Nucor Corporation Q2 2026 Earnings Call

Good morning, and welcome to Nucor's second quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise, today's call is being recorded. After the speakers' prepared remarks, I will provide instructions for callers wishing to ask questions. I would now like to introduce Chris Jacobi, Director of Investor Relations. You may begin your call.

Thank you. Good morning, everyone. Welcome to Nucor's second quarter earnings review and business update. Leading our call today is Leon Topalian, Chair and CEO, along with Steve Laxton, President and COO, and Jack Sullivan, CFO. Other members of Nucor's executive team are also here with us today and may participate during the Q&A portion of the call. Yesterday, we posted our second quarter earnings release and investor presentation to Nucor's IR website. We encourage you to access these materials as we'll cover portions of them during the call. Today's discussion will include the use of non-GAAP financial measures and forward-looking information within the meaning of securities laws. Actual results may be different than forward-looking statements and involve risks outlined in our safe harbor statement and disclosed in Nucor's SEC filings. The appendix of today's presentation includes supplemental information disclosures along with a reconciliation of non-GAAP financial measures.

With that, let's turn the call over to Leon.

Thanks, Chris. Before discussing the quarterly results, I want to begin with the most important measure of our performance and our greatest value, safety. Earlier this year, we launched our Safest Summer Ever initiative because we know that the summer months can present additional risks. As we move into August, I'm pleased to say that we're on pace to not only make this the safest summer in Nucor's history, but also the safest year as well. While I'm proud of our progress, our job isn't finished. Let's remain focused and make sure every one of our teammates goes home safely at the end of every shift. Turning to our financial results, Nucor delivered another strong quarter with improved earnings across all three operating segments. We generated approximately $2 billion of EBITDA and earned $5.04 per share. Excluding a non-cash benefit of $0.20, adjusted earnings were $4.84 per share.

During the quarter, we returned $479 million to Nucor shareholders through dividends and share buybacks, representing 41% of our net earnings. Capital expenditures totaled $571 million in the quarter, and we still expect to reinvest approximately $2.5 billion for the year, with about 60% of that allocated toward growth projects. Moving to our operational performance, demand for steel and steel products remains strong across most of our key end markets, and our teams continue to execute exceptionally well. In the steel mills, quarterly shipments reached an all-time high of 7.1 million tons. This is the second straight quarter we've set a new record. We're seeing strength across all of our product categories and are benefiting from the investments we've made to grow our core steelmaking capabilities over the past few years.

In particular, I want to recognize our team at Brandenburg, which shipped more than 230,000 tons this quarter, leading to another quarterly shipment record in plate. In steel products, shipments were up 11% versus Q1, with growth across all major products in the portfolio. This performance was led by our tube group, which posted a second consecutive quarterly shipment record and strong earnings. Even as our shipments grow, our backlogs continue to build. This reflects the business momentum we are seeing from our customers across a broad set of sectors in the economy. Our team is executing at a very high level right now. Execution is critical, but so is having a level playing field.

While we saw an increase from the first quarter, finished steel imports are down 25% year-over-year due to the strengthening of the 232 program, along with anti-dumping and countervailing duties on corrosion-resistant steel and other steel products. The impacts are real, and they are measurable. Vigorous enforcement of our trade laws is helping level the playing field for domestic producers by curtailing the flood of unfairly traded steel into the U.S. market. Earlier this month, as expected, the Trump administration announced it has opted not to renew the USMCA trade agreement unless changes are made. This decision triggers an annual review process that provides a real opportunity to improve demand for the North American content while closing loopholes that operate to the detriment of the American industry.

One important change we hope to see is a requirement that all steel used in any steel or steel-intensive products must be melted and poured in North America to qualify as USMCA compliant. We also believe the North American steel purchasing requirement for automotive products should be increased with a melted and poured requirement effective immediately. Finally, a renewed agreement should require Canada and Mexico to take additional steps to prevent excess capacity from non-USMCA economies, particularly China, from entering North American supply chains and undermining our industries and workers. Beyond USMCA, the U.S. Trade Representative is currently conducting investigations under Section 301. We support the administration use of tools like these to level the playing field for American manufacturers and achieve balanced trade.

We also commend the administration's decision to act consistently with Section 232 program and exempt vital steelmaking inputs and raw materials from the final action in the Brazil enforced labor 301 investigations. We urge the administration to do the same in all other 301 investigations.

These are more than simply trade policy priorities. They're investments in America's long-term industrial strength. With our nation recently celebrating its 250th anniversary, it's worth remembering that America's success has been built not only on freedom, but also on the ingenuity, resilience, and productive capacity of American manufacturing. A robust industrial base has always been essential to our economic prosperity and our national security. For generations, steel has been the backbone of America's growth, security, and prosperity, and it will remain essential for generations to come. At Nucor, we are proud to help build the bridges, buildings, energy infrastructure, manufacturing facilities, and defense capabilities that keep our country strong. With that, I'll turn it over to Steve for an update on our growth initiatives and market outlook. Steve? Thank you, Leon, and thank you all for joining us this morning.

Our team is continuing to make great progress at our new sheet mill project in West Virginia. We remain on time and on budget with continued excellent safety performance. The team has achieved several important milestones over the past two months. Earlier this month, we began commissioning of the melt shop in both the automotive and construction galv lines. Later this year, we will expand that to the cold mill and hot mill, keeping us on track to complete commissioning, inspection, and testing of equipment across the mill by the end of the year. Our startup plan is unchanged. Following commissioning, our priority will be to operate safely and reliably as commercial shipments begin to ramp in early 2027.

Capacity utilization and product offerings will be building steadily throughout 2027 and into 2028. In addition to West Virginia, we're making steady progress across our other major capital projects that are either under construction or ramping up. On the construction front, we expect to complete our Berkeley galv line, the full range of our Crawfordsville coating operation, and Indiana Towers and Structures facility later this year. We also expect our Utah Towers and Structures facility to reach full production by mid-2027. Turning to our recently completed growth projects, we continue to advance their strategic and commercial plans. Many of these projects, including our Lexington micro mill and our Kingman melt shop, reached EBITDA positive run rates during the first quarter, while others, like our Alabama Towers and Structures facility, are expected to reach EBITDA positive later this year.

Across these projects, performance has improved steadily throughout the year, and we expect that trend to continue as they ramp to their full run rates. Leon spoke earlier about the operational results in our steel mill and our steel product segments. Building on that, I'd like to share how we're thinking about the current market environment and outlook for each of our businesses. Overall, the strength we see across the broad set of end markets is very encouraging. We now expect shipment growth to finish closer to the higher end of our previously suggested 5%-10% range for 2026. Beginning with flat products, we've seen double-digit shipment growth in both our sheet and plate groups in the first half of the year. Within sheet, underlying demand is strong, and we expect that to continue into 2027, led by energy, advanced manufacturing, and data centers.

In plate, although domestic consumption has moderated from the 2025 levels, demand remains healthy across many important end markets, while imports have fallen significantly. That backdrop, combined with our expanded plate capabilities, positions us well heading into the second half of the year. Moving to long products, our bar and structural mills have also seen a meaningful step up in shipments year to date. In our bar group, rising rebar demand reflects a sustained multi-year construction cycle with energy, infrastructure, advanced manufacturing, and data centers more than offsetting softness in residential construction. In structural, domestic consumption has increased approximately 15% this year, fueled by data centers and other mega projects. While higher imports have absorbed some of that incremental demand, our backlogs are up significantly compared to prior years, and we expect that strength to carry into next year. Nucor is unparalleled in its geographic reach, product diversity, and size.

These factors are allowing our team to optimize at scale to more effectively and more efficiently meet customer needs. Finally, our steel product segment represents one of the broadest and most diverse portfolio of steel construction products in North America. Throughout these businesses, we're seeing many of the same demand drivers as in our steel mill segment, with order visibility extending into 2027 for many products. Looking to the second half of the year, we expect continued momentum across our steel products group, along with further margin expansion over time as higher realized pricing more than offsets higher steel input cost. With that, I'll turn it over to Jack for a closer look at our second quarter financial results and our outlook for the third quarter. Jack? Thanks, Steve, and good morning, everyone.

In the second quarter, Nucor generated net earnings of $1.2 billion, or $5.04 per share, exceeding the midpoint of our guidance range by $0.29. Excluding a non-cash benefit of $0.20 related to an increase in the value of our Helion investment, adjusted earnings were $4.84 per share. The beat relative to our mid-quarter guidance was largely due to better than anticipated results in our steel mills segment, with many divisions outpacing their June forecast. Steel products and raw material segments also came in ahead of forecast.

Let me now review our second quarter performance by segment. The Steel Mills segment generated $1.6 billion of pre-tax earnings, an increase of more than 35% from the prior quarter. Higher average selling prices, especially in our sheet and plate groups, were the largest drivers of the quarterly increase. Even with three few calendar days compared to the prior quarter, Q2 shipments for the Steel Mills segment grew slightly. The results also reflect $130 million of cash refunds associated with prior period raw material procurement costs, primarily related to pig iron. Turning to Steel Products, we generated pre-tax earnings of $353 million, up more than $75 million from the first quarter. Volumes increased 11% on stable pricing, with the volume growth occurring across all of our major product lines.

In our Raw Materials segment, we generated pre-tax earnings of $146 million, compared to $45 million in the prior quarter, reflecting higher volumes and improved margins. Our DRI operations benefited from a higher transfer price as we base internal DRI sales on pig iron pricing, which has risen over the past several months on strong demand in the U.S. We also saw improved performance in our scrap processing operations. Pre-operating and startup costs totaled $120 million for the quarter. We expect these costs to remain elevated through the rest of 2026 and throughout 2027 as we complete construction and ramp up production at our Greenfield Sheet mill in West Virginia. Turning to the balance sheet and capital allocation, our strong investment grade credit profile has long been central to Nucor's success, enabling us to consistently invest in growth while delivering meaningful returns to shareholders.

We ended the quarter with approximately $2.7 billion in cash and liquidity of $3.4 billion. Total debt as a percentage of capital sits at 23%, and our credit ratings remain the strongest of any North American steel producer. During the quarter, we generated $829 million in free cash flow, our strongest quarter since 2023 as higher earnings drove improved cash from operations and CapEx moderated to $571 million. We also returned $479 million to shareholders through dividends and share repurchases, an increase of more than $200 million from the first quarter and representing 41% of quarterly net earnings. Consistent with our capital allocation framework, we remain committed to returning at least 40% of net earnings to shareholders on an annual basis. Year-to-date, we've returned over $730 million to shareholders and deployed approximately $1.2 billion in CapEx, with most of that going toward growth projects.

Taken together, more than 75% of the capital we've allocated this year has gone directly to shareholder returns and growth investments. Looking forward, we expect free cash flow to continue to inflect higher as these growth projects come online and CapEx moderates. Turning to our third quarter outlook, we expect higher consolidated earnings. For the Steel Mills segment, in contrast to the second quarter, we do not expect any further cash refunds to materially benefit us in the third quarter or beyond. Even without that benefit, we expect higher third quarter segment earnings from expanding metal margins and stable volumes. The margin improvement reflects higher realized pricing across all product groups. In Steel Products, we expect increased earnings from higher volumes and higher average realized pricing.

In Raw Materials, we expect lower earnings primarily due to lower margins resulting from lower expected realized scrap pricing and elevated iron ore costs due to the idling of some pellet capacity in the Middle East. As we look to the second half of 2026, we're encouraged by strong demand across key end markets, growing contributions from our recent investments, and federal policies that support a healthy domestic steel sector. With the broadest range of capabilities in the North American steel market, the Nucor team is well-positioned to create value for our customers and shareholders. With that, we'd like to hear from you and answer any questions you may have. Operator, please open the line for questions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Lawson Winder of BofA Securities. Your line is open. Please go ahead.

Thank you, operator. Good morning, Leon, Steve, and Jack. Very nice to hear from you all. Thank you for today's update. If I could, I'd like to start off with your view on flat roll benchmark pricing. The CSP was up another $10 yesterday as per your report, continuing to extend the gap versus import parity pricing. Just given that the U.S. still is a net importer of steel, to what do you contribute the continued willingness of customers to buy domestic despite the import price advantage?

Hey, Lawson, it's Leon. I'll kick us off. Then maybe ask Noah Hanners, who's over our sheet group, to touch on it because I think there's a lot to unpack there in your question. Look, I also want to begin with thanking our team for the safest start to any summer in the history of Nucor. It's the men and women of this entire company that derive every result we're going to talk about today and how they execute and continue to execute it and becoming the world's safest steel company is our most important value. With all that said, the demand drivers across the spectrum are incredible. As we look specifically to sheet in your question and the relative balance on imports, we saw a tick up Q over Q in imports and primarily in beams and some in sheet.

The reality is, it's not a pricing delta that's driving that. It is a demand picture that we're seeing. The robust demand almost in every product group area that we have is either at or near record backlogs, record order entry rates, and is driving, again, healthy returns for our shareholders. Again, this isn't where we saw in 2021 or 2022, where you had a really rapid spike of HRC and kind of knew it wasn't sustainable or for very long. It is a very different condition today. Again, I think part of that comes in what Noah and his team have done regarding CSP. Noah, why don't you unpack that and then dive a little deeper into his question?

Yeah, Lawson, to build on what Leon shared about demand and why we see it so strong now and continuing into 2027. First, let's back out and talk about just the broader demand picture for sheet. Imports, while a little elevated in Q2, remained very low. If you back up to 2024, we saw sheet imports at 9 million tons. Today, we look forward, we see probably 4.5 million tons this year. 4.5 million tons of additional addressable market for domestic suppliers. You add on to that what we believe is a couple million tons increase in ADC, 6.5 million tons of addressable market for domestic suppliers, strong market for us to participate in. Talking about the significance of some of those demand drivers.

Leon mentioned a few in the opening, border fence, energy, data centers, these things are all consuming millions of tons, and they're not projects that are one-off in 2026. We expect multi-year demand out of some of these drivers. The other thing I'll share with you is we're starting to see some reshoring driving new demand for us, and the reshoring looks different than you may expect. It's things like auto and consumer durables that maybe consumption here in the U.S. isn't going up, but we've seen our customers reshoring their production here to utilize existing capacity. We're supplying more into auto, for example. Our auto shipments are up 6% Q2 over Q1. The last thing I'd share on the demand side is we're finally seeing service center demand turn the corner.

Service center shipments were up 10% in June year-over-year, and we expect that trend to continue with really moderate to low inventories throughout the supply chain. All that together, we think looks like a very strong demand picture for us in 2026, going into 2027. I want to take a minute and talk to you about CSP for a second, because that's the other thing that feels so unique about this market. It's not just demand, but it's how pricing has moved over the last 6 months to a year. We believe our discipline and our approach around CSP is markedly changing volatility in this market. We've seen these extreme swings in sheet for decades, and we're providing our customers with this transparent hot roll pricing every week.

What we're seeing out of them is we do not see the speculation we typically would have seen at this point in the cycle before. We're seeing buying that is reflective of supply and demand, not speculation. We also think this has contributed, another contributing factor is imports remaining low because customers are able to buy what they want when they need it. We see a really strong demand picture. We are confident in our approach with CSP, and we have the best steel making team in the world hitting at a really high level right now. We feel good about 2026 going into 2027.

I really appreciate that detail, guys. That's really helpful. If I could, just a follow-up. Thank you very much for providing the shipment tonnages for Brandenburg. It suggests a capacity utilization around 75%. Would you push back on us putting 75% capacity utilization in our models for that asset going forward?

Yeah, Lawson, this is Brad. I'll tackle that one. As you mentioned, the team had an awesome quarter. Brandenburg producing record volumes and record earnings. I'd expect that number to continue to creep up, right. The investments we've made over the last 18 months in product development is really paying dividends. Nearly a third of the shipments out of Brandenburg in Q2 were grades and sizes that were previously unavailable from the Nucor plate group prior to Brandenburg. Things like API line pipe, where we're fully qualified, we're producing that and shipping now. We expect that could be as much as a quarter million tons in 2027. Armor grades for our nation's military. We continue to qualify and expect to be a larger participant in the future. ABS grades for shipbuilding, wide and long plates for bridge applications, and on down the list.

In addition, it opens up doors for companion tons for our plate group. Obviously, that was reflected in our record shipments, backlogs, and market share in Q2. I'd expect additional upside, not just out of Brandenburg, but out of the plate group into the future.

Thank you. Your next question comes from the line of Timna Tanners of Wells Fargo.

Timna, your line is now open.

Yeah. Hey, good morning, everyone. I wanted to try to drill down a little bit more on some of the project progress, if we could. Definitely seems like coalescing on ramp-up of some of these projects that you've been talking about for a while. Can you help us put a finer point on how to quantify the benefit of some of these towers and structures and gal lines ramping up and the Q3 benefits? Could that help Q4, and could Q4, with all this demand, see an offset to typical seasonality?

Well, look, Timna, I'll kick it off and maybe let Jack or Steve jump in or any of the product group folks. Look, if we go back to Lexington, for example, the Lexington micro mill, EBITDA positive, already contributing. Again, they're launched and on their own and again, contributing cash to the operations. Our Kingman, Arizona facility is doing the same thing. Brandenburg, as you now heard and Brad just mentioned, is also profitable. They're ramping up very quickly. The towers and structures facilities, yeah, you're going to see additions come in into the back half of the year, positively, to the balance sheet and in our cash flow.

Really, as we think about Berkeley's gal line, which is going to come on later Q3, it's probably end of the year, early Q1, because again, demand drivers are so strong there, that before we see that cash positive. That's going to come very quickly. Again, it's a line that they know. It's their second galvanizing line, a product we know, customer base we know well. This isn't going to be a slow ramp-up. We should be able to ramp up that facility very quickly. Same in Crawfordsville. The things that will carry into 2027 before we see some likely positive contribution will be the third towers and structures greenfield facility in Utah. That'll come on in Q1 of next year. Again, it'll take a little bit of time to ramp up.

I would expect by the end of the year, that is contributing very nicely. If we think about the towers and structures group as a whole, as you know, it was an area we looked really hard in trying to do that in M&A. Didn't work out, so we built, bought a small facility in Summit, facility in Pennsylvania, and now we're building out three. Two are operational. The third, again, will start up next year. We've mentioned, probably several calls ago, that we were going to generate $150 million of EBITDA through that group. What I would tell you with the order book, the backlog, the relationships with the utilities that is being built by that team, man, I hope that's a really low number. I think there's upside potential to that number. Obviously, we got to get there.

I would tell you that, too, our team is one of the most exciting, high-growth mega trends that are going to continue for decades to come because all those utilities are specific engineered, geographic, and geological engineered. Again, we're ramping that up very quickly. You'll see in the coming weeks some things that will come to fruition that we can be a little more detailed in that backlog that's coming. Look, this team is firing on all cylinders. Again, this all culminates, too, with the West Virginia facility that will start up later this year. I would tell you 2027 will be that ramp-up year.

I'm not sure they're going to contribute in 2027, but certainly as we get into 2028, they're going to find their footing, and that will not only contribute then, but for the next two, three, four decades, continue to ramp up Nucor's overall earnings profile well beyond the $6.7 billion that we rolled out in 2022 from a through cycle standpoint. Finally, I would just tell you the drivers that I've seen as I celebrate my 30 years in Nucor, I would tell you, create a profile and a demand picture unlike I've ever seen in my career. Again, in almost every area across this spectrum, not only is the market demand drivers, but Nucor's capability set is the broadest and most diverse it's ever been. There are a bunch of things we don't talk about a lot in these calls.

Border walls, grating, UIG gases, Nucor Fastener, our tube group, tower structures, insulated metal panels, Nucor Data Systems. They are all contributing at a really high level and executing it at a really high level. I couldn't be more optimistic in the back half of this year. As we head into 2027, I think 2027 could be a very special year, not just for Nucor, but this industry.

Okay, thanks. Congrats on your 30 years as well. If I could follow up on the 2027 outlook, and you've been intimating the CapEx is rolling off, of course, and a lot of interest in what Nucor's next plans are for cash use. Could you just give us any more color on how you're seeing the landscape with build versus buy in the downstream side, and if that's still your focus for growth? Thanks again. Yeah, absolutely, Timna.

Look, almost seven years ago, when I became CEO, our mission statement was really simple, to grow the core, expand beyond, and live our culture. Culture obviously is how we care for the 33,000 men and women of this incredible family of ours. The core is just that, the steel making, the Kingman, the galvanizing lines, the pre-paint, the Lexington Micro Mills, Brandenburg, West Virginia. The expand beyond is the area where we purchased C.H.I. Overhead Doors and now Rytec, and couldn't be more excited about what they're doing and the value proposition that they're going to bring, not just to our shareholders, but to also provide our customers, again, with a very differentiated standpoint. It leads to your question, which is, okay, that's tied up a lot of cash. Where is that cash going to go?

Because we're going to continue to generate a lot of money. It's going to go into the expand beyond bucket. What I would tell you is, you can think about a few things. One, it's going to come in and around the mega trend areas. As we think about towers and structures, as we think about the downstream areas that we can bring value in, enclosures, energy infrastructure. Those types of areas are the things that I would tell you our M&A and BD teams are looking really hard at identifying those companies that I obviously can't get into. Again, I want to provide a little more color for you so that you can understand where that's going to go.

The one caveat that I think is really, well, maybe two that's really important to note is Nucor's vision back then and now wasn't a pivot because our models broke. In fact, I would tell you we're the safest, cleanest, most profitable steel company in the world. I would rival us against anyone. We don't have to pivot away from a broken model. It's in fact the best it's ever been. We get to tweak that. We get to reinvest in our operating divisions to make them more efficient. We get to use AI and tools like that and automation to create safer outcomes and higher return outcomes. The other side is, we're going to be incredibly disciplined with our capital because we don't have to pivot. There's no urgency and money burning a hole in our pocket.

You're going to see Nucor continue to be incredibly disciplined about the M&A growth and how we approach that. If it's not accretive, if we can't find pathways to being the market leader and do way better than our cost to capital, if not double our cost to capital, we're just not going to do it. If we don't, then you're going to see a lot of money coming back in the form of dividends and share repurchases back to our shareholders. As we always have, and as Jack spoke to earlier, we're going to commit to 40% of our net earnings. I would tell you in the next several years, you can expect there's some incredible growth opportunities for Nucor that we're going to move into in the expand beyond bucket.

Okay. Thank you. Thanks, Timna.

Your next question comes from the line of Bill Peterson of J.P. Morgan. Bill, your line is now open.

Good morning, everyone. Thanks for all the color and nice job on the quarterly execution. Based on your comments on expectations to be at the higher end of the range, 5%-10% for the mills, I guess taking into account backlog, presumably longer lead times, low inventory, the channel and so forth, how should we think about seasonality in the back half of the year, including the fourth quarter, which I believe you might have less shipping days, Can you help us understand just the profile in the back half? That would be helpful. Hey, Bill, this is Steve.

I'll take this one. We'll be closer to that high end of the previously guided range of 5%-10%. You know our business really well. There is seasonality, you should expect a little bit of that in the fourth quarter. As Leon, Brad, Noah have all already addressed, the demand drivers are extremely robust right now. They're multi-product. It's across all the spectrum that we have. We're pretty bullish on the back half of the year. That doesn't mean there won't be seasonality. There always is. It's a relative move down, I guess I would say, because there's still so much strength in the marketplace. Bill, to your question about- Thanks, Steve.

To your question about the fiscal days in the fourth quarter, we'll have 91 days in the third and 89 days in the fourth.

Okay, great. That's helpful. Maybe drilling down to the border wall opportunity, can you give us a sense of the shipping opportunity into 2028 and any color you can provide on your share expectations?

Hey, Bill, this is John Hollatz. I appreciate you bringing up that border wall. That is a mega trend that I think needs to get a lot of attention. I appreciate Noah bringing it up earlier in his commentary. I think you've got to keep in mind that Nucor is the only company with the raw materials, the sheet, the tube capacity, and the logistics team to keep up with the demand for this border wall. We're shipping thousands of tons every week to multiple locations along the border, and that is expected to continue well into 2028. If you look at the volumes that are going through our tube group, it'll show you the increase that you've seen Year-over-year.

That's on top of an already strong demand for our traditional HSS products and leading to a lot of the improved earnings that we expect in the second half of 2026.

Okay. Thanks for the color.

Your next question is from the line of Tristan Gresser of BNP Paribas. Tristan, your line is now open.

Yes. Hi. Thank you for taking my questions. The first is on the raw materials division. That is very strong quarter. While, I don't know, it looked like should have been a relatively steady, slightly up quarter. I was wondering if you could provide some visibility on what drove the performance and, the strength of the past year has been pretty noticeable. If the margin trends we've seen for that division should carry forward. That would be my first question.

Yeah. Thanks, Tristan. This is Al Barrow. I'll take that one. I appreciate you asking the question, because I'm really proud of our raw materials team and just how that whole team performed during the quarter, and I think the results speak for themselves. That segment includes a handful of businesses, but I'll share some thoughts that may be at top of mind on a couple of the bigger pieces. One of them is our recycling yards and the other is our DRI operations. For the recycling yards, it's a simple story of strong volumes with higher margins. We saw strong margins in the quarter, both on the shredded metals as well as on the recovered metals, the non-ferrous metals that we sell as a by-product. Coupled with just really consistent, strong performance commercially and operationally within those businesses. On the DRI side, also a great quarter.

We set a quarterly production record as rising pig iron allowed us to lean into DRI as an alternative supply for our mills and our DRI teams really rose to the occasion, and super proud of what they did. What I think is important about that, Tristan, is it's just another example of how our strategy of building flexibility into our raw material supply chain is a way to drive value for the organization. We believe there's always a winning play in the market, and we've got the depth and the breadth to be able to find those plays and run them.

All right. That's very clear. My second question is actually a quick one. Just if you could provide some update on the CapEx guidance and you had some big use of working capital in H1. How do you think the H2 should look like? Thank you. Yeah. Thanks, Tristan.

It's Jack. I'll take CapEx first. Earlier this year, we guided to $2.5 billion for 2026, materially down from the prior year. Halfway into the year, we're right at about 50% of that, we remain on target with that $2.5 estimate that we set earlier in the year. With respect to working capital, yeah, we did see a bit more of a build in Q2, primarily related just to with the higher backlog, comes some higher inventory at higher valuations. Both inventories and receivables did tick up some. Got to give a lot of credit, though, to the team in terms of how we're managing inventory, how we're managing cash conversion. I think operationally, we're working through a really strong demand environment with shareholder interests in mind there with respect to cash flow.

Looking into the second half of the year, likely expect some moderation in working capital as we get into the fall months. Could be some slight source of cash in the back half of the year.

All right. That's clear. Thank you.

Your next question comes from the line of Nick Cash of Goldman, Sachs & Co.. Nick, your line is now open.

Thank you so much, and thank you team for taking the questions. I just have one follow-up here. Just wanted to drill in a little bit on the shipment mix. You mentioned your sheet continued strength through 2027. The volumes were just a little bit softer in 2Q quarter-over-quarter. The first question was: Was the softness due to just some softness in the order book? Was there an outage? Are you starting to see any import product coming back in on the flat side? On the contrary, your bar shipments have continued to accelerate despite long product imports ticking back up in 2Q. What would you attribute that market share capture to? How should we think about that going forward?

Hey, Nick, this is Noah. I'll start with sheet. You talked about Q2 versus Q1 shipments. We actually broke another production record in Q2. What you saw on the beat in Q1 from a shipment standpoint is we came into the quarter with some inventory we're able to ship, but we actually converted more efficiently in Q2, and we expect that level of production and shipment to continue.

Nick, this is Randy Spicer. Certainly, the team has performed tremendously in the second quarter, we certainly saw that in our performance, driven by a lot of the very same themes that have been talked about today.

We continue to see growth in infrastructure investment, the manufacturing reshoring, again, this continued growth in data center. Also just to echo what we've seen in both sheet and tube from John, we've also been a very active participant in border fence as well. All of those factors, along with our newer assets that are coming online, have truly allowed us to take advantage of this growth in the second quarter and are set up well here as we move into the second half.

That's helpful. Thank you. Appreciate it.

Our next question is from the line of Katja Jancic of BMO Capital Markets. Katya, your line is now open.

Hi. Thank you for taking my questions. Maybe starting on the demand outlook more broadly. You talked about a couple of tailwinds that could last for the next few years. What, in your view, would be a reasonable assumption for underlying demand growth over the next two to three years?

Yeah. Katja, this is Steve. I'll go ahead and take this one. I think the backdrop for the demand picture is, again, it's broad enough and strong enough in enough channels, and it's driven by some fundamental reshoring, fundamental capital investment cycles that are probably multi-year in nature. It's things like Leon highlighted earlier with energy investment. That's not necessarily going to slow down over the next few years. This year, we would put an estimate somewhere around 2% up on demand overall. That's all products. Nucor's portfolio is positioned a little bit more strongly to some of the stronger areas of the market. That's just a general comment about the market, not Nucor. We see strength at least for the next couple of years in that same band or more.

The parts of the market that are weak right now have to do with consumer-oriented activities. Think HVAC. Noah's comment about automotive is a fair one. Automotive consumption's down, but the reshoring patterns might mean that steel consumption in automotive could be up for us. The parts that are weaker and could be more interest rate sensitive, for example, are already down. If anything, you may skew some of that to potential upside if you saw uptick in consumer behavior. The backdrop right now should continue for multiple years of demand with what we see.

Okay, then maybe on the West Virginia mill, can you just remind us about how to think about the utilization rates over the next two years? Will the demand outlook change how the ramp-up progresses?

Katja, this is Noah. We've shared previously that we expect to be at about 50% utilization by the end of year one, and really our focus from now through 2027 is just getting on being safe, getting reliable and getting consistent production on the mill. I think you can draw a straight line from January to December and expect that we'll be at 50% by the end of the year. As we move forward into 2028, we'll be focused on growing volume, moving into qualifications that get us into the higher quality items, the consumer durables, the auto, that West Virginia is capable of. Yes, absolutely, we're going to make sure that we are making good financial decisions with the tons we put in that mill.

One of the strengths we have as we bring up an asset like West Virginia is that we're able to shift tons around from our other mills to support those opportunities to run that mill, especially in 2027. We're able to take our downstream pull through. We ship about two to two and a half million tons internally, and we're able to place that most appropriately, and that's really supportive of a strong ramp for West Virginia.

The other comment, Katja, I would make is, look, we've done this for a long time. We know how to do this. We know the markets. We've started mills up in great environments, we've started mills up in some very difficult markets. When you ask about the demand potentially changing in the ramp up, look, most recently, Brandenburg. Brandenburg did not start up any wonderfully robust demand drivers like we're seeing today. Look, Brad and the team and the play group balanced that out very nicely, just like Noah described, right? We have multiple assets where we're able to utilize and balance some tons. However, West Virginia couldn't be starting up at a better time. They've run their first coil through the pickle line last month, as Noah indicated, and it's going to ramp up through the rest of this year.

Again, from a demand picture to have the pull through that way while you're starting up a mill is obviously ideal. Look, we've balanced that. We've seen it on both sides of the equation, we know our customers. We know how to balance this. Again, what I would expect as we go into 2027, those demand drivers are going to still be very robust and just create a much better platform for this mill as it finds its way up to 50%, 60%, 70% utilization.

Thank you. Your next question from the line of Carlos de Alba of Morgan Stanley.

Carlos, your line is now open. Please go ahead. Yeah. Thank you.

Good morning, everyone. I wonder if you could provide maybe a little bit more color on the raw materials pricing. I think you mentioned, if I understood correctly, that you price your DRI based on pig iron. Could you maybe elaborate on any lag on that reference pricing and what that maybe specifically pig iron price you're looking at. Is it the imported pig iron price in the U.S.? Is it the exported price from Brazil? Anything would be helpful given the material increase in profitability at that segment.

Yeah, Carlos, I'll take that one. This is Al Bair. We don't typically talk about the direct correlation between our transfer price and pig iron, but as you said, it is influenced by the price of pig iron. As pig iron prices go up, our DRI transfer price goes up, and that was a benefit to us in the quarter. In terms of the lag, certainly there is a lag. It's a long sales cycle from when we buy iron ore pellets, we convert them to DRI and get them to our mills. I really don't want to quantify that for you because it varies a lot based on inventory positions all through that supply chain, but there is a lag. Help me out, too. I want to make sure I cover what you're asking. Was there any piece of that that you would like more color on?

No. Maybe just when you priced your DRI, you looked at what specific index for pig iron. Is it the imported price in the U.S. or perhaps is it the exported price from Brazil?

It's influenced by the price of pig. I think I'd leave it at that, Carlos. The transfer price is influenced by the price of pig. It will flow correlated to the price of pig. I really don't want to elaborate more deeply on the mechanisms for it other than to share with you its influence. As pig goes up, you can assume that our transfer price will go up.

Yeah, fair enough. Thank you. Another question I had is related to the imports of beams and rebars. Recently, they are picking up. You flagged that in your presentation. I wonder if you can elaborate as to what you think may be behind this. Particularly beams have increased quite significantly. What actions could the company or the industry pursue in order to limit this increase?

Yeah, Carlos, I'll kick that off. Look, it's actually a pretty positive story. While we don't want to see imports up and we saw a spike of about 50-plus percentage points in beams coming in quarter-over-quarter, it's a demand picture. Again, when we think about our beam business at Nucor-Yamato Steel and Berkeley Beam, they're sitting on backlogs today unlike we've ever seen in the 35-year history of that facility. The demand drivers are so strong that it's creating a demand profile that volume is needed, and it's coming in. That's why you're seeing the picture. It's not a lack of demand, or you're seeing U.S. pricing versus rest-of-the-world pricing reach some gap that the importers are willing to take that risk. Look, again, I had the opportunity to spend three years at that facility and lead that team.

When you start measuring backlogs, not in hundreds of thousands of tons, but millions, it changes the profile. I would tell you that that team is executing. The utilization rates are incredibly high. Again, every moment in the beam group and just about every other product group for us matters. How our teams are executing today, yeah, it's probably going to create some opportunity. At the same time, if you asked me five years ago, would I take 16% overall imports into the U.S.? All day long. All freaking day long, right? Because in the last 20 years, we've wrestled with 22%, 3%, 4%, 5%, 6%, 7% of the overall apparent domestic market being flooded by illegally dumped and subsidized imports. Again, even with those spikes, it is an incredibly robust demand picture and one we see continuing well into 2027.

Thank you, Leon. If I may squeeze one more very quickly. I think last quarter you mentioned that you saw steel demand in the U.S. growing around 2% to 2.5% this year. Has that changed? If so, what is the new number? Thank you. 2%. Yeah, Carlos, we would just reaffirm that we're at about 2% growth probably this year as an industry.

You're right on the numbers.

Perfect. Thank you. Thank you.

This concludes our Q&A portion. I will now turn the call back to Leon Topalian, Chair and CEO, for closing remarks.

Well, thank you for joining us today. Before we wrap up, I want to once again recognize our team for delivering an outstanding second quarter and for your commitment that you demonstrate every day as we work towards our goal of becoming the world's safest steel company. Your dedication to serving our customers, operating safely, and executing our strategy continues to set Nucor apart. I also want to thank our customers and our shareholders for the trust that you place in us. We remain incredibly optimistic about the opportunities and the future ahead of Nucor and believe we are positioned to continue to have the best days that will be in front of us. Thank you all, and have a great day.

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