NUE Financial Analysis

Analysis Date: 1/28/2025

Business Model

Nucor generates revenue primarily through its three segments: Steel Mills, Steel Products, and Raw Materials

Revenue Sources

• Steel Mills (53% of shipments) - Sheet, bars, structural steel and plate products
• Steel Products (38% of shipments) - Joists, deck, rebar fabrication, tubular products, buildings
• Raw Materials (9% of shipments) - DRI production and scrap processing

Revenue Distribution by Channel

• Construction & Infrastructure: 53% of shipments
• Heavy Equipment, Transportation & Other: 25% of shipments
• Traditional and Renewable Energy: 13% of shipments
• Auto & Consumer Durables: 9% of shipments

Income Statement Analysis

• Net sales decreased 15.2% year-over-year due to lower average selling prices and volumes
• Net earnings declined 78.1% due to lower steel mill segment earnings and non-cash impairment charges
• EBITDA margin contracted to 11.7% from 20.8% in Q3 2023

Balance Sheet Analysis

• Strong balance sheet with $4.9B cash and net debt/EBITDA below 1x
• Total equity declined slightly due to share repurchases and dividends

Cash Flow Analysis

• Operating cash flow declined 42% YTD due to lower earnings
• Higher capital expenditures for growth projects impacted free cash flow

Capital Allocation

Balanced approach with $2.3B returned to shareholders YTD through dividends ($394M) and share repurchases ($1.9B). Maintaining robust capital expenditure program ($2.3B YTD) while preserving strong balance sheet with $4.9B cash.

Management Commentary

On track for safest year in Nucor history with YTD injury rate of 0.77

Strong cash generation with $1.3B operating cash flow in Q3

Expect lower Q4 earnings due to lower prices and volumes

Market uncertainty and softer end market demand

Overall Sentiment: Cautiously optimistic with focus on operational excellence while navigating near-term market headwinds

Recommendation

Rating: Hold

Reason for Rating: Strong operational execution and balance sheet offset by near-term market uncertainty

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/28/2025, 4:12:57 AM