Nucor's Q3 2025: Contradictions Emerge on Data Center Demand, Steel Product Pricing, and Strategic Capital Allocation

Date of Call: October 28, 2025

Financials Results

• EPS: $2.63 per diluted share, in line with Q2 adjusted EPS of $2.60 and above Q3 2024 adjusted EPS of $1.49 (net earnings $607M); EBITDA ~ $1.3B

Guidance:

• Q4: consolidated earnings expected to be lower than Q3 due to seasonal demand, five fewer shipping days and two scheduled DRI outages.
• Expect lower realized pricing in Q4 in the steel mills (primarily sheet); steel products pricing expected to remain stable; recent price increases expected to flow through into Q1.
• Near-term start-up/pre-operating costs expected to run roughly $100–$110M per quarter for the next few quarters.
• Full-year 2025 CapEx now expected at $3.3B; 2026 CapEx expected to decline by more than $0.5B.
• 2026: expect stable domestic steel demand; select new projects (Lexington, Kingman) EBITDA-positive by Q1 2026; towers facilities start Indiana mid‑2026 and Utah by end‑2026; West Virginia sheet mill on track to ramp by end‑2026.

Business Commentary:

* Financial Performance and Shareholder Returns: - Nucor generated adjusted net earnings of $1.4 billion or $5.98 per share year-to-date, with nearly 1 billion returned to shareholders through dividends and share buybacks. - The growth was driven by prudent capital management and strong cash-generating operating model, while maintaining a strong investment-grade credit profile.

• Steel Mills and Segment Performance:
• The steel mills segment realized $793 million in pretax earnings, despite a 6% decrease from the prior quarter.

• While long products, such as bar and structural, showed strong demand and improved profits, flat products notably suffered from lower profitability.

• Market Share and Strategic Growth:

• Nucor is gaining market share across various product segments, including bar and structural products, with record rebar shipment records in Q1 and Q3.

• This growth is attributed to strategic positioning in high-demand markets such as data centers, infrastructure, and energy, along with a focus on cost and supply chain advantages.

• Trade Policy and Tariffs:

• The ongoing Section 232 measures and trade enforcement have led to a 11% decrease in finished steel imports year-to-date through August.

• Tariffs are viewed as necessary to counteract global steel overcapacity, with expectations that the trend will continue.

• Capital Expenditures and Future Investments:

• Nucor plans total capital expenditures of $3.3 billion for 2025, with future capital spending aligning with growth projects nearing completion and expected to decline by more than $0.5 billion in 2026.
• Investments are focused on enhancing core steelmaking capabilities and expanding into downstream steel-adjacent businesses to provide comprehensive integrated solutions.

Sentiment Analysis:

Overall Tone: Positive

• Management reported EBITDA of ~$1.3B and EPS $2.63, beat guidance by ~$0.50 driven by stronger shipments and lower start-up costs. They highlighted Moody's upgrade to A3, returning nearly $1B YTD to shareholders, multiple project ramp milestones, record shipments in rebar and sheet, and growing backlogs across segments—language emphasizing execution and optimism.

Q&A:

• Question from Alexander Hacking (Citigroup): You reference gaining share—can you give more color on specific products and any strategy changes driving share gains?
  Response: Management: Share gains are driven by plate and long products ramps and by a commercial/construction solutions strategy that cross‑sells upstream mills into downstream offerings (data center, joist/deck, engineered products).

• Question from Alexander Hacking (Citigroup): Which specific products are most exposed to the data center build‑out?
  Response: Management: Nucor sells an integrated suite to data centers—insulated metal panels, joist and deck, decking, fasteners, conduits/sprinklers, rebar/foundations, exterior sheeting and specialized doors—essentially a near full‑stack offer.

• Question from William Peterson (JPMorgan): How should we think about square‑foot growth beyond 2025 between warehouses and data centers and Nucor's share opportunity (including impact of Southwest data products)?
  Response: Management: Traditional warehouse demand is ~flat into 2026; data centers are growing double‑digits for 5–6 years and Nucor's integrated capabilities (Southwest data products, racking, IMPs) provide a differentiated supply advantage to capture share.

• Question from William Peterson (JPMorgan): Any sense for data center growth next year specifically?
  Response: Management: Data center construction is expected to grow double‑digits next year and through the next 5–6 years, e.g., ~60M sq ft forecasted (strong secular growth).

• Question from William Peterson (JPMorgan): Scrap costs fell but conversion costs rose—what drove conversion cost increases and how should we think about Q4?
  Response: Management (COO): Quarter‑over‑quarter conversion rose due to slab costs for CSI, higher consumables (refractory) and slightly higher labor tied to planned outages; year‑over‑year costs are down ~5%.

• Question from Lawson Winder (BofA): Your Q4 guide factors lower volumes and some lower realized pricing—were recent CSP/spot moves (and competitor hikes) factored in?
  Response: Management: Most sheet deliveries are contract‑based so recent spot/pricing moves were not fully realized in Q4; those price increases are expected to flow through and be realized in Q1 (service center and mill inventories are low, which should speed pass‑through).

• Question from Lawson Winder (BofA): How do you characterize the acquisition opportunity set (product/region, upstream vs downstream)?
  Response: Management: Focus on adjacencies that are converter models, low capex intensity, high margins, culturally aligned and less cyclical—examples include C.H.I., Rytec, IMP and other downstream/adjacent sectors tied to energy, data centers and towers/structures.

• Question from Timna Tanners (Wells Fargo): Clarify the Seattle mill decision—are you not replacing it with a micro mill but keeping it operating, and can Kingman/other mills supply the West Coast?
  Response: Management: Correct—Seattle will continue operating; Nucor will not build the new rebar micro mill there because Kingman, Utah and existing assets provide adequate Western coverage, so capital will be deployed elsewhere.

• Question from Timna Tanners (Wells Fargo): Q3 buybacks were small—is that signaling any change in capital returns or other uses of capital?
  Response: Management (CFO): Q3 returns were the lowest quarterly amount recently but discipline remains—targeting at least ~40% of earnings returned annually and balancing investment, shareholder returns and strong liquidity; the quarterly cadence can vary.

• Question from Philip Gibbs (KeyBanc): Status of the West Virginia sheet mill—where are you in spending and build progress and timing?
  Response: Management (EVP Sheet): The West Virginia mill is ~75% built and ~75% of capital spent; most remaining work is labor and the team expects the mill to ramp and begin operations on schedule toward year‑end 2026.

• Question from Philip Gibbs (KeyBanc): Any material difference between cash tax and book tax rates in 2025/2026 from recent tax legislation?
  Response: Management (CFO): Limited impact—cash/deferred tax benefits ~ $100M in 2025 with smaller benefits in 2026; legislation's timing means modest overall impact on capital spending tax treatment for Nucor.

• Question from Katja Jancic (BMO): How should we think about start‑up/pre‑op costs over the next few quarters given multiple projects ramping?
  Response: Management (CFO): Expect start‑up/pre‑op costs to be roughly in the Q3 range—about $100–$110M per quarter for the next several quarters.

• Question from Katja Jancic (BMO): Plate margin compression tied to slabs (mostly from Brazil)—why not use more internal substrate?
  Response: Management (EVP Sheet): Much of the slab sourcing this year was from Brazil because it was the most economic choice for certain hot‑mill runs, though the team has increasingly leaned into internal substrate when it makes economic sense.

• Question from Andrew Jones (UBS): You didn't support a peer pricing hike—reasons? And how do you see the plate market given import dynamics and backlog?
  Response: Management (Bar/Plate leaders): They declined to comment on peers' specific pricing actions; bar momentum remains strong with realized price gains in 2025, and plate market shows ~15% YOY ADC growth, imports declining recently, and plate backlog up ~58% YOY—market looks constructive.

• Question from Andrew Jones (UBS): With Brandenburg qualified for X70 and military trials, are export markets (e.g., Europe) a target given rising defense spending?
  Response: Management (CFO): Yes—Brandenburg's unique capabilities position Nucor to pursue defense and higher‑grade/global opportunities; increased defense spending globally is a clear market opportunity.

• Question from Tristan Gresser (BNP Paribas): You say demand next year is stable despite structural tailwinds—what pockets of weakness could offset growth (split by longs vs flats)?
  Response: Management: We expect stronger longs (infrastructure, data centers) and more muted flats; offsetting weaknesses include heavy equipment, agriculture, residential construction and auto, which are expected to be flat or softer into 2026.

• Question from Tristan Gresser (BNP Paribas): With many growth projects ramping, how should we think about moving pieces into 2026 volumes and utilization for new projects—is consensus conservative?
  Response: Management: Management is optimistic—new melt shop and micro mill ramps (Kingman, Lexington) are expected to be EBITDA‑positive by Q1 2026 and there is upside potential to consensus, though external factors remain.

• Question from Tristan Gresser (BNP Paribas): Should we expect higher ASPs in steel products into 2026, is the $450M EBITDA target for Expand Beyond achievable, and timing/EBITDA contribution of the two new tower projects?
  Response: Management: Products ASPs are stabilizing and increasing in many segments (joist/deck order entry matching backlog pricing); Expand Beyond remains on track toward a long‑term run rate target of ~$700M (management remains committed) and towers: Indiana mid‑2026, Utah end‑2026.

Contradiction Point 1

Data Center Demand Outlook

It involves differing expectations regarding the growth trajectory of data center demand, which is crucial for understanding the company's future revenue potential and strategic focus.

How should we assess square footage growth beyond 2025 for data centers versus warehouses? - William Peterson (JPMorgan Chase & Co, Research Division)

2025Q3: Data centers are expected to grow double digits for the next 5-6 years, with a forecast of 60 million square feet in 2026, unlike warehouse growth which is expected to remain flat. - Leon Topalian(CEO)

Is the margin compression in steel products due to higher input costs? Is pricing directionally flat on a blended basis from Q2 to Q3? - William Chapman Peterson (JPMorgan)

2025Q2: Data centers account for the vast majority of the growth in the steel product market segment, particularly for our joist and deck products. The backlog of these products has increased significantly over the past year as we have leveraged our in-house engineering and manufacturing capabilities to help our customers meet the increasing demand for data centers. - Leon Topalian(CEO)

Contradiction Point 2

Steel Product Segment Performance and Pricing

It concerns differing perspectives on the performance and pricing dynamics of the Steel Products segment, which directly impacts revenue and profit projections.

Can you explain Nucor's strategy and how it's helping the company gain market share? - Alexander Hacking (Citigroup Inc., Research Division)

2025Q3: The demand drivers for the Steel Products segment are robust, and the nominal adjustment is due to the lag effect of orders taken in late Q4 or early Q1 of this year being realized at lower pricing levels. - Leon Topalian(CEO)

Is margin compression due to higher input costs? Will pricing remain flat on a blended basis from Q2 to Q3? - William Chapman Peterson (JPMorgan)

2025Q2: Our volume for the second quarter was higher than the first quarter due to the timing of customer orders. While we've seen progress in raising pricing, we continue to see the negative impact of orders from our steel products segment placed in late December that were realized at lower pricing levels into the first quarter. As a result, our average selling price for the second quarter was lower than our first quarter. - Leon Topalian(CEO)

Contradiction Point 3

Tariff Exposure and Strategic Capital Allocation

It involves changes in the company's positioning and approach regarding tariff exposure and strategic capital allocation, which could impact financial planning and risk management.

Why wasn't the micro mill replaced at the Seattle facility? - Timna Tanners (Wells Fargo Securities, LLC, Research Division)

2025Q3: The decision to not replace the micro mill is part of strategic capital allocation focusing on growth and returns. The existing Seattle mill, along with Kingman's melt shop, provides adequate coverage for the West Coast. The decision is driven by evaluating the best use of capital. - Leon Topalian(CEO)

How is Nucor addressing supply chain tariff impacts in West Virginia? - Timna Tanners (Wolfe Research)

2025Q1: We're monitoring incredibly closely what those potential impacts will be. Much of that equipment has not only been bought, it's already been delivered. So the exposure there is dropping day-to-day. - Leon Topalian(CEO)

Contradiction Point 4

Future Investments and Capacity Utilization

It involves differing expectations and positioning regarding future investments and capacity utilization, which could impact production and financial planning.

How will the new project ramps impact volumes next year? - Tristan Gresser (BNP Paribas Exane, Research Division)

2025Q3: We are very optimistic about our future, with significant investments shaping long-term growth. We are well-positioned to capitalize on these investments, supporting stable demand forecasts. - Leon Topalian(CEO)

What is your outlook for capacity utilization in the next quarter? - Carlos de Alba (Morgan Stanley)

2025Q1: We don't want to predict what the utilization rates are going to be next quarter. But the demand drivers are certainly encouraging. - Leon Topalian(CEO)

Contradiction Point 5

Data Center Demand Growth Forecasts

It involves differing perspectives on the growth trajectory of data centers, which is crucial for understanding Nucor's strategic focus and investment decisions.

How should we assess square foot growth beyond 2025 for data centers versus warehouses? - William Peterson (JPMorgan Chase & Co, Research Division)

2025Q3: Data centers are expected to grow double digits for the next 5-6 years, with a forecast of 60 million square feet in 2026. - Leon Topalian(CEO)

What are your expectations for demand growth in data centers and warehouses next year? - Tristan Gresser (BNP Paribas Exane, Research Division)

2024Q4: Data centers, in general, we believe are going to grow as well. I think it was a 30 million square foot growth last year, and we believe it's going to be 40 million square foot this year. - Leon Topalian(CEO)