Nucor Corporation · NYSE:NUE
Nucor — Q1 2023 Earnings Presentation
26 slides from Nucor's earnings presentation, Apr 21, 2023
Slide 1: First Quarter 2023 Earnings Call
FIRST QUARTER 2023 EARNINGS CALL LEON TOPALIAN Chair, President and CEO STEVE LAXTON Executive Vice President and CFO April 20, 2023
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS Certain statements made in this presentation may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties. The words “anticipate,” “believe,” “expect,” “intend,” “may,
Slide 3: Non-GAAP Financial Measures
NON-GAAP FINANCIAL MEASURES The Company uses certain non-GAAP (Generally Accepted Accounting Principles) financial measures in this news release, including EBITDA. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or
Slide 4: Q1 Financial & Operational Highlights
Q1 FINANCIAL & OPERATIONAL HIGHLIGHTS FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS • Maintained strong safety performance • $1.9 billion EBITDA1 • Steel Mills segment shipped ~6 million • $1.1 billion Net Earnings tons, up 18% from Q4 • $4.45 Earnings Per Share • 79% mill operating rate, up from 70%
Slide 5: Growing the Core: Q1 Steel Mill Projects Update
GROWING THE CORE Q1 STEEL MILL PROJECTS UPDATE SHEET Nucor Steel Gallatin • Produced 365K tons in Q1 and continued to improve continuous run times • Trending toward full run-rate production (2.8 million tons/yr) by end of Q2 • Based on anticipated throughput & margins, we expect Gallatin to be profi
Slide 6: Executing Nucor's Diversification and Growth Objectives
EXECUTING NUCOR’S DIVERSIFICATION AND GROWTH OBJECTIVES Q1 2023 SEGMENT EARNINGS MIX(a) Q1 STEEL PRODUCTS 2018-2023 EARNINGS GROWTH $1,000 EBT in millions $900 $800 Steel Products $700 52% $600 $500 $400 $300 $200 Steel Mills 45% $100 $0 Q1 2018 Q1 2019 Q1 2020 Q1 2021 Q1 2022 Q1 2023 Raw Materials
Slide 7: Living Our Culture
LIVING OUR CULTURE Priorities 2022 Nucor Accomplishments • Safest year in company history for 4th consecutive year Safety • Injury & Illness ratio more than 2x lower than U.S. industry average(a) • Ranked #1 steel company (2nd year in a row) by Fortune Magazine’s Teamwork list of “World’s Most Admir
Slide 8: Favorable Nonresidential Construction Outlook
FAVORABLE NONRESIDENTIAL CONSTRUCTION OUTLOOK. . . DODGE CONSTRUCTION FORECAST 500 1600 Non-res building starts Avg Non-Res $ billions $439 B Pre-Pandemic 2022-2027P Sector Average Average 400 Institutional $144 $197 1200 Avg Infra Manufacturing $31 $77 $315 B Warehouse $26 $44 300 Commercial $100 $
Slide 9: Supported by Federal Initiatives
…SUPPORTED BY FEDERAL INITIATIVES FEDERAL FUNDING EST. INCREMENTAL TIMING KEY INITIATIVES PROGRAMS ANNUAL STEEL* CONSIDERATIONS IIJA includes new • First wave of new bridge funding of $550B for projects underway INFRASTRUCTURE transportation & core 3-5 Mtpa • IIJA allocates transportation infrastruc
Slide 10: Q1 2023 Segment Results
Q1 2023 SEGMENT RESULTS ($ in millions) STEEL MILLS SEGMENT Q1 2023 VS. Q4 2022 % Change Versus • Higher shipments reflecting constructive market Q1 ‘23 Q4 '22 Q1 ‘22 Prior Qtr Prior Year conditions • Lower realized pricing across long and flat Shipments (000s tons) 6,035 5,110 5,814 18% 4% products
Slide 11: Corp Expenses and Intercompany Eliminations Reconcile Segment to Consolidated Earnings
CORP EXPENSES AND INTERCOMPANY ELIMINATIONS RECONCILE SEGMENT TO CONSOLIDATED EARNINGS Quarterly Segment Earnings Corp/Eliminations include: & Corporate/Eliminations(a) $4,500 Teammate incentive $264 $4,000 compensation programs $3,500 $96 $1,130 Interest expense on $685 $3,000 corporate debt $279 $
Slide 12: Nucor's Winning Business Model
NUCOR’S WINNING BUSINESS MODEL GENERATING GROWTH & SHAREHOLDER RETURNS 2020-2022 CUMULATIVE • Largest and most diversified steel products company in the US • Returned $7.6B to shareholders; 50% of net • Leader in 10 out of 14 product lines earnings • Highly variable cost structure • 50 years dividen
Slide 13: Q2 2023 Earnings Outlook
Q2 2023 EARNINGS OUTLOOK OUTLOOK VARIANCE SEGMENT EXPECTATIONS FOR Q2 2023 TO Q1 2023 • Improved profitability on higher volumes, Steel Mills higher pricing and improved margins • Stable volumes Steel Products • Slightly lower, but stabilizing realized prices • Expect stable pricing with higher volu
Slide 14: Appendix
APPENDIX NwUcoRF
Slide 15: Advancing Our Mission
ADVANCING OUR MISSION To become a more diversified, efficient, manufacturer of steel products MISSION STRATEGIC RATIONALE & ACTION PLANS • Shifting mix to higher margin, value-added end products GROW THE • Building on cost leadership position and growing market share CORE • Capitalizing on deep rela
Slide 16: Sustainability Update
SUSTAINABILITY UPDATE 2021 & 2022: OUR CLEANEST YEARS EVER • Scope 1&2 GHG intensity: 1/4 of the global average; 1/5 of the average BF-BOF producer • Scope 1,2&3 GHG Intensity: 40% of the global average; 1/3 of the average BF-BOF producer • 20 years ahead of the Paris Climate Accord’s 1.5-degrees Ce
Slide 17: IRA and U.S. Clean Energy Transition Expected to Add ~2-3 M Tons Per Year
IRA AND U.S. CLEAN ENERGY TRANSITION EXPECTED TO ADD ~2-3 M TONS PER YEAR WIND SOLAR TRANSMISSION Actual/Projected Wind Projected Solar Projected Transmission Installations (GW) Installations (GW) Line Installations (miles) Onshore Offshore 50 3 1 3 15 300 40 2.5 0.8 2.5 250 millions of tons per yea
Slide 18: Strong Balance Sheet and Consistent Capital Allocation
STRONG BALANCE SHEET AND CONSISTENT CAPITAL ALLOCATION Q1 ‘23 BALANCE SHEET SUMMARY SHARES OUTSTANDING (MILLIONS) 340 US $ in millions x2022 as of April 1, 2023 Amount EBITDA1 % cap 320 $1.75Bn Revolving Credit Facility $0 300 Senior Notes Outstanding $5,250 Industrial Revenue Bonds $1,349 280 Other
Slide 19: Margin Expansion in a Rising Scrap Market
MARGIN EXPANSION IN A RISING SCRAP MARKET Avg. Scrap Avg. Metal Nucor metal margins are highly Period Cost(a) Margin correlated with scrap & substitute 2018-2022 $385 $566 costs with an R2 of nearly 70% 2013-2022 $349 $476 2003-2022 $328 $413 $2,000 $1,800 $1,600 $1,400 Avg. Steel Mill Selling Price
Slide 20: Nucor's Flexible Raw Materials Mix
NUCOR’S FLEXIBLE RAW MATERIALS MIX 100% 10% 9% 9% 6% 11% 11% 90% 15% 12% 13% 15% 14% 15% 80% 70% 25% 23% 23% 23% 24% 24% 60% At least 75% of Nucor’s 50% Raw Mtl mix comprised 40% of recycled materials 30% 53% 53% 52% 54% 56% 51% 20% 10% 0% 2017 2018 2019 2020 2021 2022 OBSOLETE SCRAP PRIME SCRAP DRI
Slide 21: Reconciliation of GAAP to Non-GAAP Measure
RECONCILIATION OF GAAP TO NON-GAAP MEASURE $ in millions 2019 2020 2021 2022 YTD ’23 NET EARNINGS1 1,371 836 7,122 8,080 1,232 NET INTEREST EXPENSE 121 153 159 170 10 PROVISION FOR INCOME TAXES 412 -- 2,078 2,165 365 DEPRECIATION EXPENSE 649 702 735 827 221 AMORTIZATION EXPENSE 86 83 136 235 59 EBIT
Slide 22: Reconciliation of GAAP to Non-GAAP Measure
RECONCILIATION OF GAAP TO NON-GAAP MEASURE $ in millions 2019 2020 2021 2022 YTD ’23 CASH PROVIDED BY OPERATING ACTIVITIES 2,809 2,697 6,231 10,072 1,207 CAPITAL EXPENDITURES (1,477) (1,543) (1,622) (1,948) (532) FREE CASH FLOW 1,332 1,154 4,609 8,124 675 22
Slide 23: Segment Results: Steel Mills and Steel Products
SEGMENT RESULTS: STEEL MILLS AND STEEL PRODUCTS STEEL MILLS % Change Versus • Higher shipments reflecting constructive Shipments (tons in thousands) Q1 ‘23 Q4 '22 Q1 ‘22 Prior Qtr. Prior Year market conditions Sheet 2,819 2,314 2,385 22% 18% • Lower realized pricing across long and flat Bars 2,169 1
Slide 24: Segment Results: Raw Materials
SEGMENT RESULTS: RAW MATERIALS RAW MATERIALS % Change Versus Shipments (tons in thousands) Q1 ‘23 Q4 '22 Q1 ‘22 Prior Qtr. Prior Year • Returned to profit for the quarter on higher DRI 1,002 613 997 63% 1% volumes and pricing, along with lower cost Scrap Processing 1,098 974 1,146 13% (4%) of goods
Slide 25: Quarterly Sales and Earnings Data
QUARTERLY SALES AND EARNINGS DATA SALES TONS (THOUSANDS) TO OUTSIDE CUSTOMERS EARNINGS (LOSS) BEFORE STEEL STEEL PRODUCTS INCOME COMP. TAXES SALES OTHER TOTAL PRICE TOTAL STEEL STEEL COLD REBAR TUBULAR STEEL STEEL RAW TOTAL NET SALES PER PER YEAR SHEET BARS STRUCTURAL PLATE STEEL JOISTS DECK FINISH
Slide 26: Quarterly Sales Prices & Scrap Cost
QUARTERLY SALES PRICES & SCRAP COST STEEL MILLS AVERAGE SCRAP AND SCRAP AVG TOTAL SUBSTITUTE COST EXTERNAL STEEL SALES PRICE TOTAL SHEET BARS STRUCTURAL PLATE PRODUCTS PER GROSS PER NET PER NET TON STEEL TON USED TON USED 2023 2023 1st Quarter 876 1,031 1,452 1,490 1,035 2,872 1st Quarter 414 370 2n