Earnings Call Transcript - NUE Q3 2025

Operator, Operator

Good morning, and welcome to Nucor's Third Quarter 2025 Earnings Call. Today's call is being recorded. At this time, I would like to introduce Chris Jacobi, Director of Investor Relations. You may begin your call.

Chris Jacobi, Director of Investor Relations

Thank you, and good morning, everyone. I'm excited to join you this morning as the newest member of the Nucor IR team and welcome you to our third quarter earnings review and business update. Leading our call today is Leon Topalian, Chair, President and CEO; along with Steve Laxton, Executive Vice President and CFO. Other members of the Nucor 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. With that, let's turn the call over to Leon.

Leon Topalian, Chair, President and CEO

Thanks, Chris. I want to begin by thanking our 33,000 Nucor teammates for their continued commitment to safety. Our team has been lowering our injury and illness rate every year since 2017, and we are on track to do it again in 2025. This level of performance would be impressive at any point, but to do it through a period of significant growth is an amazing accomplishment. Congratulations to the entire Nucor team and let's make the last two months of 2025 the safest in Nucor's history. Turning to Nucor's third quarter financial performance. We generated EBITDA of approximately $1.3 billion and earned $2.63 of EPS. These results exceeded our third quarter guidance driven by stronger-than-expected shipments from our steel mills and favorable corporate adjustments. Steve will provide more details during his financial update. We remain committed to prudent capital management on behalf of our shareholders, balancing long-term growth with meaningful shareholder returns while maintaining our industry-leading credit profile. During the third quarter, we reinvested $807 million into the company with the majority of this capital related to growth projects that are nearing completion. We've also returned approximately $230 million to Nucor shareholders through dividends and share buybacks, bringing our year-to-date returns to nearly $1 billion or 72% of net earnings. We also saw our long-term credit ratings upgraded to A3 by Moody's. Following the Moody's upgrade, we are now rated A- or A3 by all three ratings agencies, making us the only major North American steel producer to hold that distinction. Creating value for our stakeholders requires a relentless focus on execution, and I'm proud of the work our team has done to advance our long-term mission to grow the core, expand beyond and live our culture. We are in the final phase of our multiyear capital investment campaign and will complete four major projects by the end of this year. Recent milestones include the commissioning of two bar mill projects and the commencement of pole production in galvanizing operations at our Alabama Towers & Structures facility. Our two new sheet coating facilities at Crawfordsville and Berkeley County remain on track, and the team in Crawfordsville recently processed the first coil through their new galvanizing line. And construction of our new sheet mill in West Virginia is 2/3 complete and remains on schedule to begin ramping up by the end of next year. Even as we invest to grow our capabilities, we remain focused on leveraging our existing asset base to generate attractive returns for our shareholders. For example, in steel products, we've taken steps to repurpose existing steel products facilities to support our faster-growing Nucor data systems businesses. And within the steel mills, we have recently decided to no longer pursue a new Rebar micro mill project in the Pacific Northwest region. With the recent investments we've made in the bar group, we can serve the Western U.S. and Canadian markets from our current footprint with superior cost and supply chain advantages. We will continue to monitor market developments to ensure the best use of our shareholder capital. As I've said in the past, our growth strategy is not about growing our capacity; it's about providing more capabilities for our shareholders, customers, and team. The investments we are making now to grow our core steelmaking capabilities and expand into downstream steel-adjacent businesses will better position Nucor to offer comprehensive, integrated solutions unmatched by any of our competitors. And by optimizing our full portfolio to operate as one team, we make it easier for our customers to buy, build, and succeed. Let me now take a few minutes to highlight a couple of the areas where Nucor is improving its position as the supplier, employer, and investment of choice within the steel industry. One of these is Nucor's bar mill group. As many of you know, Nucor entered the steelmaking business in 1969 when we began operating our first bar mill in Darlington, South Carolina. Over the following five decades, we have harnessed the inherent advantages of scrap-based steelmaking and Nucor's performance-driven culture to grow our Bar Mill Group into the nationwide powerhouse that it is. The Bar Mill team has delivered strong results in 2025, fueled by increased demand in the non-residential construction markets and infrastructure markets. With our broad geographic coverage and capabilities, Nucor is well positioned to optimize both product mix and volume regionally. In fact, the team has set quarterly rebar shipment records twice so far this year, first in Q1 and then again in Q3. We also began ramping production in the third quarter at our new melt shop in Kingman, Arizona and our new rebar micro mill in Lexington, North Carolina. Both facilities are strategically located in high-growth regions with reliable access to local scrap supply, enhancing our existing footprint in the Western and Southeast markets. We will continue ramping up operations over the coming months, with both projects on track to be EBITDA positive by the first quarter of 2026. While we build our leadership in steelmaking, we are also positioning Nucor as a key supplier to high-growth markets, like data center construction. The Dodge Construction Network is forecasting 60 million square feet of data center construction in 2025, a 30% increase over 2024. And the state of Virginia alone has seen 54 new data center permit applications in the first nine months of the year, underscoring the sector's momentum and long-term growth potential. With our comprehensive portfolio of products, Nucor is uniquely equipped to partner with leading developers and hyperscalers who increasingly value speed and certainty of execution. We now supply over 95% of all steel products that go into a data center, from the building envelope to the interior infrastructure. For example, we're the only provider capable of supplying steel for both conventional structures and preengineered buildings at scale. Inside of data centers, we're accelerating growth in our Nucor data systems businesses, implementing domestic production of server cabinets and increasing capacity for hot aisle containment and data center support structures. This unlocks powerful cross-selling opportunities for our diverse product portfolio, creating better outcomes for customers and driving shareholder value. Turning to trade policy. We've seen meaningful federal action this year supporting the American steel industry. Section 232 measures and ongoing trade enforcement are curbing imports, with finished steel imports down nearly 11% year-to-date through August. Since the broader Section 232 tariffs were implemented, we have seen larger month-over-month reductions in imports and expect the trend to continue. While imports have decreased since the comprehensive 50% steel tariffs went into effect, they continue to be a necessary tool to counteract the massive amounts of overcapacity that persist in the global steel sector. We believe that tariffs must stay in place with no exceptions or loopholes until there are fundamental changes in the global steel industry. Ongoing trade cases continue to provide another important defense against unfairly traded imports. In September, the ITC Commission ruled that American steel producers were materially injured by imports of corrosion-resistant steel from ten countries. Nucor is pleased with the decision, which clears the way for the Department of Commerce to issue final antidumping and countervailing duty orders in the coming weeks. We are also following the Commerce Department's investigations into rebar imports from four countries and expect to see the preliminary determination later this quarter. Overall, we are encouraged by the administration's actions to help level the playing field for the American steel industry. And as North America's largest and most capable steel products company, Nucor is well positioned to create value for our customers and shareholders. With that, let me turn it over to Steve, who will share additional details about our third quarter financial performance.

Stephen Laxton, Executive Vice President and CFO

Thank you, Leon, and thank you all for joining us on the call this morning. For the third quarter, Nucor generated net earnings of $607 million or $2.63 per share. Earnings were in line with the second quarter's adjusted earnings per share of $2.60 and above adjusted earnings per share of $1.49 for the third quarter of last year. Year-to-date, Nucor's adjusted net earnings are approximately $1.4 billion or $5.98 a share. Earnings for the third quarter exceeded the midpoint of our guidance range by approximately $0.50. The guidance beat was driven by two main factors: better-than-expected shipments and lower pre-operating and start-up costs. Our steel mills segment realized higher-than-expected shipments in sheet, bar, and structural. In September, our Berkeley division set an all-time production record. And as Leon mentioned earlier, the bar group achieved another quarterly record for rebar shipments. The steel mills group also saw stronger-than-expected shipment levels from several mills coming out of the third quarter planned outages. Additionally, the steel products segment exceeded volume expectations, contributing further to overall outperformance. Several of our newer operations progressed through start-up activities more rapidly than anticipated, resulting in lower-than-expected pre-operating and start-up costs. Pre-operating and start-up costs for the third quarter were $103 million. Favorable corporate and administrative impacts also contributed to the outperformance. These included lower inventory eliminations due primarily to lower-than-expected inventories in our downstream steel products segment as well as lower overall corporate and administrative costs. Turning to the segment level results for the third quarter. The steel mills segment generated $793 million of pretax earnings, a decrease of 6% from the prior quarter. We saw improved results across our bar and structural steel groups, but lower profitability in sheet and plate more than offset the gains in longs. We continue to see strong demand for long products and more subdued but stable demand for flats. That said, we are gaining market share and are encouraged by the recent operating performance of our steel mills. Sheet shipments nearly matched our record volumes set in the prior quarter with sheet backlog tons up 13% year-over-year. And our bar products backlog at the end of the third quarter was 35% higher than at the same time last year. Turning to Steel Products. We generated pretax earnings of $319 million, down from $392 million in the second quarter. Despite the sequential decline, volumes held up better than expected, with external shipments increasing 4% quarter-over-quarter. However, operating profit was impacted by less favorable product mix, higher substrate pricing, and planned outage costs. Our steel products backlog has moderated alongside typical seasonal ordering trends, but ended the third quarter 14% higher year-over-year. The backlog extends well into the second quarter of 2026 for some of our more custom engineered product lines. Coating activity remains robust, and we believe this reflects business confidence among our customers servicing the construction and infrastructure markets as well as their confidence in Nucor as a reliable provider of high-quality solutions. Turning to the raw materials segment. We realized pretax earnings of approximately $43 million compared to $57 million for the prior quarter. The primary driver of the sequential decline was lower pricing, partially offset by lower operating costs. Moving to the balance sheet. Nucor continues to have a differentiated position of strength and flexibility in our industry. An example of this was on display in the past quarter as evidenced by our recent ratings upgrade by Moody's. And we remain committed to maintaining a strong investment-grade credit profile. We ended the third quarter with a total debt to capital ratio of approximately 24% and cash of approximately $2.7 billion. We generated $1.3 billion in operating cash flow during the quarter, a testament to Nucor's cash-generating operating model. Capital expenditures totaled $807 million for the quarter, bringing our year-to-date total to $2.6 billion. We now expect full-year CapEx to be $3.3 billion for 2025 as some project spending was pulled forward from 2026. We will provide more detail on our CapEx budget for 2026 on our year-end earnings call in January, but we expect overall expenditures to decline by more than $0.5 billion compared with 2025. The cornerstone of Nucor's capital allocation framework is providing meaningful cash returns to shareholders. During the second quarter, we returned $227 million to shareholders in the form of dividends and share repurchases. Through the end of the third quarter, we've returned nearly $1 billion, representing 72% of Nucor's year-to-date net earnings. During the same period, we repurchased approximately 4.8 million shares at a weighted average price of approximately $126 per share. Turning to our near- to medium-term demand outlook. I'd like to take a closer look at the distinct demand drivers shaping our flats, longs, and steel products markets. While we're seeing varying levels of demand across these products, we expect each will continue to benefit from further declines in imports as the effects of tariffs and trade cases are realized. Beginning with our flat products, we expect strong demand from energy, data centers, and advanced manufacturing. At the same time, we're monitoring softer conditions in areas like residential construction, consumer durables, heavy equipment, and agricultural machinery. Additionally, new domestic supply is still being absorbed in the market. Turning to long products. Our bar and structural mills continue to benefit from a number of demand drivers, underpinning a more constructive near-term outlook while we remain mindful of typical seasonal purchasing trends. Infrastructure spending remains elevated. The American Road and Transportation Builders Association reports that bridge and tunnel contract awards are up nearly 20% year-over-year. And 60% of total funds allocated to the IIJA highway projects remain unspent. As Leon mentioned, data centers and energy infrastructure needed to power them will continue to drive pronounced demand for Nucor's long products. We also see good demand from institutional construction, stadiums, warehouses, and chip facilities. In addition, we expect to capitalize on the strong regional demand and gain market share as our North Carolina micro mill and new melt shop in Arizona ramp up. Finally, in our steel products segment, many of our business lines are benefiting from pockets of strength in nonresidential construction. As the market leader in custom engineered building products like joist and deck, metal buildings, and insulated metal panels, we're seeing strong customer interest in our capabilities, particularly from those prioritizing speed, quality, and certainty of execution. We also expect healthy demand for our rebar fabrication business and incremental demand for tubular products. That said, we're closely monitoring the impact of evolving trade policy, higher construction costs, and persistent softness among residential construction activity. Turning to our fourth quarter outlook. We expect Nucor's consolidated earnings to be lower than the third quarter. We expect lower total volumes across all operating segments due to a combination of factors, including seasonal effects, Nucor's fiscal quarter continuing five fewer shipping days, and two scheduled outages at our DRI facilities during the fourth quarter. We anticipate a decline in realized pricing within our steel mills segment, primarily driven by sheet. In contrast, pricing in our steel products segment is expected to remain stable. Looking ahead to 2026, we expect stable domestic steel demand. With the broadest range of capabilities in the North American steel market, Nucor is confident in our ability to create value for our customers and shareholders as we capture a healthy share of that demand. And with that, we'd like to hear from you and answer any questions you may have.

Operator, Operator

Our first question comes from Alex Hacking from Citi.

Alexander Hacking, Analyst

Congrats on the strong results. It seems like Nucor shipments are growing faster than the industry and you referenced they're gaining share. Could you maybe give more color on the kind of specific products where you're gaining share? Any change in strategy that led to you gaining share?

Leon Topalian, Chair, President and CEO

Thank you, Alex. Let me start with our top priority, which is safety. We are on track for our eighth consecutive year of reducing injury and illness rates, aiming for the safest year in our company's history. I want to take a moment to express my gratitude to the 33,000 team members who uphold this valuable commitment every day across 40 states and 300 locations worldwide. Now, to address your question, yes, we remain focused on maintaining our position as the market leader, which requires us to stay ahead. A good illustration of this is the restructuring of our plate group; Brandenburg continues to progress, and as Steve noted earlier, the reduction in pre-operating start-up costs means that Brandenburg is ramping up more quickly than we initially expected. They're doing an excellent job, and you'll hear more about this shortly as we discuss plate in greater detail. Additionally, our long products segment is another area where Nucor will seek growth opportunities in bars and beams. Ultimately, our strategy over the past few years has been centered around our commercial and construction solutions group, which engages major developers and hyperscalers looking for speed and capabilities that Nucor can deliver to the market. We are experiencing significant pull-through effects from our product groups ranging from upstream mills to downstream segments, which is contributing to our market share growth. As I mentioned earlier, the current demand for data centers is intense. With our recent acquisitions in data products, racking, and insulated metal panels, along with our wide range of steel offerings, we can now produce 95% of all steel components needed for framework buildings and hot aisle containment in data centers. This provides a unique set of solutions for these developers and hyperscalers.

Alexander Hacking, Analyst

I guess just a follow-up on that point on the data centers. Are there specific products that Nucor is selling that are particularly exposed to data centers? I mean I know that choice impact shipments are up over 20% like this year versus last year. Are they an obvious beneficiary from this?

Leon Topalian, Chair, President and CEO

Yes, Alex, it's really the gambit. So insulated metal panels, joist, grading, decking, fasteners, sprinkler, conduit, the foundations, the rebar in the foundations, the civil side, the sheeting on the outside of the building, the overhead doors from C.H.I., Rytec, and so really, it's the full purview. But John, anything else would you add to that?

John Hollatz, Executive Vice President

Yes, Alex. On the joist and deck side, we're definitely feeling the benefits of the data center build-out as well as e-commerce. And we're just well positioned with these end-use markets because of our industry-leading capabilities, the breadth of our product offering, our nationwide coverage. Right now, our joist and deck backlogs are about 25% higher than what they were a year ago at this time. They extend well into 2026, and we're optimistic about what the next year is going to bring.

Operator, Operator

Our next question comes from Bill Peterson from JPMorgan.

William Peterson, Analyst

Congrats on the quarter. Maybe to follow up on this data center opportunity, but maybe to contextualize relative to what I think is a larger market, much larger now, which is warehouses, I guess, based off of your backlog, how should we think about square foot growth beyond 2025, maybe from a market perspective as well as your own opportunity? And is there a way you can, I guess, help quantify or provide any anecdotes on how you're gaining share in the market with like Southwest data products compared to industry growth averages? Just trying to get more context on this opportunity relative to larger ones such as warehouses.

Leon Topalian, Chair, President and CEO

Yes, Bill, let me start by addressing your point about the warehousing segment. It is likely to remain flat year-over-year and we expect similar conditions in 2026. This segment peaked around 2021 or 2022 when we witnessed significant buildouts from Amazon and others that expanded rapidly. Over the past 12 to 18 months, the focus has shifted toward the data center side. The energy infrastructure plays a crucial role in this, and Nucor is connecting with Southwest data products, which allows us to operate in areas we weren't able to before. Nucor now has a warehouse and data systems group that offers a comprehensive solution for major developers. John, could you elaborate on how we approach the market with this?

John Hollatz, Executive Vice President

Yes, Bill, when you think about a data center, and it's on our Slide 7 in our presentation, all of the different products that Nucor supplies into that market. And we're the only company that can supply all of those products. Many of our competitors can supply one of them. We have the ability to supply all and we work directly with a lot of these companies to guarantee the surety of their supply to meet their deliveries to get these facilities operational on time. It's a big advantage that we have with that entire portfolio of products. In addition to that, having redundancy in our portfolio we mentioned, we've converted a couple of facilities over the last several months to help the build-out of these data centers because we see that market being so hot moving into the coming years.

Stephen Laxton, Executive Vice President and CFO

Bill, this is Steve. I'd like to just add one thing that's implicit in the questions that you and Alex both ask is a commentary on the flexibility of Nucor's overall portfolio. And so as you see different markets get strong, Nucor has excelled over the years at winning in a variety of different ways. And right now, you're focused in on data centers, and we can capture, as John and Leon described, unprecedented. We're unparalleled with anyone in the space and the ability to gain in that area. But it's not lost on us and shouldn't be on you that Nucor has won at various times when different markets have been strong because of the product diversity and the flexibility that we have in supply in the market.

William Peterson, Analyst

No, I appreciate that insight. Just to follow up, I might have missed it or didn't hear it, but you mentioned that data centers are expected to be flat for 2026. Can you provide some perspective on how we should view data center growth for next year? I also have another question.

Leon Topalian, Chair, President and CEO

Yes, sorry, Bill. No, traditional warehouse growth would be flat. Data centers are projected to experience double-digit growth over the next 5 to 6 years across all major categories we are monitoring. In my opening comments, I mentioned the forecast of 60 million square feet of capacity by 2026. This segment is growing rapidly, so the data center side is not flat.

William Peterson, Analyst

Yes. Well, understood. On my second question, so scrap cost was down, but conversion costs were up. I guess can you speak to what contributed to the latter? Is this related to the new mill ramps? Or is there something else there? And I guess, more importantly, how should we think about this trend into the fourth quarter?

David Sumoski, Executive Vice President

Thanks, Bill. This is Dave Sumoski. So although our costs quarter-over-quarter were up, costs year-over-year are down 5%. But specifically, the items affecting the quarter-over-quarter results are slab costs for CSI. Some of our consumables were up such as refractory and labor was slightly up due to some significant planned outages in the quarter.

Operator, Operator

Our next question comes from Lawson Winder from Bank of America.

Lawson Winder, Analyst

I appreciate the update today. Could I ask about the guide, which, I mean, in the guidance for Q4, you pointed to lower volumes just because of fewer shipping days. I mean, that all makes sense. But you also suggested there was some lower realized sheet pricing factored in. Yesterday, Nucor's CSP was $10 higher. I mean was that factored in? I mean we also saw a competitor raise their pricing by $50 yesterday. How should we think about the movement we've just seen very recently in that?

Leon Topalian, Chair, President and CEO

Yes, Lawson. Thank you for your question. Most of Nucor's sheet deliveries are based on contracts. While we are observing price movements today, we are experiencing typical seasonality and a softer flow for Q2 in our order book, which leads us to project lower realized pricing for Q4. However, with the recent price increases in that group, we expect to see those higher prices in Q1. It takes time for these changes to fully materialize. On a positive note, there are two factors that will help expedite this process. First, service center inventories are currently seasonally low, and second, we have low volumes of inventory at our mills. This will enable us to realize the pricing you mentioned much more quickly. Therefore, we expect to see these changes reflected in our order books and balance sheet for Q1.

Lawson Winder, Analyst

Fantastic. And can I ask on acquisition opportunities? When you look at the relevant acquisition set for Nucor, how would you characterize that in terms of product and region or segment upstream versus downstream? I appreciate any thoughts.

Leon Topalian, Chair, President and CEO

Yes, Lawson, our mission statement is straightforward. We launched on January 1, 2020, with the goal to grow our core, expand beyond it, and live our culture. Our core steelmaking capabilities are advancing with the start-ups of electric furnaces and a micro mill in North Carolina, as well as the melt shop in Kingman, Arizona, which are ramping up. We also have three start-ups at Crawfordsville's galvanizing line and in Berkeley next year, along with the launch of our first towers and structures facility in Alabama. This will culminate in the start-up of the largest investment in Nucor's history in Mason County, West Virginia, featuring the most advanced sheet mill in our industry. This will ensure we have the capabilities to provide our customers with the steel they need today and in the future. Regarding our expansion, it involves initiatives like C.H.I and Rytec Southwest data products and our Summit acquisition in the Towers & Structures sector, along with our insulated metal panels group, which adds unique products to our offering. Looking ahead, we don't foresee building more greenfield facilities in the near term; instead, we'll invest in adjacent spaces. Our expansion will focus on mega trends in the U.S. economy, such as the energy sector and data centers. We are searching for targets that align with our culture, utilize a converter model that incorporates our competencies, have low capital intensity, offer high margins, and are countercyclical to traditional steel market cycles. We want to acquire businesses that won't be significantly impacted by the typical steel cycles we've observed over the last 60 years. Companies like C.H.I., Rytec, and IMP provide a more stable earnings base and demonstrate growth across various sectors, maintaining stability even during financial crises like COVID-19. Our ultimate aim is to stabilize Nucor’s overall earnings, achieving higher highs and higher lows.

Operator, Operator

Our next question comes from Timna Tanners from Wells Fargo.

Timna Tanners, Analyst

I wanted to ask about my home state, Washington, and what's happening in Seattle. I noticed the announcement about not replacing the existing mill. Can you provide more details on that decision? You mentioned that you could supply from other mills, but with imports to the West Coast declining, is there enough supply available there? Can you source it from Kingman? Are you simply not replacing the existing mill, or is it that you are not shutting it down?

Leon Topalian, Chair, President and CEO

Yes. Look, you kind of answered the question within that question as well, Timna. So thank you for it. Look, we have a great relationship with the city of Seattle, and our team out there does an amazing job connecting with our community, being in that community and welcoming that committee with open arms and how we take care of our safety, the environmental, the sustainability side. So they do a really, really nice job. But it is, as we step back and look at our prudent capital allocation, where our dollar's best spent. And where is the best returns on those dollars going to be? With the investment of the melt shop in Kingman, Arizona, our Utah facility and the breadth and exposure of our Seattle mill, we are adequately covered for the Western side of the United States as well as Western Canada. So again, as we step back to really evaluate that, we feel really good about where the mill is and its capability set in Seattle, but couple that with the addition of Kingman's melt shop, and we think we've got a very adequate coverage there. So we're going to use those dollars elsewhere to think about growth. And again, how do we not just meet our cost of capital but double our cost of capital? How do we make sure that we're generating EVA for our shareholders for the long term? And that's where we're going to put that. And again, if we don't have that home, as you've seen over the course of the years and following us, Timna, this year, we're at 72% return of our net earnings back to our shareholders in dividends or share buybacks, and that will continue.

Timna Tanners, Analyst

Great. That's my next question. But just to clarify, that Seattle mill keeps operating. You're just not replacing it with the micro mill, is that right?

Leon Topalian, Chair, President and CEO

That's correct.

Timna Tanners, Analyst

Okay, super. So along the lines of the shareholder returns, your third quarter buybacks at $100 million. Is the smallest you've had, I think, since 2020 when you didn't have any buybacks? Is that correct? And if so, is that a statement of anything? Do you have other uses of capital? Anything you can elaborate on there?

Leon Topalian, Chair, President and CEO

Yes, I'll let Steve answer that. But I would remind you the $13 billion that we've returned back to our shareholders over the last five years, but I think you're accurate. But Steve.

Stephen Laxton, Executive Vice President and CFO

Yes. Hey Timna, you're correct. That is the lowest quarterly return we've had, but we remain committed to getting back at least 40% of our earnings every year. We don't necessarily do that every quarter. And so over the course of the year, we're well ahead of that mark. And as Leon alluded to, over the last five years, we've given back around 60%. Just under 60% of the earnings. So we've continued that discipline of balancing investment with our capital and growing the company while we also maintain strong liquidity and a strong balance sheet position. We've actually improved that even getting the upgrade from Moody's this past September and give meaningful returns. So those three elements remain in place, and that's not going to change going forward. So I wouldn't get too focused on the quarterly number. I'd just remind you that we remain very mindful and intentional about the management of those three pillars of our capital allocation framework.

Operator, Operator

Our next question comes from Phil Gibbs from KeyBanc.

Philip Gibbs, Analyst

Just wondering if you could give us the state of the West Virginia sheet investment in terms of where you are in the spending and your expected start-up time frame?

Leon Topalian, Chair, President and CEO

Yes, certainly, Phil, I'll ask Noah Hanners, our EVP over Sheet Group, to give you a more detailed update. Noah?

Noah Hanners, Executive Vice President

Yes. Thanks for the question, Phil. It gives me a good opportunity to congratulate and recognize the team on the progress there. I'd tell you, we're at about 75% on the build. And in terms of capital spending, we're about to that same point now. Most of the 25% we have remaining remains in the labor category. So if you go there today, it looks like a steel mill. And so we have the world's best steelmaking team, and you see the foundation of it starting there with that team in West Virginia. We have done an awesome job that the West Virginia team has done an awesome job of bringing in some of the most talented people from across our sheet group and from across Nucor to lead that project. We've done a great job of hiring and experience, and I get often asked about like how do you feel about this investment? And we could not be more excited because we're taking this awesome team and we're giving them the world's best equipment, like they're going to have assets, capabilities there that are the best in our market. And then we are turning them loose in a region where we've been underserved, but where we have really strong customer demand. When you stack those things up, we're going to be extremely successful with that investment, and we're excited about what the future brings for West Virginia.

Philip Gibbs, Analyst

And then just a question for Steve. On the tax side, is there a distinct difference between your cash tax rate and your book tax rate for '25 and '26, given the recent changes in tax legislation?

Stephen Laxton, Executive Vice President and CFO

No, surprisingly, Phil, not necessarily due to the way the legislation was written. It accelerates things that begin after the legislation. Most of our spending has already started. To give you a sense of that, the deferred tax benefits and cash flow benefits this year in '25 will be around $100 million. Looking out to '26, that will be smaller because of the nature of the bill. The One Big Beautiful Bill had a relatively modest impact on us in that regard. It does accelerate some of the R&D credits slightly, which is where some of the gains are coming from. However, in terms of capital spending, it may not be as pronounced as you might expect given the amounts we are investing in capital.

Operator, Operator

Our next question comes from Katja Jancic from BMO Capital.

Katja Jancic, Analyst

Starting on the start-up costs, given that you have a couple of projects now that are ramping up, how should we think about these costs over the next few quarters?

Stephen Laxton, Executive Vice President and CFO

Katja, this is Steve. We would expect over the next quarter then to be in line with the third quarter. And give or take, they're going to be in that range into the first quarter as well. So call it $100 million to $110 million a quarter going forward for the next couple of quarters.

Katja Jancic, Analyst

And then I think some of the margin compression in the mill segment was tied to the slabs you purchased for the TSI operations. If I'm not mistaken, that mostly comes from Brazil. Is that correct? And if so, why not use more of the material produced internally?

Noah Hanners, Executive Vice President

Katja, this is Noah. I'll take that. Yes, mostly from Brazil, and we have been mostly slab served there this year, but we have a team that looks at the decision about whether to supply with internal substrates, so coils from our own mills like Allison or Crawfordsville more to buy slabs. Most of this year, it's made the most economic sense to buy slab and roll it there to our hot mill, but there have been months where we supplied a lot more coil. And I would tell you, over the course of this year, we've leaned into more of our own internal substrate. So that team will continue to look at what makes the most economic sense and we'll go that way.

Operator, Operator

Our next question comes from Andrew Jones from UBS.

Andrew Jones, Analyst

I've got a couple of questions on price hikes. And first of all, the MBQ aborted hike from some of your peers. It sounds from the commentary like you didn't support it. Curious on the reasons there. And then secondly, on plates, curious how you're seeing the market at the moment. Obviously, we've had some relief on the import side or we should have done, and it doesn't seem like the Canada carve-out is coming anytime soon. So I'm curious how you're sort of thinking about pricing and the state of the market in the coming months in plate given that sort of tighter supply side?

Leon Topalian, Chair, President and CEO

Okay. Andrew, we'll start off with the bar group. I'll ask Randy to just give you an update on your questions there, and then we'll take it to Brad on plate.

Randy Spicer, Executive Vice President

Yes. Andy, thank you for the question. Certainly, we're not going to comment on specific pricing actions. But what I can tell you is that the momentum across our bar products remains very strong. We're seeing robust order entry across all regions and key end markets. And as kind of been mentioned, it's driven by infrastructure projects, chip plants, warehouses, and data centers. And that strength is being amplified by the continued growth of our downstream businesses, Nucor rebar fab, Vulcraft, and so forth. So it's also worth noting we have implemented and realized meaningful price increases in merchant bar throughout 2025, supported by our multiyear high backlogs and extended lead times. So all of that gives us confidence as we move through Q4 and into 2026 that the market is strong and ready for us to continue in that space.

Brad Ford, Executive Vice President

Yes, I'm pleased to discuss the plate sector. Overall, the plate market has performed well this year. According to the latest data, ADC is showing an upward trend of about 15% year-over-year, and we are beginning to notice the effects of tariffs on imports. While imports were slightly up earlier this year, they have decreased significantly in recent months. We are seeing strong demand in the plate market, particularly in energy sectors, both traditional and renewable, as well as in infrastructure. Our bridge business has thrived this year, and the non-residential construction segment is also strong. Currently, our backlog at the end of Q3 is 58% higher than at the same point last year, which makes us optimistic about the future of the plate market.

Leon Topalian, Chair, President and CEO

Brad, why don't you touch on just the military applications and great development at Brandenburg as well?

Brad Ford, Executive Vice President

Yes, quick Brandenburg update. The team continues to make significant progress at the mill. We announced last quarter that we achieved EBITDA positive results. We achieved that again in Q3. I'd mentioned some weekly or monthly records from last quarter, but honestly, the team has already shattered those records so far into Q4. And then on the product development side, we've had some pretty notable achievements, one being X70 API grade for line pipe. We've achieved qualifications and certifications there and captured a very large order for Q4 and into Q1. And then on the military side, we're really encouraged by the early-stage military armor trials. Nucor's product breadth in place between our three plate mills really is going to allow us to become the premier plate supplier in the U.S. military. And then finally, Brandenburg's capabilities, I know we've mentioned on prior calls that we're seeing opportunities with existing customers, and we're really seeing that play out. The capabilities of Brandenburg are allowing us to sell deeper with our current customer base, and we're seeing that in our total plate volumes where we've shipped nearly as much plate through the first three quarters this year as we did for all of last year.

Leon Topalian, Chair, President and CEO

Does that cover all the questions you had, Andrew?

Andrew Jones, Analyst

I have a follow-up regarding the military aspect. I'm interested in knowing if you're targeting export markets, particularly in Europe, where there's potential for significant increases in defense spending. Given that these high-quality grades are more relevant in a global context than just the U.S., is that a focus area for Nucor?

Stephen Laxton, Executive Vice President and CFO

Yes. Thanks for the question. Certainly, it's an opportunity. Again, Brandenburg's capability set is unique in the world market. There's only so few folks that can produce the qualities and size ranges engages that Brandenburg can. So defense spending increases not just here in the U.S., but across the world. We're well positioned to take advantage of that.

Operator, Operator

Our next question comes from Tristan Gresser from BNP Paribas.

Tristan Gresser, Analyst

The first one is just on your prepared remarks, you mentioned stable demand outlook for next year. But in your presentation, it seems you have a lot of structural tailwinds, especially on resi and infra. So I'm just trying to understand what could be the pockets of weakness next year that would offset that growth? And that stable demand outlook. If you could split that between longs and flats that would be helpful as well.

Leon Topalian, Chair, President and CEO

Yes, Tristan, look, I'll touch on a couple of things that we expect to be, I guess, relatively tepid next year, but it is factored into our comments about next year being stable, and it could be up a couple of percent. But again, it's factored in with some softer markets like heavy equipment and agriculture. Right? We don't see that coming back. We think the tariff impact of that has gotten into those heavy equipment suppliers in agriculture. We think residential construction is, again, probably not going to be great. Interest rates will certainly help that, and we'll see what the fate does over the next 70 or 80 days as we finish out 2025. And then auto is probably another one that's not a huge market for us today, again, about 5% or 6%. But one that we think we can continue to grow in because, again, we're increasing our capability sets. But again, I think those are probably three areas that we see either flat or down into '26.

Tristan Gresser, Analyst

All right. That's clear. And maybe just following up on that. I mean consensus has external shipments for the steel mills, I think, below 21 million tons for next year. Obviously, you have all those growth projects coming online and ramping up at different paces. So could you help us understand a little bit of the moving pieces into volumes for next year? And what sort of utilization rates for the new projects do you expect? And do you see consensus is conservative or pretty well calibrated at this point?

Leon Topalian, Chair, President and CEO

Well, okay. Look, I appreciate the question, and we'll be careful on how much detail we get into for obvious reasons, Tristan. But look, I'm an incredibly optimistic guy. We're sitting on the eighth safest year in the history of Nucor. We've returned $1 billion through the first nine months of the year. We're ramping up two of our products today that we expect in Lexington, Carolina and Kingman, Arizona, that we expect to be profitable in Q1 of '26. We've been upgraded by Moody's to A3. We started up the first of three Towers & Structures facilities in Alabama, the other two next year. Continue to grow our capabilities and now make 95% of the data centers that steel that's in data centers that's required, starting up Crawfordsville galvanizing line and Berkeleys galvanizing line, culminating in West Virginia startup next year. The tsunami of earnings power that's going to be brought to Newport's balance sheet is significant. And so I couldn't be more optimistic about our future, and do I think there's upside in our forecast? Absolutely. But look, there's other external factors that we all weighed. But again, the investments Nucor has made are for the long term. Not the quarter-to-quarter, that's the 10-, 12-, 15-, 20-year cycles. And again, I think we are as well positioned today as we have ever been in our history.

Tristan Gresser, Analyst

All right. All right. No, that's fair. And maybe just a last one on steel products. Is it fair to expect higher ASP into 2026, have you seen rebar prices going up? And joists and decks, you mentioned good momentum. And if you could also, I think, expand beyond we're supposed to do $450 million of EBITDA for this year? Do you think it's achievable? And lastly, if you could just remind us the timing and EBITDA contribution of the two new tower projects, that would be also really helpful.

Leon Topalian, Chair, President and CEO

Yes, I'll address the last question first. If I forget the first one, Steve can remind me, or you can, Tristan. Regarding your question about the other two tower facilities, we expect the Indiana facility to be operational by mid-year next year, and the Utah facility should be completed by the end of 2026. By this time next year, we plan to compete with some of the largest players in the industry with our distinctly capable facilities. These new sites are fully automated and utilize the latest technologies, providing significant cost and technological advantages. Another area where we are very optimistic is our products segment. I'll let John add to this, but over the past few years, this segment has contributed approximately 30% to 40% of Nucor's total net earnings. In the cyclical market we are currently experiencing as a steel company, the products group has reached a new peak, and while we have seen lows, we are already on the rise. Our backlogs have increased by 25% to 30% year-over-year, and we're noticing that prices are stabilizing and increasing in most segments of that group. Therefore, I believe there is significant upside potential as we enter the new year, accompanied by favorable conditions that could enhance our prospects.

John Hollatz, Executive Vice President

Yes, Tristan, this is John. The market will determine pricing, but the most common question we get is about joist and deck pricing. As we mentioned last quarter, we're seeing our order entry for joist and deck align with our backlog pricing, and this has been consistent for about nine months. We are experiencing significant stability in that area. Additionally, as Leon noted, the margins and profits generated by these businesses are much stronger than pre-pandemic levels, which is crucial for our overall performance.

Stephen Laxton, Executive Vice President and CFO

Yes. Tristan, thanks for that question. Expand Beyond is doing fine. It's hitting its clip, and it's a mixed bag of things as Leon was highlighting some of the progress we're making in towers. Keep in mind that's a bit of a build-out, a greenfield build-out. So we still would point people to our long-term run rate of $700 million as a target, and we're not going to back off of that.

Operator, Operator

Thank you very much. We currently have no further questions. So I just like to hand back to Leon Topalian for any further remarks.

Leon Topalian, Chair, President and CEO

Well, thank you for joining us for today's call and for your questions. Nucor is continuing to execute on our strategy to grow our core steelmaking capabilities while expanding into downstream steel-adjacent businesses. I'd like to thank our team for delivering solid financial performance and for your unwavering commitment to become the world's safest steel company. Thank you to our customers for allowing us to serve you and to our shareholders for investing your valuable capital with us. Have a great day.

Operator, Operator

As we conclude today's call, we'd like to thank everyone for joining. You may disconnect your lines.