Nucor Corporation (NUE) Earnings

Management highlights

- Safety • Management named safety as Nucor's top core value, and reported that the ongoing 'Safest Summer Ever' initiative is on pace to deliver the safest summer and full year in Nucor's history • The company remains focused on ensuring all employees return home safely after every shift - Operational Performance • Steel mill quarterly shipments hit an all-time record 7.1 million tons, the second consecutive quarter of record shipments; the Brandenburg plate facility set a new quarterly shipment record of 230,000 tons • Steel products segment shipments rose 11% quarter-over-quarter, with the segment posting a second consecutive quarterly shipment record; backlogs continued to build across both core segments amid broad-based customer momentum • Recently completed growth projects (Lexington Micro Mill, Kingman Melt Shop) reached EBITDA-positive run rates in Q1 2026; the Alabama Towers and Structures facility is on track to reach EBITDA-positive status by the end of 2026 • The new Greenfield Sheet Mill in West Virginia is progressing on time and on budget: first coil processing through the pickle line was completed in June, melt shop and galvanizing line commissioning began in July, and full commissioning is still on track to finish by the end of 2026; commercial shipments will ramp starting in early 2027 • Other active projects: the Berkeley Galvanizing line is on track to launch by the end of 2026/early Q1 2027, and the third Towers and Structures Greenfield facility in Utah is scheduled to start up in Q1 2027 - Trade Policy Priorities • Finished steel imports are down 25% year-over-year, due to strong enforcement of the Section 232 trade program and anti-dumping/countervailing duties; management stated that vigorous trade enforcement has successfully leveled the playing field for domestic producers • Management called for revisions to the USMCA trade agreement, including: requiring all steel in USMCA-compliant products to be melted and poured in North America, increasing North American steel content requirements for automotive products with an immediate melted-and-poured rule, and requiring Canada and Mexico to block excess capacity from non-USMCA economies (notably China) from entering North American supply chains • Management supports ongoing Section 301 trade investigations to level the playing field, and urged the administration to continue exempting vital steelmaking raw materials from retaliatory tariffs - Capital Allocation and Balance Sheet • Nucor maintained the strongest investment-grade credit profile among North American steel producers, with 23% total debt as a percentage of capital, $2.7 billion in cash, and $3.4 billion in total liquidity at quarter-end • Q2 2026 free cash flow was $829 million, the strongest quarterly level since 2023; the company returned $479 million to shareholders via dividends and share repurchases (41% of Q2 net earnings), in line with its policy of returning at least 40% of annual net earnings to shareholders • Full-year 2026 capital expenditure guidance is maintained at $2.5 billion, with approximately 60% allocated to growth projects

Guidance

- Full-year 2026 Nucor mill shipment growth is now expected to land at the higher end of the previously guided 5% to 10% range - Preoperating and startup costs will remain elevated through the rest of 2026 and throughout 2027, related to the West Virginia Greenfield mill construction and ramp-up - For Q3 2026, management expects higher consolidated earnings compared to Q2 2026: • Steel mill segment earnings are expected to rise, even with no additional material cash refunds for raw material costs, driven by expanding metal margins and stable volumes from higher realized pricing across all product groups • Steel products segment earnings are expected to increase on higher volumes and higher average realized pricing • Raw materials segment earnings are expected to decline due to lower expected scrap pricing and elevated iron ore costs from idled Middle Eastern pellet capacity - Overall U.S. steel industry demand growth is projected to remain around 2% in 2026, with sustained strength in core end markets expected to continue for at least the next 2-3 years - The West Virginia Greenfield mill is expected to reach ~50% utilization by the end of 2027, with volume growth and product qualification continuing through 2028 - Management expects the Towers and Structures group to exceed its prior $150 million EBITDA target, driven by strong backlog and demand for energy infrastructure - Free cash flow is expected to rise as growth projects come online and capital expenditures moderate in coming years

Segment performance

1. Steel Mill Segment: Generated $1.6 billion in pre-tax earnings, a 35%+ increase from the prior quarter. Shipments grew slightly quarter-over-quarter to an all-time record 7.1 million tons, even with fewer calendar days. The segment benefited from $130 million in cash refunds for prior period raw material procurement costs, primarily for pig iron, and higher average selling prices across sheet and plate product groups. This segment contributed 76% of total pre-tax segment earnings. 2. Steel Products Segment: Generated $353 million in pre-tax earnings, an increase of more than $75 million from the first quarter. Shipments rose 11% quarter-over-quarter, with volume growth across all major product lines, on stable pricing. This segment contributed 17% of total pre-tax segment earnings. 3. Raw Materials Segment: Generated $146 million in pre-tax earnings, up from $45 million in the prior quarter. Improved performance was driven by higher volumes and expanded margins: DRI operations benefited from higher transfer prices tied to rising pig iron prices, and scrap processing operations also saw improved results. This segment contributed 7% of total pre-tax segment earnings.

Risks & headwinds

• The transcript does not contain explicit discussion of material new operational risks or failures. Management acknowledges ongoing structural risk from unfairly traded imported steel, but noted that current trade enforcement has materially reduced this risk compared to historical levels, with total imports remaining far below the elevated levels seen in prior years. The only implied risk noted is potential seasonality in Q4 2026, though management expects underlying demand strength will offset most of the typical seasonal decline.

Analyst Q&A

• Q: Why are customers continuing to buy higher-priced domestic steel despite the import price advantage, and what is driving current strong flat-roll demand?

  A: Even with a small Q2 uptick, sheet imports are projected to hit just 4.5 million tons in 2026, half of 2024 import volumes, opening up ~6.5 million tons of additional addressable market for domestic producers. Strong multi-year demand from energy infrastructure, data centers, border wall projects, and reshoring (including 6% Q2 auto shipment growth) is supporting demand, and service center demand has also turned a corner with low industry inventories. Nucor's weekly transparent CSP pricing has reduced historical market volatility and eliminated speculative buying, creating a more stable demand dynamic.

• Q: What is Nucor's approach to future capital deployment, particularly for downstream growth, between build vs buy?

  A: Nucor's core steelmaking business is stronger than ever, so there is no need to pivot away from the core; future excess cash will be focused on the 'Expand Beyond' growth bucket, centered on downstream megatrends like energy infrastructure, towers and structures, and enclosure products. Management will maintain strict capital discipline, only pursuing M&A or greenfield projects that can deliver returns well above the cost of capital. If attractive opportunities are not found, excess cash will be returned to shareholders via dividends and buybacks, in line with the existing 40% minimum return policy.

• Q: Why was the raw materials segment's Q2 performance much stronger than expected, and will these margin trends continue?

  A: Strong performance came from two core segments: recycling yards delivered higher volumes and expanded margins for both shredded ferrous and non-ferrous byproduct metals, and DRI operations set a quarterly production record. Nucor's strategy of building flexibility into its raw materials supply chain allows the segment to capture value across different market conditions, and rising pig iron prices lifted DRI transfer pricing in Q2. The segment's structural flexibility is expected to support ongoing strong performance.

• Q: Why have structural beam imports risen recently, and what can Nucor/the industry do about this increase?

  A: The Q2 quarter-over-quarter spike in beam imports is purely a result of extraordinary domestic demand: Nucor's beam facilities are running at very high utilization and have record backlogs (measured in millions of tons), so excess demand is being met by imports. Even with this spike, total U.S. steel imports are still at just 16% of the domestic market, far below the 22-27% levels seen in the 20 years prior to recent trade enforcement, which management calls a very positive outcome overall.