Nucor's Q3 2025: Contradictions Emerge on Seattle Mill Operations, Start-up Costs, Acquisition Strategy, Tariffs, and Share Buybacks

Date of Call: October 28, 2025

Financials Results

• EPS: $2.63 per share, in line with Q2 adjusted EPS of $2.60 and up from $1.49 in Q3 2024

Guidance:

• Q4: Consolidated earnings expected to be lower than Q3 due to lower volumes (seasonality, five fewer shipping days) and two scheduled DRI outages; lower realized pricing anticipated in steel mills (sheet) while steel products pricing expected to remain stable.
• Lexington and Kingman ramp-ups expected to be EBITDA positive by Q1 2026; West Virginia sheet mill ~75% complete and on schedule to begin ramping by end of 2026.
• 2025 CapEx now expected to be $3.3B; 2026 CapEx expected to decline by >$0.5B.
• Expect stable domestic steel demand in 2026 with multi-year, double-digit data-center growth as a tailwind.

Business Commentary:

• Strong Financial Performance and Shareholder Returns:
• Nucor reported net earnings of $607 million or $2.63 per share for Q3 2025, exceeding the midpoint of their guidance range by approximately $0.50.
• This was driven by higher-than-expected shipments in sheet, bar, and structural products, as well as lower pre-operating and start-up costs.

• The company returned approximately $230 million to shareholders through dividends and share buybacks, bringing the year-to-date returns to nearly $1 billion or 72% of net earnings.

• Demand and Market Share Gains:

• Nucor's steel mills segment realized higher-than-expected shipments, contributing to a 6% decrease in pretax earnings for the quarter.
• The company gained market share in long products, with strong demand from infrastructure spending and data center construction.

• Market share gains were also supported by the ramp-up of new facilities in Kingman, Arizona, and Lexington, North Carolina, which are expected to be EBITDA positive by Q1 2026.

• Strategic Investments and Capacity Expansion:

• The company reinvested $807 million into capital projects, nearing completion, with a focus on expanding core steelmaking capabilities and downstream adjacent businesses.
• Key investments include the commissioning of two bar mill projects, the commencement of pole production in galvanizing operations, and the start-up of a new sheet mill in West Virginia, which remains on schedule to begin ramping up by the end of next year.

• These investments aim to enhance Nucor's comprehensive solution offerings and position it as a key supplier to high-growth markets like data centers and energy infrastructure.

• Trade Policies and Tariff Impact:

• Nucor welcomed ongoing trade enforcement actions, including Section 232 measures and recent investigations into rebar imports, which have reduced finished steel imports by approximately 11% year-to-date.
• The company believes tariffs are necessary to counter the global steel industry's overcapacity and supports the continuation of trade enforcement measures.
• These actions are intended to level the playing field for the American steel industry and enhance Nucor's competitive position, with expectations that the trend of reduced imports will continue.

Sentiment Analysis:

Overall Tone: Positive

• Management reported EBITDA of ~$1.3B and EPS $2.63, noting results "exceeded our third quarter guidance"; Moody's upgraded Nucor to A3; multiple executives highlighted record shipments, ramping projects reaching EBITDA positivity and confidence in multi-year demand tailwinds (data centers, infrastructure).

Q&A:

• Question from Alexander Hacking (Citigroup): Shipments growing faster than industry — where are you gaining share and any strategic changes that led to gains?
  Response: Nucor is gaining share in plate and long products and via its integrated commercial/construction solutions—especially data-center related capabilities—leveraging new mills and downstream offerings to capture pull-through demand.

• Question from Alexander Hacking (Citigroup): Which specific products are most exposed to data centers?
  Response: A broad suite — insulated metal panels, joist, decking, fasteners, sprinkler/conduit, foundations and rebar, overhead doors and data-center-specific products like server cabinets and hot-aisle containment.

• Question from William Peterson (JPMorgan): How should we contextualize data-center growth versus warehouses and quantify your share gains (e.g., Southwest Data Products)?
  Response: Warehousing is roughly flat year-over-year; data centers are growing double digits for the next 5–6 years and Nucor's full-suite capability (augmented by Southwest Data Products) gives it a unique go-to-market to capture share.

• Question from William Peterson (JPMorgan): Clarify data center growth next year — is it flat or up?
  Response: Data centers are expected to grow double digits; warehouses are flat.

• Question from William Peterson (JPMorgan): Scrap costs down but conversion up — drivers and outlook into Q4?
  Response: Quarter-over-quarter conversion costs rose due to slab costs for CSI, higher consumables (refractory) and slightly higher labor from planned outages; year-over-year conversion costs are down ~5%.

• Question from Lawson Winder (BofA): Recent CSP price moves and a peer $50 hike — were recent spot moves factored into Q4 guide and how to think about timing?
  Response: Most sheet deliveries are contract-based; recent spot/price actions will flow through over time with expectation to realize higher pricing by Q1 given low service-center and mill inventories enabling faster pass-through.

• Question from Lawson Winder (BofA): Characterize acquisition targets — product/region/upstream vs downstream?
  Response: Target adjacencies that fit culture: converter-style businesses, low capital intensity, higher margins, stable/less cyclical returns — i.e., downstream steel-adjacent assets (C.H.I., Rytec, IMP, towers/data systems).

• Question from Timna Tanners (Wells Fargo): Clarify Seattle decision — not replacing the mill with a micro mill; can you supply the West Coast from other mills?
  Response: Correct — Seattle will continue operating but Nucor chose not to build a new rebar micro mill there because Kingman, Utah and existing Seattle capacity together adequately serve Western US and Western Canada; capital will be deployed elsewhere.

• Question from Timna Tanners (Wells Fargo): Q3 buybacks ~$100M — lowest since 2020; is that signaling a change in capital returns?
  Response: No change in framework — Q3 was a lower quarterly repurchase but company remains committed to returning at least 40% of earnings annually and balancing investment, returns and balance sheet strength.

• Question from Philip Gibbs (KeyBanc): Status of West Virginia sheet investment — where are you in spending and expected startup timing?
  Response: Project ~75% complete on construction and capital spend; remaining work is largely labor; team expects world-class capabilities and is on schedule to begin ramping by end of next year.

• Question from Philip Gibbs (KeyBanc): Any material difference between cash tax rate and book tax rate for 2025/2026 after recent legislation?
  Response: Modest impact — ~ $100M deferred tax cash benefits in 2025, smaller in 2026; overall legislative impact on capital spending tax profile is limited due to timing of spend.

• Question from Katja Jancic (BMO): How should we think about start-up and pre-operating costs over the next few quarters?
  Response: Expect start-up/pre-operating costs roughly in the $100M–$110M per quarter range over the next couple of quarters (Q4 into Q1).

• Question from Katja Jancic (BMO): Mill margin compression tied to slabs mostly from Brazil — why not use more internal material?
  Response: Slab purchases (mainly Brazil) have been the most economical this year for certain facilities (TSI); the team evaluates internal coil vs bought slab and has leaned more on internal substrate at times and will continue to choose on economics.

• Question from Andrew Jones (UBS): You didn't support a peer MBQ hike — why, and what's the plate market outlook given tighter imports?
  Response: On bar products: momentum is strong with realized price increases implemented and robust orders; on plate: market improving (imports down, backlog +58% YoY), pockets of strength in energy, infrastructure and nonresidential construction with optimistic near-term outlook.

• Question from Andrew Jones (UBS): Given Brandenburg's high-grade plate capability, is exporting to higher-defense-spending regions (e.g., Europe) a target?
  Response: Yes — Brandenburg's unique capabilities position Nucor to serve rising defense demand globally, and management sees export opportunities from increased defense spending.

• Question from Tristan Gresser (BNP Paribas): You described a stable demand outlook for 2026 — what pockets of weakness offset structural tailwinds (split between longs and flats)?
  Response: Potential soft spots include heavy equipment, agriculture and residential construction (and modest auto exposure); longs should benefit from infrastructure and data centers while flats face mixed demand with pockets of strength in energy and advanced manufacturing.

• Question from Tristan Gresser (BNP Paribas): With multiple ramping projects, how should we think about volumes/utilization in 2026 and is consensus conservative?
  Response: Management is optimistic and sees upside — two ramp-ups (Lexington, Kingman) expected EBITDA positive in Q1'26 and other projects come online through 2026, but they declined to provide precise utilization metrics while noting upside vs consensus is possible.

• Question from Tristan Gresser (BNP Paribas): On steel products — expect higher ASPs into 2026; is the Expand Beyond $450M EBITDA target achievable and timing of the two new tower projects?
  Response: Joist and deck pricing is stable and improving with backlogs +25–30% YoY; Expand Beyond remains on track with a long-term run rate target of $700M (not backing off that) and tower facilities expected: Indiana mid‑year next year and Utah by end of 2026.

Contradiction Point 1

Seattle Mill Operations and Strategic Allocation

It involves the planned operation and strategic allocation of the Seattle mill, which could impact production capacity and resource allocation within the company.

What is the current status of the Seattle mill? - Timna Tanners(Wells Fargo Securities, LLC, Research Division)

2025Q3: Nucor will not replace the Seattle mill as the Kingman melt shop and Seattle mill can cover the Western side of the United States. - Leon Topalian(CEO)

What's your largest opportunity to displace imported steel products? - William Chapman Peterson(JPMorgan)

2025Q2: In the second quarter, we closed our Seattle facility. The ramp-up of our modern and efficient Kingman melt shop, which is just outside of Las Vegas, Nevada, has more than offset the capacity from the Seattle mill. - Leon Topalian(CEO)

Contradiction Point 2

Start-up Costs and Capital Expenditure Forecast

It involves the company's projections for start-up costs and capital expenditure, which are critical for financial planning and investor expectations.

How should we think about start-up costs over the next few quarters? - Katja Jancic(BMO Capital Markets Equity Research)

2025Q3: Start-up costs are expected to be in line with Q3 levels, around $100-$110 million per quarter, over the next few quarters. - Stephen Laxton(CFO)

Can you clarify the pre-operating and start-up costs for Lexington and Kingman and how they positively impact EBITDA? - Lawson Winder(BofA Securities, Research Division)

2025Q2: The pre-op start-up costs are expected to decline in the second half of the year. - Stephen D. Laxton(CFO)

Contradiction Point 3

Acquisition Strategy and M&A Appetite

It highlights a shift in Nucor's approach to acquisitions, potentially impacting future growth and capital allocation strategies.

Can you discuss acquisition opportunities for Nucor? - Lawson Winder (BofA Securities, Research Division)

2025Q3: Nucor's acquisitions focus on growing core steel capabilities and expanding into adjacent spaces. Targets should align with long-term growth trends like energy and data centers. - Leon Topalian(CEO)

Is Nucor considering M&A, particularly in EAF, to strengthen its position? - Carlos De Alba (Morgan Stanley)

2024Q4: Nucor is open to M&A to grow, focusing on disciplined capital allocation. Current projects are progressing well, with a strong balance sheet allowing for future acquisitions. Nucor will not overpay for assets. - Leon Topalian(CEO)

Contradiction Point 4

Tariffs and Trade Policies

It involves differing perspectives on the impact of tariffs and trade policies, which can significantly affect Nucor's operations and competitiveness.

Which specific products are driving share gains? - Alexander Hacking (Citigroup Inc., Research Division)

2025Q3: New tariffs will be broad-sweeping, addressing abuses in trade. Most U.S. imports are commodity grades, while Nucor exports higher-value products. - Leon Topalian(CEO)

How will tariffs impact slab imports from California and Mexico operations? - Timna Tanners (Wolfe Research)

2024Q4: Tariffs will benefit Nucor, with most imports being commodity grades. Nucor's Mexican operations are small relative to the U.S.’s market. - Leon Topalian(CEO)

Contradiction Point 5

Outline of Share Buyback Strategy

It reflects differing perspectives on the company's share buyback strategy, which is crucial for investors and stakeholders.

Does the recent decline in share buybacks signal something? - Timna Tanners (Wells Fargo Securities, LLC, Research Division)

2025Q3: We've returned to shareholders $13 billion since early 2020. Steve: The $100 million in Q3 was the lowest quarterly return, but Nucor remains committed to returning at least 40% of earnings annually. - Leon Topalian(CEO), Stephen Laxton(CFO)

Can you provide an update on the magnitude of start-up costs this year, given four solid months of data? - Lawson Winder (Bank of America Securities)

2025Q1: Our Q1 return to shareholders of nearly $600 million is the second highest in our history. Since the beginning of 2020, we've returned over $11 billion to shareholders, or nearly $10 billion in the last 3 years alone. - Leon Topalian(CEO)