Executive Summary / Key Takeaways

• Nucor, North America's largest recycler and steel producer, is executing a multi-year strategic transformation focused on growing its core EAF steelmaking business, expanding into higher-margin downstream products, and leveraging its culture.
• Despite a sequential decline in Q1 2025 earnings driven by lower steel mill profitability and pricing, the company expects a meaningful increase in Q2 2025 earnings, led by anticipated higher average selling prices in sheet and plate and increased volumes in steel products.
• Significant capital investments, including major greenfield projects like the West Virginia sheet mill and new downstream facilities, are nearing operational phases, expected to diversify earnings and capture growth in key markets like advanced manufacturing, energy, and data centers.
• Nucor maintains a robust financial position with strong liquidity and investment-grade credit ratings, enabling disciplined capital allocation towards growth initiatives and substantial direct returns to shareholders through dividends and share repurchases.
• The company's competitive positioning is reinforced by its technologically advanced EAF process, diversified product portfolio, integrated raw materials strategy, and advocacy for fair trade policies to counter the impact of unfairly traded imports.

The Foundation: EAF Technology and a Mission for Growth

Nucor Corporation stands as North America's preeminent steel producer and largest recycler, a position forged over decades of strategic evolution. Founded in 1958, the company underwent a pivotal transformation led by visionaries who championed the electric arc furnace (EAF) process. This recycling-based method, initiated at the first minimill in Darlington, South Carolina, in 1969, revolutionized American steelmaking by utilizing scrap steel as the primary raw material. By 2025, this cleaner, more efficient process accounted for over 70% of U.S. steel production, fundamentally reshaping the industry landscape.

Under the leadership of CEO Leon Topalian, Nucor embarked on a new long-term growth trajectory approximately five years ago, guided by a three-part mission: grow the core, expand beyond, and live its culture. This strategy aims to enhance capabilities, diversify market offerings, and ultimately double the company's through-cycle earnings potential. Nucor is currently about two-thirds of the way through the significant capital deployment phase of this plan, investing heavily in both organic growth projects and strategic acquisitions.

A cornerstone of Nucor's competitive advantage lies in its technological differentiation, particularly its advanced EAF steelmaking process. This technology offers tangible benefits over traditional integrated blast furnace methods, including significantly lower energy consumption and a substantially reduced carbon footprint. Nucor's greenhouse gas emission intensity is among the lowest in the global steel industry, a critical advantage in a market increasingly prioritizing sustainability. While specific, universally comparable quantitative metrics versus all competitors are complex to detail publicly, the inherent efficiency of the EAF process contributes to a more agile and cost-effective production model.

Nucor is not resting on its technological laurels. The company is actively engaged in research and development aimed at further enhancing its processes and raw material inputs. Initiatives include developing new technologies for scrap segregation and recovery, advancing low-emission iron production (such as the carbon capture project at its Louisiana DRI facility), and investing in cleaner energy sources like advanced nuclear technologies through partnerships with companies like NuScale (SMR) and Helion. These efforts target improved operational efficiency, reduced environmental impact, and a stronger competitive moat in the production of low embodied carbon steel, which is increasingly demanded by end-use customers. The strategic intent behind these R&D efforts is to ensure Nucor remains at the forefront of sustainable and cost-effective steel production, securing its position for decades to come.

Navigating the Competitive Currents

Nucor operates within a dynamic and intensely competitive landscape, facing pressure from both domestic rivals and global imports. Key publicly traded competitors include Steel Dynamics Inc. (STLD), United States Steel Corp. (X), ArcelorMittal (MT), and Commercial Metals Company (CMC). Each competitor brings different strengths and strategies to the market.

Steel Dynamics (STLD), like Nucor, is a major EAF producer known for its operational efficiency and cost leadership, particularly in flat-rolled and long products. While STLD often competes fiercely on price due to its lean cost structure, Nucor differentiates itself through a broader product portfolio, a more decentralized operational model enabling faster innovation, and a growing focus on higher-value-added products and sustainable offerings. Nucor's profitability metrics, such as net margin (4.40% TTM) and ROIC (25% in 2024), generally reflect a strong financial performance relative to peers like STLD (9% net margin TTM, 15% ROIC in 2024), indicating effective capital deployment and operational execution.

United States Steel (X) and ArcelorMittal (MT) represent a mix of integrated and EAF assets, with MT being a global giant with significant international reach. While integrated mills like some of X's facilities offer scale in high-volume production, they typically have higher operating costs and a larger environmental footprint compared to Nucor's EAFs. Nucor's technological advantage in cleaner production is a key differentiator against these players, particularly as demand for sustainable materials grows. MT's global scale provides broad market access, a dimension where Nucor, primarily focused on North America, faces limitations. However, Nucor's domestic focus allows for greater agility and responsiveness to U.S. market dynamics and trade policies.

Commercial Metals Company (CMC) specializes in recycled metals and long products, competing in niche segments. While CMC has a strong position in its core markets, Nucor's significantly larger scale, broader product range, and deeper investments in advanced technologies and downstream capabilities provide a more diversified earnings base and greater potential for capturing growth across multiple sectors.

A persistent challenge and critical competitive dynamic for Nucor is the impact of unfairly traded imports. Management has consistently highlighted how rising global steel overcapacity leads to surges of illegally dumped and subsidized steel entering the U.S. market, negatively affecting domestic prices and mill utilization rates. Nucor has been a tireless advocate for strong trade enforcement for decades, actively filing trade cases (such as the recent one on corrosion-resistant steel) and working with government administrations to strengthen measures like Section 232 tariffs and address circumvention issues. The recent reinstatement and broadening of Section 232 tariffs and progress in trade cases are viewed as necessary steps to level the playing field and temper unfairly priced materials, allowing for improved stability in the domestic market. Nucor's diversified raw material supply strategy, including its DRI facilities and growing low-copper shred capacity, also provides crucial flexibility in managing input costs and reducing reliance on volatile global scrap markets, further enhancing its competitive resilience.

Performance, Strategy in Action, and Outlook

Nucor's financial performance in the first quarter of 2025 reflected a moderation from the strong levels seen in prior periods, yet demonstrated resilience and positive momentum heading into the second quarter. Net earnings attributable to Nucor stockholders were $156 million, or $0.67 per diluted share, a significant decrease compared to $845 million, or $3.46 per diluted share, in the first quarter of 2024. Adjusted net earnings for Q1 2025, excluding $29 million in losses and impairments related to facility closures and repurposing, were $179 million, or $0.77 per diluted share.

This sequential and year-over-year decline was primarily driven by decreased profitability in the steel mills segment, where lower average selling prices and metal margins, coupled with increased conversion costs (partially due to higher energy expenses), weighed on results. The steel products segment also saw lower earnings due to decreased average selling prices, despite a 9% increase in tons sold to outside customers compared to Q1 2024. The raw materials segment provided a brighter spot, with increased earnings driven by improved profitability at the DRI facilities and higher brokerage prices.

Despite the earnings dip, operational indicators showed strength. Total tons shipped to outside customers increased 10% in Q1 2025 compared to Q1 2024, reaching approximately 6.83 million tons. Steel mills segment outside shipments rose 12%, and steel products segment tonnage increased 9%. Backlogs across both segments grew meaningfully throughout Q1 2025, with steel mills backlog up over 30% sequentially and nearly 25% year-over-year, and steel products backlog increasing nearly 25%. Notably, the structural backlog reached its highest levels in Nucor's history, indicating robust demand from large, committed projects.

The company's strategic investments continue to progress. Capital expenditures were $859 million in Q1 2025, an increase from $670 million in Q1 2024, primarily directed towards the West Virginia sheet mill and new Nucor Towers & Structures locations. Total CapEx for 2025 is estimated at approximately $3.0 billion. Several key growth projects are slated to begin operations soon: the Lexington, NC rebar micro mill and the Kingman, AZ bar mill melt shop are expected to be operational in Q3 2025, the Alabama utility tower facility in Q3 2025, the Indiana utility tower facility in Q1 2026, and the Crawfordsville coating complex by year-end 2025. These projects, along with the West Virginia sheet mill commissioning by the end of 2026 and new galvanizing lines through 2027, are designed to enhance Nucor's capabilities, increase its mix of higher-margin products, and capture growth in strategic end markets. The "Expand Beyond" platforms (Overhead Doors, Racking, Insulated Metal Panels, Towers & Structures) are expected to contribute approximately $450 million in EBITDA in 2025, up from $400 million in 2024, demonstrating the value creation from these diversification efforts.

Nucor's financial strength remains a core advantage. The company ended Q1 2025 with a strong liquidity position of $4.06 billion in cash and short-term investments. Cash provided by operating activities was $364 million. The balance sheet is robust, with a funded debt to total capital ratio of 27.2% and the highest credit ratings among North American steel producers (A-/A-/Baa1). This financial health supports continued investment and shareholder returns. In Q1 2025, Nucor returned $429 million to shareholders through $300 million in share repurchases and $129 million in dividends ($0.55 per share, the 208th consecutive quarterly dividend). The company targets returning at least 40% of annual net earnings to shareholders and has ample capacity for future buybacks ($806 million authorized).

Looking ahead, management provided an optimistic outlook for the second quarter of 2025, expecting earnings to be meaningfully higher than Q1 2025. This anticipated sequential increase is projected across all three segments, with the steel mills segment driving the largest portion of growth due to stable volumes and higher realized pricing in sheet and plate. The steel products segment is expected to benefit from higher volumes and improved costs, offsetting slightly lower realized pricing. The raw materials segment anticipates increased earnings from stable DRI pricing and cost improvements. Management's outlook for full-year 2025 demand remains generally in line with prior optimism, expecting growth in domestic steel demand driven by secular trends like reshoring, infrastructure investment, and the expansion of advanced manufacturing and data centers. The expected effective tax rate for 2025 is approximately 20.9%.

Despite the positive outlook, Nucor faces inherent risks. The cyclical nature of the steel industry exposes it to fluctuations in demand and pricing. Volatility in raw material and energy costs can impact profitability. The success of large capital projects depends on effective execution and market conditions upon commissioning. Competitive pressures, particularly from unfairly traded imports, remain a challenge, although recent trade policy actions are seen as supportive. Macroeconomic uncertainties, including interest rate changes and global economic conditions, could also affect demand. Nucor mitigates these risks through its diversified business model, flexible EAF operations, integrated raw material supply chain, strong balance sheet, and disciplined capital allocation.

Conclusion

Nucor's investment thesis is rooted in its foundational strengths as a leading, technologically advanced EAF steel producer and its ongoing strategic transformation. While recent financial results reflect the cyclical nature of the industry and the impact of moderating steel prices, the company's operational performance, robust backlogs, and positive outlook for the second quarter of 2025 signal underlying resilience and improving market conditions.

The significant capital investments currently underway are poised to unlock substantial future earnings potential by expanding capabilities in core steelmaking and diversifying into higher-margin downstream markets aligned with powerful secular growth trends. Combined with a strong balance sheet, disciplined capital allocation, and a persistent focus on operational efficiency and technological leadership, Nucor is well-positioned to navigate market fluctuations and capitalize on opportunities. The company's ability to leverage its EAF advantage, strategically expand its product portfolio, and advocate for a level playing field against global competition underpins its potential for long-term value creation for shareholders.