Q1 2025 Nucor Corp Earnings Call
Good morning, and welcome to no no of course, the first quarter.
<unk> earnings call.
All lines have been placed on mute to prevent any background noise and today's call is being recorded.
After the Speakers' prepared remarks, I will provide instructions for colors wishing to ask questions.
Speaker Change: I would now like to introduce Jack Sullivan, Vice President of Snooker Investor Relations you.
You may begin your call.
Speaker Change: Thank you and good morning, everyone and welcome to new cores first quarter 2025 earnings review and business update, leaving our call today is Leon Topalian Chair, President and CEO, along with Steve Laxton.
Speaker Change: Executive Vice President and CFO other.
Speaker Change: Other members of Nucor's executive team are also here with us today that may participate during the Q&A portion of the call.
Speaker Change: Yesterday, we posted to our first quarter earnings release, and Investor presentation to new cores IR website. We encourage you to access these materials as we will cover portions of them during the call.
Speaker Change: Today's discussion will include the use of non-GAAP financial measures and forward looking information within the meaning of securities laws.
Speaker Change: <unk> results may be different than forward looking statements and involve risks outlined in our safe Harbor statement and disclosed in Nucor's SEC filings.
Speaker Change: The appendix of today's presentation includes supplemental information and disclosures along with a reconciliation of non-GAAP financial measures.
Leon Topalian: So with that let's turn the call over to Leon.
Leon Topalian: Thanks, Jack before we discuss the quarterly results I'd like to acknowledge the important contributions of two retiring executive team members Chad you to Mark our EVP of new markets and innovation will retire in June after more than three decades with nucor chat as exemplified the nucor culture and has positively impacted thousands.
Leon Topalian: Team members during his tenure his leadership in executing our expand beyond strategy and driving key acquisitions has been invaluable we.
Leon Topalian: We extend our best wishes to Chad and his family in his retirement.
Leon Topalian: Additionally, Greg Murphy, our EVP of business services and General Counsel will also retire in June since joining <unk> in 2015, Gregg has provided exceptional leadership and his impact and advocacy, leading our legal environmental government Affairs and communications teams has been instrumental in developing long.
Leon Topalian: <unk> strategies that serve our shareholders customers and our team.
Leon Topalian: So on behalf of our more than 32000 team members. Thank you both for all of your leadership friendship and dedication to Nucor you will be greatly missed.
Leon Topalian: With Greg's retirement been ticket has also been promoted to EVP of business services and Doug Wilner has been promoted to president of corporate legal Affairs, and General Counsel and just last week, we announced Tom batter B will be promoted to EVP of human resources and talent effective may 11th.
Leon Topalian: Tom is an exceptional leader with more than 35 years of service with Nucor in his new role Tom will drive new core strategy for the growth retention and development of all Nucor team members.
Leon Topalian: Join me in giving a warm welcome to Ben Doug and Tom in their new roles.
Turning now to our first quarter results nuclear generated EBITDA of $696 million and earned 77 of adjusted EPS. Despite the lower results compared to prior quarters Nucor's strong balance sheet and deep liquidity allowed the company to advance its long term growth plans on a number of fronts.
Leon Topalian: During the quarter, we reinvested nearly $860 million into the company with approximately two thirds of that going into projects that will commence operations over the next two years.
Leon Topalian: We've returned nearly $430 million of capital to Nucor shareholders.
Leon Topalian: We have pre funded upcoming debt maturities raising $1 billion of new senior notes with a weighted average coupon of 488% and took steps to wind down or repurpose certain operations at divisions, where we believe resources can be allocated more efficiently.
Leon Topalian: Through it all we've continued to live our culture, taking care of our team customers and shareholders.
Leon Topalian: The capital projects, we have undertaken are designed to strengthen and diversify our earnings profile for shareholders and better serve the evolving needs of our customers. Several of these projects will commence operations within the next 12 months and I'd like to take a moment to provide an update on them.
Leon Topalian: Within the bar Mill group, our rebar micro mill in Lexington, North Carolina rolled its first build in April it is on track to produce its first heat in June.
Leon Topalian: Commercial shipments are expected to occur in the third quarter.
Leon Topalian: At our Kingman, Arizona Bar Mill, we expect a new melt shop to produce its first heat in June and be operational in the third quarter.
Leon Topalian: We've also made considerable headway with new coating facilities at our existing sheet mills, the coating complex at our Crawfordsville, Indiana sheet mill is schedule to be completed by year's end and will add galvanizing and prepaying capabilities at the location. Additionally, the new <unk> at our Berkeley County sheet Mill in South Carolina.
Leon Topalian: <unk> is on track to completion by mid 2026.
Leon Topalian: Within our towers and structured business the greenfield projects in Alabama in Indiana will commence operations throughout the next nine months customers have already started to tour, Alabama location and we were working through initial phases of the qualification process.
Leon Topalian: Alabama project is slated to begin operations in the third quarter of this year and the Indiana project is on track to begin operations in the first quarter of 2026.
Leon Topalian: Construction on our West Virginia sheet Mill will continue through 2026. The team there continues to do a great job of moving the project forward, we're near the midpoint of construction timeline and equipment installation is well underway. We remain on schedule to commission. The mill by the end of next year and look forward to supplying the market with some of north.
Leon Topalian: <unk> cleanest and most advance sheet steels.
Leon Topalian: Over the past several months, we've seen significant changes in federal trade policy, including the welcome Marine statement and broadening of section 232 steel tariffs.
Leon Topalian: Since its implementation in 2018, the 232 tariffs have been significantly weakened through country exemptions quotas and numerous product exclusions by 2024 fewer than 18% of steel imports were subject to section 232 tariffs.
Leon Topalian: Ending the exclusions in quarter agreements was necessary to strengthen the U S steel industry, which was the original goal of the 232 tariffs. We have always maintained the belief that America's national security depends on a robust and healthy American steel industry as.
Speaker Change: As America's largest and most diversified steel producer, we applaud recent steps to help level, the playing field for American steel producers.
Speaker Change: In addition, the trade case relating to certain corrosion resistant steel products continues to progress earlier. This month, the department of Commerce announced preliminary antidumping duties on coated flat rolled steel from 10 countries.
Speaker Change: Many of our country's trading partners have taken advantage of our open markets for far too long to the detriment of the American manufacturer and their teams. These trade remedies as well as a comprehensive section 232 tariffs of the sort of enforcement mechanisms required to stop unfairly traded imports for NIM.
<unk> 30 years Nucor has worked across administrations to ensure strong trade law enforcement and we will continue to be outspoken on these issues. So long as they are trading partners, who do not play by the rules of free and fair trade.
Speaker Change: When speaking to investors over the past several weeks, we've heard a lot of questions about the outlook for steel demand in light of macroeconomic uncertainty and volatility. So let me spend a few moments describing what we're seeing and what we're focused on.
Speaker Change: For starters in the first quarter, we saw backlogs rise over 30% and our steel mill segments and rise nearly 25% and steel products. We recognize a portion of this may be pull forward. However, we continue to see very healthy order entry rates and relative stable pricing.
Speaker Change: We're also seeing an administration that seeks less regulation, a lower corporate tax rate and has demonstrated a willingness to pivot and course correct as conditions evolve we're.
Speaker Change: We're seeing steady to improving demand for steel among customers, who are engaged in the re shoring rebuilding and repowering of American industry.
Speaker Change: Nucor is best positioned to supply these growing markets as evidenced by our order books, which include projects like the advanced manufacturing facilities infrastructure projects, new hospitals schools airports power plants and stadiums overall.
Speaker Change: Overall, we continue to see the current improving demand environment in line with our expectations at 2025, and when you couple that with nucor's product breadth and capabilities paired up with recent policies in support of U S manufacturers, it's hard not to be optimistic about nucor's future. While the economy is grappling with.
Speaker Change: A lot of uncertainty and volatility rest assured nucor's built for this we have the right capabilities the right team and the right financial strength to preserve regardless of the macroeconomic trends.
Speaker Change: Our mission to grow the core expand beyond and live our culture is how we plan to succeed but all of this requires execution, it's through great execution that nucor turns potential into value creation for our shareholders and our customers and that's why my most important message to the team during this period of <unk>.
Speaker Change: Transformative growth is to stay focused and accountable as we bring new projects to life across the enterprise.
Speaker Change: Before handing it over to Steve I want to mention that we recently posted our 2020 for corporate sustainability report to the Nucor website, we're proud to share that our greenhouse gas emission intensity is among the lowest in the global steel industry and we believe demand for cleaner steels will continue to grow the report highlights.
Speaker Change: How we are advancing the development of cleaner energy sources, such as nuclear energy as well as carbon free iron sources and other low carbon raw materials there.
Speaker Change: The report also highlights impressive progress our team has made in reducing injuries over the last several years.
Speaker Change: I'd encourage you to look through it and learn more about how our team is working to care for one another the environment and the communities we call home.
Speaker Change: With that I'll turn it over to Steve who will provide more details about our performance in the first quarter and our outlook for the second Steve.
Steve Laxton: Thank you Leon and thank you all for joining us on the call. This morning <unk>.
Steve Laxton: During the first quarter Nucor generated net earnings of $156 million or <unk> 67 per share. This includes pre tax charges of $29 million or <unk> <unk> per share of after tax charges related to the closing or repurposing our facilities in our steel products segment and ceasing production of wire Rod.
Steve Laxton: At our Connecticut Bar mill.
Leon Topalian: Excluding these onetime charges our annual earnings were approximately $179 million or <unk> 77 per share Leon highlighted the progress we've made on several of our larger growth initiatives.
Leon Topalian: These growth investments create long term shareholder value. They also create near term earnings headwinds during.
Leon Topalian: During the first quarter, nucor incurred $170 million or <unk> 56 per share and pre operating startup cost.
Leon Topalian: Turning to the segment level results for the quarter and adjusting for the onetime charges just mentioned the steel mill segment generated adjusted pre tax earnings of $241 million, increasing approximately 43% from the prior quarter.
Leon Topalian: While average realized prices were roughly in line with the fourth quarter prices volume increased 14%.
The most pronounced increase came from the bar mill group, where shipments rose, 21% compared to the prior quarter and 20% year over year.
Leon Topalian: We also saw improvement in plate shipments driven by a combination of good customer demand and improved operations at our Brandenburg, Kentucky plate mill.
Leon Topalian: <unk> shipments and production have trended higher for five consecutive quarters, a testament to the progress of that team.
Leon Topalian: While shipments were higher during the first quarter. We were also booking at healthy levels as Leon mentioned previously our steel mills backlog grew more than 30% throughout the quarter and sets up nearly 25% over this time last year.
Leon Topalian: Nucor's steel product segment affords a wider and more diverse set of solutions than others in our industry that capability breath, as a meaningful differentiator and value creator.
Leon Topalian: This segment continues to deliver pronounced impacts on nucor's overall earnings profile with.
Leon Topalian: The steel products segment generated adjusted pre tax earnings of $307 million for the first quarter.
Leon Topalian: Steel products also saw meaningful backlog growth up nearly 25% across all downstream products for the quarter.
Leon Topalian: Our joist and deck backlogs now extend into the fourth quarter.
Leon Topalian: As we've shared in the past the longer duration backlogs for some products within this segment.
Leon Topalian: We experienced a lag between pricing changes in the market and realized financial results and we are seeing this effect now and expect lower realized pricing in our financial results for some of these businesses in coming months.
But it's important to note that we expect margins in this backlog to remain well above pre pandemic levels, given where backlog set broader coverage under section 232, and our healthy current order book, we have a constructive view on the steel products segment for the balance of 2025.
Leon Topalian: Since 2022, we've made several acquisitions to expand our construction products capabilities that leverage our company's core competency as an efficient manufacturer.
Leon Topalian: These acquisitions and subsequent organic growth investments have established four distinct platforms with higher growth and margin potential for our shareholders.
Leon Topalian: During 2024, our overhead doors, racking and insulated metal panels platforms generated EBITDA of approximately $400 million when annualizing for mid year acquisitions.
Leon Topalian: For 2025, we expect these three platforms will generate approximately $450 million in EBITDA with further growth expected in 2026, when our new towers in structures facilities enter their first full year of production.
Leon Topalian: Turning to our raw materials segment, we realized pre tax earnings of approximately $29 million for the quarter, a decrease of approximately $28 million from the fourth quarter.
Leon Topalian: Lower realized pricing for <unk> and higher operating expenses in some of our scrap processing operations were the primary factors affecting the quarter over quarter change.
Leon Topalian: Moving to the balance sheet, we remain committed to maintaining a strong investment grade credit quality are.
Leon Topalian: A healthy balance sheet with ample liquidity has been a hallmark of nucor for decades and continues to put the company in a position of strength, allowing us to execute our strategy throughout various phases of the economic cycle.
Leon Topalian: In March new core increased its revolving credit facility by $500 million.
Leon Topalian: And we raised $1 billion of senior notes at a weighted average coupon of just under four 9%.
Leon Topalian: This $1 billion offering with split evenly across five and 10 year tenors with proceeds being used to retire $1 billion of notes that reached final maturity in late May and early June.
Leon Topalian: The rating agencies continue to affirm our investment grade credit ratings and outlooks are ratings are the highest of any north American steel producer with an a minus rating and stable outlooks from both S&P and Fitch and a <unk> one rating on positive outlook from Moody's.
Leon Topalian: Nucor ended the first quarter with a total debt to capital of approximately 27% and just over $4 billion in cash however.
Leon Topalian: However, as just mentioned, we intend to use $1 billion of cash recently raised from our debt offering to retire debt.
So adjusting for this intended use nucor would have debt to capital of just under 25% more in line with recent periods and cash of just over $3 billion.
Leon Topalian: In addition to maintaining a strong balance sheet, a cornerstone of nucor's capital allocation framework is to provide meaningful direct returns to shareholders.
Leon Topalian: During the first quarter that principle was on display as we returned $429 million to shareholders in the form of dividends and share repurchases.
Leon Topalian: We all spoke earlier about our outlook, but now I would like to drill deeper on what we're seeing across some of our businesses.
Leon Topalian: Within sheet, we're seeing continued resilient demand from key end use markets like construction and energy.
Leon Topalian: <unk> backlog grew meaningfully during the first quarter and we expect our second quarter shipments to increase further the effects of the cores trade case, coupled with the recent section 232 refresh.
Leon Topalian: Should temper unfairly dumped and predator shortly priced materials, allowing for improved stability in the sheet business.
Leon Topalian: Turning to bar, while there is potential concern that some of the commercial construction planning, maybe pausing and response to recent market volatility.
Leon Topalian: Larger projects and advanced manufacturing infrastructure and institutional construction remain largely unaffected and continue to represent steady business for us.
Leon Topalian: Consequently, we see improved financial performance and bar in the second quarter.
Leon Topalian: Imports were meaningfully higher during the first quarter, reflecting front running of tariffs.
Leon Topalian: Within our plate and structural groups. Some of the same demand drivers are having a positive impact nucor as a leading supplier of structural fabricators and we saw higher shipments for projects ranging from data centers and warehouses to bridges and other infrastructure projects.
Leon Topalian: New energy related projects are also driving demand.
Leon Topalian: We're supplying pilot for solar farms plate for onshore wind.
Leon Topalian: And transmission towers.
Leon Topalian: And getting qualified to supply steel for API grade line pipe out of Brandenburg are.
Leon Topalian: Our backlogs are up significantly and both beam and plate and we expect strong shipment levels and stable pricing to continue into the second half of this year.
Leon Topalian: And in the steel products segment, our backlogs are up year over year by 19% highlighting a few of our larger businesses within that segment. We expect continued strong performance from joist and deck and strengthening performance from our tubular and metal buildings groups.
Leon Topalian: Positive construction trends on growing data center demand stable warehouse activity and ongoing institutional construction are driving backlog growth. In addition, operational gains in our tubular and metal buildings group, coupled with lower imports for tubular are setting this up for positive momentum in coming months.
Leon Topalian: Turning to our second quarter 2025 outlook, we expect nucor's earnings to be meaningfully higher than in the first quarter of this year.
Leon Topalian: Operating results at the steel mills steel products and raw materials segments are all expected to be stronger than the first quarter.
Leon Topalian: The steel mill segment is expected to drive the largest portion of the sequential earnings growth due to stable volumes and higher realized pricing.
Leon Topalian: Within this segment Nucor sheet and plate business are expected to drive the majority of the increase.
Leon Topalian: And the steel products segment, we expect higher volumes and improved cost to more than offset slightly lower realized pricing.
Leon Topalian: And our raw materials segment, we expect volumes to remain flat, along with moderating scrap pricing and stable realized IRI pricing.
Leon Topalian: We also expect sequential cost improvements within our scrap processing operations.
Leon Topalian: As we look further into 2025, our expectations for demand remained generally in line with the optimism we shared on our year end earnings call.
Leon Topalian: We still expect to see growth in domestic steel demand this year.
Leon Topalian: And we're confident in our ability to capture a healthy share of that demand with the best and most diverse range of solutions in the marketplace.
Leon Topalian: And with that we'd like to hear from you and answer any questions. You may have operator, please open the line for questions.
Leon Topalian: Thank you.
Leon Topalian: Ladies and gentlemen, we will now begin the question and answer session.
Leon Topalian: Should you have a question. Please press the star followed by the number one on your Touchtone phone.
Leon Topalian: You will hear a problem that's your hand, there's been rate should.
Leon Topalian: Should you wish to declines from the bottling process. Please press the star followed by the number.
Leon Topalian: If you are using a speaker phone please lift the handset before pressing any keys.
Speaker Change: Please for your first question.
Leon Topalian: Okay.
Leon Topalian: Your first question comes from Lawson Winder Banc of America Securities.
Speaker Change: You may now speak.
Lawson Winder: Thank you very much operator, and good morning, Liana Good morning, Steve Nice to hear from you Paul Thank you for the update.
Speaker Change: Steve on the last call you provided some guidance in terms of.
Speaker Change: Some some backward looking guidance in terms of what the startup costs were in 2024 and mentioned.
Speaker Change: That we should consider those startup costs in 2025 can you provide any any color on the magnitude of what those startup costs might look like this year.
Speaker Change: Heading through the balance of this year, particularly with the benefit of now having.
Speaker Change: Four solid months behind you.
Speaker Change: Yeah.
Speaker Change: Yeah, Hey, Austin.
Speaker Change: Great question.
Speaker Change: What you will see for balance of the year is probably very similar to what we had last year. So.
Speaker Change: For your purposes.
Speaker Change: Now for the next couple of quarters I would pencil in something close to what we've done in the last few quarters.
Speaker Change: And just a reminder, we had $160 million and $164 million last couple of quarters.
Speaker Change: $170 million this past quarter.
Speaker Change: In a heavy period.
Both capital spending.
Speaker Change: Okay.
Speaker Change: The new projects.
Speaker Change: So you haven't highlighted in his opening remarks, we've got five projects coming online. This year, we're excited about those.
Speaker Change: Yes.
Speaker Change: Part of that calculation is the ramp rate on the on the startups as well.
Speaker Change: Something similar to last year exploration expense.
Speaker Change: Okay. That's extremely helpful. Also when you think about Brandenburg, where what are you guys penciling in for utilization at year end 2025.
Speaker Change: And it's really on look I would tell you we couldn't be more proud of what the team has done in Brandenburg in their ramp.
Speaker Change: To touch on just a few of the details because I think they're worth highlighting some of the very specifics that they've been able to achieve in the recent months.
Speaker Change: <unk> provides.
Liana: Details there, yes, thanks Liana.
Speaker Change: It was mentioned on the last earnings call.
Speaker Change: We're very confident in getting to EBITDA positive run rate by the summer and we remain comfortable we're on track for that.
Our confidence really stems from what the team has been able to achieve there we've seen record days record weeks record bonds.
Speaker Change: Production and quality in shipments really culminating in a record shipment month in March.
Speaker Change: And we expect those volumes to continue to grow as the year goes on.
Speaker Change: Again, the key Brandenburg is really around product development in Michigan, a tremendous amount of progress there.
Speaker Change: 5% of what we shipped out of Brandenburg and the first quarter were products that Nucor was unable to offer prior to Brandenburg.
Speaker Change: Specifics there I'd like to touch on.
Speaker Change: One the team has been working for six or eight months now.
Speaker Change: And finally achieved our ABS certification, which will allow us.
Speaker Change: To supply customers in the shipbuilding space, So a huge huge step forward.
Speaker Change: And then secondly, we shipped our first.
Speaker Change: Slide 70 trials for that growing API line pipe market Steve.
Speaker Change: First in his comments.
Speaker Change: That's a market that's typically a rounded to $2 5 million ton market.
Speaker Change: Heavily supplied traditionally by imports.
Speaker Change: So we're seeing very high levels of quote activity and our customers are excited for.
Speaker Change: Brandenburg to give them a domestic supply chain option.
Speaker Change: So overall, we're super proud of the team what they've accomplished we're excited about the feedback we're getting from our customers who are ready to grow with Brandenburg and with the Nucor playground.
Speaker Change: Yes, it's a fantastic story, great great update thanks for that color and just maybe one sort of follow up on Brandenburg what is or.
Speaker Change: Or how do you think about the split between higher margin higher value added product versus more commoditized product from that in the mix going forward from here of this year and potentially next.
Speaker Change: Yes.
Speaker Change: Just touch on that from a high level as we think about the product capability set in Brandenburg.
Speaker Change: It covers about 90% of the overall consumption in the United States.
Speaker Change: And as Brad just mentioned Theyre going to continue to work on the most advanced grades.
Speaker Change: <unk> again, the highest quality.
Speaker Change: Great products, but again it is a balance sheet. It says you've commented. So we are going to look at our overall mix between Brian and Burke, our Hertford County plants in.
Speaker Change: Tuscaloosa, so between the three there's a very comprehensive commercial plan and strategy that will do both bring volume to the mill as well as <unk>.
Speaker Change: Moving them ramping up.
Speaker Change: To the higher value added products and higher grades so youre going to see us kind of a target both ends of that.
Speaker Change: Don because some of these qualifications as Brad just mentioned like the ABS, they don't come in weeks or months and months.
Speaker Change: Proving process control behind that and.
Speaker Change: Anecdotally I would tell you ABS comes at a perfect time right as we've seen the President's executive order on ships section 301.
Speaker Change: While we believe it is likely to pass in the coming weeks and the shifting of our Americas <unk>. So again.
Speaker Change: Positions us incredibly well.
Speaker Change: <unk> products today that Nucor has never offered but very quite frankly in North America almost no one else can produce.
Speaker Change: Thank you very much.
Speaker Change: Thanks, Paul.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Thank you. Your next question comes from Timna.
Speaker Change: Timna Tanners from Wolfe research.
Timna Tanners: Yeah, Hey, good morning, thanks for that color too.
Timna Tanners: Two questions. The first one I wanted to ask about is if you can provide us more clarity on the second quarter guidance. When you talk about the steel now segment improving quarter over quarter. It seems like a pretty.
Timna Tanners: Easy calculation on the flat rolled side to say prices are up say 200 bucks quarter over quarter scrap is maybe flat to down it seems like it could be a huge order of magnitude I'm. Just wondering if you could provide any more framework around year over year is it going to be similar or R&D.
In more ways to think about the cadence first to second quarter. Thanks.
Timna Tanners: Okay.
Timna Tanners: And then I think thats and Thats pretty good math youre doing there.
Speaker Change: We're going to we're not going to give any quantitative guidance with detail on the earnings call. We're going to do is wait until mid quarter guidance on that.
Timna Tanners: But your math your math is dialing in the right direction.
Speaker Change: Okay fair enough.
Timna Tanners: And then the second question is it really about.
Timna Tanners: Not taking away from that clear benefits from cash for the entire sector of course and for your downstream business, but just getting questions about tariff impact particular kidney acquire so for example, the slab is brought in to CSI traditionally equipment for your new mill, such as West Virginia to Trinidad Cri can you talk about waste.
Timna Tanners: You are mitigating any of those tariff impacts that might not be so positive. Thanks again.
Timna Tanners: Yes timna.
Timna Tanners: I'll touch on that and it's something obviously is changing every day right. We are seeing that it reports out this morning as Im sure you are on.
Timna Tanners: Presidential likely to Juno regarding automobiles and that that sector. So we're monitoring incredibly closely what those potential impacts will be.
Speaker Change: You, specifically mentioned in West Virginia.
Speaker Change: Much of that equipment has not only bought it has already been delivered and so exposure. There is dropping day to day and so it's not de minimis, but again, it's not from an overall perspective, a significant scale.
Speaker Change: Over to new core this year.
Speaker Change: Coming but I say that.
Speaker Change: Same time, telling you.
Speaker Change: Many of these.
Speaker Change: Paris and the final remedies are not executed yet so in the raw materials supply chain and Nucor maintains the most diversified raw materials supply strategy and the industry period full stop but look I'd be remiss, if I didn't come up to a higher level as well to say the small impact.
Speaker Change: Potential.
Speaker Change: Raw material.
Price.
Speaker Change: Vasily.
Speaker Change: Okay.
Speaker Change: Much smaller than the impact on the overall macroeconomic trends in the industry are healthy vibrant steel industry and having a critical national defense and the pro American.
Speaker Change: Is that Youre seeing adopted by the administration.
Speaker Change: All of that unintended and so again.
Speaker Change: Well monitor we'll try to provide you more realistic data as we learn it but again, we think the impact to west Virginia from an equipment standpoint should be minimal on raw materials.
Speaker Change: <unk>.
Speaker Change: I didn't touch on.
Speaker Change: I think you've covered it well Tim it's a good question. It's obviously been an active year for US I think what's helpful to talk to US just how we're positioned in raw material and there's a few ways. We're positioned that are unique and create value.
Speaker Change: The footprint not only of our recycling assets, but all of our mills.
Speaker Change: Particularly our high quality metallic assuming built the place you those are all located on the water.
Speaker Change: It gives us access to global markets seaborne markets and then once that materials here, we can move it around the country really effectively on the river.
Speaker Change: The second is the intelligence gathering capabilities, we have David J Joseph Company, we operate the largest scrap brokerage North America, whereby showing ferrous and nonferrous Ferro alloys raw materials around the globe every day.
Speaker Change: And third of those global relationships. These are long standing relationships, we have that give us access to.
Speaker Change: Levers, we can pull to impact and mitigate the very risks that youre talking about so.
Speaker Change: It's really the unique positioning and Leon.
Speaker Change: Very fluid, we don't spend a lot of time predicting we've spent a lot of time preparing for the changes that we know will come and we've got the levers we can pull and we've got the pieces in place to allow us to do that and create value.
Speaker Change: Okay I appreciate it thanks al.
Speaker Change: Thanks.
Speaker Change: Sure.
Speaker Change: Thanks.
Speaker Change: Thank you our next call will be Alex hacking the API.
Speaker Change: Yes. Good morning, Thanks for the question.
Speaker Change: So I just wanted to ask about.
Speaker Change: The extension of section 232 to a downstream products.
Speaker Change: Have you tried to quantify how many tons that could impact and what the benefits could be for nucor.
Alex: Yes, Alex.
Speaker Change: It is fluid as al just mentioned and it is something that.
Alex: Our team in <unk>.
Alex: And his team in Washington spend.
Alex: Great deal of time.
Speaker Change: No we have not quantified or at least if we have nothing that I would share publicly but what I would tell you is the overall impact and how we're seeing these move through.
Speaker Change: As consequential it is impacting we're seeing again dropped below 20% imports for the first time in many years. So it is having that positive impact the other piece of this that we did not see in.
Speaker Change: Trump won during his first term was in derivative products being included in these pieces of legislation. So again, we think that's a.
Speaker Change: A step in the right direction and we will continue to work with the current administration to make sure that all of the products, whether it's raw materials or downstream are being looked at and considered.
Speaker Change: Four.
Speaker Change: Again, not just nucor, but the health and the vibrancy of the steel industry in the macro.
Speaker Change: Yes.
Speaker Change: Okay. Okay. Thanks, and then just following up on the guidance for steel products, Steve I think you said that prices would probably decline.
For the next couple of quarters, just based on lags and so on but I also think you implied that margins would be relatively stable because substrate costs would also kind of be coming down is that was that the message I just wanted to double check that.
Speaker Change: Yes, Alex this is John Pollok.
Speaker Change: We were successful in implementing price increases across all of our downstream businesses over the course of <unk>.
Speaker Change: Q1.
Speaker Change: And some of those businesses you will see a lag when we realize those price increases later in the year.
Speaker Change: Joist and deck buildings rebar fabrication, so there will be some.
Speaker Change: Margin compression when just normal as we work through these cycles.
Speaker Change: Q2, the business that will see the.
Speaker Change: Benefit immediately.
Speaker Change: <unk> products, where those are very closely related to the price of hot band.
Speaker Change: And we are realizing well above.
Speaker Change: The increases in hot band on our tubular sales, but we've been through this every time, we go through the cycle, it's very much what we would expect to happen.
Speaker Change: Okay that makes sense, thanks a lot.
Speaker Change: Thanks, Alex.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Thank you and your next call is.
Speaker Change: From Bill Peterson from JP Morgan.
Speaker Change: Yes, hi, good morning team and thanks for taking the questions.
Speaker Change: I wanted to come back to the mills in the first quarter results and second quarter guidance and what's driving the stable outlook and I wanted to ask did you benefit from five extra shipping days.
Speaker Change: And April 5th quarter, and so I'm wondering if there was more shipping days in the first quarter less shipping in the second quarter. I'm also if you can kind of help us understand if theres any pull forward in demand in Q1, and how that I guess informs the stable outlook for the second quarter and I guess within the mills.
Speaker Change: Parts of the formats plate bar.
Speaker Change: Our sheet that may outperform or ship, let's say increased shipments versus weaker.
Speaker Change: Yes, Bill I'll start us off and then maybe Steve can add some color.
Speaker Change: I think the first question you had around volumes and additional shipping days, but let's begin with <unk>.
Speaker Change: And part of your question about pull through we got that a lot over the last six to eight weeks since the tariffs were announced and what I would tell you what we did see some pull through we did see some.
Speaker Change: Some some urgency coming right and its those were announced but what the important part of that and looking through that pull through is what happened on the back end of that in the last month or two and what we've seen is no drop off at all in terms of order entry rates in inquiries in fact, I would tell you it has been as strong.
Speaker Change: As we continue into the into the quarter. So we've seen no drop off whatsoever, and as we think about the backlogs that Steve and I, both touched in our opening comments.
Speaker Change: One data point with you again, while they are up about 30% Q over Q2.
Speaker Change: 25% year over year, one data point that we look at that I think is a good bellwether for.
Speaker Change: Kind of the macroeconomic trends are structural backlog.
Speaker Change: If we look today and what our structural backlog is sitting at the highest levels in.
Speaker Change: Our history.
Speaker Change: Ever so the backlogs at Nucor Yamato Nucor, Berkeley beams are sitting at levels, we've never seen before and what I would tell you in that backlog, it's not distribution it has.
Quarter orders by our fabricators and so that is often business on projects that have been let and awarded and so that backlog is.
Speaker Change: Massive.
Speaker Change: Hundreds and hundreds of thousands of tons and so that bodes very well as we move throughout the rest of this year in terms of.
Speaker Change: As you asked about the upside and so are there upside potentials, yes, they are absolutely upside potentials.
Speaker Change: The words cautiously optimistic, but we are optimistic in what we're seeing we're optimistic in our backlog and order entry rates are pricing stability throughout the entire enterprise as well as the demand drivers for like the segments that we serve and data centers energy.
Speaker Change: Warehousing the advanced manufacturing.
Speaker Change: Towers and structures in those two plants that will be coming up online in the coming weeks. So nucor is well positioned to.
Speaker Change: Again meet these end markets.
Speaker Change: Today as well as tomorrow as these projects come online and so as Brad mentioned, our excitement about Brandenburg and niche realizing a flow offering and again.
Speaker Change: Our shareholders for the $1 7 billion, it's exciting but look we couldn't be more excited by our Lexington, North Carolina is micro mill.
Speaker Change: Many Arizona melt shop that will be starting up in the coming months, our galvanizing lines at CSI, Crawfordsville, Nucor steel, Berkeley, and ultimately, culminating with West Virginia startup at the end of next year, which will offer the most state of the yard cleanup.
Speaker Change: In automotive.
Speaker Change: Exposed deals hit nucor's ever entertained before so yes.
Speaker Change: I couldnt be more optimistic about the year, but quite frankly, the next several years as nucor's full potential is realized.
Speaker Change: Yeah.
Speaker Change: Yes, thanks for that and again, Steve can comment on the AG side shifting days or not but.
Speaker Change: Maybe the second question is the <unk>.
Speaker Change: Intersegment eliminations came in a bit lighter than we had expected in the guidance implies a higher level in the second quarter.
Speaker Change: Is this primarily related to expectations of steady downstream activity into the third quarter and back half of the year.
Speaker Change: Is there anything related to higher price DRA DRA coming out of Trinidad or are there other factors at play.
Speaker Change: Yeah, Hey, Bill back to the calendar question.
Speaker Change: Nucor's financial calendar, the crops up and you'll see it every five six years, where we will have a 95 day.
Speaker Change: Last year, we had like 90 days 91 days, if I remember what it is.
Speaker Change: So theres a little bit of that and that has to do with how we.
For roughly 50 years.
Speaker Change: Our fiscal calendar versus.
Speaker Change: Gordon calendar.
So.
Speaker Change: You'll have to just kind of adjust that if you want to but the other thing.
Leon Topalian: The other part of your question was about the already Lamson, probably isn't surprising that that's rising given the pricing environment that we have across the board the strength of our backlog, which is very very broad based Leon highlighted that it's not one or two areas essentially across our whole portfolio strength and so.
Leon Topalian: You will see either either flat to increasing volumes in some spots, but that's margin and profitability. It goes up that number goes up as well.
Leon Topalian: Thanks, Steve.
Yeah.
Leon Topalian: Thanks Bill.
Leon Topalian: Thank you. Your next question comes from Mike.
Speaker Change: Mike Harris from Goldman Sachs.
Mike Harris: Yes, good morning. Thanks.
Speaker Change: Considering the adjusted EPS of <unk> 77.
Speaker Change: Compared to the guided range of 50 to 60.
Speaker Change: Can you speak to what happened or didn't happen between March 20th in quarter and that resulted in what appears to be roughly <unk> <unk>.
Speaker Change: 40% to $60 million after tax windfall.
Speaker Change: Yeah, Hey, Mike there were really kind of two parts to your question. There. One is why do we have a b on the other Watson the adjusted number and so really the bulk of the beat.
Speaker Change: Driven by.
Speaker Change: By volume.
Speaker Change: In our steel segment.
Speaker Change: The vast vast majority of that came from and it was far in sheet primarily.
Speaker Change: Our largest volume businesses, so maybe that's not overly surprising to you.
Speaker Change: With regards to the adjustments.
Speaker Change: Those were not.
Speaker Change: Non reoccurring adjustments that were related to.
Speaker Change: The closure of facilities or the Repurposing and facilities about one third of those were related to our steelmaking business and about two thirds.
Speaker Change: Related to downstream product locations.
Speaker Change: Okay. Thanks for that additional color and then just one quick follow up here it looks.
Speaker Change: As if you lost about maybe 120 basis points of gross margin sequentially and I guess, besides the 10 planned outages what else contributed to the squeeze in maybe speak to any structural.
Speaker Change: Cost increases versus what may be transient.
Speaker Change: Yes, Mike Theres really a couple of places where the margin squeezes, we're seeing one is.
If you look at year over year numbers, if you look at that in our steel mill business.
Speaker Change: Conversion costs were up about 2% to 3%.
Speaker Change: That was largely driven by energy after being a little bit higher and some of our consumables were up just a little bit.
Speaker Change: Overall, most of the cost for a sideways year over year and a few were down so you're seeing some of that and primarily energy. But then the second aspect is scrap cost quarter over quarter were up about 3%. So the combination of those and.
Speaker Change: That lag effect that we have in our pricing.
Speaker Change: Neil.
Speaker Change: So you had some margin squeeze even though we were in a period when market prices were going up.
Speaker Change: Got it thanks, a lot for that.
Speaker Change: Yep.
Speaker Change: Sure.
Speaker Change: Thank you your next.
Speaker Change: Question is from.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: From BMO capital markets.
Speaker Change: Hi, Thank you for taking my questions.
Speaker Change: Maybe circling back to the earlier questions and just to confirm the 3 billion capex that you're spending this year.
Speaker Change: That does not include any.
Speaker Change: Stipulation for tariffs is that correct.
Speaker Change: That's correct.
Speaker Change: And then if there is any equipment that still needs to be imported into the U S, which countries would that equipment be coming from.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Italy.
Speaker Change: Mostly Italy, some Germany.
Speaker Change: Europe Gotcha.
Speaker Change: Okay. So theres no other it's mainly just Europe exposure then.
Speaker Change: Correct Thats correct, yes, and then.
Speaker Change: Last one and I might have missed this but Brandenburg mill how much.
Speaker Change: Did it produced this quarter.
Okay.
Speaker Change: Yeah.
Speaker Change: We didn't we didn't share the number earlier, but.
Speaker Change: Around that 150 to 160000 ton pace, but that's ramping up.
Speaker Change: We anticipate that increasing throughout the rest of this year.
Speaker Change: As we bring it to its full run rate potential.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Thank you and your next question is from Chris.
Speaker Change: <unk> from Jefferies.
Chris: Hi, Thanks for taking my question. So I just wanted to ask about demand you had mentioned that commercial construction, maybe pausing in some cases.
Chris: And obviously order books very strong, but we're seeing in other metal markets, maybe even unprecedented.
Chris: Inventory building in.
Chris: In the U S ahead of tariffs and obviously, that's a factor in steel you mentioned that but how do you differentiate between.
Chris: Demand being pulled forward ahead of tariffs and the actual underlying demand and what gives you the confidence that the outlook beyond the first quarter is good when there's clearly been some stockpiling happening in the steel markets in the U S, especially when youre seeing semi markets begin to soften.
Chris: Yes, Chris.
Chris: I think it's a great question Budd.
Chris: The reality is we've been in this business for six decades.
Chris: Operator, do you model for 35 years, we know our fabricator community incredibly well and so to your point, we're not alone to the recognition of tariffs and the impact.
Chris: A number of factors number one our fabricator community just not preorder they don't build up inventory.
Chris: And putting on the books and speculation they just don't do that when you look at months on hand in that area. Thank you do worry about which is distribution and looked at we see an increase from.
Chris: At two one months on hand, two or three or three and a half which tells you you're going to see two or three months gap between orders well, what if we can see and <unk> seen no drop off whatsoever, we see.
Chris: The days on hand in the distribution side remaining very flat. So we're not seeing the initial pull through of a.
Chris: A couple of months ago actually having any material impact of decreasing the relative order book and strength that we're seeing the third piece of that arm is booked our team to get out our commercial teams are interacting with our customers and talking to them each and every day and show the confidence that our customers are describing that their customers have.
Chris: Significant and again added to that or other areas that we're going to continue to see in growth one of the areas. We didnt mentioned in Brandenburg that's incredibly promising.
Chris: Can't tell you the number of Rfps that have hit that bill on <unk>.
Chris: Volume of the potential impact of that.
Chris: <unk> sector coming through to Nucor's order book is not.
Chris: Okay.
Chris: The border wall potential to come through in our tubular products.
Chris: Again, bodes very well for us.
Chris: The potential as well as what we're seeing.
Chris: The structural orders in bridge contracts.
Chris: Jay and the infrastructure Bill, which is still in the early days.
Chris: And that shake Shack and show all of these again have meaningful impacts to our order book, but we are not seeing is what you described.
Chris: Massive buildup and a drop off in a holding pattern of projects not being what we are seeing the opposite and we're seeing these things come to fruition, because they're taking the deliveries.
Chris: That's very good to hear thank you for that.
Chris: Thanks.
Chris: Yeah.
Speaker Change: Thank you and your next question is from from BNP Paribas.
Speaker Change: Yes, hi, Thank you for taking my questions, maybe a first one on the follow up on the trade policy outlook are you in discussion with the U S administration to remove those tariffs on pig iron and <unk> shipments.
Speaker Change: Do you think Thats a possibility and also do you think there is another area of focus that the.
Speaker Change: Installation should have do you think quotas could actually come back.
Speaker Change: My first question.
Speaker Change: Yes, Tristan look here's what I would tell you is.
Speaker Change: And we mentioned in my opening comments from <unk>.
Dan <unk>, who is running this company we've taken a very active in public role to be advocates in our industry as north America's largest steel and steel producer products producer.
Speaker Change: That continues to this day and some weather was president Biden are currently president Trump.
Speaker Change: <unk>.
Speaker Change: We are working to make sure that their administration that has the right information the right.
Speaker Change: Understanding any impacts related to this industry, absolutely we're doing that every day.
Speaker Change: Are we looking to.
Speaker Change: Provide the right context for the decisions made unequivocably. However have looked at that as an input to the administration and its not.
Speaker Change: The only source that obviously they are taking and so.
Speaker Change: Waiting that relevancy and how that.
Speaker Change: Maybe that to decision, making landfall both wait and see but obviously the raw materials sector.
Speaker Change: Terrorists and derivative products those things that impact anymore.
Speaker Change: We are working incredibly closely.
Speaker Change: And making sure that they have the right information.
Speaker Change: Alright.
Speaker Change: Helpful and my second question is on Capex can you could you discuss a little bit the increase.
Speaker Change: The West Virginia budget.
Speaker Change: Also for the project how much have you spent already.
Speaker Change: 23 2024.
Speaker Change: And if there was a high to the budget does it mean that if we look at 2026 group Capex could actually be quite close to occur in 2025 guidance.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Chris This is no let me let me give you some broad color on West Virginia without specifically answering some of your questions. Yes, we are tracking.
Speaker Change: What we told you the pathway, we told you it would be on our Capex.
Speaker Change: Still on time for a late 2006 into 2007 startup and I'd tell you. The team there is at about a 40% to 50% completion of the mill. So it looks like a steel mill now we're starting to place equipment.
Speaker Change: I would tell you.
Speaker Change: We are now focusing our effort around our commissioning plan and getting that mill up into this auto market.
Speaker Change: Secondly is comparable and the team.
Speaker Change: You can see the future of <unk>.
Speaker Change: Auto supply starting to starting to happen at West Virginia team execute this plan.
Speaker Change: One outstanding work, we're still on track for for the timeline, we provided you before.
Speaker Change: Tristan Additionally, look here's what I would tell you over the last several years at that facility and that project are not immune to the.
Speaker Change: The impacts of what we've seen in inflation.
Speaker Change: Price increases in terms of contractor rates.
Speaker Change: She also materials and labor and show that that is why you've seen the increase in west Virginia.
Not adding scope or things that were missed its the inflationary impacts of again.
Speaker Change: First of all healthy economy, and again demand poll in construction right now that that you saw the increase.
Speaker Change: Yes.
Speaker Change: Alright, and how much have you spent already on West Virginia.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Interest and we expect we're not going to give you a precise number on that.
Speaker Change: Sure.
Speaker Change: Finally over halfway through.
Speaker Change: On that project.
Speaker Change: Youre going to see us continue to spend a good amount of money over the next few years.
Minor in the total capital.
Speaker Change: Plan that we've got for this coming year of about $3 billion roughly two thirds of that is growth oriented question.
Speaker Change: West Virginia is the largest projects.
Speaker Change: And so.
Speaker Change: So youll see that take up roughly half of our overall capital spend for the year.
Speaker Change: Okay.
Speaker Change: Alright Thats helpful. Thank you.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: And your next question is from Carlos de Alba from Morgan Stanley.
Speaker Change: Okay.
Speaker Change: Yes, Thank you and good morning, everyone.
Speaker Change: Could you comment maybe on capacity utilization and what are your expectation in the coming in the coming quarter. We saw very nice jump quarter on quarter was more stable, but based on the comments that you provided.
Speaker Change: Look for demand to we expect capacity decision to keep going higher.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: I don't want to predict what the utilization rates are going to be next quarter, but I would tell you based on our commentary.
Speaker Change: And from Q4 of about 70, 475% to 80% in this quarter.
Speaker Change: Look the demand drivers are certainly encouraging the overall picture, though in terms of our volume that we're looking at in this year and it's going to be up a couple percentage points, but.
Speaker Change: That will flow through in different sectors of our business, but overall I.
Speaker Change: Thank you could see them slightly improving as we move throughout the year.
Speaker Change: Alright, great.
Speaker Change: I might have missed this but any color on the inventories at nucor's operating segments that grows nucor's nucor's operating segment segments or specific product lines.
Speaker Change: And how do they compared to the historical average for.
Speaker Change: This time of the year.
Speaker Change: Are you talking backlogs Carlos.
Speaker Change: Inventory you brought up the inventory.
Speaker Change: Okay sorry.
Speaker Change: Yeah.
Speaker Change: Inventory is roughly in line.
Speaker Change: It's seasonal adjustment and backlog levels.
When compared to history.
Speaker Change: Alright, and is that you've got the case across most product lines.
Speaker Change: The main product lines.
Speaker Change: Yes, yes.
Speaker Change: Yes.
Speaker Change: Perhaps building a bit more.
Speaker Change: Some areas and others is the backlog isn't universal.
Speaker Change: When you aggregate all of it relative to our backlog and where we are in a good spot.
Speaker Change: Alright, Thank you very much.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Sure.
Speaker Change: Thank you.
Speaker Change: There are no further questions at this time I will now hand, the call back.
Speaker Change: Leon Topalian for the closing comments.
Speaker Change: Thank you for joining us for today's call and for your questions two more strong balance sheet and prudent capital allocation strategy positions us well for long term success to our team members, which continue to make 2025, the safest year in our history. We thank you to our shareholders and our customers for the trust you place in us each and every.
Speaker Change: Day, and with every order have a great day.
Speaker Change: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: [noise].
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Yes.