production in Q3 2026; Brigham City, UT on track for full production by mid-2027.
  • Capacity Expansion: Announced $165 million investment to increase Indiana and Alabama facility capacity by ~50%.
  • Long-term Outlook: Revised long-term annual EBITDA contribution expectation to $200 million (up from prior $150 million forecast).
  • Backlog: Order backlog has more than doubled since start of year, extending into early 2028.
• Steel Products (Downstream/Merchant Bar):
  • Automotive: Shipments to automotive customers up 4% YTD; aiming to double auto shipments long-term. West Virginia ramp expected to contribute 1 million tons of auto steel by 2028, with ~100,000 tons eventually being "exposed" automotive steel.
  • Data Centers: Represents 15% of enterprise backlog (30–35% in structural products); strong demand expected to continue through 2027.
  • Border Wall: Estimate of 1,400 miles of wall (primary and secondary) requiring 1,500 tons of steel per mile; shipments expected to continue through 2027 and well into 2028.
• Raw Materials: Louisiana DRI plant capturing CO2 emissions for storage (up to 800,000 tons annually) with ExxonMobil to support emissions reduction goals.

Market and Competitive Outlook:

• Demand Trends: Describes "strongest demand environment across the breadth of Nucor products" in 31 years, driven by infrastructure (IIJA), reshoring, digital infrastructure (data centers), and energy (grid, LNG, oil & gas).
• Pricing & Margins:
  • Expect significantly better contract terms entering 2027 (lower discounts, higher extras, tighter volume variances).
  • Anticipate 70–75% of sheet contracts fixed (higher than the 80–85% historical run rate, but with a strategic shift in mix); fixed contracts will reset at higher prices in 2027.
  • Only 5–7% of fixed sheet contracts are auto-related; majority of contracts reset at year-end.
  • Expect EBITDA margin expansion to continue, though Q4 2026 sees modest conversion cost uptick due to outages and lower fixed cost absorption.
• Competitive Position:
  • Automotive: Won entire GM platform for exposed automotive sheet; claims ability to fully replace integrated producers in this segment.
  • Towers: First-mover advantage in organic greenfield tower plants with 30 utility qualifications; expecting significant cost advantage due to automation.
  • Trade: Imports from Finland down 13% YoY and 24% vs. 2024; noting surge from South Korea despite tariffs and commitment to vigilance.

Macro / Industry Outlook:

• Economy: Views "healthy economic conditions" and "durable underlying drivers" as supporting the market; sees "greatest economic growth" in the nation.
• Policy: Cites "vigorous trade law enforcement" and Section 232 measures as critical for a level playing field; expects continued supportive federal policy.
• Infrastructure Spending: $135 billion of IIJA funding remains unspent; utilities plan to spend nearly $1.4 trillion over the next five years.
• Rates/Capital: Noted as "healthy" for capital spending; expects free cash flow to "skyrocket" in 2027 as capex unwinds.

Strategic Initiatives:

• West Virginia Sheet Mill: Full ramp expected in 2027; startup costs in 2027 expected to be elevated ("similar to or higher than 2026").
• Organic Growth: Expansion of "Expand Beyond" categories (towers, data centers, automotive).
• Capacity Additions: $165M investment in Towers & Structures; new galvanizing line at Berkeley; micro mills (Lexington, Kingman, Frostproof, Sedalia) ramping.
• M&A/Partnerships: No new M&A announced, but emphasis on "playing where the puck's going to be" via organic capability building (e.g., acquisitions of Southwest Data Products, Nuclear Warehouse Systems previously executed).
• Safety: Targeting "safest year in history" for 2026; "safest summer ever" achieved in 2026.

Risks and Headwinds to Outlook:

• Cost Inflation: Conversion costs ticked up in Q3 (consumables, freight, energy, overtime) and expected to modulate up in Q4 due to winter weather and outages.
• Seasonality: Q4 typically sees volume declines (historically ~7% QoQ) due to fewer shipping days (2 fewer fiscal days + 4+ holiday days) and planned mill outages.
• Import Volumes: Vigilance required as import volumes from South Korea have surged despite tariffs.
• Startup Complexity: Expectation of elevated startup costs and slower-than-peak utilization at West Virginia in 2027.
• Market Volatility: While demand is robust, the "tip of the spear" implies potential for volatility in the broad demand environment.

Management Tone on the Future:

• Confidence Level: Highly Optimistic. Repeatedly used phrases: "strongest demand environment," "best days are definitely in front of us," "greatest economic growth in our nation," and "2027 will be even stronger."
• Strategic Shift: Moving from "investment phase" to "harvest phase" with capex unwinding in 2027, fueling free cash flow and shareholder returns.
• Execution: "Executing exceptionally well" across segments; confidence in ability to capture share from integrated producers in automotive.
• Changes vs. Prior: Upgraded Towers & Structures EBITDA outlook ($150M → $200M); reiterated confidence in 10% shipment growth for 2026 (high end of 5-10% range).

Miscellaneous:

• CO2 Project: Louisiana DRI plant project with ExxonMobil designed to capture/store 800,000 tons of CO2 annually.
• Safety Culture: 33,000 teammates; safety emphasized as the "most important value."
• Backlog Visibility: Order backlogs in structural and merchant bar mills are at "unprecedented" levels, with visibility extending into 2028.