Nucor Corp (NUE) Q3 2026 Earnings Call Transcript

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

Thank you, and good morning, everyone. Welcome to Nucor's third 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 third quarter earnings release and investor presentation to Nucor's IR website. We encourage you to access these materials as we will 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 and disclosures along with a reconciliation of non-GAAP financial measures. So with that, let's turn the call over to Leon.

Thanks, Chris. I want to begin by recognizing our 33,000 teammates for making the summer of 2026 our safest summer ever. Summer brings added safety challenges, and our team met them with focus and determination. That's something to be proud of, and it reflects our commitment to the most important value we have, safety. And as we finish the year, let's keep looking out for one another and make sure every one of our team members goes home safely at the end of every shift. Turning to our third quarter financial results, Nucor delivered its strongest quarter in more than three years with approximately $2.3 billion of EBITDA and earnings of $5.80 per share. Jack's going to unpack our results in more detail, but many of the themes we've highlighted throughout the year continue this quarter. Strong demand across key end markets, growing contributions from recent investments, and federal policies that support a healthy domestic steel sector. And with a capital spending moderating as major projects near completion, that strength is increasingly showing up in Nucor's free cash flow. We also remain committed to meaningful shareholder returns, returning $629 million in dividends and buybacks during the quarter, bringing our year-to-date total to nearly $1.4 billion. Operationally, the Nucor team is executing exceptionally well across each of our business segments. In our steel mills, quarterly shipments exceeded 7.2 million tons, setting another shipment record for the third consecutive quarter. This would not be possible without the investments we've made over the past six years, many of which are now online and contributing to our results. For example, the plate group set another quarterly shipment record. Brandenburg shipped approximately 240,000 tons, or roughly one-third of the group's total shipments. The team has done an amazing job bringing the mill's full capabilities online and advancing customer qualifications. The Bar Group also set another quarterly shipment record. Our Lexington Micro Mill has had a very successful ramp-up since coming online last year. The team became EBITDA positive in March and is built on that progress, reaching a utilization rate of nearly 80% in the third quarter. We've also seen very strong results from Kingman, Arizona, and our Micro Mills at Frostproof and Sedalia. as well as our upgraded Kankakee Mill helped to deliver our best merchant bar quarter in several years. In steel products, we saw a significant improvement in quarterly earnings. Higher shipments and a notable inflection in pricing led to margin expansion across most of our major product groups. Joyston Deck had a standout quarter, with shipments up about 20% and realized pricing increasing by $110 a ton. In the raw materials, our Louisiana DRI plant has begun capturing CO2 emissions for transport and storage through a project with ExxonMobil. The project is designed to capture and store up to 800,000 tons of CO2 annually, supporting our greenhouse gas emissions reduction goals and strengthening Nucor's position as one of the world's cleanest steel producers. Congratulations to our entire team in Louisiana on this achievement. The strength we are seeing in today's domestic steel market is being driven by healthy economic conditions and broad-based investment across key-end markets. Nucor is benefiting from these conditions because trade policy improvements over the past decade have created more level playing field. In particular, vigorous trade law enforcements and strengthening Section 232 measures are allowing us to realize a greater share of the strong demand environment in the U.S. Finished-deal imports are down more than 13% year-over-year and down 24% compared to 2024. Fair trade supports strong markets. Unfair trade distorts them. However, import volumes have been increasing in recent months, including a massive surge from South Korea despite the Section 232 tariffs. From decades of experience fighting for a level playing field, we know we must always stay vigilant. Therefore, we will work closely with the administration to ensure trade measures remain robust and effective. But make no mistake, demand is very healthy. Even as imports have crept higher this year, domestic shipments have risen in each of the past three quarters. Strong market fundamentals and favorable trade policies will continue to support a positive outlook for the domestic steel industry. 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. We're in the final stages of construction at our new sheet mill project in West Virginia, and we're commissioning equipment across the site. I want to thank the team in West Virginia for their hard work and excellent safety performance throughout the multi-year construction phase. They've kept the project on time and on budget while reaching several important milestones. In September, the melt shop produced its first heat, and in October, we started shipping coils from the pickle line to our downstream Nucor divisions. And by December, we expect to run our first coils through the hot mill, cold mill, and construction-grade galv lines. As we complete commissioning, the team is preparing to ramp production in early 2027. Our priority will be to operate safely and reliably while steadily increasing production toward our 50% utilization target by the end of 2027. Our sheet mill network provides an important advantage as production begins. By gradually shifting baseload tons from other Nucor sheet mills to West Virginia, we can provide the new mill a steady base of orders to support a successful ramp through 2027 and 2028. As with any project of this scale and complexity, we expect startup costs to remain elevated in 2027 at levels similar to or higher to those in 2026. Turning to our Berkeley, South Carolina sheet mill, our new automotive-grade galvanizing line began production early this month. We expect utilization rates for the new galv line to reach 50% in the second quarter of next year, on its way to full run rate by the end of 2027. At full production, this new line will add 500,000 tons of annual galvanizing capacity. Taken together, our investments in West Virginia and South Carolina enhance Nucor's ability to serve the automotive market, where we are relatively underweighted today. As both projects ramp and complete customer qualifications, we will build on the strong relationships we already have in place with many of North America's leading automakers. But we are not simply waiting for these investments to ramp. While North American automotive production is essentially unchanged year-to-date, Nucor's flat-rolled shipments to automotive customers are up 4%. And as we grow our automotive shipments, we're expanding what we can offer with the capabilities we have in place today. Recently, we commercialized exposed-quality galvanized steel for the exterior panel of an SUV platform. We accomplished this using thin slab casting, demonstrating Nucor's innovation in EAF steelmaking. And, as new growth projects come online, we'll have even more opportunities to expand our position in the automotive market. Moving to our towers and structures business, we're encouraged by how each of our facilities is progressing and the strength of our customer demand. Our Decatur, Alabama facility is on track to be EBITDA positive this month, while our Crawfordsville, Indiana facility began full production in the third quarter and is expected to follow a similar path toward profitability. Our Brigham City, Utah facility remains on track to reach full production by mid-2027. We are now qualified with more than 30 utilities, with additional customer qualifications underway, and we've entered into multi-year agreements with several of the largest utilities in the United States. That momentum is reflected in our order backlog, which has more than doubled since the start of the year and extends into early 2028. Based on the strength of customer demand, we recently announced a combined $165 million of investments to increase the capacity of our Indiana and Alabama facilities by about 50%. As a result, we now expect our long-term annual EBITDA contribution from our towers and structures business to reach approximately $200 million, up from the $150 million previously forecast. Turning to our demand outlook, Nucor continues to expect steel mill shipments growth to finish closer to the higher end of our 5-10% range for 2026, supported by several durable underlying drivers. Let me touch on a few of these. First, infrastructure. While the IIJA was passed about About five years ago, the infrastructure investment activity it was meant to spur is still accelerating. State-level decision-making and permitting have in many cases taken years to complete, extending construction activity over a longer period of time. Today many projects are underway, but new ones are still being approved, and over $135 billion of funding has yet to be spent as of August. In addition, steel requirements for the border wall are substantial, and stadium construction shows no signs of slowing. Second, reshoring in digital infrastructure. The COVID pandemic highlighted the fragility of our domestic supply chain and underscored the need to manufacture more in the U.S. In support of federal actions on tax, trade, and regulatory fronts have helped stimulate considerably higher levels of manufacturing construction. This is broader than the CHIP-FAB activity first encouraged by the CHIPs Act and now includes sectors like pharmaceuticals, automotive, appliance, and electrical components. And data center construction activity has gone from a small niche to a significant driver of non-residential building construction activity. Finally, energy. Rising demand, aging infrastructure, and the need to strengthen the grid are driving substantial investment in the power sector. Utilities plan to spend nearly $1.4 trillion over the next five years with steel-intensive investments ranging from generation and substations to transmission upgrades. Beyond power, we're seeing strong demand across the oil and gas sector, including LNG terminals and pipeline construction, and growing domestic production of oil country tubular goods. We see these trends as durable, and we believe Nucor is incredibly well-positioned with our world-class manufacturing team and broad portfolio to meet the needs of our customers across these diverse applications. With that, let me turn the call over to Jack.

Jack? Thanks, Steve, and good morning, everyone. In the third quarter, Nucor generated net earnings of $1.3 billion, or $5.80 per share. This exceeded the midpoint of our guidance range by roughly 3.5%, primarily due to higher-than-expected shipments and higher average selling prices in our steel mills segment. Let me now review our third quarter performance by segment. The steel mills segment generated $1.8 billion of pre-tax earnings, an increase of $232 million from the prior quarter. As Leon mentioned, we set another quarterly shipment record with volumes up 2%. Average selling prices rose across the segment, led by our sheet and structural groups. These increases were partially offset by higher costs. As a reminder, the second quarter benefited from $130 million in cash refunds that reduced cost of goods sold, and that benefit did not recur in the third quarter. Turning to steel products, we generated pre-tax earnings of $465 million, an increase of $112 million from the prior quarter. Volumes increased 6%, and average selling prices rose 7%. The improvement in pricing was particularly encouraging, as realized pricing in our downstream businesses is catching up with the higher steel input costs that compressed margins earlier this year. As a result, the EBITDA margin for our steel product segment increased approximately 200 basis points from the second quarter. And in our raw materials segment, we generated pre-tax earnings of $105 million compared to $146 million in the prior quarter, reflecting lower pricing and shipments. Pre-operating and startup costs total $124 million, compared to $120 million in the prior quarter. Turning to capital allocation and the balance sheet, we generated $1.6 billion of free cash flow in the third quarter, bringing our year-to-date total to nearly $2.7 billion. Cash from operations has grown from $900 million in the first quarter to over $2.2 billion in the third, as we benefit from healthy market conditions and growing contributions from our recent investments. At the same time, capital spending is moderating as our major projects near completion. We've deployed just under $1.9 billion in CapEx year-to-date, with the majority going toward growth projects. For the full year, we expect our capital expenditures to finish at or slightly below below our original $2.5 billion estimate. Our free cash flow supports meaningful returns to shareholders. During the quarter, we returned $629 million through dividends and share repurchases, up approximately $150 million from the second quarter. Year to date, we've returned nearly $1.4 billion, or 42% of net earnings. We remain committed to returning at least 40% of net earnings to shareholders on an annual basis. All of this is underpinned by our strong balance sheet and investment-grade credit profile. We ended the quarter with approximately $3.6 billion in cash and liquidity of $4.3 billion. Total debt as a percentage of capital was 23%, and our credit ratings remain the highest of any North American steel producer. Looking ahead, we expect our capex to decline further in 2027, extending the step down from peak spending in 24 and 25. We'll share more detail on our 2027 capital allocation plans on our year-end call in January. Turning to our fourth quarter outlook, we expect consolidated earnings to be in line with or modestly higher than the third quarter results. In steel mills, we expect stable earnings, as higher average pricing across all product groups is offset by seasonally lower volumes and higher costs. The cost increase reflects lower fixed cost absorption and higher startup spending at West Virginia as we add teammates and prepare to ramp production. In steel products, higher pricing is expected to offset the impact of lower volumes, resulting in stable earnings for the segment. In raw materials, we expect slightly lower earnings, primarily due to lower realized DRI pricing. Finally, we expect to benefit from lower intersegment profit eliminations that should reduce corporate and elimination expense relative to the third quarter. And as 2026 draws to a close, we're excited about Nucor's earnings prospects for 2027. Healthy, durable demand across key end markets, another step up in contributions from new growth projects, and supportive federal policy all position us for another strong year. And with the broadest range of capabilities in the North American steel market, we're confident the Nucor team will deliver on that opportunity for our customers and shareholders. And 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. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, please 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 and a roster your first question comes from the line of nick cash with goldman sachs and co your line is open please go ahead hi team good morning and thank you for taking my questions um the first question i have is you know You've been running at record shipment levels this year and suggesting it will be closer to the 10% range, you know, driven by strength and demand over the past few quarters, as well as backlog visibility.

I just wanted to know, you know, as you think into 27, how much further organic volume growth do you think Nucor's, you know, existing system can generate before considering contribution from West Virginia? And then which end markets give you the most confidence in another year of growth?

Hey, Nick, it's Leon. I'll kick us off. and I want to begin with something I shared in the opening. You know, Nucor has just come through the safest summer ever, and if we look back at our history, the months of June, July, and August have historically been the most dangerous and the most opportunity for injuries across our entire enterprise. Our team set out a very audacious goal to target no injuries for those three months, and while we didn't meet that, we ended up with the safest three months in the history of Nucor and now are putting those efforts towards the safest fall. The thing to really remember in all of that is every one of those numbers that we track has a name. Every name has a family, and every family deserves to be complete. Our greatest responsibility as leaders in this company is to the men and women of this amazing company of ours. And so thank you, team, for what you do and how you take care of our customers and for working safe each and every day. And, Nick, as you talk, look, you know, as we came off the highs of 21 and 22, you know, 23 was an okay year. 24 and 5 were very tepid. But, look, our investment strategies, our capital allocation philosophy has been to invest for the long term. And so over the last six and a half years, you've seen Nucor deploy about $19 billion worth of capital, half in organic growth and the other half in M&A. and so it's it's the ultimate strategy of playing where the puck's going to be now where it's at understanding our customer demand understanding the capability sets that are needed by our customers and building and creating those opportunities to win and that is exactly what you're seeing Nucor do today executing on an incredibly strategic plan to grow the core expand beyond and live our culture and so we've had the best quarter in three years we're on the track to have the safest year in all of our entire history 26 is shaping up to be the third best financial year in the history of our company and we fully expect that 27 will be even stronger but where the where's that coming from and you know the end market probably that gets more attention in the entire economy is data centers and while that's a a major part in some of our product groups it represents about 15 percent one five percent of our entire backlog and as an enterprise but it's a strong end market but so is chips and technology and hardware natural gas gas power plants lmg export terminals nuclear utilities pharma heavy equipment is coming back in gangbusters ship building military and defense spending appliance and hvac and so i would tell you my 31 years in new coordinate we are seeing i i am seeing currently the strongest demand environment across the breadth of new course products couple that with the investments that we've made in west virginia brandon burgh lexington or micro mill in lexington kingmans arizona crawfordsville's pain line berkeley's galvanized line and brandon burgh's plate mill are all now firing where again as steve mentioned just a minute ago west virginia will fully commission this year and begin its full ramp in 2027 we are at the tip of the spear of the greatest economic growth in our nation and i couldn't be more optimistic about what 2027 and beyond is going to bring. Finally, I would tell you where the last part of all of that is that CapEx unwinds of our spend into 2027. It skyrockets the free cash flow on top of the margins that we're earning, on top of the contributions that the new investments are already having and will continue to ramp into 27. It means we're fueled for growth, disciplined and growth just like we have over the last six years that money is not burning a hole in our pocket and if we don't have a great use for it you're going to get it back over the last 16 years we've returned nearly 15 billion dollars to our shareholders through dividends or share buybacks and we will continue to focus on that however i can tell you there are massive areas of growth for our company that we're targeting now mostly in the expand beyond categories but uh we are just getting warmed up. I couldn't be more optimistic about 2027 and beyond in the future of Nucor.

That is all really fantastic color. I really appreciate it. And then just one quick follow-up. I mean, you mentioned, you know, just on the cost side, you know, costs were a little bit higher than expected. I think, you know, mills margins were a little bit, you know, lighter than expected, you know, acknowledging the $130 million tailwind from last quarter. Could you provide any, you know, further color on any inflationary pressures you might be experiencing and I know you mentioned some you know lower fixed cost absorption but any other experience any other impacts experienced in the quarter and then for the full q guide of flat earnings can you provide any additional color on how these these impacts uh or how these costs could impact margin trajectory in the year end yeah Nick good morning it's Jack um you're right conversion costs did tick up some in q3 but I think we need to put a few things into perspective here.

Nucor's EBITDA margin expanded to over 20%, and that's our highest level in the past three years. So we continue to see margin expansion, even with some of that conversion cost per ton creep. But in terms of specifics and where we saw that, I'd point you to certain consumables, uh, freight, uh, certainly energy and just some other services. Uh, but keep in mind when you're running at high utilization rates, particularly in hot demand environments, like we're seeing right now, you do tend to see some costs creep up just to, uh, just to keep operations running. Um, maybe that's overtime pay or some higher energy costs when, uh, in softer markets, we may have chosen to curtail in higher energy cost environments. And you pointed out correctly, we also didn't benefit from the tariff refunds that occurred in Q2. The other thing unique to Q3, when you're comparing it to Q2, we did have more planned outages in the quarter. And of course, that led to some some lower fixed costs absorption so um i'd say uh your your last question about looking ahead to q4 and i think you could expect a modest uptick in conversion costs uh q over q and again uh we we do have some outages uh in q4 we've got uh you know we've pointed to some gradual increase in pre-operating startup costs as we get west virginia closer to ramp up um and yeah those would be the i think those would be the things that point to thank you so much i'll pass it on your next question comes from the

line of bill peterson with jp morgan your line is open please go ahead hey good morning team congrats on the quarter and thanks for taking my questions i would like to unpack the shipment guide in 4Q, you're still planning on being towards the high end of the range, which would be like 10% year-on-year growth. But I guess if you ran it through, it would imply around down 10% quarter-on-quarter, which would be more like 2021-2022 as compared to the last few years, which were below that in terms of seasonality. I believe you have two less shipping days.

Are you taking into account other things like holidays, and maybe you can characterize how much downtime you're expecting or just trying to get a sense can there be upside to this number yeah hey bill it's jack all good questions um you're right we do have two fewer fiscal days in q4 uh compared to q3 89 versus 91 um but also to your point there are four additional non-shipping days really just due to q4 holidays when you think of veterans day thanksgiving a few days around Christmas, even New Year's. So, you know, in aggregate, you're talking five or six fewer days of shipping compared to the prior quarter, plus the added risk of some winter weather in certain regions. Q4 planned outages I just mentioned, you know, some of those outages are at our largest mills. And so planned downtime relative to Q3 actually has a few more days. So keep that in mind. But I think it's also important to recognize we're coming into Q4 off of record high Q3 shipments. So I think sometimes it's easier to ship through outage season during softer markets, a little bit harder to do so when the mills are already operating at such a high level. There's just less slack in the system. But I think if you looked historically, quarterly shipments, Q3 to Q4 have trended down about 7%. And so that may be a useful planning assumption as you're looking to fine-tune your models. I think the silver lining here, though, Bill, is, you know, we've guided you to steel mills earnings having, you know, relatively flat quarter over quarter. And really that's just, you know, for all the obvious reasons, we're going to see some volume softness due to seasonality and the outages. but stronger pricing outlook sort of neutralizes that impact. Rest assured, our goal is to ship every ton possible.

That's a terrific caller. Thanks for that. Earlier, I think you said that your data center was something around 15%. I'm not sure if that's a mill statement or a product statement, but I'm trying to get a sense for how big that opportunity, I guess, is for you as we think about 2026 and you expect that to grow and then the second one you call that was the border wall and you characterize it tons per mile. I was trying to figure out how much border wall needs to get built but I'd like to get a sense too on how you see the border wall opportunity this year and also for next year would you expect that to grow again?

Yeah Bill I'll touch on and you're going to remember now I got the second part of your question the first part was on data centers right look if we step back you know all most of the forecast analysts are are talking massive numbers you know multi-trillion dollars worth of spend over the next five six seven years um and so nucor's entrance into this isn't like weeks or months old this is something going back two or three years that we had been again readying um ourselves to be where the puck's going to be at and so today with the acquisitions of southwest data products our nuclear warehouse systems our capability set in our buildings plate structural tube group all are now combining where today nuclear can make or supply roughly 95 percent of all the steel required inside of and outside of a data center today so we're um you know really really capable of providing most of what the hyperscalers need today our relationship build with them over the last four five six years has been incredible there's a high level of trust there we earn a lot of that business and so to your question do we anticipate that growing into 2027 yes and again as um you know we think about growth and fueling Nucor's expand beyond growth you can expect that some of those areas of growth will be in that space and the continued build out of our data center offering to our to our customers you know as we get to the border wall I'll ask John Hollitz maybe to comment on that it's been a lightning rod for us and again another in market that we've been really very uh well prepared and capable to supply that need but john may be giving some framing around the the volumes hey hey bill uh on the border wall we estimate there's about 1400 miles of of new wall to be built that's primary and secondary wall And there's around 1,500 tons of steel in there per mile.

And we have been shipping thousands of tons every week to the border. You can see it in the increased volumes in our tubular group. And that's going to continue all the way through 2027 and well into 2028. And, again, we're the only company with the raw materials, the sheet supply, the tube capacity and the logistics team to keep up with the demand for the border. And for the tube group, it's not just border. On top of that, you've got a really strong demand for structural and the HSS side. We're seeing incredible performance from our conduit team. Our sprinkler pipe team is having a great year. And all of that has played a role in leading to our steel products group having the best quarter on the earnings side that we've had since the beginning of 2024. So we see a really good outlook well past the end of 26 and into 27.

Appreciate the color, guys, and congrats again.

Thank you, Bill.

Your next question comes from the line of Lawson Winder with Bofa Securities. Your line is open. Please go ahead.

Thank you, Operator. Good morning, Leon, Steve, and Jack. Nice result. Thank you for today's update. If I could ask on your comments around Merchant Bar, could you just discuss a bit more as to what end markets are primarily driving that? And then, you know, how do the market dynamics vary regionally on Merchant Bar? and then is there any merchant bar replacement of rebar capacity at the current moment or to any extent at all?

Say that last part of your question again, Lawson. Just in terms of the strength in shipments from merchant bar, is that causing any displacement of rebar shipping capacity? okay uh look i'm going to ask randy spicer to uh to jump in on this but just you know a bit of framing you know our our rebar strategy and our you know that end market has been incredibly strong for us our launch product groups are some of the most profitable and have been through the entire cycle you know there's a lot of questions right of the flattening of this cost curve but our ability to maintain margins, our ability and how our team's executed and remaining the low-cost producer, building these facilities where there's a high level of scrap inventory as well as the customers that are in proximity gives unique Nucor, unique differentiated advantage in this marketplace. And quite frankly, ADC is growing. And so, again, I remain very optimistic knowing that, and there's some competitors coming into the space and that will continue. But we've been in this business for 60 years now. We know this market incredibly well. Our teams are executing at a high level, but Randy, why don't you share a little more on what we're doing with Merchant Bar in particular and that growth?

Yeah, thanks, Leon. Lawson, thank you for the question. Yeah, certainly seeing tremendous growth in both, quite frankly, Merchant and Rebar is evidenced by the record shipments that we've seen that's in place. What I would tell you specifically around merchant bar is it's got exposure to some of the highest markets that we've seen right now specifically as as leon had just talked about uh data centers uh we're in the middle of what we call the ai super bowl the the hyperscalers committed enormous amount of capital to these data center build outs and those structures require uh these these larger sections that we're able to produce showing up directly in our order book as you can look and look and see at we're at record levels to be able to take advantage of both here in 26 as well as the growth as we go forward into 27. With that, you're also spot on of, as you see the margins increase in that space, you're also seeing some of the rebar producers out there, right, that are capable of making flexible products, of which Nucor is one of the largest in that space that you're actually able to move into the merchant bar space as well. So with that growth, we've continued to see strong performance, and we would expect to see that as we go forward.

Okay, that's very helpful. And then maybe just to put a finer point on my last question, I mean, given the way your capacity is kind of set up between Kentucky and Missouri, is there some displacement of rebar as a result of that merchant bar capacity, i.e. is the rebar market in the U.S. getting tighter as a result of what you're seeing in merchant bar?

Well, look, you're seeing ADC actually grow. If you look back a year or two, it was roughly 9, 9.5 million tons. We're predicting that to be upwards of 10.5 or possibly 11 and so the market is growing and so um you know that that's just booms very well again for our capability set and uh and where we're going but you know very specifically to your your displacement um question you know one of the unique advantages and what randy and his groups have done um again this is over years is when we put frost proof in sedalia in our first two micro mills. We looked at the overall mix and how do we supply that. We took Darlington from rebar and some MBQ into normal rebar and all MBQ and higher end SBQ and wire rod. And so Darlington's capabilities has expanded tremendously. Kankakee's investment in their growth and they've moved out of a lot of rebar into heavy MBQ and beyond. And so again, the breadth of our footprint enables us to shift and modify where we meet the geographic needs and the capability sets that, again, our customers need from us in the regions where we're located. So, yeah, there's been a lot of that that's happened, Lawson, over the last five, six, seven years that really kind of catapulted with the investment of the rod mill at Darlington and now continues on.

Fantastic.

As always, i appreciate the color very much thank you awesome your next question comes from the line of tristan gresser with bnp paraba your line is open please go ahead yes hi good morning thank you for taking my questions uh i have two um first one is uh on your auto strategy you had a slide in your presentation and i think a couple years ago you mentioned your goal to double auto shipments So could you provide maybe an update tonnage-wise, how much you expect to achieve this year and the next? Also, I was curious if you're – I don't think you've done this in the past, but are you entering into annual contracts with OEMs? Do you have everything you need from a raw material standpoint, or you need to make some adjustments? And lastly, from a quality perspective, it would be interesting to have your view if you're confident that you can, you know, fully replicate the products that, you know, customers usually get from integrated producer. I leave it there.

Tristan, I'm going to go ahead and jump in here. And while I'm going to tell you Noah Hanners will answer the question in a minute, I may not leave him anything to answer. because I really appreciate the question and I want to fully blow apart any notion that EAFs do not have the technical and quality capabilities to provide and make exposed automotive panels. It has been the last bastion of the integrated competition and the only thing they have left, think about it, left in America, there's not a single integrated producer making a long product in america all eafs do all of that today so the last piece of that pie has been the exposed automotive panels and i'm really pleased to report on behalf of knowing the entire sheet group that nucor has been awarded an entire platform with general motors for exposed automotive sheet and you're going to couple that work that time that effort those resources the process engineering and process and quality control, the PPAPs, all that work is now shifting into West Virginia. So as they begin ramping up, that mill will produce 30% automotive steels capable of making the highest end. So you can fully dismantle any notion that the EAF producers cannot make the most complex high quality and exposed pieces of that vehicle it's it's over we're on it we're doing it and we're going to continue to do and we're going to continue to take that market share away from the integrated producers period full stop so no anything to add on that i'll leave bob i love leon's energy around this because so proud of what our team is accomplishing and we can produce the full suite of what auto demands from us and i'll tell you our customers are are pumped about doing more business with us and and the capabilities that we're bringing to the

market are perfectly timed for for meeting their demands i mean you talk about west virginia you know the first phase of west virginia is largely volume improving the mill and then we get out into 2028 and that's when we'll start to put auto times through qualifications on west virginia so it's coming soon the second thing is at berkeley we already do a lot of auto out of berkeley they were the substrate mill for that qualification leon just just mentioned they just galvanized their first coil on the new guideline last week awesome accomplishments from that team on time on budget and we're just really well positioned to to to take substantial share in the automotive market continue to grow exercise our capabilities there we're at about 10 percent this year we'll do about a million tons at at um west virginia as we're ramped up there significant portion of that probably 10 percent goes into auto exposed to worry about our growth and the other thing i'd add there, Noah, and our investors on this journey.

As Leon mentioned, we are now on a platform aspirationally. We'd like to get a bigger chunk of that platform, but starting out with certain parts and look forward to continuing to...

Just a reminder, if you would like to ask a question, please press star one to raise your hand. And to withdraw your question, press star one again. Your next question comes from the line of Matt Dushkin with Wells Fargo. Your line is open. Please go ahead.

On the data centers that y'all said it's 15% of backlog, I just kind of want to unpack, what's the breakout of that between your different products? You know, like how much is structural versus how much is sheet versus downstream? Just any color there would be helpful.

Yeah, look, the 15% is the entire enterprise. You know, and obviously in the long products, particularly structural, much higher, Matt, it's in the 30 to 35 percent range. And so, you know, those teams continue to operate in one of the strongest demand environment we've ever had. New Corgumato and Berkley Beam are running rates with backlogs that are unprecedented. And we've never seen in the history of those mills in the 35-year history at NYS. So, again, robust doesn't really put justice to the demand drivers fueling that. And a big piece of that for structural is the data centers.

Matt, maybe if I could just add downstream businesses, particularly Volcraft Metal Buildings Group, has picked up a fair amount of volume as well. And that's just a testament to our team's ability. the breadth of the portfolio and solutions that we offer and the range of in-market capabilities we have and the willingness to work with customers to find the right outcomes. So it's really – it's – Leon, correct, surprising to anybody. Randy highlighted her impact on MBQ and Barr and, of course, in volume pickup.

And then I just want to pivot to piggyback on Tristan's question. And sorry, when you all cut off, you all may have been answering this. But just curious about the commercial approach to the exposed auto qualifications. How are y'all thinking about the contract structure? You know, maybe attack it with the spot market, which I assume would be tough, but just curious on that.

Matt, where did we cut off? What did you hear? How far into the answer before you lost us? We got to one with GM, and then it kind of just cut off a little bit after that. so i didn't okay well look it gives me a wonderful opportunity to make sure everyone understands the dispelling uh nature that eaf producers cannot make the most uh stringent grades of exposed automotive again we're on the general motors platform for that um the berkeley startup of their uh second gav line is is in play in west virginia will continue to ramp and look this this is also not a new story. Well, it's the first platform we've been given. We've been in the automotive space for more than 10 years, right? So we've learned and worked with the major OEMs in this country for a long time, not just GM, but Ford and BMW and Mercedes and many others. And I'll let Noah speak more to that. But look, with General Motors, we've had a great relationship. We're, you know, six-time recipient of the Supplier of the Year Award with them. And so we we understand their needs. We've worked closely with them. Our engineers, metallurgists, and commercial teams have built incredible relationships. Our technical teams in Detroit provide an incredible avenue for those OEMs to understand how we're doing it and for us to link in those PPAPs and process control side to have that full offering.

And so, you know, I'll let you answer maybe if you want to add any more detail to the commercial and how we're thinking about that. i just wanted to provide the backdrop that these are not new orders or new customers for us it's a new platform new grades but not not new relationships yeah and thanks for the question matt sorry you missed my answer the first time i assure you it was brilliant but to give you some work more color i guess specifically to the contract side you know it's one thing to have the capabilities and and we're at a point where we're very confident in our capabilities it's It's built on decades of work by our team to learn how to make the grades and meet our customers' requirements. And this proof of our ability to get on platform that we talked about here is real. But then getting qualified takes a number of years. And we have a leg up on Outline in Mexico where we do extensive automotive variety of different grades that will match up nicely with the suite of capabilities at Berkeley and at West Virginia. And then we have a broad book of capabilities and qualifications that we've worked through. So our team is very experienced with the qualification process, and we're able to lean into those qualifications at some of our other low pace set West Virginia up for success. West Virginia, by volume, our resources.

I think the answer was probably even better the second time, but I appreciate all the color, guys. thanks matt your next question comes from the line of richard garcia terena with barclays your line is open please go ahead good morning and thanks for opening up again to my question um if i could just ask quickly in terms of pricing obviously the market has uh been able to withstand pricing um moving higher uh can you provide some color in terms of what you're hearing from customers um and you know when it comes to fixed price contracts uh resetting next year how should

we think about that um yeah impacting uh your results thanks sure i want to make sure i understand the question are you asking how pricing in the structural side and moving into 27 is impacting our customers contract on the market yeah hey richard this is noah let me let me just step in and talk about about where we are with um our sheet contracts and how we've how we how we work through reset this contract as we step into 2027 and you know we come into this market you've heard that the van drivers we've talked about really robust demand picture um across the sheet group and an expectation of and then we're bringing these new capabilities to the to the fold as well so west virginia will start to come online berkeley um indiana just painted their first coil um so our goal through contract season is to match up these new capabilities and these really strong this really strong demand picture to to meet the needs especially our long-term our long-term customers and we've never been i would tell you more deliberate about that that plan um and we have a strategy that feels good because it's very coherent across our mills so some mills are going to have to give up volume to get west virginia online they're able to go out and we're able to back those those replacement tons up contractually so i think we have a very coherent plan in the face of a lot of strong demand picture out there um to maybe talk about about the the terms you know we're not going to get into the specifics but they're significantly better as we step into 2027 we've improved the overall quality of the agreements lower discounts higher extras and our volume variances are tighter than they were in in 2026 if you look back historically we've been about 80 to 85 percent contracted will be a little heavier than that this year and overall i think our commercial team's done an outstanding job positioning us for 2027 and tristan you had also

asked about the composition of our contract that may be resetting at a different price as we go into 2027. Nucor really doesn't have a very large percentage of our fixed are going to be in auto.

And I would call that just loosely five to maybe at 7% of our fixed contracts, but the majority will reset.

Your next question comes from the line of Tristan Gresser with BNP paraba your line is open please go ahead yes hi it's me again sorry i got disconnected and thank you for for your answer i just have another question on uh the strong performance of the steel products division if you could dive a little bit into that the domain driver behind it maybe the the contribution of towers panels doors anything standing out or anything really behind the strong performance. And also when we look past that, looking into Q4 and Q1 next year, should we expect some similar scale of ASP increase or would you expect some moderation of that? And even with lower volumes, how do you think about margins? Are they going to continue to expand every quarter or are you going to feel a bit the pressure from those higher substrate costs in general?

Well, look, that's a lot to unpack here, and I'm going to let John Hollett take most of it. But look, as we sort of answered earlier as well, Tristan, you know, as we came out of 25 into 26, the demand environment has continued to become more and more and more robust. And with that, pricing is flowing through the enterprise as well. So you're seeing higher realized pricing in our downstream products groups that are now hitting the balance sheet and will continue to do so well into 2027. I, you know, again, at a very high level, man, the products group now in Nucor is such a wide and diverse set of businesses and generates great returns. But again, there's a lot of different business segments in that. So, John, why don't you just walk through, you know, to Tristan's question, some of those highlights and what we're most excited about as we head into 27.

Yeah, Tristan, I appreciate that question and the recognition that our steel products earnings were the best earnings in Q3 that we've had since the beginning of 2024. And this is not just one specific product. This is a variety of different products that are contributing to this. we talked earlier about the the tubular group and their performance related to border wall overall construction on on the volcraft joyston deck side we had noted previously that we were seeing higher prices in new order entry and that is now being realized in our earnings and new orders continue to exceed and that backlog carries us well into 2027. uh it was mentioned earlier earlier, our buildings group and their participation in the data center market, they had a really strong third quarter. It's setting the stage for a great year in 2027. And again, we're the only company, as Steve mentioned, that has the ability to support data centers through conventional construction with joist and deck and structural steel or the alternative of supplying a pre-engineered metal building. And then I also want to recognize our insulated panel group, one of our Expand Beyond businesses that had record earnings in the third quarter, and that, again, will carry us well into 2027. Overall, our backlogs are up about 25%. Pricing continues to improve, and we're going to have a good Q4 and a really strong 2027. up.

Maybe the other thing, too, and you mentioned it, Tristan, but look, we're excited. We love our dorm business. We love what CHI and RideTech are doing, but think about the build out, what we've done in towers, right? We've been pretty public that we made some runs in the M&A side that didn't work out. We love the space and have for a lot of years, and so we made the decision a couple years ago that we're going to do it organically. We bought a small company in Summit to kind of begin and get some in-house knowledge that now has expanded to three greenfield towers plants two of which are online and the third that will be up and running by mid next year but think about what and I think it was Steve's opening comments we've that team has already qualified at 30 different utilities so not unlike the robust excitement and demand picture from OEMs into the sheet group to provide the higher end and automotive exposed grades we're finding and feeling the very same um relationship build and networking within the utility side to grow that space and so the order books are um getting filled very very quickly and again it's the uh it's a space that not only are do we feel really well poised to provide but the build out of those facilities is so automated we truly believe we're going to have a cost significant cost advantage in a differentiated position in that market so again i'm really proud of what the the downstream products groups teams are doing across the board and including these span beyond businesses so appreciate the question tristan all right very clear thank you thanks this concludes our q a portion i will now turn the call back to leon depalian chair and ceo for closing remarks well team as we close i want to thank our 33 000 teammates for another strong quarter and for your continued unwavering commitment to our most important value the health safety and well-being of every one of our team members thank you to our customers for the place trust you place in us with each and every order we want to continue to work hard and earn your business every day and lastly to our shareholders thank you for trusting us with your valuable shareholder capital. 26 is shaping up to be a really, really good year and we believe 27 will be even stronger. Our best days are definitely in front of us. Thank you for your interest in Nucor and have a great day.

This concludes today's call. Thank you for attending. You may now disconnect.